Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Morgan of Drefelin) (Lab)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Lord in Waiting/Government Whip (Lord Leong) (Lab)
My Lords, before we start the debate, I remind the Grand Committee that we started this group last month and that only those who were here at the start of the group should contribute. A list has helpfully been provided by the clerks, if any noble Lords would like to check it before contributing. However, I understand the expectation was that the debate was likely to resume with the Opposition’s contribution before the Minister’s response.
The Earl of Clancarty (CB)
I apologise for the noble Baroness, Lady Freeman, who is unable to be here today.
Lord Lucas (Con)
My Lords, I suggest that, since the noble Baroness, Lady Neville-Rolfe, is on her feet in the Chamber, we do not have just 30 seconds but should wait for the Division. It would seem very odd to have a short intervention. If you want one, you can have one from me.
Lord Leong (Lab)
The noble Baroness might go on for a while or she might not. I say we start and then adjourn.
English Devolution and Community Empowerment Bill
(1 day, 4 hours ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Scott of Bybrook (Con)
My Lords, I am grateful to all noble Lords who have spoken on what was—
Baroness Scott of Bybrook (Con)
My Lords, before we were interrupted, I was just saying that we are very grateful to all noble Lords who spoke on 11 February—it was as far away as that, and we have not met since then. If noble Lords think back, it was quite a substantial debate on quite a detailed group. It exposed three central questions, which the Government must answer before the Committee can be satisfied with Schedule 29. First, is community right to buy being strengthened, or is it being quietly diluted? Secondly, will the new way of doing it be workably practical? Thirdly, are we broadening community value or are we narrowing it?
I will begin with Amendment 222A in the name of my noble friend Lord Lucas. However carefully drafted Schedule 29 is, community right to buy will not function without progressive funding, and that is simply a fact. Under previous Administrations, community right to buy was not merely a legislative gesture; it was always backed by dedicated financial support. That funding was increased year on year. It was recognised that if communities are to compete with commercial purchasers, they require practical backing and not statutory wording.
I ask the Minister directly: what funding will operate under this regime? Will there be a National Lottery partnership funding, or are communities now expected to rely entirely on their own fundraising capacity?
Schedule 29 makes significant changes to the way assets of community value are defined and protected under the existing localism framework. A number of amendments in the name of my noble friend Lady Coffey quite rightly step back and ask a more fundamental question: are we improving the system that communities rely on, or are we making it more fragile? Her amendments probe whether protections could fall away too easily, whether designated periods are being weakened and whether the balance is shifting away from communities and towards expediency. At the heart, this is about certainty for communities.
The amendments from the noble Baroness, Lady Hoey, take us to valuation and compulsory purchase. If market value is assessed in a way that takes into account speculative planning uplift, communities will often be priced out right from the very outset. Section 14A of the Land Compensation Act 1961 was designed to deal with precisely that issue. Therefore, I would like the Minister to explain why the Bill does not address this directly and whether the current drafting leaves community purchasers at a structural disadvantage.
Finally, Amendment 234B, tabled by my noble friend Lady Coffey, raises a practical but important point about maintenance. What is the point of designation if an asset can be allowed to decay beyond viability into the future? If local authorities are to hold these powers, do they also have the tools to prevent deliberate neglect?
This group of amendments reveals a consistent concern across the Committee. We support the principle of community right to buy. We introduced, funded and strengthened it. But Schedule 29 represents a significant rewriting of that framework. The Committee is entitled to clear assurances that we are not, through complexity or technical adjustment, weakening the very protections that gave the right meaning. The Government must now demonstrate three things: that the right will be properly funded, that protections are not being eroded and that the definition of community value reflects modern community life in all its cultural, environmental and sporting dimensions. If those assurances cannot be given, this House will inevitably return to these issues at a later stage. I look forward to the Minister’s response.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, I thank all noble Lords and noble Baronesses for their amendments on the community right to buy and assets of community value, which I will refer to as ACVs. I know we debated this as far back as 11 February and, if it were not for the magic of Hansard, it would be a considerable memory test as to where we got to.
I hope I can reassure noble Lords of the determination of our Government to strengthen community right to buy and make it work. I will turn first to Amendment 222A tabled by the noble Lord, Lord Lucas, on the subject of funding for the purchase of ACVs. I assure the noble Lord and the noble Baroness, Lady Scott, that we are already putting record investment into communities, supporting them to take ownership of valued local assets and ensuring that they can make effective use of the new community right-to-buy powers in the Bill. The noble Baroness rightly pointed out that if you do not do that, there is little point in having a community right to buy at all. Our Pride in Place programme is providing up to £5.8 billion over 10 years to support 284 places to regenerate and improve their communities. The Pride in Place impact fund will also provide £150 million of funding for up to 95 places to support the development of community spaces, as well as revitalising local high streets and the public realm.
The Government launched the £175 million community wealth fund in September last year as part of our commitment to put power in the hands of communities and deliver on the Pride in Place strategy. The community wealth fund is funded, as the noble Baroness indicated, through dormant assets and match funding from the National Lottery Community Fund, our delivery partner. Disadvantaged communities will receive funding pots of between £1 million and £2.5 million each over a 10-year period, building community power in the places that need it most. Local people will have a say on where the funding should be spent, be that community cooking classes, after-school clubs, improvements to the look and feel of neighbourhoods, sports facilities or many other projects that have come forward for that funding. We believe that providing funding directly to the most in-need communities and putting them in the driving seat is the right approach. Communities can use their funding on the projects that are most important to them, including protecting local assets.
Baroness Scott of Bybrook (Con)
I understand all that money coming in, but it is targeted to certain communities. The community right to buy was for communities across the whole country. They had the ability to ask for support to save their pubs, or village or town amenities. I worry that those not in the schemes that the Government have now set up are going to be left behind.
Baroness Taylor of Stevenage (Lab)
The point is that many communities have managed to raise funding for schemes themselves. We are trying to target those communities that are less able to do that, and that is the point of the way in which this is funded.
Turning to Amendment 222D, I share the desire of the noble Baroness, Lady Coffey, to ensure that communities do not lose local assets that are important to them. She tabled an identical amendment to the Planning and Infrastructure Bill and, as she will be aware from the debates on that amendment, it is already the case that the demolition permitted development right excludes many types of buildings that may be designated as ACVs. This includes pubs, concert halls, theatres, live music venues and so on. Local planning authorities are able to use Article 4 directions to remove permitted development rights in their area where they consider it appropriate to do so.
However, as the Minister for Housing and Planning acknowledged during Commons consideration of Lords amendments to the then Planning and Infrastructure Bill,
“we think there are justifiable arguments for removing demolition of ACVs from permitted development rights”.—[Official Report, Commons, 13/11/25; col. 362.]
The Minister has, therefore, already committed to consult on this matter. We intend to include this proposal in the next consultation on permitted development rights, which we will publish in due course.
I turn now to Amendment 222E on the listing period for ACVs, which was also tabled by the noble Baroness, Lady Coffey. Under the provisions in the Bill, a local authority must remove an asset from its list of ACVs after a period of five years, with the Secretary of State able to amend this period through regulations. Although we want to ensure strong protections for ACVs, we do not think that it would be appropriate to remove this requirement and thereby make the listing period indefinite. Our intention is to empower communities at the same time as protecting the rights of asset owners. Indefinitely subjecting asset owners to the sale restrictions created by community right to buy would not be justifiable, given that the value of an asset to a community may diminish over time. There is also a risk that local authorities would be incentivised to make tougher judgments on requests from the community to list ACVs if listings are indefinite. This would conflict with the intention of the policy to allow communities to protect as many locally important assets as possible.
The noble Baroness pointed out that sporting assets of community value will, by contrast, be indefinitely listed. This is to provide sports grounds with longer-lasting protections, in recognising their inherent value to communities as places that foster local pride and identity and promote healthier lifestyles. It also reflects the low take-up of sports grounds under the existing regime for ACVs. Eligible sports grounds will also be listed automatically, meaning that there is not a similar risk of indefinite listing resulting in tougher listing decisions by local authorities.
The current five-year listing period for ACVs recognises that the needs of the community can change over time and that an asset may not retain the same value for a community in future. The policy must be responsive to this, but I will of course reflect on the noble Baroness’s proposal to ensure that this period is the right length.
I turn now to Amendment 222F. I agree that the scheme should not be limited to assets with a current use that furthers the economic or social well-being of the community. There are many assets that have had a community use in the past and continue to hold significant value for a community. It is right that these assets are also in scope of the policy. That is why proposed new Section 86B already allows buildings or land that furthered the economic or social well-being of communities at any time in the past to be listed as ACVs. We believe that Amendment 222F is, therefore, not necessary.
I turn now to Amendments 223, 224, 227, 229, 230, 231, 232, 233 and 234 on assets of cultural value. I agree in this case with the noble Earl, Lord Clancarty—I nearly always do—that it is important to safeguard arts and cultural spaces such as music venues, recording studios, theatres and rehearsal spaces. They ensure that artists can thrive and play an important role in the vibrancy and identity of local areas. However, a broad range of arts and cultural assets will already be in scope of the protection through community right to buy, provided that communities are able to demonstrate a social or economic value to the community. Indeed, the provisions are clear that the social interests of the community include cultural interests. Statutory guidance will make clear the types of assets that we expect to be listed by local authorities if they are nominated; I welcome the noble Earl’s feedback on its development. This guidance will also be explicit that cultural assets are in scope of the policy, with examples such as the spaces I have already mentioned.
The noble Earl will also be aware that the planning system already offers protection for cultural assets and that there is a range of other government support available for both these assets and the artists who use them. I hope he will agree that, taken together, these measures provide strong support for valued cultural spaces.
The Earl of Clancarty (CB)
Is the department still looking for feedback on this? It may not be complete yet, so I thought I should ask that question.
Baroness Taylor of Stevenage (Lab)
Indeed, I would very much welcome the noble Earl’s feedback as we start to develop the statutory guidance on that. He is very welcome to comment further on the issues around this use of cultural assets.
Amendments 223A, 224A, 225, 226 and 228 are on assets that further the environmental well-being of local communities. I reassure the noble Baronesses, Lady Bennett of Manor Castle and Lady Freeman of Steventon—I am sorry that she cannot be here today but I will send a draft of my speech to her—that the community right to buy will empower communities to protect a broad range of assets that are important to local life. That includes environmental assets. Communities will be able to nominate an extensive range of environmental assets, where they further their social or economic well-being, through the current provisions in this Bill. This could include allotments, playing fields, woodlands and farms, to name but a few. Statutory guidance will make clear that local authorities should accept nominations for such assets that meet the criteria.
However, the scheme is not intended to be used as a vehicle for general environmental protection. While excluding land allocated in local development plans will be helpful in preventing the scheme being used to block development activity, it is important that it remains focused on those assets that have an existing or historic role in community life. Environmental problems are best tackled through effective regulation, and this scheme should not act as a fallback or proxy for that.
Baroness Jones of Moulsecoomb (GP)
I feel that, once you have left the environment out of the legal safeguards on this particular aspect, you are inviting people to ignore them. I am very concerned about that. I am not just talking about sorting out problems; opportunities for local people could be completely disregarded.
Baroness Taylor of Stevenage (Lab)
As the noble Baroness will be aware, there is a whole range of safeguards in the planning system for environmental purposes. This asset of community value is there for communities to enable them to protect particular assets that they find of value in the environment. We will be developing the guidance for this and I hope the noble Baroness will take part in that guidance. She asked me earlier today if I will meet her and I am of course very happy to do that.
I turn to Amendments 232A and 232B. I agree with the noble Baroness’s sentiment that as many assets as possible should come into the scope of the policy; however, we have to recognise that there are some types of land that it will not be feasible or justifiable to designate as ACVs, as other interests may take precedence. That includes private residences and operational land used for statutory undertakings such as water, gas and electricity. It is right that the policy prevents the listing of land in these limited circumstances, which is why the Secretary of State has the power to set out land that is not of community value in regulations. We will continue to keep the list of exemptions under review to ensure that it is not unnecessarily restrictive and that communities can protect a wide range of assets.
Amendments 234ZA and 234A seek to broaden the definition of a sporting asset of community value. The current statutory definition of a sports ground in the Safety of Sports Grounds Act 1975 explicitly states that the ground must have a spectator facility, so that provides a clear objective framework to help councils assess eligibility for listing as an SACV. There is no comparable alternative legislation that provides a comprehensive or universally applicable statutory definition. Broadening this definition would place a considerable burden on local authorities to identify grounds they consider to be eligible for SACV listing and to retain up-to-date lists of them. Any ambiguity could lead local authorities to being less confident about listing these vital assets.
The current definition of an SACV, which encompasses the majority of grounds that have a spectator facility, will significantly increase the number of assets that communities can take ownership of under the new community right-to-buy scheme. Furthermore, a spectator facility is a sensible and objective indicator of community value. A ground with a built space for spectators is clearly designed for shared organised use and already serves a wider community purpose. Grassroots-level grounds that do not meet the definition under the 1975 Act will still be eligible for listing under the regular ACV scheme.
Baroness Coffey (Con)
If a council decides to designate, say, Hackney Marshes or some other area like that and it is clearly for sporting value, will it then get the same protection even if the council has not initially designated it because it did not have spectator facilities? Will it then get the same protection for life?
Baroness Taylor of Stevenage (Lab)
That is a very good question. Because those are sporting facilities, I would imagine that they come under the ACV scheme or the SACV scheme. I feel that they should be because they are all sporting assets but I will check that and respond to the noble Baroness in writing.
Lord Lucas (Con)
My Lords, I am very grateful to the Minister for her very high-quality, thoughtful and complete reply, which I have become used to. I am sure that I and my noble friends will spend much time reading it again in order to further trouble her on Report.
On my Amendment 222A, I understand what the noble Baroness said. I will merely comment that this is, looking back at our record in government, a misconceived policy: centrally designating deserving communities does not work. The centre does not know and understand enough. Where we produced levelling-up schemes, either with a very short timescale, or where the use of the funds was entirely undefined, my observation was that an awful lot of those funds went astray or were employed in projects that should not have been funded.
Funding for assets of community value stood out against that as a really successful scheme because, in order to qualify, the project had to have been thought through. It had to have the support of the community and got through those hurdles that would demonstrate that, at the end of the day, what would be produced would be used by and be of value to the community, and be what the community wanted.
It was not a huge scheme but it was a very successful one, and we found it much more powerful and effective as a way to distribute money. I am sorry that the Government have abandoned that, and I hope that at some stage they will take the chance to look at the record of what has been achieved by these various schemes and at what the most effective way is of dispensing money.
I am grateful to the Minister for her replies to the amendments tabled by the noble Baroness, Lady Hoey. I understand what she says, but obviously it will be up to the noble Baroness, Lady Hoey, to decide whether she takes that forward. I am obliged also to the noble Earl, Lord Clancarty, the noble Baroness, Lady Freeman, and others. I think that they got good answers but maybe not quite good enough.
As for my noble friend Lady Coffey and this business of a five-year time limit on assets of cumulative value, there is nothing obvious in this scheme that says whether you can or cannot immediately relist. I understand what the Minister says about things changing and the community maybe not using an asset anymore—but it is not clear from here that an asset can be immediately redesignated at the expiry of the five years. By not making that clear, it risks people arguing with it and the decision going the wrong way. If the Government’s intention is that it is a review rather than an all-time cross-off, which is my understanding, I think we might find a way of expressing that better. But I am very grateful for the Minister’s replies and beg leave to withdraw the amendment.
Lord Banner
“Chapter 2ALand disposed of by local councilsDischarge of statutory trusts
Secretary of State to have power to discharge statutory trusts(1) LGA 1972 is amended in accordance with this section.(2) After section 128 insert—“Discharge of statutory trusts
128A Statutory trust discharge orders(1) The Secretary of State may make an order under this section in relation to land in England (a “statutory trust discharge order”).(2) The Secretary of State may not make a statutory trust discharge order in relation to land unless— (a) a person has applied to the Secretary of State for the statutory trust discharge order to be made in relation to the land, and(b) the Secretary of State is satisfied that the qualifying conditions are met (see section 128D).(3) The effect of an order being made in relation to land is that the land is freed from any trust arising solely by virtue of its being land held in trust for enjoyment by the public in accordance with—(a) section 164 of the Public Health Act 1875 (pleasure grounds), or(b) section 10 of the Open Spaces Act 1906 (duty of local authority to maintain open spaces and burial grounds).(4) The order has that effect in relation to that land generally (and so its effect is not limited to that land as freehold or leasehold land as held by the applicant for the order).(5) The Secretary of State may, by regulations, make provision as to the making and determination of any application for a statutory trust discharge order.(6) Regulations under subsection (5) may in particular make provision as to—(a) the steps to be taken by a person before making an application;(b) the form of an application;(c) the information or evidence to be supplied with an application;(d) the publication of an application;(e) the holding of an inquiry before determination of an application;(f) the evidence to be taken into account in making a determination and the weight to be given to any evidence.(7) Regulations under subsection (5) may include provision for the Secretary of State to appoint a person to discharge any or all of the Secretary of State’s functions in relation to an application for a statutory trust discharge order.(8) The power under subsection (5) to make regulations includes power to make—(a) different provision for different cases;(b) incidental, supplementary or consequential provision;(c) transitional or saving provision.(9) A statutory instrument containing regulations under subsection (5) is subject to annulment in pursuance of a resolution of either House of Parliament.(10) Section 128G contains further provision about the making of statutory trust discharge orders.128B Applications for statutory trust discharge orders(1) A person making an application must have regard to any guidance issued by the Secretary of State (whether relating to how the application is made or to its form or content).(2) Qualifying condition B (see section 128D(3)) limits which kind of person is able to make a successful application.(3) An application may be varied after it has been made (and section 128A, this section, and sections 128D to 128G then apply to the application as varied).(4) The Secretary of State may require a person making an application to pay a fee before the Secretary of State considers the application (the “application fee”). (5) The application fee is to be of an amount specified in, or determined in accordance with, regulations made under section 128A(5).(6) The determination of an application for a statutory trust discharge order which relates to particular land does not prevent a further application from being made subsequently in relation to the same land.(7) But the Secretary of State may reject a further application if the Secretary of State considers that there has not been a material change in the circumstances relevant to the qualifying conditions.(8) If a further application is rejected, the Secretary of State must publish notice of the rejection in the manner which the Secretary of State considers appropriate.128C Applications where land has been divided up(1) This section applies where—(a) a principal council, parish council or parish meeting appropriated or disposed of land, and(b) the freehold or leasehold title to that land has subsequently been divided.(2) An application may be made in relation to the land comprised in any of the relevant titles.(3) A single joint application may be made in relation to the land comprised in two or more of the relevant titles; and, in the case of such an application, the question of whether the qualifying conditions are met must be decided separately in relation to the land comprised in each title.(4) For the purposes of this section—(a) a freehold title is “divided” if either or both of the following occurs—(i) the title is divided into two or more different freehold titles;(ii) a lease (including a sublease) is granted over some or all of the land comprised in the freehold title;(b) a leasehold title is “divided” if—(i) the title is divided into two or more different leasehold titles (for example by an assignment of part);(ii) a sublease (including a sublease that is not immediately inferior to the leasehold title) is granted over some or all of the land comprised in the leasehold title.(5) In this section “relevant title” means—(a) the freehold title to the whole or a part of the land appropriated or disposed of;(b) the title to a long lease of the whole or a part of the land appropriated or disposed of.128D The qualifying conditions(1) This section sets out the “qualifying conditions” (referred to in section 128A(2)(b)).(2) Qualifying condition A: the application for the statutory trust discharge order identifies land in England in relation to which the order is being sought.(3) Qualifying condition B: the applicant for the order is—(a) the freehold owner of the relevant land, or(b) the tenant of the relevant land under a long lease, whether granted before or after commencement,at the time of the application (whether or not by virtue of the previous appropriation or disposal).(4) Qualifying condition C: a principal council, parish council or parish meeting—(a) appropriated, or (b) disposed of,the relevant land at a time before the application for the statutory trust discharge order is made (the “previous appropriation or disposal”).(5) It does not matter whether the previous appropriation or disposal occurred before or after commencement.(6) Qualifying condition D: the previous advertisement procedure was not complied with in relation to the previous appropriation or disposal.(7) For the purposes of determining whether qualifying condition D is met—(a) it is sufficient that the previous advertisement procedure was not complied with;(b) accordingly, it is irrelevant—(i) whether the previous advertisement procedure in fact had to be complied with, or(ii) whether the land was in fact land held in trust for enjoyment by the public in accordance with a trust of the kind mentioned in section 128A(3).(8) Section 128F includes provision for presuming that the previous advertisement procedure was not complied with; and qualifying condition D must be taken to be met if that presumption is made.(9) Qualifying condition E: the new publicity requirements have been complied with.(10) Qualifying condition F: it is in the public interest for the relevant land to be freed from the trusts by virtue of the order.(11) The reference in subsection (10) to the public interest includes the public interest in—(a) nature conservation;(b) the conservation of the landscape;(c) the protection of public rights of access to the relevant land;(d) the protection of archaeological remains and features of historic interest;(e) development proposals relating to the relevant land;(f) economic, environmental or social benefits which the order would facilitate if made.128E The new publicity requirements(1) This section sets out the “new publicity requirements” (referred to in qualifying condition E in section 128D(9)).(2) The applicant must publish a notice of the application in four consecutive weeks—(a) in a local newspaper — and, if there are two or more local newspapers, it must be the main local newspaper;(b) if there is no local newspaper, either—(i) in a national newspaper, or(ii) on a website with a readership in the local area that is comparable to the readership of a local newspaper.(3) If—(a) a newspaper is published in print and on a website, and(b) it is possible to publish notices of the kind required by subsection (2) in both versions,a requirement under subsection (2) to publish a notice in the newspaper can only be complied with by publication of the notice in both versions.(4) If the applicant is a principal council, a parish council or parish trustees, they must also publish a notice of the application for a period of 28 days on their website (if they have one). (5) The applicant must display a notice of the application for a period of 28 days at the point of entry, or at the main points of entry, to the relevant land.(6) The Secretary of State must publish a notice of the application for a period of 28 days on the website, or main website, containing information about the Secretary of State’s department.(7) A notice under this section must identify the relevant land.(8) A notice under this section must—(a) state that a person who wishes to make representations about whether or not the order should be made may notify the Secretary of State of the representations, and(b) state the manner in which, and date by which, representations must be notified;and that date must be later than the last day of the period of 56 days beginning with the day when that notice is first published or displayed.(9) When publishing or displaying a notice under this section, the applicant must have regard to any guidance issued by the Secretary of State (whether relating to its publication or display or its form or content).(10) In this section—“local area” means area in which the relevant land is situated;“local newspaper” means a newspaper circulating in the local area.128F Previous advertisement procedure: co-operation by councils etc and presumption(1) This section applies if an application has been made to the Secretary of State for a statutory trust discharge order.(2) The Secretary of State must notify the relevant council or parish trustees of—(a) the application,(b) the relevant land, and(c) the information about the previous appropriation or disposal which the Secretary of State has as a result of the application.(3) Within the response period, the relevant council or parish trustees must give the Secretary of State—(a) notice which—(i) confirms that the previous advertisement procedure was complied with in relation to the previous appropriation or disposal,(ii) confirms that the previous advertisement procedure was not complied with in relation to the previous appropriation or disposal, or(iii) states that the relevant council or parish trustees are not able to confirm either of those things, and(b) any information relating to compliance, or non-compliance, with the previous advertisement procedure which the relevant council or parish trustees have.(4) If the relevant council or parish trustees—(a) give the Secretary of State a notice under subsection (3)(a)(iii) within the response period, or(b) do not give the Secretary of State any notice under subsection (3)(a) within the response period,the Secretary of State must presume that the previous advertisement procedure was not complied with in relation to the previous appropriation or disposal, unless the Secretary of State is satisfied that the procedure was complied with. (5) In this section—“relevant council or parish trustees” means—(a) in a case where a principal council undertook the previous appropriation or disposal, the principal council for the area where the relevant land is situated;(b) in a case where a parish council undertook the previous appropriation or disposal—(i) the parish council or parish trustees for the area where the relevant land is situated, or(ii) if the relevant land is no longer in the area of a parish, the principal council for the area where the relevant land is situated;(c) in a case where a parish meeting undertook the previous appropriation or disposal—(i) the parish trustees or parish council for the area where the relevant land is situated, or(ii) if the relevant land is no longer in the area of a parish, the principal council for the area where the relevant land is situated;“response period”, in relation to a notification given by the Secretary of State under subsection (2), means the period of 28 days beginning with the day on which the notice is received by the relevant council or parish trustees.128G Making statutory trust discharge orders(1) In deciding whether to make a statutory trust discharge order, the Secretary of State must take into account all matters that are relevant, including these matters—(a) whether, and how, the person making the application has had regard to the guidance issued by the Secretary of State under section 128B(1) and section 128E(9);(b) any representations about whether or not the order should be made that are notified to the Secretary of State (including any representations made by persons who are freehold owners, or tenants, of land comprised in the previous appropriation or disposal but who are not applying for the order).(2) A statutory trust discharge order may relate to only some of the relevant land specified in the application.(3) A statutory trust discharge order takes effect—(a) on the day after the day on which the order is made, or(b) if the order specifies a later day on which it is to take effect, on that day.(4) In relation to each application for a statutory trust discharge order, the Secretary of State—(a) must publish notice of the decision whether or not to make the order, and(b) if the order is made, must publish the order.(5) That notice, or the order, is to be published in the manner which the Secretary of State considers appropriate.128H Sections 128A to 128G: interpretation and application to the Crown(1) In sections 128A to 128G and this section—“application” means an application for a statutory trust discharge order;“commencement” means the coming into force of section (Secretary of State to have power to discharge statutory trusts) of the English Devolution and Community Empowerment Act 2025;“long lease” means a lease which was granted for a term of 20 years or longer; “new publicity requirements” has the meaning given in section 128E(1);“previous advertisement procedure” means whichever of the following applied to the previous appropriation or disposal—(a) the requirement to advertise notice of the intention to make the appropriation in accordance with—(i) section 122(2A) in the case of an appropriation by a principal council;(ii) section 126(4A) in the case of an appropriation by a parish council or parish meeting;(b) the requirement to advertise notice of the intention to make the disposal in accordance with—(i) section 123(2A) in the case of a disposal by a principal council;(ii) section 123(2A) as applied by section 127(2) in the case of a disposal by a parish council or parish meeting;“previous appropriation or disposal” has the meaning given in section 128D(4);“qualifying conditions” has the meaning given in section 128D(1);“relevant land” means the land identified in the application for a statutory trust discharge order as the land relation to which the order is being sought;“statutory trust discharge order” has the meaning given in section 128A(1).(2) A reference in sections 128A to 128G to the freehold owner, or the tenant under a long lease, is a reference to—(a) the Crown Estate Commissioners, if the freehold or long lease belongs to His Majesty in right of the Crown and forms part of the Crown Estate;(b) the government department having the management of the freehold or long lease, if it belongs to His Majesty in right of the Crown but does not form part of the Crown Estate;(c) the government department concerned, if the freehold or long lease belongs to a government department or is held in trust for His Majesty for the purposes of a government department;(d) a person appointed by His Majesty in writing under the Royal Sign Manual, or if no such appointment is made the Secretary of State, if the freehold or long lease belongs to His Majesty in right of His private estates (which must be construed in accordance with section 1 of the Crown Private Estates Act 1862);(e) the Chancellor of the Duchy of Lancaster, if the freehold or long lease belongs to His Majesty in right of the Duchy of Lancaster;(f) a person appointed by the Duke of Cornwall, or the possessor for the time being of the Duchy of Cornwall, if the freehold or long lease belongs to the Duchy of Cornwall.”(3) In section 266(1) (orders which are to be made by statutory instrument), for “other than section 261 above” substitute “other than section 128A”.”Member’s explanatory statement
This would enable the Secretary of State to make an order in relation to land previously appropriated or disposed of by a council. The order would discharge the land from statutory trusts relating to open land that arise under section 164 of the Public Health Act 1875 or section 10 of the Open Spaces Act 1906.
Lord Banner (Con)
My Lords, Amendment 222C is in my name and those of the noble Lords, Lord Grabiner and Lord Pannick. Noble Lords who participated in the House’s recent consideration of what was then the Planning and Infrastructure Bill will recall that we proposed an amendment to that Bill with a view to addressing the wide-reaching consequences for persons who acquire former public open-space land in light of a Supreme Court decision known as Day: R (on the application of Day) v Shropshire Council [2023] UKSC 8.
To recap, open spaces held by the local authority under the Public Health Act 1875 or the Open Spaces Act 1906 are subject to a statutory trust in favour of the public being given the right to go on to that land for the purpose of recreation. Section 123(2A) of the Local Government Act 1972 provides that the local authority may not dispose of any land consisting or forming part of an open space unless, before it does so, it advertises its intention to sell the land in the local newspaper for two weeks and then considers any objections received in response. Section 123(2B) provides that the sale of the land post-advertisement proceeds free of the statutory trust.
In the Day case, the Supreme Court held that, even when the decision to dispose of open-space land has not been challenged, and even when it was made many years or even decades in the past, a historic failure to comply with the advertisement requirements means that the statutory trust continues to exist and therefore continues to frustrate the beneficial repurposing or redevelopment of the land in question. Crucially, that is the case even if the land was sold in good faith by the local authority to a bona fide purchaser who was completely unaware of any procedural irregularity, even if there remains no dispute that the land was surplus to requirements when it was sold.
That is highly problematic; it means that the land that has been sold on the basis of an unchallenged decision that it is in the public interest to dispose of it—land that now has planning permission for beneficial reuse—is none the less permanently banned by the statutory trust and cannot be put to its intended beneficial use for which planning permission has been granted. Given that the advertising cannot be done retrospectively, the land may be blighted for ever.
This is causing considerable uncertainty in relation to land purchased in good faith from local authorities, sometimes decades ago. The evidence about whether the land in question had or had not been properly advertised prior to sale may no longer be readily available, particularly in historic cases. Land that may very well have been properly advertised is brought within the blight because of this issue, and this is holding up many developments across the country that already have planning permission.
Lord Grabiner (CB)
My Lords, I support this amendment and have added my name to that of the noble Lord, Lord Banner. I am afraid that the noble Lord, Lord Pannick, is unable to be with us this afternoon and apologises to the Committee for his absence. The background has been well explained by the noble Lord, Lord Banner, and I shall emphasise a couple of points.
The purpose of the amendment is to reverse the decision of the Supreme Court in the case of Dr Day v Shropshire Council. In paragraph 116 of her judgment, Lady Rose very fairly said:
“I recognise that this leaves a rather messy situation”.
The mess referred to by the learned Supreme Court Justice is that, although the land was acquired by the purchaser in good faith and for value, and the Local Government Act 1972 expressly confirmed that a good title passed to the purchaser, the fact that the local council failed to advertise the proposed sale in local newspapers for two weeks meant that the public right to go on the land for recreational purposes remained in place. As a result, the land cannot be developed and, as the noble Lord, Lord Banner, suggested, it is blighted, effectively forever, because the original failure to advertise cannot ever be put right. Also, your Lordships will readily appreciate that the original sale by the local authority in such cases may have taken place many years earlier, which would likely give rise to the key evidential question: was the original sale properly advertised? It would be impossible to go back to the records in a case that had happened many years earlier.
The noble Lord, Lord Banner, explained what happened in Committee and on Report during the passage of the Planning and Infrastructure Bill, and I need not repeat the history. That said, when this issue was before this House, concerns were expressed by some noble Lords about the form and content of that amendment. The concern—I hope that I summarise it accurately—was that the amendment would merely have reversed the decision in the Day case, leaving members of the public who are concerned to protect recreational space with no ability to challenge a proposed sale.
Amendment 222C takes full account of that concern. It would make provision for a robust public consultation process; it would mean that an application would have to be made for a statutory trust discharge order, associated with strict requirements for the giving of notices and the publication of suitable local advertisements. Before making the order sought, the Secretary of State would be obliged to take account of all comments received and would have to be satisfied that the qualifying conditions were met, as per proposed new Section 128A(2)(b). The qualifying conditions are precise and stringent, as laid out in proposed new Section 128D. Most importantly, new publicity requirements, as set out in proposed new Section 128E, would have to be complied with, as per proposed new Section 128(D)(9), and the Secretary of State would have to be satisfied—this is critical—that it was in the public interest for the relevant land to be freed from the public trusts by virtue of the order, as per qualifying condition F in proposed new Section 128D(10). I inserted the word “public” there for clarification purposes. The public interest is fully defined. I do not need to repeat what the noble Lord, Lord Banner, already said on that point, but it is defined in the widest possible terms in proposed new Section 128D(11).
I appreciate that there are more wide-ranging concerns regarding recreational space and general well-being, as expressed by the Campaign to Protect Rural England and others. For those groups, we are told, this amendment does not go far enough. I will respectfully make two points on that. First, this amendment has a very precise scope. It is not concerned with the much wider political issue of—
The Deputy Chairman of Committees (Baroness Morgan of Drefelin) (Lab)
My Lords, there is a Division in the Chamber. The Committee will adjourn for 10 minutes.
Lord Grabiner (CB)
My Lords, your Lordships will pleased to know that I have accepted the advice of others that it would not be acceptable for me to start again. I had actually reached the last paragraph before we were—I will not say rudely, but I simply say—interrupted by the Division Bells. I was just about to make my two closing points. These were in response to the suggestion from various interested groups outside whose contention is that Amendment 222C does not go far enough. I shall make two points in response to that suggestion.
First, the amendment has a very precise scope. It is not concerned with the much wider political issue of parks’ trusts and protections. In my view, it should not be caught up in, or delayed by, that distinct political debate—it is a separate issue. The second point is that, for practical purposes, the amendment would actually produce significant improvements in the law. The advertising requirements in the 1972 Act are minimal compared with the amendment. If the local authority had complied with the simple requirement to advertise locally for two weeks, Dr Day’s claim would have failed. Indeed, he would never have started the action.
Lord Lucas (Con)
My Lords, my noble friend Lord Banner, unsurprisingly, makes an eloquent case for his Amendment 222C. I very much hope that the Minister will hold to what she said when this issue was addressed previously and reassert the Government’s commitment to a wider review of the existing protections to bring coherence to the legal framework, making protections more transparent and accessible so that communities can protect their most valued spaces, to paraphrase what she said.
At the heart of the amendment lies the travails of the All England Lawn Tennis Club. I declare an interest as a resident of Eastbourne and, therefore, as someone who holds a very low opinion of that organisation, which seems to be entirely concerned with itself and its money and very unconcerned with the communities that it interacts with. That is a widely shared opinion, as noble Lords will know—although they may not agree with it.
The troubles that the ALTC is facing have roots in the predecessors of assets of community value. We have long considered that communities have rights when it comes to the places and spaces that they enjoy. These have grown complicated and difficult to understand and enforce, which is why the Minister’s review is needed. But these places and spaces are needed and should be respected.
In this particular case, the ALTC has behaved abysmally, and it should not be advantaged by shortcutting what should be a careful review. I would like to see it soon and done with speed, but it should be an open public review, involving national bodies and others that are interested in the protection of public trusts and recreation rights to arrive at a coherent, well-agreed solution to this problem. To do it by way of an amendment in a Bill is far too limited; there are far too few opportunities to really get into the competing rights and interests that are involved here. I urge the Minister to stick to her previous resolution.
Baroness Pinnock (LD)
My Lords, the noble Lord, Lord Banner, has returned to this issue, which was the subject of debate during the then Planning and Infrastructure Bill. Then, the amendment in his name concerned only the Wimbledon Park Community Trust. That amendment did not reach the statute book, so here we are again with round two.
In this case, the amendment encompasses all statutory trusts. The noble Lord, Lord Banner, is very persuasive, but there is an alternative argument. The argument proposed by the noble Lord is to clarify the legal technicalities, whereas the opposing argument, which I hope to be able to put, is one of principle: the principle of protecting green spaces that are kept in public trust.
In summary, Amendment 222C is a four-page amendment that proposes to grant the Secretary of State unprecedented power to permanently discharge statutory trusts from land once held for the public’s enjoyment. It is being framed as a measure to resolve legal technicalities—we have heard that argument from the noble Lords, Lord Banner and Lord Grabiner. In truth, it seems to me that the amendment would be an assault on some of our nation’s parks, sports grounds and green open spaces, which were created for the benefit of the local community.
Under the proposal in this amendment, land held in trust for the public under the Public Health Act 1875 or the Open Spaces Act 1906 could be stripped of its protected status by a simple order from the Secretary of State. This would essentially erase the general right of public enjoyment on that land for ever. The question is: in what circumstances is that justified? Who will benefit from the protection of land held in trust where the protections are removed? Will the community that has enjoyed the rights conferred by the trust have a significant right over any attempt to change the status of the land held in trust? Those critical questions are yet to be answered by either of those who have spoken in favour of the amendment. I hope that, when we get to the end of this debate, the noble Lord, Lord Banner, will be able to answer them.
What is most troubling is the basis on which these trusts would be destroyed. The amendment targets cases where a council failed to follow the “previous advertisement procedure” when it originally moved or sold the land. Essentially, we are being asked to reward past administrative incompetence. If a council ignored the law decades ago by failing to notify the public of a land disposal, this amendment would allow that very failure to serve as the qualifying condition for stripping the public of their rights today.
In addition, in my view the amendment would create a dangerous presumption of non-compliance. If an application is made, the Secretary of State must notify the relevant council, which then has a mere 28 days to respond. If that council, which may be struggling with records from 50 years ago, say—and which may have been reorganised by this or a previous Government—cannot confirm that the advertisement took place, the Secretary of State “must presume”, as the amendment says, that the law was broken, thereby clearing the path to discharge the trust.
This is a remarkably low bar for the permanent alienation of public assets. In my view it is outrageous—28 days is a completely inadequate period for doing paper archive searches. Then, the power of presumed guilt is totally contrary to the basis on which our legal system stands. The balance is being deliberately stacked in favour of those who wish to dissolve trusts that hold land for the common good.
That leads me on to the idea of public interest, as defined in the amendment, in the condition proposed in new paragraph (f). It is broad enough to include any “development proposals” or “economic … benefits” that the order might facilitate. If we allow development proposals to be weighed against the sanctity of a public trust, we know which will win in the era of intense commercial pressure and economic benefit or, indeed, financial benefit. The amendment proposes a 56-day window for representations. By the way, the amendment refers to publicity in a “local newspaper”. That is novel. I do not know how many local newspapers still exist. Whether that is a satisfactory way in which to advertise for local representation is one of the questions that needs to be asked and answered.
We are ultimately placing the fate of local green spaces in the hands of the Secretary of State rather than the local communities who use them. There is the idea that the noble Lord, Lord Grabiner, proposed, whereby the public will have a view and can be consulted. I have many experiences of public consultation, certainly in the reorganisation of local councils currently, where the vast majority oppose but, nevertheless, the changes are made.
Baroness Pinnock (LD)
I was making a point about public consultation. Since the land is held by a trust for public benefit and for the public good, it seems to me that some consideration should be given to giving the people who benefit from that trust—the community; I am sure it could be defined—some sort of veto over any change in the status of the land held in public trust. Obviously, it could not be just half a dozen folk thinking that it should not happen, but if there were a huge swell of public opinion in favour of keeping the land in a public trust, as was done many years before, maybe that ought to be an option for local people.
There are various places across different parts of the country where the council’s own land in public trust would be affected if this amendment were accepted by the Government. The ones I have been able to find—apart from Wimbledon, of course—include Winchester, Swansea, Finchley, Hornsey and many others. Once a statutory trust discharge order takes effect, the land would be freed from the trust “generally”. Its status would be altered for all time, regardless of who holds the title. We should not enable a statutory loophole in this amendment that would allow the procedural errors of the past to become the justification for stealing the green lungs of our communities in the future. As noble Lords might have realised, the Liberal Democrats strongly oppose this amendment and stand on the side of communities that strive to protect the integrity of our public open spaces held in trust.
I finish with a common little rhyme that emerged from the 18th century when the enclosures were taking place at great pace—when common land was taken by landowners. It goes:
“The fault is great in man or woman,
Who steals a goose from off a common;
But who can plead that man’s excuse,
Who steals the common from the goose?”
Lord Grabiner (CB)
Before the Division Bells, the noble Baroness was very dismissive of the consultation process, which is spelled out in the amendment. She referred to what sounded like her own unpleasant experience of such processes in the past. I wonder whether, on reflection—we have had a bit of time to reflect during the break—she thinks that a fair criticism of the amendment.
Baroness Pinnock (LD)
My Lords, the difficulty the public have with the word “consultation” is that they often dismiss it as being a mere sop by those who want to change the order of things, whatever that might be. Consultation is frequently used; it is a basic part of the planning process. Often, members of the public make representations based on planning law, the NPPF and local plans, but nevertheless the developers overcome those objections. It is the same with changes to the structure of local authorities. Consultation has become, “You can have your say, but in the end you’re going to be overruled”.
With something as serious as this, where land has been donated for public use for many years and held in trust—a word we need to reflect on—for public use, it should not be easy to remove that public trust, in effect removing the public from the trust. In my view, using a device called consultation is totally inadequate in those circumstances. There ought to be a different way of determining whether land should be taken out of that protection.
Lord Jamieson (Con)
My Lords, this is an issue that we remember well from debating the Planning and Infrastructure Bill, now an Act. I am pleased that the Government and my noble friend Lord Banner have been able to work together on this and have, I believe, come to an agreed position. I am also grateful that my noble friend has been able to lend his significant expertise to the drafting of Amendment 222C to help find a solution. However, as we are only in Committee, we will need a little more time to go through it thoroughly before we consider giving it our support.
In the meantime, can the Minister please update us on the wider review of existing protections, so that communities, local authorities and developers can have clarity about when and how land is protected, which she committed to during the passage of the Planning and Infrastructure Bill? Has this review been conducted? If so, what was the outcome and has it been published? If not, when will it be conducted?
We are also aware of the impact of the Supreme Court judgment in the Day case. That needs looking at in detail. Will the Government look into the case of Wimbledon specifically, given the enormous importance of Wimbledon to our national sporting life and the contentious issues at stake? Would a targeted inquiry into that case be appropriate? I would be grateful if the Minister could give her view on these points.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank everybody for their patience while we have had to adjourn the Committee several times for voting. I thank the noble Lord, Lord Banner, for his Amendment 222C and for his engagement on this matter. I thank all noble Lords who have spoken in this debate. I thank the noble Lord for his very careful consideration and constructive efforts to address the issue at hand. We need a mechanism to close this lacuna in the law, while ensuring balanced decisions can be made in the public interest. In my view, Amendment 222C does just that.
As the noble Lord, Lord Banner, set out, and as we discussed during debates on what is now the Planning and Infrastructure Act, there is currently no way of releasing such statutory trust if the statutory advertisement procedure is not followed. This means that the land is bound by the trust in perpetuity, which can risk holding up important developments that may be in the public interest—for example, the building of important new amenities and facilities for the local community. The amendment would provide a practical solution to this issue, while still ensuring that balanced decisions are made in the public interest. The noble Lord helpfully set out the safeguards enshrined in the qualifying conditions, which the Secretary of State will have to consider to make a discharge order.
The issues around community rights are, of course, very important. The noble Baroness, Lady Pinnock, raised this but the amendment would embed a robust public interest test and significant transparency safeguards. Before any statutory trust discharge order can be made, the Secretary of State must be satisfied that all six of those qualifying conditions are met, including full compliance with the new publicity requirements and a broad public interest test. I remind the Committee that the conditions are: nature conservation, landscape conservation, public rights of access, features of historic interest or archaeological remains, development proposals, and economic, environmental or social benefits, which the order would facilitate, if made. This is a transparent, evidence-based process and it would ensure that trusts can be discharged only where it is demonstrably in the public interest to do so.
The purpose of Amendment 222C is to provide clarity for those who are already impacted by this lacuna in the law. It does not address past failures to follow the advertising procedure. However, it places additional requirements on local authorities to co-operate with the Secretary of State to identify if this procedure has not been followed. Most importantly, the application process and advertising procedure in the amendment would maintain the core elements of the Local Government Act 1972 by ensuring that communities have opportunities to make representations, should they object to the release of the statutory trust held for public recreation.
The proposed amendment also provides that a statutory trust may be released only where this is in the public interest, which the advertised provision in the Local Government Act does not specify. I feel that, to some extent, the noble Baroness, Lady Pinnock, has misunderstood the narrow focus and purpose of this amendment, and the rigorous guardrails that have been placed around it. We need a method of resolving an issue. This amendment effectively allows that public consultation to be responded to in a Secretary of State process where it has been omitted originally.
Lord Lucas (Con)
My Lords, I had not realised that the noble Baroness was so much in favour of this amendment. The noble Lord, Lord Grabiner, made reference to consultation. The provision for consultation in the amendment is exceptionally thin and ill-defined. There is nothing here that I would recognise as getting in among the community and finding out what they care about and want. There is no provision for that kind of depth of research, particularly in the context of the issue we are talking about in Wimbledon, where the interests of those who actually live there, as opposed to the neighbouring borough, seem to be ignored entirely. There is nothing in the wording of this amendment to suggest that that will not continue to be the case. If this is an amendment which is to be proceeded with on Report, we will have a large number of amendments to it and a long debate.
Lord Banner (Con)
My Lords, I am thankful for the comments and to all the contributors to this debate. I emphatically endorse the comments of the noble Lord, Lord Grabiner, that the issue this amendment presents is separate to the wider protections of parks and open spaces that are to be the subject of the review mentioned. The substantive content of the trusts in question, the protections they place on development spaces when the trusts are in force, are unaffected. The law in relation to registered parks and gardens, national parks et cetera are unaffected. Planning policy in relation to open spaces is unaffected. All those matters may be the subject of the future review.
This amendment concerns one issue alone, which is that the Local Government Act 1972 already allows for the relevant trusts to come to an end upon the sale of the land if there is advertisement of two weeks, which is half the level of advertisement that this amendment proposes for the context that we are dealing with. All that we are dealing with here is what happens either when the original sale was not advertised or the evidence is unclear as to whether it was. How do you rectify the situation? The answer is that you double the advertisement later. What possible complaint can there be that there is insufficient consultation of advertisement, when you get twice what the law already provides for to discharge the trust at the time?
Lord Lucas (Con)
I am sure my noble friend’s imagination is broader than that.
Lord Banner (Con)
Can I also clarify that this amendment is not just about Wimbledon, nor was the previous one? They were both fully ranging in relation to all such trusts in question. In light of that, while welcoming the Minister’s support in principle for the amendment, given that there is a degree of contention, I withdraw it now but will bring it back on Report.
Lord Borwick
Member’s explanatory statement
This probing amendment, and others in the name of Lord Borwick, seeks to ensure that the Secretary of State makes regulations related to the licensing of taxis and private hire vehicles within six months of the day on which this Act is passed.
Lord Borwick (Con)
My Lords, I rise on this St Piran’s Day to carry forward the millstone of ensuring accessibility just a bit, knowing that so many disabled people still struggle with accessibility every day, even 30 years after we legislated to make a change. I am indebted to the noble Baroness, Lady Taylor of Stevenage, for pointing out the importance of the patron saint of Cornwall. His miracle was to carry a millstone across the Irish Sea. My task is much easier: getting accessibility to actually happen. I should first declare my interests as the owner and driver of a wheelchair-accessible London taxi and as a London taxi proprietor. I have had a long history in the taxi trade.
The amendments in my name, co-signed by the noble Baronesses, Lady Brinton and Lady Grey-Thompson, the noble Lord, Lord Blunkett, and my noble friend Lord Young of Cookham, come in two sets. One is a set of probing amendments that add a new twist to an old chestnut—if noble Lords will forgive a badly mangled metaphor—and the other amendments are serious improvements to the reliability of wheelchair accessibility in this country. Thirty years ago, in the Disability Discrimination Act 1995, Parliament decided that all taxis in the country should be able to carry disabled people who use wheelchairs in dignity in their chairs. This intention was repeated in the Equality Act 2010. The phrase
“The Secretary of State may make regulations”
was used but, 30 years later, they still have not done so.
This English Devolution and Community Empowerment Bill, whose taxi clauses I thoroughly support, also states that the Secretary of State “may” bring forward regulations, but I am puzzled. Does this mean that they may bring forward regulations in more than 30 years’ time? How can we be assured that the Government will bring forward regulations called for by the Casey report, when they have not done so in 30 years on disability? Can the Minister therefore tell us when the Government may bring forward these regulations? Can he also compare the regulations with the accessibility regulations that were passed by agreement 30 years ago? We must have both sets, not just one set of regulations.
I am old-fashioned enough to believe in the sovereignty of Parliament and that, when decisions were made in Parliament, those decisions were the law and something that law-abiding departments followed. It appears that Parliament has achieved the credit for improving accessibility, while intentionally leaving disabled people, such as the noble Baroness, Lady Brinton, to walk home in the snow pushing their wheelchair because it has a flat battery.
This is only a probing amendment and I have no intention of proposing it on Report, provided the Minister deals with my next point. The requirement of the Disability Discrimination Act 1995, repeated in the Equality Act 2010, is that disabled people should be able to travel safely and comfortably in their chairs in a taxi. Private hire vehicles are different. The words to be inserted under my Amendment 235B are that:
“The Secretary of State may make regulations (in this Chapter referred to as ‘taxi accessibility regulations’) for securing that it is possible for disabled persons—
(a) to get into and out of taxis in safety;
(b) to do so while in wheelchairs;
(c) to travel in taxis in safety and reasonable comfort;
(d) to do so while in wheelchairs”.
Of course, when we at Manganese Bronze Holdings plc made the first wheelchair-accessible taxi to enter volume production in 1997, we discovered that the majority of people who could not walk were babies in baby buggies. We all spend time in a wheelchair while we are babies, and we are very lucky if that is the only time in our lives when we are dependent on wheels. The arguments used when Parliament decided on this matter included that the country needed a dependable, integrated transport system on which disabled people could rely. The fact is that they can now get wheelchair-accessible transport—a bus or a taxi—from anywhere in London to a mainline station, where they can get a wheelchair-accessible train to almost anywhere in the country. Only after this amendment is accepted will they know that they can get a wheelchair-accessible taxi at their destination. Hooray—this is an integrated transport system.
This amendment would abolish one of the constant problems of disability: the overhead of planning. Can I get an accessible loo at my destination? Will there be steps on the way? These are all old problems that the Minister—the noble Lord, Lord Hendy—has done more than his fair share to abolish. As disability becomes more complex in general, many more people have a range of simultaneous disabilities that can make the overhead of planning much harder.
Another argument produced is that taxi drivers cannot afford the cost of a wheelchair-accessible taxi. This argument has the flaw that drivers compare the cost of a new taxi with the cost of a second-hand car. A new taxi is indeed expensive, but that is partly because the volume is so low. I am confident that the price will reduce as volume increases.
Comparing two 100,000-mile vehicles makes the answer different. My taxi, which is parked in a car park outside and has 126,000 miles on the clock, has only one year left on its life in London because of the emissions regulations and age limits in London, so it will be sold next year for very little. However, all taxi drivers have had 30 years’ notice of this change, ever since the Disability Discrimination Act was passed in 1995. Is 30 years’ notice insufficient?
If any noble Lord wants to replay this argument, I am perfectly content to do so, but I would say that the argument is over. Parliament has already decided on this matter, and the choice is either to implement the Equality Act 2010 or to repeal it. Hiding a change in the long grass of legislation, passing an accessibility measure and modestly accepting praise for it but then doing nothing is immoral and offensive to disabled people; I am sure that the noble Lord, Lord Hendy, would not want to have anything to do with it.
I was amused to see a press release issued by the Department for Transport on 27 November last year. It was proud that these taxi clauses in the English devolution Bill improved accessibility—so proud, in fact, that the press release mentioned accessibility four times. The trouble is the clauses do not mention accessibility at all. On introducing these clauses on Report in another place, the Communities Minister, Miatta Fahnbulleh MP, said that they are
“improving the accessibility of services for everyone. That means that people—particularly those who rely on these services the most, such as women, girls and people with disabilities—can be reassured”.—[Official Report, Commons, 25/11/25; col. 286.]
However wonderful and necessary Clauses 64 to 72 are, they do not seem to me to improve accessibility at all.
This should not be a party-political matter. All parties and the department have been trying to do the right thing over the past 30 years. No party is trying to stop this. Any criticism of the Department for Transport may be misplaced because, clearly, the department showed extraordinary foresight in knowing both that I would propose such amendments as these and that its prediction that these clauses would improve accessibility would come true in the end, because it would accept my amendments and take the credit for them. I do hope that I am right. I beg to move.
Baroness Pidgeon (LD)
My Lords, there are a number of issues in this group on taxis and private hire, but I will explain my Amendments 235BA, 235CB and 235CC. I thank the noble Lords, Lord Hampton and Lord Bradley, and the right reverend Prelate the Bishop of Manchester for adding their names to them.
Out-of-area working, also called cross-border hiring, allows drivers and vehicles licensed in one area to operate entirely in another. The scale of this is highly significant and is a major feature of the private hire sector nationally. It is estimated that more than 11% of all private hire vehicles nationally are licensed by just one licensing authority: the City of Wolverhampton Council. Let us put this into some context. Back in 2023, TfL was aware of at least 300 private hire vehicle drivers licensed by Wolverhampton but with a London residential address. Data from Greater Manchester shows that 49% of private hires operating in Greater Manchester are licensed by authorities outside of their current 10 local licensing authorities.
Why does this matter? It undermines the ability of local licensing authorities to regulate effectively and creates serious risks for public safety. Last year, the Casey audit into group-based child sexual exploitation exposed harrowing failures in protecting vulnerable children and identified that cross-border hiring was being exploited by individuals and groups sexually exploiting children. The noble Baroness, Lady Casey, recommended that the Government should introduce more rigorous safety standards and put a stop to cross-border hiring. The recommendation was:
“The Department for Transport should take immediate action to put a stop to ‘out of area taxis’ and bring in more rigorous statutory standards for local authority licensing and regulation of taxi drivers”.
The Government accepted all the recommendations made in the report, in order, they said,
“to get justice for victims and survivors, and to get perpetrators behind bars”.
However, the Government have not yet set out when and how they will take action that fully closes the loophole that enables cross-border hiring. In December, they introduced amendments to this Bill that have focused only on national minimum standards. Although those national minimum standards may work to ensure a strong foundation and ensure that more consistent standards apply across different licensing authorities—I welcome this as one step in dealing with this complex issue—this alone does not go far enough. These standards will be subject to consultation, with no clear deadlines for implementation, and they do not close the existing loophole. They are only part of the solution to addressing the recommendation of the noble Baroness, Lady Casey.
Additionally, the Government have not set out how national minimum standards will be enforced. Enforcement is already a challenge for many licensing authorities, and the ability of drivers effectively to licence shop means that authorities who rely on local licensing fees to fund their enforcement will continue to be undermined. I also understand that there is anecdotal evidence that existing enforcement mechanisms are not being used correctly by all licensing authorities, including in cases of driver behaviour representing public safety concerns.
In January, the Government launched a consultation into simplifying the taxi licensing system. However, this is about significantly reducing the number of taxi licensing areas, and it does not set out any actions to address the issue of out-of-area working, meaning that passenger safety will remain at risk. In London, Transport for London has long called for national enforcement powers, which would enable enforcement officers to uphold national standards regardless of where a driver or vehicle is licensed, supported by data-sharing provisions. In Greater Manchester, the mayor and leaders of all 10 local authorities have been advocating for an end to out-of-area licensing, most recently through their “Local. Licenced. Trusted” campaign which they launched last April. In addition, an independent review undertaken in Greater Manchester, with input from over 5,200 licensees, trade bodies and local authority officers, highlighted that legislating on out-of-area was necessary, even in a regional system with licensing powers at a city-region level.
If the Government are serious in their commitment to improve standards and safety for this industry, this Committee urgently needs assurances from the Government on how and when they will fully close the loophole of cross-border hiring and that they will continue to improve enforcement powers as part of their review of the industry. My Amendments 235CB and 235CC look to tackle the out-of-area licensing issue and have the support of Transport for London, Transport for Greater Manchester, other metro-mayor areas and the Local Government Association, which I have contact with. It said:
“The LGA supports this amendment as the most effective way, combined with minimum standards, to meet Baroness Casey’s objective”.
However, I have also tabled my Amendment 235BA, which would grant powers to all licensing authorities to take enforcement action on any private hire or taxi vehicle on their streets, wherever they are licensed. In my view, this could be the way forward that would plug the gap that the noble Baroness, Lady Casey, flagged, but would also allow the Government time to review and research the other issues, such as cross-border hiring, standards and so on, so that, in tackling one issue, the legislation does not restrict access to taxi services in another area. I hope that the Minister will consider that carefully.
The accessibility issues that have been raised by the noble Lord, Lord Borwick, and other noble Lords today are really important as we look at private hire and taxi services across the country. I thank the Ministers for meeting me and other noble Lords to discuss the complexity of issues in this area and I look forward to hearing the Minister’s response.
Lord Blunkett (Lab)
My Lords, I shall be very brief for the reasons that we all know about—the number of votes that have taken place in the House this afternoon.
I offer my support to the movers of the amendments that have just been spoken to, first on accessibility. It is fairly close to my heart. Even with a high national profile, I have sometimes had real problems with accessible transport because of having a guide dog, and it is a nightmare for those who are wheelchair users. I hope that we can do something that is within the practicalities of protecting those who are prepared to have the vehicles and pay the extremely substantial investment that is needed to have accessible vehicles when Uber and other operators clearly do not.
I also give my support to the noble Baroness, Lady Pidgeon. An issue has been rumbling along for years in relation to the licensing shopping scheme, where people have been able to license a taxi and then rove around the country, which certainly put people at risk. In my own region, that applied to Rotherham. Apart from Wolverhampton, my city of Sheffield seems to have an inordinate number of taxis licensed in Kirklees in West Yorkshire; we clearly need to do something about it. There would have to be flexibility.
In my Amendments 235CA and 235E, which I speak to this afternoon, I am trying to say that there should first be a recognition that devolution and local empowerment means that there should be continuing engagement of elected members. That is not easy in strategic authorities that are combined authorities, because although we can proclaim elected mayors, the engagement of those who know the localities within which those strategic authorities are placed is left out.
First, we need an accountable input and, secondly, we need national standards that apply right across England and deal, in part at least, with the correct assessment that the noble Baroness, Lady Pidgeon, made of the difficulties and dangers. There should be some flexibility: if you are genuinely licensed in Wolverhampton but the license authority becomes the West Midlands Combined Authority, you need to also be able to use your licence in Telford in Shropshire. I know it quite well and I think that people in Shropshire county are quite bereft of taxi services as it is. There needs to be flexibility that allows the licensing authority to specify very clearly and then, as the noble Baroness rightly said, to actually have some enforcement powers.
But local authorities also tell me that we need transitional arrangements. We need to assess the costs and ensure that there is that genuine local input. There is a serious issue here. I know my noble friend very well and know he will be incredibly sympathetic to the points that have been made this afternoon and, overcoming internal bureaucracies within government, will seek to find a way forward on Report, should we reach it.
Lord Hampton (CB)
My Lords, I will speak to Amendments 235BA, 235CB and 235CC, tabled by the noble Baroness, Lady Pidgeon, to which I have added my name. I associate myself with all the amendments in this group. I must also apologise that this is my first intervention in this Bill. A mixture of the Children’s Wellbeing and Schools Bill and my own children’s well-being, I am afraid, has precluded me from taking part so far. As this is my first time speaking on this Bill, I must declare, as ever, that I am a teacher in a state secondary school.
As we have heard, there is real concern from local licensing authorities that, nationally, cross-border hiring generates serious public safety issues while undermining local licensing regimes. The TaxiPoint website says:
“The Casey Report highlights what has been evident for more than a decade: in a small minority of cases, taxis have played a role in the exploitation of children. Vehicles have been used both to traffic victims and to introduce them to perpetrators. This was identified as early as the Rotherham inquiry in 2014, where Professor Jay found that taxi drivers were a ‘common thread’ in abuse cases. Subsequent reports from Oldham, Newcastle and Telford reinforced these concerns”.
The scale of the cross-border hiring problem has been magnified significantly in recent years through the advent of new technology, with many taxi and private hire customers now mainly being through app-based services. This also restricts the enforcement capabilities of local licensing authorities, as they have only limited powers to enforce against out-of-town vehicles. Cross-border hiring in the taxi and private hire industries has been commonplace for many years, which has resulted in localised issues, particularly in areas where there are a number of licensing authorities in close proximity. This is coupled with a significant and rapid growth in the number of private hire drivers and vehicles, and all these issues have exacerbated cross-border hiring concerns.
The noble Baroness, Lady Pidgeon, talked about Wolverhampton Council, which has issued in excess of 40,000 private hire licences, far exceeding local operational demand. The proposals considered by the Law Commission review in 2012, in respect of addressing cross-border hiring, are now considered by TfL and other stakeholders to be out of date. Urgent legislative reform is required to address these issues. The Metropolitan Police Service has said that cross-border hiring is the single largest risk to policing nationally. Amendments 235CB and 235CC would go a long way to solving these issues, and Amendment 235BA would strengthen enforcement. They have been needed for far too long, and I urge the Government to accept them.
Lord Holmes of Richmond (Con)
My Lords, I associate myself with all the speakers and amendments so far. In making my comments, I would like to focus on just one word. It is in the title of the Bill: “empowerment”. I ask this very simple question, not only on taxis but on transport in this country: if you are a disabled person, where is the empowerment? That is true with so-called shared space—completely inaccessible and excluding to large swathes of the community—and so-called floating bus stops, ditto. When it comes to taxis, having an integrated transport strategy that does not consider the key role of taxis at key points in people’s journeys means that there is no integrated transport strategy and there is certainly no inclusion.
Lord Bradley (Lab)
My Lords, I will speak very briefly to this group of amendments, which I fully support. I can be even briefer than I thought I might be because of the eloquence of the speeches already made, and any repetition I make will be to reinforce the message and the value of those amendments, having been pleased that the Government have increased the scope of the Bill to include taxis during its passage—that is not meant to be a pun.
I want to reinforce the point on Greater Manchester, where I live and where I was the chair of the licensing committee many years ago. The noble Baroness, Lady Pidgeon, mentioned its “Local. Licensed. Trusted” campaign, which the Mayor of Greater Manchester, Andy Burnham, and the 10 district leaders fully supported. As we have heard, in Greater Manchester, over 50% of private hire vehicles are licensed outside it, particularly in Wolverhampton but also in St Helens on Merseyside. That is totally unacceptable in terms of proper enforcement of their activities across the country.
We have also heard of the audit of grooming gangs and child sexual exploitation by the noble Baroness, Lady Casey. Again, that has a great resonance in Greater Manchester because of the issues that were faced there. It continues to be a great, urgent public safety concern. It is believed that this Bill is the quickest and most appropriate way to tackle that issue that so desperately needs tackling.
I will not go through the details of the amendment tabled by the noble Baroness, Lady Pidgeon, to which I have added my name. I fully support it. She eloquently presented it to the Committee. My noble friend Lord Blunkett made a point on transition. There clearly needs to be a transition period, certainly in Greater Manchester and in other strategic authorities, so that it could align with licence renewal, which would reduce the costs and disruption of an immediate transition and provide sufficient time for local authorities to rebuild capacity in their licensing departments, while supporting the Government’s aim for all regions to move towards strategic authorities.
I welcome the constructive meetings that I have had with both Ministers responsible for this Bill, my noble friends Lady Taylor and Lord Hendy of Richmond Hill, and their desire to make progress to address licensing and enforcement across the country. I also recognise that there are many more difficult issues that need to be addressed about taxi and private hire vehicles, and this is just one particular aspect that this Bill enables us to address. I strongly believe that this group of amendments would take a significant step forward for the benefit and safety of the public across the country, and I am sure that we will receive a positive response from the Minister.
Lord Young of Cookham (Con)
My Lords, I will make a very brief speech in support of the excellent speech made by my noble friend Lord Borwick in moving Amendment 235A, an amendment beloved in Committee: delete the word “may” and insert the word “must”.
I commend in passing the moving speech made by my noble friend Lord Holmes. I have a paternal interest in this in that when the Disability Discrimination Act was put on the statute book in 1995 by my noble friend Lord Hague, I was Secretary of State for Transport and therefore had responsibility for taxis. My department was responsible for Section 32 of the DDA which, as my noble friend said, made provision for regulations that taxis should be accessible to wheelchair users and that they should be carried safely. It is interesting to see what happened in London. In 1989, the then Transport Minister Michael Portillo said that all new London taxis had to be wheelchair accessible. We were actually the first capital city in the world to take that step. By 1 January 2000, all licensed London taxi cabs—some 20,000 of them—were wheelchair accessible. That gives an indication of the timescale in which it is reasonable to expect the taxi trade to make the transition from where it was to where it is now.
As we know, Section 32 was repealed and replaced by a similar provision in the Equality Act. I wanted to see what Members of your Lordships’ House thought would happen when that section of the Bill was debated. The Minister at the time was Lord MacKay of Ardbrecknish. Reading his speech, it was quite clear that he did not think that 30 years later we would be where we are today. He said,
“more accessible taxis will be a boon for more than just wheelchair users”.—[Official Report, 22/5/1995; col. 890.]
At the time, the Opposition spokesman was the late Lady Hollis. She said this:
“My Lords, we on this side of the House broadly support the Government’s position on taxis. We believe that they are public service vehicles. Taxis are an important ingredient of public service transport and, therefore, they must be accessible to disabled people on a flexible and realistic basis. We believe, as the Bill lays down, that new vehicles introduced must be fully wheelchair accessible”.—[Official Report, 20/7/1995; col. 442.]
They would both be surprised at the position that we are now in. One cannot possibly blame the Minister for any inaction on his part, but what we are entitled to on Report is some timescale by which the rest of the country will be brought into line with what has already happened in London. I hope that when he replies, the Minister will give us some reassurance that that will be the direction of travel and that there might even be a date at which we reach the destination.
Lord Moylan (Con)
My Lords, I thank all noble Lords for their thoughtful contributions to this important debate, which goes to the heart of both public safety and the need for flexibility within our transport system. The proposed introduction of national minimum standards has an important role to play in delivering consistency across the country, but it is to be run alongside a system where local licensing authorities can add to those standards, as local flexibility and responsiveness is of course important. The Government’s responsibility in this context must be to ensure that such variations do not place unnecessary burdens on operators.
There is also the issue of cross-border services, which are essential for many passengers. While these services continue, they raise legitimate concerns about how they are to be regulated. In her report, the noble Baroness, Lady Casey, recommended more rigorous standardised statutory requirements across all licensing authorities in order to close the loophole whereby a driver can be licensed in one area but work exclusively in another. Ultimately, it is important that the Government recognise the need for a licensing framework that comprehensively deals with abuses, supports operators and keeps public safety at its core.
Regarding the amendments tabled by my noble friend Lord Borwick, he is right to point out that all London taxis are accessible. He has long been a consistent and principled advocate on this issue. Over many years, he has drawn attention to the importance of ensuring that those with disabilities are not left behind by our transport system. His work has helped keep accessibility firmly on the policy agenda. The case he advances appears to be both practical and fair. He makes a compelling argument: accessibility should be viewed not as an aspiration but as a standard that passengers across the country can reasonably expect. Although achieving this may present challenges in some areas, the progress made in London demonstrates what is possible in the right circumstances. As I say, my noble friend has made persuasive arguments as to why this requirement should apply more widely, strengthening independence for disabled passengers and promoting a more inclusive transport network. I therefore look forward to hearing what the Minister has to say in response to this important point.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, I thank the noble Lord, Lord Borwick, my noble friend Lord Blunkett and the noble Baroness, Lady Pidgeon, for their amendments on taxi and private hire vehicle national standards, licensing authorities and enforcement powers, and all other noble Lords who have spoken in this debate.
For me, this is a bit of déjà vu because, as the commissioner of Transport for London 15 years ago, I personally, with others, worked very hard on the Law Commission’s work on taxi legislation, but, sadly, nothing was done as a consequence. As the noble Lord, Lord Hampton, remarked, the work is, sadly, substantially out of date, principally because, in those 15 years, the growth of the private hire sector of this market, which many users regard as interchangeable, has been enormous. I will come back to that.
I will begin with Amendments 235A, 235D and 260A. The Government recognise the pressing need to reform the regulation of taxis and private hire vehicles. The current legislation is archaic and fragmented. I am absolutely aware of the challenges that the current licensing framework can cause, and of the huge variation in the supply and use of taxis and private hire vehicles across both urban and rural areas in the country.
Baroness Pidgeon (LD)
As the Minister works through options to bring back on Report, would he be prepared to meet with me and other interested noble Lords on the matter of enforcement?
Lord Hendy of Richmond Hill (Lab)
I can absolutely confirm to the noble Baroness that I will do exactly that. It is a very important subject.
Lord Borwick (Con)
On taxi accessibility, is the Minister arguing that the local requirements of disabled people might be different in one area from those in another? Surely, that is completely wrong, because the whole purpose of this is to organise transport—that a disabled person in London should be able to travel to Penzance and know that in Penzance there are the same standards of accessibility. It is in the nature of travel that people change their location; therefore, they surely need to have the same standards. It is the job of the Government, as was put in the Disability Discrimination Act 1995, that they set the regulations that can be met by as many disabled people as possible. That I would approve of, but saying that we cannot do anything just in case there is a difference in the local arrangement seems to me more in the nature of an excuse than a plan for the future.
Lord Hendy of Richmond Hill (Lab)
I am certainly not arguing that the needs of disabled people are different in different areas, but—and some noble Lords have heard this in the course of meetings that we have already had on this Bill—I am expressing that there are extraordinarily different sets of local circumstances across the country and that what the park of vehicles in local areas consists of is very different in different places, and serves quite different purposes.
Lord Borwick (Con)
I thank the Minister for his point, but I am not sure that I entirely agree with him and I look forward to the meeting and to Report. In the meantime, I withdraw my amendment.
Lord Foster of Bath
“Permission for gambling premises: cumulative impact assessments(1) A local authority which is a planning authority must, when considering any application for planning permission or change of use for premises which are to be used for gambling, take into consideration any relevant cumulative impact assessment published in accordance with section 349(1A) of the Gambling Act 2005, and where the conditions in that document are satisfied they shall in the absence of very special circumstances refuse the application.(2) The Gambling Act 2005 is amended according to subsections (3) and (4).(3) In section 153(1)(d), after “statement” insert “, including any cumulative impact assessment,”.(4) After section 349(1), insert—“(1A) A licensing authority may include in their statement an assessment (“a cumulative impact assessment”) stating that they consider that the number of premises licences granted under section 163 in one or more parts of their area described in the assessment is such that it is likely that it would be--(a) inconsistent with the licensing objectives in section 1, or(b) harmful to the wellbeing of the community,for the authority to grant any further premises licences which would result in an increase in the number of such premises in that part or those parts”.”
Lord Foster of Bath (LD)
My Lords, rather like the noble Lord, Lord Hampton, I apologise for being a Johnny-come-lately, having left my noble friends to do all the heavy lifting on this Bill. I have come to raise only one issue: the concern that many of us have about the prevalence of gambling premises on our high streets.
In raising that issue, I declare my interest as the chairman of Peers for Gambling Reform and the chair of Action on Gambling. Many noble Lords will be aware of the serious concerns about the large number of gambling premises, particularly betting shops and adult gaming centres, on many of our high streets. Only a few weeks ago a Minister wrote in a Written Answer:
“Some high streets have become increasingly dominated by certain types of premises—including gambling establishments—which don’t always meet the needs of their communities. According to the Gambling Commission, the number of adult gaming centres (AGCs) rose by 7% between 2022 and 2024, with additional data showing that AGCs are most concentrated in areas of higher deprivation”.
That last point was confirmed by the NHS’s Office for Health Improvement and Disparities, which confirmed that the most deprived local authorities have three times more gambling premises per head of population than the least deprived local authorities. Research shows not only very clear links with increased crime but, crucially, higher levels of gambling harm and all the problems that brings to the individuals, their families and their communities.
As a result, communities across the country have been demanding that local councils take action to stop the proliferation. But, as has been seen in many council areas—Peterborough, Brent and numerous others—they have come up against a stumbling block: Section 153 of the Gambling Act 2005. This is the so-called aim to permit section, under which the default position that councils have to take is that they must permit the use of premises for gambling unless there are specific reasons not to do so. Councils that have tried to stop new gambling venues have often had lawyers from the very powerful and wealthy gambling companies to contend with and have always ended up losing.
No wonder Brent Council, which has been leading a group of councils to try to bring about change to get more power, has come up with a little card pointing out that it is easier to block a fast food joint opening next door to a school than it is to stop a high street casino next door to a homeless shelter. Quite simply, planning and licensing authorities need additional powers to regulate the circumstances in which they authorise or reject premises being used for gambling.
On numerous occasions the Government have said that they wanted to do exactly this. The Pride in Place strategy, published on 25 September 2025, said:
“We … want to empower local authorities to curate healthy, vibrant public spaces that reflect the needs of their communities”.
It reaffirmed the Government’s commitment
“to strengthen councils’ tools to influence the location and density of gambling outlets”.
That is a clear commitment and has been repeated by the Prime Minister and other Ministers time after time. Sadly, the answer has been not to rule out the aim to permit but to come up with another solution. This alternative way forward was based on the solution to a problem that used to exist when there was a growth in the number of premises selling alcohol, and it is the basis for my amendment today.
That solution enabled local authorities to review and consult on the number and impact of the existing relevant premises, including pubs, in a particular area. Are there too many? Are there enough, or could we have some more? That was called a cumulative impact assessment. If that CIA concluded that there were already enough pubs in an area and that an extra one would harm the well-being of the community, it could be used to reject a licence for an additional one.
That idea of a cumulative impact assessment being used for gambling premises was picked up by the Conservative Government when they were in power. Their White Paper on gambling said categorically:
“We will align the regimes for alcohol and gambling licensing by introducing cumulative impact assessments”,
for gambling licences,
“when Parliamentary time allows”.
The new Government have come to the same conclusion. The Prime Minister announced that it is the Government’s intention to introduce cumulative impact assessments when parliamentary time allows, and Ministers have used it time after time in answers to Written Questions.
During the passage of the Planning and Infrastructure Act, I argued that it provided the necessary parliamentary time, so I introduced an amendment that would have provided CIAs for gambling licences. The Government accepted that it was a great idea and they really wanted to do it, but told me that that was not the right Bill to do it in. I was confused at the time as to why that was but nevertheless accepted it. I am very much hoping that we have another Bill which is the right Bill in which to do it. My Amendment 235F would therefore bring forward, as I have done previously, the giving of the power to local councils to use cumulative impact assessments to address, where it is appropriate, concerns about additional gambling premises coming to a particular area.
I hope the Minister will agree at least in principle to the amendment. If she is in any way unhappy with any of the details, I hope she will agree to work with me and other interested parties so we can resolve them and bring back an amendment that is acceptable to all parties at a later stage in the Bill, therefore giving councils the additional powers they need to curb the proliferation of gambling venues with all the problems they can create on our high streets.
Lord Jamieson (Con)
My Lords, I thank the noble Lord, Lord Foster of Bath, for his amendment. Having listened to his arguments, I believe he is right that local authorities should not only have the ability to but should take into account cumulative impact before deciding on planning applications for gambling premises.
This would not be an outright ban on premises being used for gambling, nor would it encourage local authorities to come to a particular conclusion or other. Rather, this would allow councillors to make a reference to cumulative impact assessments and adopt an evidenced-based approach on planning matters. Local authorities should be empowered to respond and make planning decisions according to their communities’ needs, and they are best placed to interpret the evidence and act proportionately. I look forward to hearing the Minister’s response.
Baroness Taylor of Stevenage (Lab)
I thank the noble Lord, Lord Foster, for his amendment, for all the work he continues to do on tackling gambling harms—it is much appreciated—and for raising this very important topic. I assure him the Government are committed to introducing cumulative impact assessments for gambling licensing. Once introduced, these will help local authorities take evidence-based decisions on premises licences, particularly in areas identified as vulnerable to gambling-related harms. They will also create a presumption against new gambling premises licences being granted in specific areas. As the noble Lord, Lord Jamieson, said, this is not about banning gambling premises; it is about assessing the harms and being able to deal with those.
Anyone who has been a councillor will know the issue, how this works and how it can cause detriment to high streets, so I absolutely support the spirit of the noble Lord’s amendment. As drafted, it would introduce cumulative impact assessments to guide planning decisions. However, the cumulative impact assessments will be most effective for local authorities when specifically applied to the licensing process and licensing applications, rather than simultaneously applying to planning and licensing. This would match the approach already taken by licensing authorities when using cumulative impact assessments in relation to the licensing of alcohol premises, which the noble Lord mentioned. The planning and licensing regimes are separate legal frameworks. This amendment risks creating inconsistencies between a local authority’s planning process and licensing process.
The amendment tabled by the noble Lord would require the planning authority to consider a cumulative impact assessment published by the licensing authority during the planning process. By granting this power to the planning authority, the amendment risks conflating the licensing and planning regimes. The noble Lord is quite correct to say that licensing is in the scope of the Bill. However, this amendment would not allow local authorities to use cumulative impact assessments in the most suitable and effective way and risks creating conflict between the planning and licensing regimes. That is our concern.
Lord Foster of Bath (LD)
My Lords, before I do exactly that, I thank the Minister for her very warm response. I am well aware of the difficulty around the issue of planning and licensing. The Minister will be aware that many councils have combined the two, even though they must have separate business because of the regulations and rules surrounding that. I absolutely appreciate that there are a lot of issues around that.
If the Minister’s indication is that we can work this out together before Report, I look forward to that very much indeed. I know that the Government are very keen to do this, so I am sure that, between us, we will come up with a way of making it happen. With that, I beg leave to withdraw my amendment. I apologise again to the Committee for being a one-trick pony and departing fairly rapidly after having done it.
Lord Lucas (Con)
My Lords, I welcome Clause 73; it is an excellent development. I want to take advantage of the opportunity to debate its inclusion in the Bill to press the Government further on Amendment 241E from the noble Baroness, Lady Freeman, which urges that, along with the general power of competence, national parks be granted a stronger place in spatial development strategies.
National parks are big beasts. Between them and national landscapes, they cover about 25% of our landscape. They play key roles in areas such as climate and 30 by 30, as well as looking after communities and economic development. Relegating them to second-class status and just making them consultees is a recipe for tension rather than collaboration.
In her reply to Amendment 241E, the Minister briefly referred to the provision of guidance to support early and effective engagement with national park authorities. I would be very grateful if the Minister could provide further clarification. Is this a commitment to provide guidance, or just an intention? If the guidance is provided, will it ensure that engagement goes further than mere consultation? What further details might be available regarding the timelines for this guidance, given the speed at which mayoral devolution is moving? All six of the selected areas currently on the fast track contain either a national park or a protected landscape. I would prefer to have a detailed letter before Report rather than a brisk verbal response now, but that is obviously up to the Minister.
Earl Russell (LD)
My Lords, very briefly, I support the noble Lord, Lord Lucas, on these matters. Our national parks are now in their 75th anniversary year. Some 10% of our land and most of our SSSIs are part of our protected habitats in national parks. National parks are key for protecting our ecosystems and adapting to climate change, and they provide untold social, health and cultural benefits to the nation. They are an extremely important part of national cultures and psyche. I support the noble Lord; we need further clarity on these matters. I absolutely support his call for the Minister to provide greater clarity and guidance on these matters between now and Report, so that we can properly examine them between now and then.
Baroness Scott of Bybrook (Con)
My Lords, I will speak briefly to my noble friend Lord Lucas’s opposition to the question. His intention is not to frustrate the purpose of the legislation but to probe an important constitutional question: how powers exercised by the national park authorities will intersect with those newly empowered devolved authorities. National parks occupy a distinctive position within our public framework. As devolution evolves, and as mayoral and combined authorities acquire broader strategic competences, clarity of responsibility becomes ever more important.
We would therefore welcome the Minister’s reassurance on two points. First, how do the Government envisage disputes of competence being resolved where priorities differ between the national park authorities and devolved bodies? Secondly, how will the statutory purposes of national parks be safeguarded within the new governance structures? This is not a question of resi1sting devolution but of ensuring that, in our enthusiasm to devolve, we do not dilute clear lines of accountability or the protection afforded to some of our most precious national landscapes.
This are sensible probing clause stand part Questions, and we are most grateful to my noble friend for raising them today. I look forward to the Minister’s response.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank the noble Lord, Lord Lucas, for opposing Clause 73 and Schedule 30 standing part in order to encourage a debate on the role of national park authorities in the production of spatial development strategies. We have discussed this issue during the passage of both this Bill and the Planning and Infrastructure Bill, and I know it is a matter of great interest to him.
As they are not strategic planning authorities, the legal duty to prepare a spatial development strategy does not apply to national park authorities. That means that they cannot be constituent members of a strategic planning board either. They remain local planning authorities with responsibility for preparing a local plan. Although national park authorities are not formally part of spatial development strategy governance, we still expect them to play an active role in preparing the strategy. This could be as a non-constituent member of a strategic authority or as a co-opted member of a strategic planning board.
Strategic planning authorities will be under a legal duty to consult any local planning authorities within or adjoining the strategic development area and affected by the strategic development strategy, including national park authorities, on their draft spatial development strategy. Planning inspectors examining a spatial development strategy will want to make sure that any views expressed by consultees have been properly taken into consideration.
During a previous Committee debate, I confirmed that the Government intend to publish guidance to support strategic planning authorities in engaging effectively with national park authorities on their strategic development strategies. I reassure the noble Lord that the Government still intend to publish guidance on this matter alongside other guidance to support the implementation of the new strategic planning system.
To respond to the noble Baroness, Lady Scott, that guidance will set out how protections are in place for the statutory purposes of national parks, how that can be conveyed as part of the strategic planning process and how park authorities can contribute to the development of strategic plans in that way, and it is the same with the competencies.
With this confirmation, I hope that the noble Lord will be able to withdraw his opposition to the clause standing part.
Baroness Scott of Bybrook (Con)
I did ask about this: if there is a disagreement between the national park authority and the mayor, who takes precedence?
Baroness Taylor of Stevenage (Lab)
When it comes to drawing up a strategic development strategy, it will be for the planning inspector—as they would, in the normal way, if there were a dispute between two of the parties engaged in that process—to work through that and determine whose view holds sway in the strategy.
Lord Lucas (Con)
Can the noble Baroness give me a little more comfort on the timescale for the emergence of this guidance? Without asking her to commit to it, roughly when does she expect it to appear?
Baroness Taylor of Stevenage (Lab)
I am sure the noble Lord will have heard me respond with frustration from the Dispatch Box many times when I cannot give specific dates. Once the Bill has reached Royal Assent, we will aim to make sure that the pieces of guidance that I have referred to throughout the passage of the Bill are dealt with as quickly as possible but, inevitably, there will be consultations to take place. I cannot give him a specific timescale for that. As soon as we have any idea about when that will be, I will let him know.
Lord Lucas (Con)
My Lords, I am grateful for that answer, as far as it went.
Lord Ravensdale
“Report on Local Area Energy PlansThe Secretary of State must, within 18 months of the day on which this Act is passed, publish a report setting out—(a) the number of strategic, combined, or local authorities that have—(i) developed, or(ii) implementeda Local Area Energy Plan (LAEP);(b) barriers to progress that authorities have had in the introduction of LAEPs;(c) options for introducing, within one year of publication of the report, a statutory requirement for LAEPs;(d) proposals for funding, technical support, training, and capacity building initiatives to assist local authorities in preparing and implementing LAEPs;(e) clear evaluation criteria and success metrics for the programme and any pilots carried out.”
Lord Ravensdale (CB)
My Lords, I declare my interest as the director of Peers for the Planet and as chief engineer at AtkinsRéalis. This is another one of those areas where we have recycled amendments from the Planning and Infrastructure Bill. We had a few of those earlier. I worked on a similar amendment on that Bill with the noble Earl, Lord Russell. The response of the Government at that time was pretty much “Wait and see” in relation to the publication of various plans, many of which we have now seen, which includes the warm homes plan and the local power plan. We have an opportunity to come back to this issue and see what progress we can make. I thank the Minister for her engagement with me on this matter and for her recent letter, which helps to clarify some of the thinking within government.
This amendment aligns closely with my Amendment 3, debated on the first day of Committee, on competence for strategic authorities relating to energy. There are two key issues with the energy transition that local area energy plans will help to resolve. The first is a cost-effective transition. Of course, the cost of energy has received a lot of attention in recent years, but bringing in the local knowledge that knows the housing stock, the charging infrastructure and the grid infrastructure best in local areas is of real benefit to ensure that the most cost-effective and efficient solutions are taken forward in the transition. Also of critical importance is that buy-in from local stakeholders. There is a huge amount of infrastructure that needs to be built as we go through the energy transition, and ensuring that local stakeholders are brought into that, are taking part in it and making a lot of those decisions is of huge benefit in ensuring that the transition is successful.
I work closely with the East Midlands Combined County Authority—EMCCA—on a number of areas. I am chair of Midlands Nuclear, where the EMCCA is the secretariat for that organisation. EMCCA is blazing the trail with local area energy plans, and it is worth focusing a little on what it is doing as an exemplar in this area to illustrate what is possible. EMCCA funded a region-wide development of local area energy plans for Derbyshire and Nottinghamshire, and it used a single provider to develop eight plans across the 17 local authority and unitary areas. Those plans will also have a digital-twin model to bring all that data and proposed interventions to life.
As part of this, those organisations have clarified the governance route in respect of how local area energy plans fit into the overall governance of the energy system. The regional energy strategic plans—RESPs—are developing with the National Energy System Operator, but local area energy plans are a key input into those RESPs. This has tested how these really need to be live documents; they cannot just be produced once and sit on a shelf but need to be constantly matured and to be integrated into governance and decision-making.
To give one example, the Nottingham local area energy plan has highlighted a number of things. There is potential for a significant increase in solar from 40 megawatts to over 200 megawatts in the dense urban area that Nottingham is; the type of retrofit that is appropriate for the housing stock in that particular area; the heat transition, heat network expansion, air source heat pumps and what the most appropriate level of technology is for heat transition in that area; EV charging; and capacity planning for the different headroom in each substation across the geography. It has shown how these local area energy plans answer those practical questions on how the energy transition needs to work for a local area. They have proven their worth.
Earl Russell (LD)
My Lords, I support Amendment 241 in the name of the noble Lord, Lord Ravensdale. I should have put my name to it and apologise to the noble Lord for not having done so, but I very strongly support this amendment; it is a very well-reasoned and proportionate response. As the noble Lord said, we worked together on a similar amendment to the Planning and Infrastructure Bill, so it is good to come back to this issue.
For clarity, local area energy plans—LAEPs—are data-driven spatial plans, led by local authorities, that map out how a place will decarbonise its buildings, transport and local energy infrastructure over time. They identify which low-carbon measures—such as heat pumps, heat networks, EV charging and local renewables —should go where, when and at what cost, using a whole-system approach. They create consistent, place-based and evidence-based guides for regional and national decision-making on the energy transition, helping to align local plans with network investment and regulation.
They are important because they turn our national net-zero targets into locally specific, cost-effective investment pipelines and give network operators, investors and communities a shared, evidence-based plan for the energy transition. They are the spearhead of the energy transition delivered at the local level in a way that is particularly suited to local needs. In energy terms, we are undertaking the biggest energy revolution since the start of the Industrial Revolution. For this to work, we need to work in conjunction with our local communities to empower them. Their empowerment is the key driver of this success.
The amendment is an important but measured enabling amendment that would help us move from high-level ambition on net zero and warm homes to the practical local delivery plans at ground level that we require. This amendment would not force the Minister’s hand but would require the Government to assemble the evidence, confront the barriers and set out a pathway for local area energy plans across the country. The energy transition is fundamentally a place-based endeavour and it needs to happen at the local level. Although the Government are acting—we recognise that and we welcome the warm homes plan, the energy systems catapult and the regional energy strategic plans—my worry remains that this landscape is still quite confused and not as joined up or as focused as we feel it needs to be for the delivery of these plans.
Decisions about where to reinforce electricity networks, where to zone for heat networks, where to focus on insulation or heat pump installation, and where to roll out EV infrastructure cannot sensibly be taken in Whitehall alone; they depend on the fundamental character of our local housing stock, patterns of local industry, levels of fuel poverty and the capacity of local grids. LAEPs are exactly the emerging tool designed to answer all these questions and help deliver these needs. In Wales, they are being rolled out and deployed at national level and they are the go-to choice for helping with the transition. Many local and combined authorities are also taking this initiative but my worry is that, despite some progress being made, it is patchy and uneven. What we have is really a postcode lottery when it comes to these local area energy plans.
This amendment fundamentally addresses that head on and asks the Secretary of State, within 18 months, to publish a report that would do four simple but important things. First, it would take stock of which combined, strategic and local authorities have developed LAEPs and which have begun to implement them. Secondly, it would identify the barriers, the funding gaps, the skill shortages, the data and any co-ordination problems. Thirdly, it asks for options to move, within a year of the report, towards a statutory requirement for LAEPs, so that local energy planning becomes the norm, not the exception. Finally, it would require proposals for the funding, technical support, training and capacity building needed to make these plans real, with clear criteria for how success will be measured.
This last element is really important and key to the amendment. Without support on skills, data and project development as a statutory requirement, this could be an underfunded mandate and lead to underdelivery. By requiring clear evidence criteria and successful metrics, it would ensure that Parliament, Ministers and local leaders can track which LAEPs are delivering lower emissions, lower bills and greater systems resilience. Without this, we risk moving to a piecemeal, scheme-by-scheme approach. We need to know where to go first, how to phase interventions and how to co-ordinate them with local energy systems, which is precisely what this system does. We have the warm homes plan with a lot of money going into it, but it is just not clear how these plans will integrate and work together.
This amendment is really asking the Government to do what a good Government should be doing: to understand what is happening on the ground, to identify what is getting in the way, to set out options for a clearer, consistent framework and to match any new expectations placed on local government with the right support. It is modest in its ask but potentially transformative in its consequences. I hope the Minister will see Amendment 241 not as a constraint on the department but as a constructive tool to help deliver our shared goal of achieving the energy transition.
Lord Jamieson (Con)
My Lords, I have listened carefully to the valuable contributions of noble Lords in this debate and I thank the noble Lord, Lord Ravensdale, for bringing this amendment forward. As has been highlighted, local area energy plans could be helpful in addressing how local energy infrastructure can cope with the pressure of increased housing and commercial targets from central government in the context of a changing energy environment in their local areas.
Paragraph (d) would also require that the Secretary of State’s report includes,
“proposals for funding, technical support, training, and capacity building initiatives”
to ensure that local authorities are capable and well-equipped to introduce local area energy plans. In addition, the amendment insists on clear evaluation, criteria and success metrics for any pilots carried out.
I commend the noble Lord on his amendment, which rightly recognises that authorities must have the means to ensure that the local energy infrastructure can meet the needs of economic and housing growth and provide resilient energy. However, I would hesitate before introducing a statutory requirement for local area energy plans. If we are serious about community empowerment and trusting local representatives to determine what is right for the areas, it should be up to individual local authorities to set targets for which local area energy plans might be needed. There is also the question of the resources and powers that would be given to local authorities, without which plans would be undeliverable.
Finally, and crucially, energy systems are part of a broader national energy system, where all parts must work together in an integrated manner. This cannot be looked at in isolation, although those plans will obviously be a hugely helpful contribution. I look forward to the Minister’s response.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank the noble Lord, Lord Ravensdale, for Amendment 241 and for meeting me to discuss his proposals. The Government continue to work in partnership with local government, recognising the important role that local authorities play in reaching net zero and achieving our clean power 2030 mission.
We recognise that in support of local and national net-zero targets some local authorities have developed local area energy plans and have found them very helpful. We also welcome the work that many local authorities have already undertaken to incorporate planning for future energy needs into work such as the development of local growth plans and their contribution to the development of regional energy strategic plans.
Perhaps there has been a slight misrepresentation of the fact that there is no co-ordination to this. It is being co-ordinated. In fact, NESO published the transitional regional energy strategic plan on 30 January 2026. These plan for energy needs over the next few years at a regional level but include a lot of energy-related data at a lower super output area—that is, neighbourhood level. This will influence business planning for distribution network operators across the country. NESO recently consulted on the methodology for enduring regional energy strategic plans, which will be developed in partnership with local communities and implemented by the end of 2028.
However, the amendment, as drafted, risks duplicating or constraining current activity in this area. For example, the recently published transitional regional energy strategic plans contain a wealth of data on energy at local authority level and neighbourhood level as well as an assessment of regional energy infrastructure need consistently across all regions.
The local net-zero hubs have also worked with Energy Systems Catapult on Ready for RESP to support local and regional stakeholders to help deliver energy system planning aligned with investment plans and planning needs. This work included updating which places have already developed local area energy plans. Local net-zero hubs’ most recent report, published on 5 February, sets out some of the strengths and weaknesses of different approaches to local decarbonisation plans. I welcome that as a very helpful approach to take. In parallel, the Government are aware of work undertaken by the Local Government Association to consider options for a statutory duty that we plan to discuss at a future, ministerially chaired, local net-zero delivery group.
We are sympathetic to the points raised in this debate and in previous debates on energy planning by the noble Lord, Lord Ravensdale. We are yet to be convinced that a national statutory requirement to produce local area energy plans would support local authorities rather than reducing their flexibility to produce plans that meet their needs. We continue to discuss with the Local Government Association and others the benefits of statutory duties on net zero, and we will continue current research in this area. I hope that, with these reasons and explanations, the noble Lord, Lord Ravensdale, will feel able to withdraw his amendment.
Lord Ravensdale (CB)
I thank the Minister for that response. I also thank the noble Earl, Lord Russell, for all his welcome support for these amendments.
As the noble Lord, Lord Jamieson, said, all parts of the system must work together. That is what we need to focus on in the energy transition for this to work. In order to do that, we absolutely need bottom-up as well as top-down. We absolutely need a bottom-up view to inform the spatial plans that are being put together by NESO so that we can have the most effective transition.
I listened carefully to what the Minister said. I note that she referenced a lot of the work that is being done on regional energy strategic plans via NESO, which is, of course, welcome. For example, the Nottingham example that I gave highlighted the importance of having these local plans to inform regional energy strategic plans to ensure that the data and local picture are there to support those regional plans. There is still work to do to figure out how this overarching governance of the energy system will work.
I look forward to further discussions on this issue with the Minister but, for now, I beg leave to withdraw my amendment.
“Local Authority Social Media Strategies(1) A local authority must prepare and publish a social media strategy.(2) The strategy must set out—(a) how the local authority intends to use individual social media platforms,(b) governance and oversight arrangements for social media use, and(c) arrangements for review of the strategy.(3) The strategy must include a risk assessment addressing—(a) risks relating to misinformation and disinformation,(b) risks to public trust and confidence, and(c) risks relating to data protection, information security, and the use of automated or algorithmic tools.”Member’s explanatory statement
This amendment would require local authorities to publish a social media strategy, including a risk assessment, setting out how the authority and its elected officials intend to use individual social media platforms.
Lord Pack (LD)
My Lords, I have one amendment on its own in splendid isolation in this group. It is, as I hope noble Lords will agree, on an important topic: the use of social media in local government. This is an important topic for several reasons. One is that social media is so central to how local government and mayors may or may not choose to communicate with residents. It is also a crucial part of how elected public officials, whether they are councillors or mayors or, indeed, at the national level, experience politics. Often, that is an unhappy experience in terms of harassment and threats, but it can also be a very positive experience in terms of being able to engage more effectively with members of the public.
Of course, social media is important in many respects for its wider impact on society. That is why it comes up so often in debates and Questions on other topics in our House. In that respect, local authorities and local government in general have an important leadership role in setting some of the practical realities of how the social media landscape plays out. Sometimes, we are all collectively a bit too passive in assuming that the social media landscape is set by a combination of tech bros in California and Ofcom getting to grips with the Online Safety Act, but there is a practical degree of leadership at all levels of government that can encourage and help bring out the best of social media while downplaying the worst of social media.
There is an important role at local government level, in particular, because local government is the original source of information on so many topics that people love discussing, debating and sharing information about, whether it is which days you should put your bins out or which days schools are being closed due to snow in the winter or often controversial issues regarding, say, planning applications. Local government can make decisions on how and where to share information on all those things. Even if, in a sense, people think that they are not making those decisions but are simply following by default the social media channels that they have always used or that other parts of government use, that in itself is a decision.
The intention behind my amendment is absolutely to respect the discretion and flexibility that there should be—different places will wish to make different decisions, as appropriate—but also to show that there are two benefits to giving an explicit strategy a bit of a nudge. One is making sure that people are thinking through these issues sensibly and appropriately, and the other is enabling democratic accountability for the decisions that are being taken. Many of us probably have a wide range of views on how appropriate or not it is for people at any level of government to use Elon Musk’s social media channels, but, crucially, for the democratic accountability element to play out effectively, it is important to know what decisions are being made, how they are being made and what the rationale for them is. Different voters in different places may come to different decisions about which approach they prefer, but having a social media strategy that is explicitly published will make that democratic process much more effective.
Of course, I appreciate that if the Minister were to kindly accept my amendment, all the issues that it mentions, such as disinformation and public trust, would not suddenly be solved by it. On the other hand, they are difficult issues that we need to try to tackle, using all the different levers available to us. In that sense, I hope that the amendment would be a small contribution to that overall challenge, and therefore I beg to move.
Baroness Scott of Bybrook (Con)
My Lords, we absolutely understand the intention behind this amendment. Social media clearly brings its challenges, particularly around misinformation, public confidence and data security—all serious matters. However, we do not agree that this is an appropriate statutory duty to place on local authorities.
Councils are already under immense operational and financial pressure. Their focus must be on delivering front-line services: social care, housing, waste collection, planning and public health. Requiring every authority to draft, publish and continually review a bespoke social media strategy, complete with formal risk assessments, would impose additional administrative burdens at a time when capacity is already stretched.
Local authorities should of course act responsibly and lawfully online, as they already must, but mandating a specific statutory strategy in primary legislation is neither necessary nor proportionate. For those reasons, we cannot support the amendment.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank the noble Lord, Lord Pack, for Amendment 241A, which would require local authorities to prepare and publish a social media strategy. When he talked about the values of social media, it reminded me that my local authority has recently introduced food waste recycling. The bin arrived on my doorstep, and I did not know what the system was—I am not the leader of the council any more, strangely, so I did not know it was going to do it. I did not think to open the bin. Inside was a lovely set of bags that you put your food waste in and a little bag you put on your worktop. I managed to get all that from the website before I actually opened the bin and found all the relevant information. As we know, not all social media is as helpful as that.
Although I have no doubt that the noble Lord’s amendment is well intentioned, we believe it is unnecessary, given the existing legislative requirements that all local authorities must have regard to when using social media. All local authorities are already required by legislation to consider the Code of Recommended Practice on Local Authority Publicity in coming to any decision on publicity, which is defined as
“any communication, in whatever form, addressed to the public at large or to a section of the public”.
That definition clearly includes any communications posted on social media. Given that the proposed amendment would, in effect, replicate aspects of the publicity code, to which every local authority must already have regard, I urge the noble Lord to withdraw his amendment.
Lord Pack (LD)
I thank both noble Baronesses for their comments on my amendment. Although I do not agree fully with them all, I welcome the recognition of the importance of social media for local government and the importance of getting it right. Reflecting the views that I have heard in this debate, I beg leave to withdraw my amendment.
Baroness Thornhill
“(3) In performing its functions, the Local Audit Office must pay immediate regard to and investigate any issues concerning risk management identified by audit committees established under section 33A.”
Baroness Thornhill (LD)
My Lords, I will speak to Amendments 243, 249 and 250 in the name of my noble friend Lord Shipley, who regrets that he is unable to be with us today. We on these Benches absolutely understand why the Government have created this new entity of the local audit office in the Bill, but we will still listen with interest to the arguments put forward by the noble Lord, Lord Jamieson, and the noble Baroness, Lady Scott of Bybrook, on Clause 74. However, I believe that our concerns are different. These amendments speak directly to a problem that the Committee fully understands all too well: what happens when power runs ahead of scrutiny.
Amendment 243 is an early warning: it would require the local audit office to take immediate notice of serious management concerns raised by local audit committees. This is not an abstract concern. We have seen authorities where internal warnings were repeatedly raised about governance, liabilities or control systems, yet decisive action was delayed until failure became unavoidable. Audit that intervenes only after a Section 114 notice is not an oversight; it becomes a post-mortem.
I speak from bitter experience. When I was a councillor in opposition, we had our accounts disclaimed for two years on the trot. Apparently, this had never happened to any local authority before; we were not aware of it and we did not even know what the word meant until the auditor himself took the unprecedented step of breaking the story to the local Watford Observer—hence my passion to make this system work.
Analysing all those past failures, I find that they were not accidental. They were often accompanied by a pattern of executive overreach. Major decisions were taken at pace, scrutiny bodies were sidelined and challenge was treated as obstruction rather than protection. In some cases, significant financial commitments were entered into through mayor-led vehicles with limited transparency, optimistic assumptions and weak democratic oversight. In others, scrutiny committees raised concerns only to find themselves ignored, overridden or marginalised.
Amendments 249 and 250 are to deal with what happens next. They would ensure that audit scrutiny extends not only to money already spent but to how resources are planned to be used. They would allow serious findings to be made public where the audit committee considers this to be in the public interest.
Past failures were not hidden in the accounts; they were embedded in business plans, regeneration strategies and commercial ventures that were never properly stress-tested. Audit that cannot interrogate those plans early and that cannot speak publicly when necessary is simply too weak for the system that the Bill is creating.
This brings me to the local audit office itself. Done well, it could be a real asset. It could provide consistency, expertise, early challenge and a clear line of sight across a fragmented audit landscape. It could join up intelligence, spot emerging risks and give local leaders, mayors and central government the confidence that problems will be confronted early, rather than quietly managed until they explode.
We must be honest about the starting point—where we are now. The current local audit system is not working as it should, and I am absolutely certain that the Minister is aware of that. Audits are delayed, capacity is stretched and expertise is uneven. Serious concerns too often circulate without traction. The danger is that we create a local audit office in name but not in reality—an institution with responsibility but insufficient muscle.
This is now coming to the heart of our concerns, and this is what makes it more pertinent. The new system deliberately concentrates power in the hands of directly elected mayors over strategic planning, major investment decisions, long-term borrowing and delivery bodies operating at arm’s length. That concentration of power may deliver momentum, but it also magnifies risk when challenge is weak.
Baroness Scott of Bybrook (Con)
My Lords, I will focus my remarks on the amendments standing in my name and that of my noble friend Lord Jamieson, which concern the proposed local audit office. Having read the statement of intent and the consultation on local audit reform, we recognise that the Government have identified three systematic challenges. Two are particularly pertinent. First, on capacity, there is a severe shortage of auditors and too few firms in the market. Secondly, on complexity, financial reporting and audit requirements are overly complex and difficult to deliver on time. They are modelled largely on corporate auditing, rather than tailored to local public bodies. That encourages risk aversion and delay.
We do not dispute that there are real problems, but we want clarity over the proposed solutions in this Bill and in the transition plan published last November. Our opposition to Clause 74 standing part is not an attempt to frustrate reform; it is a probing step to understand the necessity and design of the proposed local audit office. What specific problem does a new statutory body solve that reform of the existing framework could not?
Regarding capacity, how does establishing a local audit office increase the number of qualified auditors in the system? Will it expand the training pipeline and make local audit more financially viable or attract firms that have previously exited the market? The Bill provides that the office will determine audit fees, while audit firms must nominate a lead partner for each audit. On what basis will the fees be set, and will local authorities and firms have any input at all? If fees remain inadequate, capacity constraints may persist.
There is also the question of delivery. If public provision is intended to sit alongside private provision, what scale of direct audit activity is envisaged for the new body? If it begins conducting audits itself, what impact would this have on competition and the long-term health of the market?
We are also told that the local audit office will reduce the audit backlog and strengthen relationships between local bodies and their auditors. Will this be achieved through simplification of reporting requirements, reform of risk and liability expectations and the adjustment of fee structures, or simply through centralised oversight? We need solutions to underline market weaknesses, not just structural governance reform.
The proposed local audit office will have regulatory functions, including maintaining a register of firms qualified to conduct local audits. Amendment 244 probes why a register is proposed while the office is also able to designate another organisation as an external registration body responsible for holding such a register. How many more bodies do we need in this landscape? At the same time, it may have operational functions. How will a clear separation between those regulating and operational roles be maintained? What safeguards will prevent conflicts of interest if both bodies regulate and potentially participate in the market?
That concern lies behind Amendment 246, which is explicitly a probing amendment. It seeks to clarify why the local audit office should be given the powers to acquire interest in audit firms or to provide assistance to them. What is the rationale for allowing the regulator to act as a market participant? Under what circumstances would it exercise those powers? Would it provide financial support to prevent market exit? What principles would guide such decisions?
Amendment 247 seeks assurance that the local audit office undertakes local authority audits itself and that its works will be subject to the same standard, scrutiny and independent oversight as private firms. Therefore, will the local audit office be subject to equivalent inspections and ethical standards when acting as an auditor? We would quite like a yes or no on that point.
Finally, Amendment 248 probes how rotations of key audit partners will work in practice and how independence will be safeguarded. If the local audit office undertakes audits directly, what arrangements will ensure appropriate rotation of the individuals acting as the key audit partner? What rotation period is envisaged? What process will govern handover and continuity? What safeguards will be put in place to prevent overfamiliarity and to protect professional scepticism? Just as importantly, where will these requirements sit? Will they be set out in the legislation, in regulation or through reference to an external ethical or professional standard? If an existing framework will apply, which one, and how will compliance be ensured in practice? The principle of rotation matters for independence but requirements that are too rigid risk worsening capacity in an already stretched system. How will the Government therefore balance independence with operational resilience?
These are not wrecking amendments. They are intended to provide clarity to the Committee. I look forward to the Minister’s response.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank the noble Lord, Lord Shipley, for his amendments and the noble Baroness, Lady Thornhill, for speaking to them, and the noble Baroness, Lady Scott.
I will start with the clause stand part notice for Clause 74 from the noble Baroness, Lady Scott, which questions why a local audit office is required at all. The local audit office is critical to overhauling the local audit system. The Kingman review, Redmond review and Public Accounts Committee all recommended a new independent oversight organisation to simplify the system and drive change. The current model of dispersed functions across different organisations has not delivered for the system, local bodies, taxpayers or government. As someone who was involved for many years with the LGA resources board and as a spokesperson for finance in Hertfordshire County Council, I felt sometimes as though I were watching this audit problem occurring like a car crash happening in slow motion—you could see it coming along.
While audit can seem like the dry and dusty aspect of local government, it is of course, as both noble Baronesses have said, absolutely vital to ensuring that members, officers and the public can have confidence in their local authority’s financial systems. That is why when we came into government I was so determined that we would fix this. The noble Baroness, Lady Thornhill, has set out some of the reasons why this is even more vital and urgent now, as we enter the new era of devolution. The local audit office will play a crucial role in ensuring that the reforms are effectively implemented to provide better value for taxpayers.
The missing data and the backlog of unaudited accounts have led to the disclaimed opinion on the whole of government accounts for the past two years, providing no assurance to Parliament and a general loss of public accountability and trust. That is just not acceptable and we cannot carry on like that. Significant steps already taken by this Government mean that the backlog has been cleared and assurance is being built back. However, without the establishment of the local audit office and our wider reforms to tackle the root causes, the situation could recur.
To reassure the noble Baroness, Lady Scott, I will come to some of her other questions as we go through, but the local audit office will support and enable our wider audit strategy, which tackles capacity and capability issues among auditors and account preparers, as well as overly complex financial reporting and audit requirements. Without the establishment of this office and the wider reforms to tackle the root causes of these problems, we could end up back where we were a couple of years ago. The local audit office will be pivotal in rebuilding that transparency, accountability and public trust in local government and will restore a crucial part of the early warning system for local authorities to which the noble Baroness, Lady Thornhill, referred.
Amendment 243 would give the local audit office an additional function to investigate risk management issues identified by audit committees within local authorities. These committees play a vital role across all local authorities. That is precisely why this Bill requires every local authority to establish an audit committee and ensure that it includes at least one independent member to provide robust scrutiny.
If audit committees identify risk management issues within a body, they should ensure that appropriate measures are in place to address them effectively, escalating serious issues to full council where necessary. The statutory guidance for audit committees that this Bill will enable is the appropriate mechanism to consider such issues. While the local audit office will have an important role in overseeing the local audit system, the statutory audit committee framework will remain with the Secretary of State, who is responsible for the overall integrity and effectiveness of local government and, crucially, is directly accountable to Parliament. For these reasons, it would not be appropriate for the local audit office to have statutory responsibility for investigating risk management issues identified by audit committees.
Amendment 244 seeks to remove the statutory requirement for a register of local auditors to be held. The local audit register is a proven and effective regulatory mechanism for audit providers that has been in place since the Local Audit and Accountability Act 2014. Currently, the register is held by the Institute of Chartered Accountants in England and Wales, overseen in this role by the Financial Reporting Council. Audit providers that join the register agree to its rules and fund its regulatory activity through their fees. In the short to medium term, we expect the local audit office to continue the current model under which a professional accountancy body is recognised to register and oversee audit firms.
New Section 6A replicates that arrangement for the new system, with two changes. First, the register-holding body will be overseen by the local audit office, not the Financial Reporting Council, meaning that the local audit office will have the final say on enforcement where serious quality or professional conduct issues occur. Secondly, there is provision for the local audit office to hold a register itself, and regulate audit providers directly, in case this becomes a more suitable mechanism at a later stage. In the unlikely event that a register-holding body became unwilling or unable to continue in its function, this provision would also enable the LAO to step in at pace to maintain regulation. This arrangement strikes a sensible balance between independent regulation of private firms and the local audit office providing oversight and taking the final enforcement decision in the rare cases where serious infringements of quality or professional conduct occur.
Amendment 245 would remove the provision enabling the body responsible for maintaining the register of authorised local audit providers to charge a fee to applicants and registrants. The register will be both a statutory requirement and a critical regulatory mechanism, supported through a range of activities that need to be properly funded. It is right that the cost of maintaining the register should be borne by those applying and registered to receive public funding for undertaking local audit work, not through the public purse. It is also unreasonable to expect an external body to assume responsibility for the registration and regulation of the local audit market without a clear mandate to charge for the range of activities required to do so. While it would be possible for the local audit office to rely on more generic fee-charging provisions elsewhere in the Bill, it is more suitable for the register to be set up and maintained by an external registration body. Registration costs covered through fees is current practice, and continuing this is the most appropriate approach, at least in the short to medium term.
Baroness Thornhill (LD)
I am going to be very honest and say that the Minister packed one heck of a lot into that response. I struggled to keep up with her and really understand the ramifications, because this matter is technical and detailed. I will revisit Hansard. I know that my noble friend Lord Shipley and I will have some detailed questions, which it did not seem appropriate to ask here but which we would like the Minister to go through with us. For us, this is about early, robust and public challenge. I am not sure that, with the Bill as it stands at the moment, we can be assured of that in the face of catastrophic failures that are shameful to local government, as well as this imbalance of power. The Minister knows that I want this to work, but I believe that it will work only if the scrutiny is as balanced as the powers of the new mayoral authorities.
With that caveat, in the hope that we will be able to have some specific discussions—and with the aim of reading the Minister’s detailed response in Hansard, perhaps tomorrow—I beg leave to withdraw the amendment, which was tabled by my noble friend Lord Shipley.
Lord in Waiting/Government Whip (Lord Lemos) (Lab)
My Lords, I am sorry to interrupt but I am conscious of the time; a number of us on all sides of this Committee will have a hard stop at 6 pm. We all want to use our best endeavours to complete these last two groups by 6 pm, I think, but we will stop then. I say this just so that noble Lords know that our intention is to try to finish this stage tonight; I know that the Minister and others will take that into account.
Lord Jamieson (Con)
My Lords, I shall speak to the stand-part notices and the amendment in the group in my name and that of my noble friend Lady Scott of Bybrook. Our intention is to oppose Clause 85 and Schedule 34, which seek to abolish long-standing, upward-only commercial rent reviews, standing part of the Bill, while Amendment 254 proposes a review of the market impacts of rent review provisions. I speak with a deep concern for the stability, liquidity and long-term health of the commercial property market and for the businesses, pensions, investors and communities who depend on it.
Clause 85 and Schedule 34 would enact an outright ban on upward-only rent reviews in new and renewed commercial leases. This represents one of the most interventionist market reforms in modern commercial leasing, yet it arrives without the benefit of any industry consultation. The British Property Federation has been clear that it does not support the Government’s blanket ban and expresses its concern about the absence of proper consultation. Why are the Government not listening?
The existing evidence is clear. Upward-only rent reviews have long underpinned confidence in UK commercial property as an investment asset. These proposed changes have caused widespread concern in the sector. We have heard that upward-only rent reviews provide vital income certainty and support property valuations by ensuring that rental income cannot decline mid-lease—an important factor for institutional investors and particularly lenders assessing long-term risk. Lawrence Stephens, one of the main real estate lawyers, notes that outlawing upward-only rent reviews will undermine the perceived security of rental income and place developers at a disadvantage when seeking finance—a consequence that risks delaying regeneration projects and suppressing new commercial investment. There is a significant concern that the Government’s proposed changes will have a widespread impact on market stability and investment confidence, affecting everything from property values to regeneration projects. Can the Minister please tell us whether the Government have taken this analysis into account and how they plan to mitigate it?
The likely effects of these measures on business tenancies that the Government claim to support cannot be ignored. Landlords will inevitably respond to this change by front-loading rents and shortening lease terms to protect themselves against the prospect of downward-only risk exposure. This would most significantly impact the very businesses that the Bill says it aims to help, especially those that require stability over the long term.
My opposition to Clause 85 and Schedule 34 standing part of the Bill reflects several key concerns: reduced investment in liquidity, threatening regional development; shorter lease durations with fewer stable long-term tenancies; higher initial rents, counteracting the Government’s aim of supporting the high street; increased financing costs, making commercial development harder to deliver; and a slowing down of regeneration projects across the country, especially in areas dependent on external investment, thereby hampering growth, which the Government say is their number one priority.
Baroness Thornhill (LD)
Your Lordships will be pleased to know that I have taken a scythe to my speech, so it might come out a bit disjointed. The short version should be directed to noble Lords at the other end of the table: I understand their position because turkeys do not vote for Christmas. It depends on which lens you look at this through.
So it is no surprise that I rise to oppose the stand part notices for Clause 85 and Schedule 34. They are the mechanism by which the Bill ends upward-only rent reviews for new and renewed commercial releases. Removing them would preserve the system that has been quietly hollowing out our high streets and small businesses for years. The noble Lord talked about evidence and there is plenty of evidence to show that. The real-world effect of upward-only rents is very simple: when trade is good, rents go up, and when trade is bad, rents go up. Rents do not come down. That might look neat in a contract but, on the ground, it has meant businesses paying yesterday’s rents in today’s economy.
We have all seen what that looks like: a shop where footfall has dropped, but the rent is still set at pre-pandemic levels and is going up; a café that has survived lockdowns, energy shocks and staff shortages, only to be hit by a rent review that moves in one direction regardless of takings; or a small local business doing everything right but that is forced out because the lease allows rents to rise but never to reflect reality. I confess to my hairdresser being exactly in that position: after 40 years of work in Watford, she is no more. “The rent rise”, she said, “was the final straw”. This is real.
Clause 85 matters because it allows rents to move down as well as up, so that they can reflect what is actually happening on a street, in a town centre or in a local economy. Markets work both ways and leases should be able to do the same. If we remove Clause 85, we are not defending the market; we are defending a one-way ratchet that has already failed our high streets.
I will blot out a big paragraph here. That does not mean that we should ignore the risks. Markets will adapt and some landlords may try to push the risks elsewhere through higher initial rents or shorter leases. This is why scrutiny, monitoring and review matter, but they are arguments for refining Clause 85, if necessary, not for removing it altogether. Perhaps the Government might consider this on Report.
Likewise, a small caveat: this is a broad reform applying across all commercial sectors, not just retail and hospitality, where the effects and problems are most visible. I would be interested to know what work has been done to understand the impact of this change on commercial property investment, particularly in struggling town centres and regeneration areas. How do the Government justify the big-bang breadth of this measure? Have they considered whether a more targeted approach might have achieved the same aims over time?
If we are confident that this is the right direction—we believe it is—we also have to be confident enough to measure its effects. Therefore, we have some sympathy with Amendment 254 in the names of the noble Baroness, Lady Scott of Bybrook, and the noble Lord, Lord Jamieson, but we feel that 12 months would not be enough time to measure the true effects of this significant change.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank the noble Baroness, Lady Scott, for Amendment 234. I will start with the stand part notices for Clause 85 and Schedule 34.
Upwards-only rent reviews have been a long-standing issue for businesses throughout England and Wales. The British Independent Retailers Association and UKHospitality gave evidence in the other place about just how damaging the practice is and why they have campaigned for decades for the Government to take action. The practice of upward-only rent reviews has an invidious effect on the efficiency and accessibility of the commercial property market—not to mention the impact on our high streets and town centres that the noble Baroness, Lady Thornhill, outlined. It is designed to ensure that landlords and investors are insured against market conditions, but there is a cost to this, which falls chiefly on the business tenants left paying excessive rents when they are already stretched to breaking point, unable to invest or improve their productivity, or, in times of hardship, to keep the lights on or pay their staff wages.
Ultimately, these clauses make running a business less viable, damaging the competitiveness of the economy. Alongside reform of business rates, banning these clauses will help make commercial rents fairer and more efficient, help businesses invest and give them greater resilience to economic conditions. In recognition that these clauses can provide some security to investors, we have committed to consult on how caps and collars could be used. I reassure noble Lords that the Government intend to work carefully and closely with the property industry and others to implement this policy, help manage risk and maintain confidence in the market, without relying on one-sided mechanisms such as upwards-only rent review clauses.
I turn to Amendment 254. I understand the desire to consider the impacts of legislation once it has passed. However, 12 months is too limited a period to see the ban fully implemented and the market adjusted. The Bill’s impact assessment also finds that the ban is likely to have a net positive impact on the UK economy because it will make the commercial property market more efficient, reducing rents for tenants who can instead invest in their businesses and help keep consumer prices low. For those reasons, I hope that noble Lords will not press their amendments.
Lord Jamieson (Con)
I am grateful to both noble Baronesses for their comments. There may be a slight misunderstanding here. Our key point is that this is a very significant change to the commercial property market, and it has not been done with the industry. The Minister said that she would “work carefully and closely” to implement it. It would have been better to have worked closely and carefully with the industry in developing it. I agree with the noble Baroness, Lady Thornton. Our issue is with a blanket ban rather than looking at how we can come up with a potential system that works better for all parties. I am glad that she is more supportive of our amendment.
Lord Jamieson (Con)
I am dreadfully sorry; I apologise to the noble Baroness, Lady Thornhill. Can we have that officially minuted? I share those concerns. The key point is that we need something that works.
I wish to point out that upward-only rent reviews are nowhere near the biggest problem facing businesses up and down the high street. They are contending with devastating increases in business rates and are facing increased regulation, increases in national insurance charges and the effects of changes to the minimum wage. Although we would all like a higher minimum wage, it must be affordable.
The Government’s solution—tearing out a long-established market measure without proper consideration, without careful engagement with the sector and without understanding the consequences for investment and lending to commercial markets—is a high-risk strategy. The question today is not whether commercial tenants deserve fair terms—they do—but whether the proposal before us is the right one. There are too many uncertainties and risks that have been left unaddressed.
We will seek to revisit this issue on Report. I hope that, by then, the Government will have reflected on the concerns raised today and will come forward with proposals grounded not in assertion but in evidence, balance and economic reality. In the meantime, I beg leave to withdraw my clause stand part notice.
Lord Norton of Louth
“Review of the Act(1) The Secretary of State must—(a) carry out a review of the operation and effect of this Act,(b) set out the conclusions of the review in a report,(c) publish the report, and(d) lay a copy of the report before Parliament.(2) The report must be published before the end of the period of five years beginning with the day on which this Act is passed.(3) The report must, in particular—(a) assess the extent to which the objectives intended to be achieved by this Act have been achieved, and(b) assess whether those objectives remain appropriate and, if so, the extent to which they could be achieved more effectively in any other way.(4) In carrying out the review, the Secretary of State must publish an invitation for interested parties to make submissions on the operation of the Act.”
Lord Norton of Louth (Con)
My Lords, the Government Whip may be pleased to know that my mother used to say that I spoke far too quickly. This amendment complements other amendments, which have been discussed, seeking reviews of one form or another. It is distinct in its scope and its timeframe. It would provide for post-legislative review within five years of the measure being enacted.
The Government accept the case for post-legislative scrutiny. The problem is in delivering it. It is essential that Acts of Parliament achieve what they are intended to achieve. The law may be implemented in a way that does not deliver on what Parliament intended. Some law may never be commenced; this is what I have termed “law but not law” and is covered in Amendment 256 in the name of the noble Lord, Lord Pack. Some law may be misinterpreted or poorly understood. We cannot properly know that without undertaking a thorough review and, in effect, completing a legislative feedback loop.
As I said on our first day in Committee, success for the Government should not be seen as getting a measure on the statute book—this is how Ministers have tended to see it—but, rather, as delivering what it is intended to achieve. The answer is to ensure that there is post-legislative scrutiny. The Government are commitment to such scrutiny, at least in principle, and have been since 2008, when they accepted the recommendation for Acts to be subject to review three to five years after enactment. Giving effect to this is, in practice, more sporadic.
Some departments are good at such scrutiny, but not all are. The reviews are sent to the appropriate departmental Select Committees in the other place, but the committees have several tasks to undertake and following up on post-legislative reviews is not necessarily a priority. In our House, we usually appoint a special inquiry committee chair to undertake post-legislative scrutiny of an Act or Acts covering a particular subject, but we are—necessarily—highly selective. We are not able to compensate fully for the lack of post-legislative scrutiny in the Commons.
During the passage of the Children’s Wellbeing and Schools Bill, I argued the case for putting in provisions for post-legislative scrutiny where a Bill is large or complex; makes substantial changes to the law; is contested; and has not been subjected to pre-legislative scrutiny. This would have ensured that the Bill will be reviewed. Knowing that it will be reviewed serves as useful discipline for the Government. As I touched on in our discussion of Amendment 1, proposed by my noble friend Lady Scott of Bybrook, there is merit in adumbrating clearly the purposes of the Bill, providing, in effect, the criteria against which the Act may been assessed once it is in force.
This Bill clearly qualifies under the terms I have outlined. It is demonstrably large—the term “heavyweight Bill” would certainly apply—and complex. It makes substantial changes to the law; that is clear from the numbers of Acts that are amended by its provisions. It is contested, and it has not been subjected to pre-legislative scrutiny.
Lord Pack (LD)
My Lords, I will speak to two amendments in this group: Amendments 256 and 264. The noble Lord, Lord Norton, has added his name to them, for which I thank him.
Both of these amendments attempt to tackle, though in slightly different ways, the problem of law/not law to which the noble Lord just referred. It is about that accumulation of sludge on the statute book of legislation that has been passed by Parliament but never commenced. That is a problem for two reasons. One is that, in a way, it undermines Parliament’s role because, when legislation is passed by Parliament, it is meant to become law. It is not meant to be simply a menu for future Ministers to pick and mix from as they wish, with commencement orders whenever they fancy. If Parliament has made the decision that something should be law, we should be able to have confidence that it will become law.
There is also a more practical problem: the huge complexity of the statute book, which flows from having this mix of legislation that has been passed and commenced, passed but only partially commenced and passed but not commenced. This is a problem because it builds up incrementally. Indeed, that is partly why the problem exists. At every individual level and every individual stage where we add a little more sludge to the system, it is easy to say, “Oh, it doesn’t really matter this time. It’s not really that important”—but it accumulates.
I will give a little example of the scale. The House of Lords Library very kindly pulled together a list for me of all of the Acts relevant to local government in England that have been passed since 1960 but have not yet been fully commenced. Bear in mind that some of these Acts were passed by Parliament before several Members of the House of Lords had even been born, yet 44 such Acts have never yet been fully commenced.
In these two amendments, I try to take two different angles on the problem. Amendment 256 is a probing amendment picking out four examples of legislation that passed a significant time ago but has not yet been commenced. If parts of that legislation have been hanging around for so long and never been commenced, perhaps we should do a little tidying-up and take the opportunity of this Bill to clear out some of those leftovers from the statute book.
The other amendment, Amendment 264, seeks to tackle this problem from a slightly different angle. It is in the nature of closing the stable door after the horses have bolted, because the statute book already has that complexity, but, as we keep on—to extend the analogy, perhaps to breaking point—adding new horses to the stable with a continuous flow of legislation, would it not be better to at least stop making things worse by ensuring that we have confidence that a piece of legislation will be fully implemented, at some point? Five years in the future, it provides a generous backstop to say that, whatever Parliament decides to pass overall, we will be sure that it comes into force at a particular date in the future.
I very much hope that the Minister will reflect on the fact that there are some areas of law where the Government absolutely understand and value having a neat and clear statute book. We have a regular rolling programme for consolidation of the rules of procedure for various parts of the legal system, which is hugely beneficial, but we should be a little more ambitious and not simply restrict the benefits of neat and tidy parts of the statute book to those where it has always been done; we should perhaps be a little imaginative in starting to extend some of those benefits to a greater part of the statute book. I very much hope that the Minister will, in due course, show some desire to expand the level of neatness and clarity in the statute book.
Lord Wallace of Saltaire (LD)
My Lords, this is not the first time I have found myself getting in the way of the last part of a Bill, usually in talking about territorial extent. The last train that would get me to Saltaire tonight leaves King’s Cross just after 7 pm, so I will try my best to be brief.
This is about terminology but also about honesty. My amendments would provide some tighter definitions of “local”, “community” and “neighbourhood”. Having seen the amendment that the noble Lord, Lord Jamieson, tabled on “parish”, perhaps I should have also included one on that. I note that his definition of a parish council includes anything that may have the same population as Greenland. The intended ideal size for a “local authority”, which this takes us to, is about the same as the population of Luxembourg. That is not really local government and it certainly is not local democracy.
I grew up believing that all politics is local, and that citizen engagement is a fundamental part of what politics should be about. This would take politics away from the local community and neighbourhood representative model, with references to community groups that are not representative but are entirely self-formed from civil society. I would not only regret that but think it a deep step back away from the principle of democratic self-government.
I know from my early experience with the Labour Party in Manchester that there are many within Labour who regard the relationship between the party and local people as one in which Labour delivers services and the local people are supposed to be grateful for them. The Liberal approach to democracy is one in which we work with people, and we expect and encourage citizens to be engaged in local and community politics.
This is a Bill that abuses the terms “community”, “neighbourhood”, “parish” and “local”. It sets up sub-regional strategic authorities and reduces the number of local elections and councillors. If I understood the answers to the Question yesterday, it is intended that, following this legislation, the next thing will be to reduce the number of local councils and borough councils in the Greater London Authority so that we have local authorities in London that are roughly the size of Luxembourg.
I regret this; as I have sat through Committee on this Bill I have found the whole Bill deeply distasteful and weakening of our democracy—but there we are. However, I wish that the Government would at least be a little tighter in their use of these important terms than they have been, and those are the intentions of my amendments.
Baroness Scott of Bybrook (Con)
My Lords, I shall speak to this final group of amendments, beginning with Amendment 251 in the name of my noble friend Lord Norton of Louth, which would require the Secretary of State to review the operation of the Act after five years and to report before Parliament. This report would assess the extent to which the objectives intended to be achieved by this legislation have been achieved, and whether objectives and measures remain appropriate.
This amendment speaks to a broader concern throughout Committee on this Bill. It is simply not clear what the Government’s objectives are in the Bill, as it does not follow through on its title—as we tried clearly to explain with the purpose clause in the first group of amendments on the first day of Committee. I cannot remember how many weeks ago that was. As we have said before, the financial implications are unclear, as well as whether local authorities will have the capacity to deliver on their responsibilities. But I do not think that we should wait to find that out in five years’ time; we need, and indeed your Lordships’ House deserves, that clarity now about the finances and the geographical configuration of these new authorities.
Amendment 256 in the name of the noble Lord, Lord Pack, intends to repeal the statutory provisions, which have never been enacted. I thank the noble Lord for taking the time to do this to simplify the statute book, unless the Minister can outline reasons as to why these provisions must be kept or announces a timeline for their commencement.
Amendment 264, also in the name of the noble Lord, Lord Pack, would ensure that the provisions in this Bill will be enacted within five years of its receiving Royal Assent. Again, we must have the assurance that the Government intend to follow through on legislation agreed in this House, and to be clear on what their exact plans are for the powers contained within it.
Amendments 257 to 259 in the name of the noble Lord, Lord Wallace of Saltaire, seek to divine more clearly in law what is meant by “local”, “community” and “neighbourhood”. That has been a crucial debate throughout Committee; we need to ensure that newly reorganised authorities and local government structures are not just areas neatly drawn on a map for the ease of those in central government. We on these Benches believe that they must also reflect local people’s wishes and be in keeping with local history and traditions. However, we have to be realistic—these new authorities are also going to be responsible for delivering not just very local services, which are now delivered by the district councils or by the town and parish councils, but the big services of social care, SEND, highways and so on. This legislation must not be based on a shallow understanding of what constitutes local communities and neighbourhoods. If anything, I am not sure that the noble Lord’s proposed definition of “local” as
“an area suitable for shared government, linked by easy communication”
goes far enough. People do not think of their local communities and neighbourhoods as districts or from the top-down perspective of governance structures.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank the noble Lords, Lord Pack, Lord Norton and Lord Wallace, for their amendments in this group.
Amendment 251, tabled by the noble Lord, Lord Norton, does not specify how the objectives of the Bill are to be identified and, as such, it is not clear from the amendment what the Government would be required to report on. The Government already produce the annual report on English devolution, which covers many of the key elements of this Bill, including the establishment of new strategic authorities, and the functions and funding devolved to strategic authorities.
I thank the noble Lord, Lord Pack, for Amendment 256, and I appreciate his desire to see primary legislation which passes through both Houses commenced following Royal Assent. I commend his desire to tidy up the statute book—I am a bit of a tidy-upper myself, so I appreciate that. However, it is my view that the Government should not prioritise parliamentary time and resource for the repeal of uncommenced provisions in existing Acts which have no impact on the effective running of local government.
Although I appreciate the noble Lord’s intention to ensure that legislation which passes through both Houses is then commenced after Royal Assent, this amendment would not be appropriate and risks unintended consequences. Most provisions in the Bill will be commenced either at the point of Royal Assent or two months after it. However, some provisions will need to be commenced by Ministers after Royal Assent using commencement regulations, and some of these provisions will require secondary legislation or guidance to be published before the provisions can come into effect.
The automatic commencement of all provisions in the Bill risks unintended consequences, especially if powers are devolved to strategic authorities and communities without the necessary guardrails in place. Therefore, it would not be sensible to set an arbitrary date at which all provisions need to have been commenced. However, I reassure the noble Lord that the Government are fully committed to delivering on all the reforms in this Bill, so I ask that he does not move his amendment.
Amendments 257, 258 and 259 were tabled by the noble Lord, Lord Wallace. Taken together, they would introduce definitions of the terms “community”, “local” and “neighbourhood” into Clause 86. The Bill already provides definitions where they are needed to interpret provisions effectively. Through regulations, we will define what a neighbourhood area is and set out the criteria for these arrangements. However, we recognise that there are differences between places and communities across England and we want to ensure that regulations include an element of local choice. For these reasons, I invite the noble Lord not to move these amendments.
Turning to the government amendments, Amendments 261 and 262 remove the subsections on the publication of councillors’ addresses and the extension of the general power of competence to English national park authorities and the Broads Authority from Clause 92(4), which would commence them upon Royal Assent, and insert them into Clause 92(6), so they will commence two months after Royal Assent, as was the original intention for these measures.
Amendments 265 and 267 are minor and technical amendments. Amendment 265 changes a reference from “regulations” to “secondary legislation” to ensure that order-making powers are also covered by the commencement provision and to be consistent with references elsewhere in the Bill. Amendment 267 changes the Long Title of the Bill to replace reference to “local councils” with “local authorities”. This reflects the Bill’s application to authorities other than just “local councils” following an amendment made in the other place to extend the general power of competence to English national park authorities and the Broads Authority. I am sure that will be a great comfort to the noble Lord, Lord Lucas, in that respect.
I will move the government amendments, and I thank all noble Lords who have participated in Committee. We have had some great discussions, and I have really appreciated the contributions that have been made.
Lord Norton of Louth (Con)
My Lords, the Minister’s response is not just disappointing but extraordinarily worrying. It suggests that the Government do not know what they are committed to. All I am seeking is to put in the Bill what the Government say they intend to do anyway. By the sound of it, the Minister is reflecting a view that does not fully understand what the Government have themselves agreed to do. It sounds as if departments are acting in silos, because the response today is very different from the response of the Minister in Tuesday’s debate on the Tobacco and Vapes Bill, which was very constructive and welcome. I was simply replicating more or less the provision that the Government accepted to that other Bill. As I say, the Minister’s response is not just disappointing but very worrying in what it conveys. It reflects very badly on the department and is therefore something I shall most certainly come back to.
Baroness Taylor of Stevenage (Lab)
I have to take issue with what the noble Lord is saying. I pointed out quite clearly that we already produce an annual report on devolution. Most of this Bill relates to the provisions that we are putting in place for the devolution agenda, so they will be covered in the annual report on devolution. It is not that the department thinks that we do not need to report on what is being done; it is that we already have a provision to report on an annual basis on the devolution agenda.
Lord Norton of Louth (Con)
My Lords, there is a difference between reporting what is happening and actually reviewing an Act in its totality and—as my noble friend mentioned when we started this Bill, and as she referred to today—identifying what it is designed to achieve, its objectives, and therefore something against which it can be measured. That is why I think it is so important, and certainly something to which we will return on Report. In the meantime, I beg leave to withdraw the amendment.
Member’s explanatory statement
This is consequential on the amendment of clause 92(6) which would provide for sections 62 and 73 and Schedule 30 to come into force two months after royal assent.
“(z1) section 62 (publication of addresses of members etc in authority registers);(z2) section 73 (and Schedule 30) (extension of general power of competence to English National Park authorities and the Broads Authority).”Member’s explanatory statement
This would provide for sections 62 and 73 and Schedule 30 to come into force two months after royal assent.
Member’s explanatory statement
This would make subsection (8) consistent with subsection (1)(c) (so that they both refer to the wider concept of “secondary legislation”).
Member’s explanatory statement
This would change the long title of the Bill to refer to “local authorities” instead of “local councils”. This would reflect the inclusion of clause 73 and Schedule 30 in the House of Commons (which relate to National Park Authorities and the Broads Authority).
House of Lords
Royal Assent
PFAS
(1 day, 4 hours ago)
Lords ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Baroness Ritchie of Downpatrick
To ask His Majesty’s Government whether the consultation announced in their PFAS Plan: building a safer future together, published on 3 February, will include an option for per- and poly-fluoroalkyl substances to be banned in all consumer products manufactured or sold in the UK.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, the PFAS plan was published on 3 February this year. It sets out for the first time the Government’s approach to minimising the harmful effects of PFAS while moving to safer alternatives. The plan includes consideration of measures to manage risks from PFAS in consumer articles. While there are no current plans to consult on banning PFAS in consumer products, any such future regulatory ban would involve consulting on a proposal.
Baroness Ritchie of Downpatrick (Lab)
My Lords, I thank my noble friend the Minister for her response. PFAS are considered to be harmful to the environment, and by the time we collect enough evidence that a substance is harmful, it is too late—it is prevalent in the environment and costly to clean up, if that is even possible. Considering this, a precautionary approach would be to not allow these substances to be sold or used in the UK unless they can definitively be proven not to be harmful. Therefore, I urge my noble friend to follow the precautionary principle and signal the Government’s intention to take rapid steps to end the use of PFAS in the UK. If we do not, there is a real risk that we will become a dumping ground for products not suitable for the EU market.
Baroness Hayman of Ullock (Lab)
My noble friend raises a really important issue. When deciding what action they will take to address any PFAS risks, the Government will have due regard to the environmental principles policy statement from the Environment Act 2021, which includes the precautionary principle. We know that many PFAS have useful properties and are widely used and that some critical uses of PFAS which benefit society do not currently have suitable and sustainable alternatives available. While we see their use continuing in the near future, we absolutely have to manage any risks effectively. The PFAS plan contains action to support this transition to alternatives.
Baroness McIntosh of Pickering (Con)
My Lords, will the Minister look carefully to the forthcoming water Bill and the conclusions and recommendations of the Cunliffe report as to how we can remove these very dangerous products from our water courses, our rivers and the sea?
Baroness Hayman of Ullock (Lab)
The water White Paper and the Bill that will follow it are a central part of the Government’s programme and a priority for Defra. We are looking at the Cunliffe report extremely carefully; it is an important piece of work.
Baroness Grender (LD)
My Lords, can the Minister explain why, when PFAS contamination of marine life and wildlife is already so widespread and understood, the Government are choosing what looks like a pathway of delay and of more research, more information and consumer choice, and considering only limited change to products such as waterproof clothing and period products rather than pursuing a more aggressive approach attempting to ban PFAS now?
Baroness Hayman of Ullock (Lab)
Clearly, we want to move forward as quickly as we can. The noble Baroness and others will be aware that we are working with the EU at the moment. There are negotiations. We know that the EU is looking at its own approach and, clearly, we need to take that into consideration and to work alongside it. It is important to remind noble Lords that PFAS is a large and complex group of over 15,000 chemicals. There are significant differences in chemical structure and toxicity, so it is important that we work alongside the EU to tackle this effectively and efficiently for the long term.
Baroness Boycott (CB)
My Lords, on the whole, on all these bans, we are way behind the EU. I have raised in this House the issue of school uniforms and polyesters being next to the skin, the largest organ in the body. I now ask the Minister to turn her attention to babies’ mattresses. Babies spend 12 to 16 hours a day on a mattress. The PVC covers leach phthalates into the atmosphere and there are fire retardants in the foam, as in most mattresses. These produce effects in babies which include cancers in later life, and there is now a definite understanding that they are hormone disruptors which are leading to lower sperm counts in males all over the world. It is important that we take a precautionary principle here and at least follow the EU all the way.
Baroness Hayman of Ullock (Lab)
As I said, we will be taking a precautionary principle approach. The noble Baroness talked about school uniforms; it is important that we make sure that children are protected as much as possible. We recognise the concerns in this area. Her point about mattresses is also important. The textiles industry is already moving away from PFAS voluntarily, but we clearly need to do more. I assure noble Lords that the PFAS plan is the starting point and the platform for moving forward in this area. This is not the limit of our ambition.
Lord Roborough (Con)
My Lords, we are concerned that the plan promises high-level actions without clear timelines for phase-outs or mechanisms for delivery. In addition, companies need sufficient time to explore safe alternatives and for the supply chain to adapt accordingly. What are the Government doing to support the private sector in innovating viable alternatives to PFAS?
Baroness Hayman of Ullock (Lab)
The simple answer is that we are carrying out a lot of stakeholder engagement. We are working very closely with industry and business. As I said, the textiles industry is moving that way voluntarily. We need to work with other sections of industry in the private sector to encourage them to do so, because the more we can do now voluntarily, the better, while we bring in our more detailed plans.
Baroness Bennett of Manor Castle (GP)
My Lords, the Minister may have seen in the Financial Times this week a large article about the concerns about PFAS in sportswear. If you are wearing sportswear, sweating and moving very fast, there is a large area of concern in terms of off-gassing and absorption through the skin. Given there is so much public concern with sportswear—particularly for children, as the noble Baroness, Lady Boycott, said—surely the Government need to address this far more rapidly than they are doing now.
Baroness Hayman of Ullock (Lab)
As I said, this is very much the starting point. We are in negotiations with the EU. The EU is looking at what it wants to do in this space. We wanted to lay out a plan that demonstrated that government was serious about doing something in this area, because it is important. It is also important that we work with industry and educate consumers along the way. It is important, too, that we continue to work constructively with the EU, because we want eventually—as I said, this is the starting point—to get to a place where PFAS chemicals are dealt with effectively.
Lord Evans of Rainow (Con)
My Lords, rural community pubs are very much a force for good, not just for the local rural communities they serve but also for the wider communities in towns and cities. Does the Minister agree with that statement, and does her department agree that diversity within the rural economy is most welcome for those in towns and cities?
Baroness Hayman of Ullock (Lab)
Absolutely. Diversity in the rural economy is important. I just wondered whether there is a particular explosion of PFAS in pubs.
Lord Bird (CB)
I just wanted to bring a bit of thinking here. Why is your Government now looking like every other Government, in that when you get the opportunity to be brave and act quickly, you are incredibly tardy. That lot was doing it before you, and presumably some lot will be doing it next after you. Let us be brave and let us grab something that will help our children to not get cancer in 10, 20 or 30 years’ time. Let us do it now.
Baroness Hayman of Ullock (Lab)
I can assure the noble Lord that I am always happy to be brave when I can and I will encourage the department to push forward as best it can in this area. It is important and I recognise the huge concern both in this House and among the public.
Earl Russell (LD)
My Lords, the Minister said that this is a starting point and we broadly welcome that, and I note that she said that this is an extremely complicated group of chemicals used in many industrial processes. The Minister also spoke of Europe and the action being taken there. Fundamentally, the approach being taken in Europe is different to that being taken in the UK. Can I ask the Minister for further clarity about how we can have further co-operation with our European partners on these important issues?
Baroness Hayman of Ullock (Lab)
As the noble Lord says, the EU is developing a broad ban on PFAS. We know that industry is concerned about any plans being workable, which is why this is the starting point in working with industry to get it right. We need to see what the EU’s proposals are; we do not know yet. We are expecting it to announce an update next week, which will be followed by a consultation. I am sure that we will debate that much more in Parliament. But our plan is the starting point; we want to work with the EU. We are waiting to see what it comes up with. Then, I hope, we can be braver.
Class Inequality in the Arts
(1 day, 4 hours ago)
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The Earl of Clancarty
To ask His Majesty’s Government what assessment they have made of the University of Manchester report Class Ceiling, published in January; and what steps they are taking to address class inequality in the arts.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
As the report highlights, it is considerably harder for someone from a working-class background to access the arts and pursue an artistic career. This is clearly not acceptable. Our £1.5 billion Arts Everywhere fund will prioritise areas previously undersupported, ensuring the arts should be for everyone, whatever their background. It is also why we are investing £132.5 million of dormant asset funding to increase disadvantaged young people’s access to enrichment and delivering a £9 million creative careers service, which will focus on tackling the greatest barriers facing young people.
The Earl of Clancarty (CB)
My Lords, my takeaway from a report that makes many crucial points is how much the starving of arts funding over many years has contributed to the neglect of a particular part of the workforce. Does the Minister agree that, if there is fiscal headroom, there should be major reinvestment not just in Manchester but across the whole country? Two examples from the report are, first, creative infrastructure, such as rehearsal and studio spaces, which has been largely ignored by successive Governments, and, secondly, the paucity of apprenticeships, which need to be far more flexible and tailored to the arts. Will the Government take action on these things?
Baroness Twycross (Lab)
The Government are already investing in arts and culture, and over the course of this Parliament they will invest £1.5 billion in capital funding for arts and culture. We are also investing in making sure that opportunities should never depend on background or schooling, and we are committed to ensuring that everyone can succeed in the arts. This includes looking at how we can encourage people to offer and take up apprenticeships. More importantly, it is about making sure the right people are in the room and that everyone knows that that room even exists.
Baroness Keeley (Lab)
My Lords, the Music and Dance Scheme schools, such as Chetham’s in Manchester and the Hammond school in Chester, give talented children from disadvantaged backgrounds access to world-class training. These eight schools are a success story, yet their future is endangered after funding was frozen or cut in real terms from 2010 to 2024. Without renewed investment, this pathway will disappear, reinforcing the class ceiling we are discussing. Can the Minister confirm whether additional funding will be found so that these schools can continue their vital specialist educational work?
Baroness Twycross (Lab)
We are working with the DWP and Skills England to define and develop the growth and skills offer, and that also includes working with the DfE on how we make sure that as many children as possible can access specialist and general music and dance education. We recognise it is important to revitalise arts education, which is why there was a focus on this in the reformed national curriculum.
Lord Addington (LD)
My Lords, the report suggests that something that sounds like institutionalised snobbery exists and that we should deal with things such as apprenticeships. Does the Minister have any idea how, in a sector dominated by freelancers and micro-businesses, we can make apprenticeships, or anything like them, more attractive to those employers?
Baroness Twycross (Lab)
The apprenticeship piece is a critical part of making sure that it is not just who you know but what your future potential is. We are doing this by focusing on making sure that we get world-class vocational training. As well as apprenticeships, we are doing things such as making sure we have a BRIT School in Bradford, which is opening in 2028. It will provide 500 free places for 16 to 19 year-olds, which will break down the barriers to elite art education.
One of the things that comes through the report—which I agree was an interesting, if sobering, read—and some of the narrative around it was that too many children do not know that these careers are open to them, so we are also investing in making sure that there are careers opportunities and advice for young people that get them to know that these careers are open to them. That is the first step to breaking down the barriers we should be breaking down, even before we start looking at increasing the apprenticeship offer. It is no use offering careers if people do not know they exist and do not take them up.
Lord Sherbourne of Didsbury (Con)
The Minister just talked about the barriers that are denying access to the arts for disadvantaged pupils and students. For our information, can she helpfully spell out exactly what those barriers are and what precisely the Government are doing to remove them?
Baroness Twycross (Lab)
I would probably far exceed the 75-word response we are supposed to give if I went through all the barriers. However, they include lack of access to parental networks, not knowing about the opportunities in the first place and schools not having creative education, which is why I referred to the fact that the curriculum review is focused on arts and why the Secretary of State for Culture is focused on increasing access to music opportunities, including through music in libraries. I could go on, but I hope that some of the other issues that we are trying to deal with will come through in other responses.
Lord Watts (Lab)
My Lords, many musicians and artists struggle in the first few years when they are leaning their trade. Has the Minister seen what Ireland has done in introducing benefits systems that take into account the low earnings of these musicians and artists?
Baroness Twycross (Lab)
We are aware of the basic income scheme for artists in Ireland. We are not considering a basic income scheme for artists at this time. However, we believe that British creators are second to none and we are committed to giving them security and a regulatory and fiscal environment where creativity can flourish. This is exemplified by our recent Employment Rights Act, our commitment to appoint a freelance champion and our 5% uplift to national portfolio organisations, as well as our commitment to addressing some of the unfair practices in the grass-roots music industry, such as pay-to-play.
Lord Parkinson of Whitley Bay (Con)
My Lords, in January, Exeter Cathedral School announced it would be closing its doors at the end of this academic year, after eight and a half centuries of training talented singers from all backgrounds who provide solace and tranquillity to those who need it. Parents and staff have said the Government’s imposition of VAT on their fees and scholarships was the “final nail in the coffin”. The headmaster of Wells Cathedral Choir School has similarly warned that, “VAT is of huge concern. Access to choristerships should be open to everyone. It is getting harder and harder to do that”. Will the Government think again, so that this important part of our living heritage can be open to everybody, not just those whose parents can afford it?
Baroness Twycross (Lab)
One of the issues with private schools is that, in principle, they have not been open to everyone. Ending the tax breaks on VAT and business rates for private schools was a tough but necessary decision that will secure additional funding to help deliver the commitments by this Government relating to education and young people. The schools that focus on the performing arts are in scope of the policy, in order to ensure fairness and consistency. However, we are pushing forward with making sure that there is better, revitalised arts education more generally, and that includes continuing some of the bursaries that are available to young people.
Lord Pannick (CB)
Would the Minister acknowledge the contribution made by many independent schools to breaking down the barriers that she referred to, by the partnerships that those schools have with state schools by which they open their facilities to children who are not being educated there?
Baroness Twycross (Lab)
When you look at that, it all sounds great in practice, but there is a massive regional difference. For example, it might work in London, but it is not going to work in some parts of the north of England. It does not work in every single part. The best thing the Government can do is to make sure that all state schools, which together educate around 93-94% of children, have a good offer for those children in terms of access to arts education.
Lord Kirkhope of Harrogate (Con)
My Lords, over many centuries, some of the finest artists in all the various forms of art have come from poorer communities and have relied very largely on private patronage to develop their artistic skills, and so on. Therefore, does the Minister think that the Government are doing enough to encourage people to provide private patronage and support to those who have these talents, which are so important?
Baroness Twycross (Lab)
I am a big fan of philanthropy, but, if noble Lords read the report the original Question referred to, they will see that, in essence, our approach is about making sure that young people are aware of the opportunities and breaking down the systemic, widespread barriers to young people accessing the information and knowledge to get on in this area in the first place. We want to make sure that renumeration across the board and low or no pay early on in people’s careers do not stop those without parental income, or access to private financing, getting on.
Access to Work Fund
(1 day, 4 hours ago)
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Lord Touhig
To ask His Majesty’s Government when the operation of the Access to Work fund was last reviewed.
Lord Touhig (Lab)
My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I declare an interest as a vice-president of the National Autistic Society, an honour I share with my noble friend Lady Browning opposite.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, Access to Work is a demand-led, personalised discretionary grant programme, which supports the recruitment and retention of disabled people in employment. As part of standard operational practice, the DWP continually reviews how the service has delivered to drive improvements. Access to Work has not substantially changed since its introduction in 1994. In our Pathways to Work Green Paper, this Government consulted on the future of Access to Work and how to improve the scheme so that it helps more disabled people in work.
Lord Touhig (Lab)
My Lords, last year I met a group of autistic youngsters who were in employment for the first time, thanks to the support of the Access to Work fund. But the fund, in truth, is in crisis. There is a backlog of 60,000 applications waiting to be processed, 33,000 people are waiting for payments, and the system is overwhelmed and struggling to cope. The National Audit Office recently produced a report making recommendations for major changes to how the fund operates. Will my noble friend the Minister use this report as the basis for a complete review, to prevent this fund failing completely?
Baroness Sherlock (Lab)
I share my noble friend’s view of the importance of supporting people into work; that is what Access to Work is there to do. The NAO report, published last month, is a really helpful contribution and highlighted a number of pressures that we already know about. It also noted that the demand on Access to Work has gone up dramatically. It began to escalate significantly coming out of the pandemic—application rates have doubled since 2019-20—and the Government are now spending a record amount, over £320 million, which is the highest ever and 22% more than the year before.
A range of changes have made a difference, partly about the scale and partly about complexity, so we are taking those steps now. We increased the number of staff working in this area by 29% last year and we have looked at operational improvements to speed up cases. We are getting more complex cases coming through, which is making a difference. We also need to reform Access to Work. It has not been looked at properly since it was introduced over 30 years ago; we need to make sure it is fit for the future.
Lord Sterling of Plaistow (Con)
My Lords, I totally agree with the points brought up by the noble Lord, Lord Touhig. We are very fortunate in having a Minister who cares so deeply about this subject, as we all know. One of the problems in getting a job, which is what I want to ask the Minister about, is that, in practice, the workforce in many small companies is very nervous indeed to have somebody who is disabled or has a problem of that type. How can we deal with that better and faster?
Baroness Sherlock (Lab)
I thank the noble Lord for his question and for his kind words. He raises a really important point. One of the things we have discovered, both through our general work with employers but also through the report we have done in this area, is that many employers really want to help, but some small and medium-sized businesses do not know how. They are nervous, and they worry about having the right conversations and how to help. We have a special service, developed with SME employers, called SEND, where we can work with employers and bridge conversations between employer and employee to help them work out what they should do and what help they can get elsewhere.
At the same time, we need to make sure that really big employers step up to the plate. We should not be in a situation where very large employers use Access to Work for small pieces of equipment, such as buying keyboards or chairs, which one would hope they could have managed in the normal run of things. Our job is to help employers to do the right thing, because most of them want to, but the noble Lord knows very much from his experience that this can be challenging. Yet, the rewards of having a really good workforce can make all the difference in the end.
Lord Palmer of Childs Hill (LD)
My Lords, I compliment the Minister on the work that is being done in this area. In my view, the aim of the Access to Work fund is to get people out of the house and into work. The fund also pays for improvements and developments in the home when people are working from home. I am sure it would be of great interest to the House to know what proportion of the fund is going to support people working from home rather than working in a place of employment, which is not quite the same in what it achieves for mobility.
Baroness Sherlock (Lab)
My Lords, the noble Lord makes an important point: the scheme helps people to get into and stay in work. It is incredibly wide-ranging, covering anything from a customer applying for a single one-off grant of £100 to buy a piece of equipment, which they might keep for the duration of their work in that particular role, through to the other end, of a cap of £69,260 for someone who needs large levels of personal support. There are people who buy a single piece of equipment, or have British Sign Language support to do a job, and right across the piece. I do not have the figures about location, but if we have them I would be very happy to write to the noble Lord.
The Lord Bishop of Leicester
My Lords, although I recognise that spending on Access to Work has increased in recent years and applaud the Government’s ambition to support more disabled people into work, this will most likely require more financial investment and more training of specialist staff. Therefore, have the Government assessed how their welfare reforms will affect demand for Access to Work and how the scheme can be strengthened to meet what may be an increased case load in coming years?
Baroness Sherlock (Lab)
The right reverend Prelate raises a very important point. The Government hope there will be more demand for support. In reviewing Access to Work, we also have to review the whole landscape to look at how well supported employers are to be able to do the things they can do, which was the point raised by the noble Lord, Lord Sterling. What is the right thing for an employer to do, what can the individual do themselves and what can the state do to help them directly?
One of the challenges in recent times is that, along with that growth, we are getting very different types of cases. Broadly speaking, when the scheme was much smaller, people traditionally applied for a piece of physical kit for a physical barrier. The biggest single case now is people needing help with mental health. There are also cases of people coming through with a range of learning conditions, which are quite complex to assess and need a lot more work. We are having to review that, alongside broader policies, but the right reverend Prelate makes an important point to connect them.
Lord Holmes of Richmond (Con)
My Lords, if you are blind or visually impaired in the UK you have only a 27% chance of being in employment. In the light of that, what changes does the Minister propose need to be made to Access to Work, connect to work and all job programmes to close this horrific employment gap?
Baroness Sherlock (Lab)
I commend the noble Lord for raising these issues. I am really grateful to him for having been in touch with me, and I look forward to discussing this more with him directly. The Government are increasingly looking at how we can personalise our support. The disability employment advisers in our jobcentres are well trained to make sure they work with individuals, but the next stage goes back to employers. We can get individuals job-ready, but we have to make sure that places of employment are disabled person-ready as well, so we are trying to do both.
In developing the future of Access to Work, we consulted generally and set up a collaboration committee, working closely with disabled people and people from representative organisations, as well as employers, to look at how we get the scheme right. Within that, we are trying to capture the full range of needs and make sure it carries on being personalised, but in a practical way.
Baroness Stedman-Scott (Con)
My Lords, the Minister and I suffer from the same condition: an obsession with getting people into work and keeping them there. I hope the whole House shares an obsession with the same outcome. Nothing makes my heart sing more than knowing how many people we get into work, how many stay in work—particularly after a year—how much a job costs and how we can make sure we measure what we are doing. How does the department keep these outcomes under review and how does it ensure that expenditure in this area is demonstrably helping people enter and stay in work?
Baroness Sherlock (Lab)
I commend the noble Baroness for the really interesting and innovative work she has done in the past, and for her commitment to this area. It is always a pleasure to debate these issues with her. On value for money and the results of Access to Work, she will remember from her time in the department that the previous Government tried to look at how you assess the impact of this scheme, only to find that it is very difficult, because you do not have a counterfactual: you cannot have a control group who get no help at all and struggle on their own, and compare to see how the two groups are doing. The NAO flagged these issues to the department and we are very aware of them. We are looking all the time at how we reform the scheme in a way that helps individuals, demonstrates additional value for money and is not a substitute for what employers should be doing, but which none the less is not so bureaucratic that you cannot get the money you need. To reassure her, all those things are being taken into account in the review process.
Lord Harper (Con)
My Lords, when I was in the Minister’s position and responsible for this scheme, one of the problems we had was getting enough people to take advantage of the scheme. I urge her, although it is challenging, to take as a win the fact that demand is very high and to make the argument with the Treasury that getting people into work is a net benefit to the public finances. I assure her that, if she makes that argument, she will get cross-party support for it. Access to Work is a fantastic scheme and I look forward to the changes she is able to make to enable it to get more people into work, whether they are in a workplace or working from home, where that may suit them best.
Baroness Sherlock (Lab)
I am grateful to the noble Lord both for the history lesson and for his support. Access to Work has many challenges, but getting people to apply for it is not chief among them. One of the challenges is that, although we are spending record amounts of money, we are still supporting only around 1% of the working disabled population, so this is also about identifying the best way to get the right amount of support to the highest number of people. The noble Lord was helpful in raising that issue; that is now our challenge, and I am grateful to him for reminding me of it.
Small Businesses: VAT Threshold
(1 day, 4 hours ago)
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Lord Londesborough
To ask His Majesty’s Government what assessment they have made of HMRC data showing that an increasing number of small businesses in the UK are earning below the VAT tax threshold.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, the data referred to does not show that an increasing number of small businesses in the UK are earning below the VAT threshold. It shows only the number of voluntarily VAT-registered businesses below the VAT registration threshold of £90,000 and does not include unregistered businesses. Of the 5.8 million businesses in the UK, 2.3 million are registered for VAT and 3.5 million are unregistered.
Lord Londesborough (CB)
I thank the Minister for his reply, but we have double trouble. First, an increasing number of registered small businesses are earning less than the VAT threshold of £90,000. Secondly, there has been a big drop in those earning £90,000 to £150,000—in fact, there was a decline of 26,000 businesses in the year 2025. Is that because some are deliberately suppressing their growth to avoid the additional tax and admin burden of complying with VAT, or is it because higher employment costs and taxation have choked off their incentive to grow? Either way, it is surely time to reset this threshold.
Lord Livermore (Lab)
I am grateful to the noble Lord for his question. It is neither of the things that he set out. As I have said, the data cited by the noble Lord relates only to VAT-registered businesses and does not include unregistered businesses, so I do not think it shows what the noble Lord claims that it shows. If a business is already registered for VAT, it has no incentive to suppress turnover to avoid VAT, because it is already charging VAT and would need to continue to do so even below the threshold. Why would they do what the noble Lord suggested? That would not make any sense. If he looks at a longer time series of this data, he will clearly see that it moves around significantly, so the conclusions he is trying to draw are very difficult to sustain.
Lord Fox (LD)
My Lords, if the Minister could open his mind beyond the data of the Question, there is no shortage of studies from very reputable organisations—the IMF, the OECD and others—that there is significant bunching around a threshold, and that is not a surprise. Where they do not agree is whether the brake on growth would be improved by raising or lowering the threshold. Can the Minister tell your Lordships’ House that the Treasury will not succumb to a Goldilocks effect and conclude that, because some say it should be higher and others say it should be lower, it is happy to leave it where it is? Can he assure us that sensitivity studies are being run to look at where the threshold should be? Getting it right will open up more growth.
Lord Livermore (Lab)
I am very happy to open my mind in response to the noble Lord’s question. The existence of bunching around the VAT threshold is well established and has been analysed by the Office for Budget Responsibility. The OBR has explained that, where a registration threshold exists, some firms will cluster just below it to avoid the administrative and pricing consequences of entering the VAT system. That is an inevitable consequence and recognised feature of a threshold-based tax system. He will know that decisions on tax and thresholds are taken only at fiscal events. Raising the threshold further would reduce burdens for some firms, but it would also carry significant fiscal cost. The UK threshold is already high by international standards. The UK threshold of £90,000 compares to an average in OECD economies of £30,000. It could be argued, as I think the noble Lord is doing, that lowering the threshold could support growth by reducing the distortions created by the cliff edge of the threshold, but the Government are also mindful of the impact this could have on small businesses.
Lord Howell of Guildford (Con)
Is the Minister aware that, according to official statistics, 99.18% of all British businesses are defined as “small”—those with 50 employees or fewer. It sometimes seems, in the answers we get, that the Government have not quite understood that.
Lord Livermore (Lab)
I fully understand that, and I am grateful to the noble Lord for reminding me of it. Last year, the Government published their plan for small and medium-sized businesses, setting out support for smaller firms. We are partnering with industry to unlock productivity growth through the adoption of digital technologies. We are legislating to tackle late payments, which cost the UK economy £11 billion a year. We have launched a new Business Growth Service to make it easier to access advice and support. We are making SMEs a national priority in our new procurement policy system. We are expanding the UK Export Finance capacity by £20 billion and creating a small export builder insurance product. I assure the noble Lord that we are very aware of the points he raises.
Lord Watts (Lab)
My Lords, are the Government concerned about what seems to be the growth of cash-only businesses? They are not there for the customers’ benefit but, in some cases, for the business to avoid tax and other things.
Lord Livermore (Lab)
Yes, absolutely, the Government are very aware of the points that my noble friend raises. HMRC has recently engaged in increased enforcement activity around those exact points.
Lord Leigh of Hurley (Con)
The Minister will be aware of the successful campaign that Retailers Against VAT Abuse Schemes and I ran to ensure that online marketplaces are required to collect VAT on certain transactions involving non-UK established sellers. The problem is that the current system has been exploited by proxy directors, proxy companies and artificial fragmentation. The chairman of the British Independent Retailers Association has written to the Exchequer Secretary to the Treasury to ask for urgent consultation on this issue, which is probably costing HM Treasury £700 million a year. Can the Minister use his influence in HM Treasury to ensure that urgent consultation takes place immediately with the retailers who signed that letter?
Lord Livermore (Lab)
Yes, I am grateful to the noble Lord for his campaigning work and raising this with me on a number of occasions. He knows that we are reviewing the online marketplace rules established under the previous Government. As part of that review, those consultations will take place. I will bring it to the attention of my colleague, the Exchequer Secretary to the Treasury, to make sure that he consults with the businesses that the noble Lord mentioned.
Baroness Neville-Rolfe (Con)
My Lords, for many small businesses, the VAT threshold is only one part of a much wider cumulative burden, which includes rising national insurance contributions, business rates and minimum wage pressures, and the increasing complexity of employment regulation. That all hits enterprise and dampens the ambition and animal spirits that we need to get this country growing. Does the Minister therefore see a case for lifting this and other thresholds, and for exempting SMEs from some of the ever-growing burden of regulations that we are seeing? If so, where would he start?
Lord Livermore (Lab)
In a previous answer, I discussed the issues surrounding changing the threshold. The noble Baroness may know that the Windsor Framework imposes an upper limit of just over £90,000 on the threshold in Northern Ireland. The Windsor Framework is relevant by extension to the Government’s decisions in Great Britain too, so there are limitations to what we can do. She talked about the other decisions that the Government have taken, which she has consistently opposed—for example, raising the minimum wage. However, it is only because of these decisions that the Chancellor was able to tell Parliament, the day before yesterday, that living standards are now rising, having fallen under the previous Government, and that by the next election people will be £1,000 a year better off.
Lord Bellingham (Con)
My Lords, small businesses are the key driver for creating jobs and employment. Can the Minister confirm that unemployment is now 5.6%—higher than during the Covid pandemic—while youth unemployment is 15.9%? What is going wrong? The Minister spent 18 months blaming the £22 billion black hole and everyone from Liz Truss to Boris—he even blamed the Tories for repealing the corn laws. When will he take responsibility for what is going wrong?
Lord Livermore (Lab)
It is a little rich for the party opposite to ask anyone else to take responsibility after the 14 years they inflicted on this country. Last week’s labour market statistics show that there are 381,000 more people in work since the start of 2025. Of course there is more to do. However, the updated forecast from the OBR this week shows that unemployment will peak later this year before falling for every remaining year of the Parliament, ending lower at the end of the Parliament than it was at the beginning—the rate that we inherited from the noble Lord’s Government.
The Earl of Effingham (Con)
That is the 322nd time that noble Lords opposite have used the phrase “14 years”. Will they please listen to Sir Tony Blair, who said this week:
“Labour’s policies are harming growth and undermining young people’s job prospects”?
Does the Minister agree with Sir Keir Starmer, who said of the previous Government that they were lurching
“from crisis to crisis and U-turn to U-turn … To correct one error, even two, might make sense. But when they’ve notched up 12 U-turns and rising, the only conclusion is serial incompetence”?
Lord Livermore (Lab)
Well, that was a most enjoyable question from the noble Earl. I am grateful for the opportunity to talk about the last Government’s 14 years in power. We had austerity, followed by Brexit, followed by Liz Truss. The growth record of the previous Government was an absolute catastrophe. He will know from the forecast presented to Parliament this week that growth has been increased for next year and the year after. That is only possible because of the stability that we have brought about. Borrowing will be £18 billion lower over this Parliament. It will fall every year of the forecast and will be below the G7 average for the first time—something that the previous Government did not achieve in 14 years. It is only because of those decisions that we are seeing the stability and growth of this economy, decisions that the party opposed at every turn.
Business of the House
(1 day, 4 hours ago)
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Baroness Smith of Basildon
That Standing Order 44 (No two stages of a Bill to be taken on one day) be dispensed with on Thursday 12 March to allow the Industry and Exports (Financial Assistance) Bill and Universal Credit (Removal of Two Child Limit) Bill to be taken through their remaining stages that day; and to allow the Supply and Appropriation (Anticipation and Adjustments) (No. 2) Bill to be taken through its remaining stages that day in the event it has been brought from the Commons.
Pension Schemes Bill
(1 day, 4 hours ago)
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Baroness Sherlock
That the amendments for the Report stage be marshalled and considered in the following order:
Clauses 1 to 118, the Schedule, Clauses 119 to 123, Title.
Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2026
(1 day, 4 hours ago)
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Baroness Sherlock
That the draft Regulations laid before the House on 15 January be approved. Considered in Grand Committee on 2 March.
National Insurance Contributions (Employer Pensions Contributions) Bill
(1 day, 4 hours ago)
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13:02 - Division on Amendment 1 - Ayes: 214 / Noes: 142 - Amendment 1 agreed.
13:55 - Division on Amendment 5 - Ayes: 208 / Noes: 142 - Amendment 5 agreed.
14:17 - Division on Amendment 9 - Ayes: 198 / Noes: 139 - Amendment 9 agreed.
14:29 - Division on Amendment 12 - Ayes: 194 / Noes: 140 - Amendment 12 agreed.
14:40 - Division on Amendment 16 - Ayes: 193 / Noes: 143 - Amendment 16 agreed.
Baroness Neville-Rolfe
Member’s explanatory statement
This amendment would exempt basic rate taxpayers in England, Wales and Scotland from the £2,000 cap.
Baroness Neville-Rolfe (Con)
My Lords, I am pleased to be opening our deliberations on Report by speaking to a powerful group of amendments tabled by not only the Opposition but noble Lords from across the Chamber. This group in many respects shows the scale and breadth of the concerns that are held by noble Lords with respect to this Bill.
My first amendments in this group seek to exempt basic rate taxpayers from this policy. I am grateful to noble Lords from across the House who supported Amendment 1 in Committee and who recognise the seriousness of the issue that it seeks to address. This Bill is a mistaken Bill. It will limit incentives to save into pensions and reduce pensions adequacy. In our lively Committee discussions, Peers with business and tax experience and knowledge of pensions and payroll exposed its failings. The responses from the noble Lord, Lord Livermore, did not allay our concerns. On the contrary, they reinforced them.
The Government have been clear in the Bill’s Explanatory Notes and in Statements made in this House and the other place that this policy is intended to target higher earners. That is the stated purpose and the political justification, but it is not the reality. The Society of Pension Professionals has told us that around one-quarter of those who use salary sacrifice and who will be caught by these changes are basic rate taxpayers. When this was put to the Minister, he did not dispute it. In fact, he went further. He told us that around 74% of basic rate taxpayers currently using salary sacrifice will be protected by the £2,000 cap. That is the current position and, as far as I know, does not allow for wage inflation in the period before the measure takes effect. That could increase the number of basic rate taxpayers who are affected.
The new arrangements take effect in 2029-30, conveniently helping the Government with £4.7 billion of revenue to satisfy their fiscal rules in that crucial year. However, the Minister’s exclamation means that 26% of basic rate taxpayers will not be protected. More than one in four basic rate taxpayers using salary sacrifice will be hit. The Minister also acknowledged that some people earning under £30,000 would be affected. Let us pause on that. This is a policy presented as targeting high earners, yet it will impact workers earning under £30,000. Surely that is, by the Treasury’s own admission, a fundamental contradiction between rhetoric and reality. For a basic rate taxpayer, the 8% national insurance charge represents two-fifths of the value of their income tax relief. In practical terms, the marginal cost of this policy is four times higher for a lower-paid worker than for someone on a higher income. That is a very different definition of a progressive tax. The lower your income, the greater the relative blow.
Our amendment offers the Government a straightforward way out. By exempting basic rate taxpayers from the cap, we would align the policy with its stated objective. If the aim is to target higher earners, let us do precisely that. Let us not drag lower and middle earners into a measure that they were repeatedly told would not affect them. Lower savings today mean lower retirement incomes tomorrow, and lower retirement incomes tomorrow mean greater reliance on the state. That is neither fiscally prudent nor socially responsible.
This is closely related to another of my amendments in the group, Amendment 7, which would require that regulations made under Clauses 1 and 2 should explain the basis on which the Treasury considers certain employed earners to be higher earners for the purposes of the national insurance charge and how the contribution limit reflects that assessment in Great Britain and Northern Ireland. This amendment, which we also tabled in Committee, received a wholly inadequate response. I asked the Minister who in the Government’s view were higher earners. I asked for a number. Was it people on £50,000 a year or £60,000 a year? The Minister refused to give one. Indeed, he did not engage with the point at all. Remember, some basic rate taxpayers will be affected by this policy. They are not higher earners. The Government should be honest about that.
Amendment 7 seeks to ensure that when regulations are forthcoming—and there are a lot of them provided for in the Bill as it stands—the Treasury will do the right thing and explain how the regulations meet the policy intent of affecting only higher earners. It would not impose costs on the Treasury or affect how the policy works but would ensure that we get an explanation of how lower and medium-income workers are to be protected. That is the Government’s stated aim. If the Minister is confident that regulations will meet the Government’s own test, he should accept this amendment.
The final one of my amendments to which I wish to speak, Amendment 29, concerns SMEs and charities. Throughout the passage of this Bill, and in debates far beyond it, many of us have warned about the cumulative burden this Government are placing on smaller employers. Think about the Employment Rights Act, the minimum wage hikes, the spiralling business rates, U-turns and uncertainty, compliance and regulatory costs and, indeed, the previous NICs hike. The list goes on. Each item is a policy that damages small and medium-sized enterprises in our country. They include family firms, start-ups, local manufacturers, high-street shops, care providers and charity and community employers. They often do not have in-house tax teams or compliance departments. They do not have margins that allow them quietly to absorb new fiscal shocks. Many do not offer salary sacrifice, but some do and more may do so now that it is more in the public consciousness thanks to this change.
My amendment simply says that, where the employers are a small or medium-sized enterprise, or a charity or a social enterprise, the provisions of this clause should not apply. If the Government’s intent is to truly address behaviours concentrated in large corporates then they should have no difficulty accepting that smaller employers ought to be shielded.
Lord Leigh of Hurley (Con)
My Lords, I will speak to my amendment in this first group. Needless to say, I agree with everything my noble friend Lady Neville-Rolfe said from the Front Bench. This Bill is a most unfortunate Bill. It clearly has come about because the Chancellor has said to her officials, “I need £5 billion, can you find it now?”, and out of the bottom drawer has come a Bill which has been rejected by so many others. I do not think it was in the manifesto; it is just an opportunistic grab of people’s savings.
The Bill has most unfortunate side effects. As we will show in later amendments, it will not raise the £5 billion that the OBR has been led to believe it will. It will fall far short of that. Proof of that, of course, is in the fact that even the OBR recognises that that £5 billion will fall by half the following year, as people work out what is going on and take evasive action. The reason it will not raise £5 billion is that people will work out, well in advance of it coming into 2029, that there are simple ways round this Bill that already have been identified, and therefore will take pre-emptive action. We are stuck with a Bill that does not work, is not needed and, workers having been penalised by the national insurance increase, penalises savers. In particular, for some bizarre reason, it penalises students who have taken out loans. This is not a good time to be making these proposals.
The Minister, a few minutes ago, suggested that the Chancellor believes that people will be £1,000 a year better off by the time of the next election. Will they really? The Joseph Rowntree Foundation—no friends of mine—has said that when housing costs from rent and mortgage payments were factored into those figures, total disposable income would have risen by just £40 a year. No pandemic to rely on, no Brexit, no nothing—that is just what it is: £40 a year.
This is not the time to impose further hardship on people, in particular students. One benefit of a pension salary sacrifice can be to reduce earnings liable to national insurance for student loan repayment purposes, as the liability to repay student loans is, for employees, based on their earnings liable to national insurance. Frankly, there remains a lack of clarity about how the policy interacts with student loan repayment calculations, which are based on national insurance definitions of earnings. If salary sacrifice pension contributions above the cap are treated as earnings for NIC purposes, this will have knock-on effects for graduate repayment levels. It will mean higher effective repayments for some borrowers, reduced disposable income and a further distortion of incentives around pension savings. The Government have not yet provided sufficient clarity. My amendments seek to address that situation.
I am grateful to the national press, in particular the Times, for its support of this amendment. I hope later to be able to test the opinion of the House on it, unless the Government feel inclined to agree to it.
Lord Ashcombe (Con)
My Lords, this is a very large group with a number of issues to address. First, I support my noble friends Lady Neville-Rolfe and Lord Altrincham in Amendment 1 in this group. I remind the House that the Department for Work and Pensions has acknowledged that, as of 2025, around 14.6 million working-age people are undersaving for retirement. Many of these individuals will be basic rate taxpayers, though certainly not all, and some will not have access to salary sacrifice arrangements. This amendment would ensure that only higher taxpayers are affected by the proposed £2,000 cap on salary sacrifice schemes. As a result, no basic rate taxpayer would be drawn into what might only be described as a new trap.
In Committee, the noble Lord stated more than once that 74% of employees who pay only the basic rate of tax—currently applicable up to £50,270—and who benefit from a salary sacrifice scheme would be unaffected by the £2,000 limit before the national insurance becomes payable. However, this necessarily means that 26% would be affected, and no figure has been provided for how many people that represents. Percentages alone can be extremely misleading without the underlying numbers. Therefore, I would be grateful if the minister could inform the House how many employees fall within that 26%, so that we may properly understand the scale of those who stand to be impacted.
This brings me directly to Amendment 7, in asking the Government what the definition of a high earner is. The answer given in Committee was totally noncommittal. May I therefore ask the Minister, as my noble friend Lady Neville-Rolfe has, to be transparent and provide a clear number? Is the threshold £30,000, £50,000, or is it some other number? I do not think this is too much to ask.
As for Amendment 5 in the name of my noble friend Lord Leigh of Hurley and others, there are already many students—including my sons—caught by the student loans repayment scheme. To fleece this cohort of individuals even harder seems extraordinary if salary sacrifice payments are considered as part of their income. They will never have a sufficient pension and, no doubt, some future Government will have to pick up the pieces.
Next, I would like to address the size of the cap, which currently would be £2,000. As I have mentioned, the proposed limitation is simply too low. Moreover, it fails to take account of those employees who may, on occasion, receive an unexpected windfall which they wish to contribute to their pension through a salary sacrifice arrangement. Amendment 12 from the noble Baroness, Lady Kramer, provides for a £5,000 cap, which would give employees the opportunity not only to save more towards their retirement but also to avoid a substantial national insurance liability on such a windfall. Provided inflation remains under control, this is a far more realistic and workable figure. While I would prefer the figure to be £10,000, as in amendments in the name of the noble Baroness, Lady Altmann, I fear that that is a step too far.
The amendments in the name of the noble Lord, Lord de Clifford, and those in the names of my noble friends Lady Neville-Rolfe and Lord Altrincham both address another issue: the quiet but persistent impact of fiscal drag. This is one of the most insidious ways in which Governments raise revenue without taking any overt action. With such a modest cap set out in the Bill, it risks being rapidly eroded by inflation, placing an unnecessary burden on basic rate taxpayers—precisely the group for whom pension saving is the most vital to support. I very much support those amendments.
Finally, Amendments 16 and 27 concern the SME and charity sectors. Last week in Committee, I mentioned many recent legislative changes that these entities have had to face, including the cost of energy, which now appears to be heading even further in the wrong direction. Between Committee stage and now, this has become very personal, as one of my children working in the retail industry was made redundant yesterday due to all these excessive costs. This Bill has not yet hit. I truly wonder if the company will survive. The Bill is, surely, another nail in the coffin for many more employees and, I suspect, a number of companies and charities themselves. They simply do not have the wherewithal to weather these storms, yet this Government insist on piling on ever more expenses, not only through greater national insurance payments but substantial additional associated administration costs. They will need to hire external resources to handle this difficult and pernicious legislation. It will not surprise noble Lords to know that I very much support these amendments.
Lord de Clifford (CB)
My Lords, I speak today in support of all the amendments in this group, particularly Amendments 12 and 26 in the name of the noble Baroness, Lady Kramer, and other Peers, and my own Amendments 14 and 27. I would have added my name to the noble Baroness’s amendments, but sadly I was a bit slow, and her popularity beat me. I remind the House of my registered interests as an owner of an SME and an employer.
Both these sets of amendments seek to increase the limit in separate ways. As I have spoken about at both stages of the Bill, the proposal mainly impacts middle-income earners. If the Government were to accept the amendment of the noble Baroness, Lady Kramer, this would allow all basic rate taxpaying workers making regular contributions to salary sacrifice not to have to pay NIC on their contributions. Also, it would encourage and give flexibility for workers on different salaries to increase their pension contributions above the 5% of auto-enrolment without being penalised and having to pay NIC on these increased contributions. Auto-enrolment is such an easy way for employees to raise their pension contributions and show flexibility.
I have seen in my own business that employees on a range of salaries from £30,000 to £50,000 per annum do increase and decrease their pension contributions depending on their current situation. This could be, for example, before starting a family or when they have a salary increase, small bonuses are paid, or they are moving closer to retirement. Accepting this limit will encourage people to save for their long-term retirement and give them flexibility in their contributions.
I have resubmitted my amendment as a suggestion and a compromise between the Government’s limit of £2,000 and the proposed new limit of the noble Baroness, Lady Kramer, of £5,000. My amendment seeks to increase the limit to £5,213.15 as it stands and is linked to the upper threshold of national insurance, at 5% of that amount.
I asked the Minister in Committee if there was any basis to the £2,000 limit other than the researchers’ suggestion to employers in the research commissioned by HM Revenue & Customs on attitudes to salary sacrifice, released in January 2024. Having reviewed the research, it appears that £2,000 is an arbitrary figure, if in some way linked to the median salary. The researchers contacted only 51 employers, of whom only 41 offered salary sacrifice. I believe that the total number of employers who offer salary sacrifice is around 290,000. Surely, only 51 employers is not a significant sample on which to base such an important change to the tax and pension systems.
Baroness Altmann (Non-Afl)
My Lords, I first need to declare my interests as a non-executive director of a pensions administration company and as a board adviser to an auto-enrolment master trust. This is a very large group of amendments, and I thank the noble Baroness, Lady Neville-Rolfe, for her excellent introduction. The 15 amendments in this group cover a whole range of different issues, and I will try to be as brief as possible.
I start with Amendment 1, to which I have added my name, which seeks to tease out the Government’s actual policy on pension incentives. As the Minister and other noble Lords have said, around one-quarter of basic rate taxpayers whose employers are using salary sacrifice will be impacted. They will have lower take-home pay and/or lower pension contributions and, clearly, less incentive to pay more into a pension. Therefore, they have more risk of being poor in later life.
We still do not have an explanation for this limit being chosen, and the idea of limiting it to higher rate taxpayers makes enormous sense from the point of view of pension policy. Even a small number of people who are earning less than £30,000 will be caught by this. We have no explanation. I hope that the Minister might be able to help us understand where the £2,000 figure came from and why it is acceptable to hit the pensions and take-home pay of these lower earners.
Any proposal that we have heard over the years—and there have been many—for reforming the incentives for pensions have tried to suggest making the incentives for lower earners better. This Bill does the opposite. With a progressive tax system, using tax relief as an incentive mechanism will always give more generous relief to higher earners than lower earners who are on lower tax. At the moment, the availability of salary sacrifice helps to even that up a bit. If somebody is on a 20% tax rate, for every £4 they put into a pension, the basic rate tax relief gives them an extra £1. That is a 25% uplift. For a 40% taxpayer, for every £3 they put into a pension, tax relief gives them an extra £2. That is a 66% uplift. If you add in the 8% national insurance relief on top of the 20% basic tax relief, these lower or moderate earners will get a 38% uplift. If we take that away, they are back to 25%. I cannot explain how that is consistent with the Government’s aim of improving pension outcomes and helping lower earners or ordinary workers to have a better future. They will have lower take-home pay and/or lower pension contributions as a result of this policy. I understand that national insurance relief has always been a bit of an anomaly, but it is there, so taking it away makes things worse. Higher earners are only losing 2%. I hope that the Minister will look favourably on this amendment, but if the noble Baroness chooses to test the opinion of the House, I will support her.
Amendment 5 in the name of the noble Lord, Lord Leigh, to which I have also added my name, talks about the student loan problem and seeks to find a way to exempt students who are contributing more than £2,000 from higher repayments or lower take-home pay as a result of this policy. I would be grateful if the Minister could help us understand the impact on someone with a student loan who is paying more than £2,000 and will say what the Government’s proposals for mitigating are. If we do not have any such proposals, I hope the House will support the noble Lord’s amendment.
Amendment 12 and related Amendment 26 in the name of the noble Baroness, Lady Kramer, seek to address this problem in a different way by increasing the £2,000 limit to £5,000. These are both arbitrary numbers. There is no specific justification in the modelling of what pension contributions are in salary sacrifice schemes. My Amendment 13 was trying to raise the limit to £10,000, which would mean catching even fewer people but more higher earners. I accept that there is not enough support in the House for going as far as £10,000, which is the minimum contribution that the highest earners can make under the annual limit, but I would certainly support a change to £5,000.
On Amendment 27, which has just been spoken to by the noble Lord, Lord de Clifford, I understand the logic of trying to tie this to the national insurance upper earnings limit. I would support it, but I can see that the support is not widespread. In any case, adding this would make the whole administration system much more difficult to understand and complex. At least a round number of £5,000 is something that people can aim at and see whether they are over it.
The noble Lord, Lord Leigh, mentioned employers taking evasive action to avoid this before 2029. Will the Minister say what is the rush? Why, just a few weeks after announcing this, do we have this primary legislation which raises huge numbers of questions and poses such significant risks to the pension system? What evasive action can employers take? The most likely is that they will significantly reduce their pension contributions if they are not already at the minimum, or just stop salary sacrifice altogether because the costs of changing this system from the current salary sacrifice payroll provision and introducing new provisions will be significant.
This policy goes against everything the Government have rightly said they would like to achieve with their pension reforms. It makes the position of lower earners worse, it makes the pensions of lower earners worse, and it is likely to make overall pension provision worse throughout the economy. I hope that the Government might think again on some of these issues.
Lord Fuller (Con)
My Lords, I support Amendments 5 and 21 tabled by my noble friend Lord Leigh of Hurley, which rightly shine a light on the way in which this policy particularly benights graduates who are starting out in their careers. The Government have perpetrated the lie that the restrictions on salary sacrifice will affect only the fat cats, those with the broadest shoulders, whatever that means, the higher earners, another nebulous term, and certainly not hard-working families or those who are paid hourly. It is just not true. It is an example of Labour’s mis-selling, which is why I support Amendment 1 in the name of my noble friend Lady Neville-Rolfe. The Daily Telegraph reports that 3.3 million employees will be affected. The Times accuses the Government of wilfully obscuring the effects of their proposals on employees who are left behind after the real fat cats have run for the border.
By far the most affected group are youngsters at the start of their careers—graduates, people making a start on their working lives. They are already burdened by the Renters’ Rights Act 2025, which has driven up their rents, and the Employment Rights Act 2025, which has made it harder for businesses to take a chance on someone starting out. Graduate programmes have been bombed out by the jobs tax and dynamited by the rise in the minimum wage which reduces the incentive for employees to train up the newbies. Now we have a further insult and assault on Generation Z with the proposals of this slim Bill with fat consequences in an unthinking aggravation of intergenerational unfairness. Let nobody say that Labour is on the side of youngsters who want to get on. Even the OBR has twigged what we on these Benches have been saying for months: that the cumulative effect of all these issues is damaging incentives to work and harming those trying to climb the ladder to success.
At Second Reading, I gave the example of my daughter’s boyfriend who has a good job in the West End. He is no fat cat. He lives in a flatshare in Brixton with people he does not know, but his employer has recognised his hard work and, importantly, the value he brings to the business, so he was given a bonus of £17,000. Of that, he kept less than £6,000—a marginal rate of 71%—not just because of the tax, but on account of his student loan repayments. I do not know how it has taken so long for the OBR to realise that it does not pay to work. How much can these people be expected to bear? At least he had salary sacrifice to save for a pension for his future to reduce his reliance on the state in later life because, let us face it, employers are still shovelling cash into defined benefit schemes that are not even available to students who have to make do and mend with the less generous defined contribution arrangements instead, but even that has been snatched away by this Bill, as the noble Baroness, Lady Altmann, has so forensically exposed.
Taken together, these proposals risk salary sacrifice being taken away as a thing, which will damage employers and damage their opportunities to attract and retain the best talent because it will become just too complicated. As the Spectator’s leader last week asked, is it still worth going to university? When the world’s oldest magazine starts questioning the value of higher education, you have to wonder for our economy, our society, the future prosperity of our nation and what it says about aspiration in these islands. As somebody said last week, you used to get something from hard work, a reward for initiative, doing the right thing, but instead everyone is being beaten with a stick.
Lord Freyberg (CB)
My Lords, I apologise for not speaking earlier in the Bill’s passage. I have only recently become aware of how its provisions bear on freelance workers in the creative industries, and I hope the House will permit me to raise those concerns across the relevant groups. I declare an interest: I have worked both as a freelance editor on short-term contracts and on payroll, and I understand from personal experience how differently this legislation lands, depending on which side of that line a worker falls.
I support the amendments in this group, in particular Amendments 1 and 17, which would exempt basic-rate taxpayers from the cap, and Amendments 14 and 27, which would index the limit to the national insurance upper earnings limit, rather than fixing it at a flat £2,000.
The creative industries are built on short contracts. A set designer or director of photography may work for three or four different employers in a single year, such as a commercial house, a broadcaster or an independent film company, each engagement lasting weeks rather than months. Many of those workers are basic-rate taxpayers. The Government have consistently justified the Bill as targeting higher earners, yet, as we have heard, these are precisely the workers it will catch. Amendments 1 and 17 would correct that directly.
Amendments 14 and 27 address a related problem. A creative worker with a good year followed by a lean year faces a rigid £2,000 cap that takes no account of natural variation in earnings. Indexing the limit to the upper earnings limit would at least ensure that it kept pace with the economy.
Amendments 12, 26 and 13 would raise the cap to £5,000—or £10,000, as we have heard—which would substantially reduce the problem for those with fluctuating incomes, and I support the principle behind them.
Finally, Amendments 4 and 20 would remove from the optional remuneration rules any pension contributions where no cash alternative was offered. For a freelancer on a standard short-term contract, where the pension arrangement is simply a term of engagement, not a personal tax planning choice, that is a straightforward matter of fairness. I urge the House to support these amendments.
Lord Davies of Brixton (Lab)
I want to contribute, by supporting the Government, a bit of sense to this debate. We have heard so much doom and gloom, but what is the reality? What impact are these measures going to have? I am sure my noble friend the Minister will be able to tell us.
The first point to understand is that salary sacrifice for pension contributions really makes no sense. It is a form of regulatory arbitrage. It has never made any sense and it is notable that previous Governments have taken away almost all forms of salary sacrifice on other in-work benefits, without forecasting the end of incentives for working. I have always been against it in principle—I would be happy to see it removed entirely, but possibly that might be politically suicidal—but a £2,000 limit seems an entirely reasonable approach to providing some fair incentive without the opportunity for, in truth, gross inequality. We are told that this measure hits the lower paid and not so much the higher paid, but of course the people who make most use of this are people with enormous bonuses. That is where the money is going and these measures will stop that.
Secondly, it is not an essential element in our current pension system. The key question that none of the previous speakers has addressed is: what is the right level of tax incentive for pension saving? That is a proper debate, and it cannot be answered by saying that more is always better. We have to draw up a fair judgment on where, and how far, tax incentives to encourage people to save for retirement should go. It is obvious that, if you reduce tax incentives, there will be an impact on people’s decisions. One impact that it might have is to encourage them to save more, because, if they have a target pension in mind, they will need to save more money than they did previously.
Thirdly, figures are quoted for the impact on individuals, particularly those under the higher-rate threshold. Well, I have a spreadsheet and I have calculated those figures, and, as I said at Second Reading and in Committee, the effect on basic-rate taxpayers on incomes around and above the median level is marginal. What sorts of figures do you think we are being told are going to have such a shattering effect on the pension system? For someone on median earnings, paying the median contribution rate, it is nothing. Maybe, if you earn a bit more towards the tax threshold, it will be something like £40 a year.
Now, nobody likes paying more tax. I could explain that the reason why there is this demand for more taxes is 14 years of mismanagement by the previous Government, but I will leave that to my noble friend. But it does annoy me that so much emphasis is placed on what is essentially a sideshow to the important questions of pension provision that we are going to have to address.
Baroness Altmann (Non-Afl)
As I think the noble Lord knows, I have enormous sympathy with everything he says, and there is a strong case for reforming and improving the incentives for low earners. However, does he not accept that, if you change for the worse the incentives on the people who earn least, for whom it is most difficult to contribute, there is bound to be an effect at the margin, however large or small the difference is? If your pension is giving you lower take-home pay because something you have is being taken away, that can have only negative consequences. Therefore, there are risks in this proposal as it stands.
Lord Davies of Brixton (Lab)
I thought I said in my earlier remarks that there will be a marginal effect: I accept that, although we do not actually know what that marginal effect will be. It is all hypothetical at the moment. One thing we do not know from the OBR figures is quite what the reaction will be and how people will adjust their behaviour between now and when this comes in.
I accept the noble Baroness’s point but, as I say, nobody likes paying tax and nobody wants to pay more tax. If you ask people whether they want to pay more tax they say no, but it has to fit in with the Government’s overall financial strategy.
Of course, only some people gain an advantage from salary sacrifice. Many private employers just do not offer it. The number is increasing all the time, which is part of the problem because it is increasing the cost. Nobody in the public sector benefits from salary sacrifice. We can, and will, have an interesting debate about public service pensions, but noble Lords should understand that it is unequal that people in the private sector can take advantage of salary sacrifice but people in the public sector cannot.
Baroness Kramer (LD)
My Lords, I thought it might be best to combine standing as a winder and talking for a few moments to the two amendments in this group that are in my name. I start by thanking the noble Baroness, Lady Neville-Rolfe, who made an incredibly powerful speech to introduce the whole series of amendments in this group. I thank her for signing my two amendments, Amendments 12 and 26. Amendment 26 is the Northern Ireland parallel to Amendment 12, so we need not treat it separately. I also thank the noble Lords, Lord Altrincham and Lord Londesborough, for signing my amendments. The noble Lord, Lord de Clifford, would also have signed them had space been permitted on the Marshalled List.
I also talked very extensively, both at Second Reading and in Committee, and I will try to discipline myself not to repeat those comments, particularly because speaker after speaker has so fully described the issues that are at stake. I find myself in complete disagreement with the noble Lord, Lord Davies of Brixton, which does not happen very often, but I think that the Government will recognise that, for a whole series of political leanings around the House, there is very common ground on this issue.
My Amendment 12, as others have described, would lift that limit on salary sacrifice contributions subject to NICs relief to £5,000 a year. I discussed in detail in Committee why I talked to various people and came to that number, but the key point I want to emphasise—others have made it, but let me make it again—is that it would strongly benefit younger people and quite low earners. We are looking primarily at the second decile of earners, who are probably on their first or second pay rise. They are still low earners and still living a life much more akin to that of a student. They are sharing accommodation and do not yet have mortgages, children or families. Many have, very responsibly, with the nudge that is given by this tax relief, been encouraged to start seriously saving for pensions, well in excess of that £2,000 benchmark that the Government propose.
As these people move on in their lives and acquire children and mortgages, their pension savings drop. Those very early savings that then have a chance to accrue over a working lifetime are very significant in the end result to the quality of pension that they receive. That is why we took an approach that we thought would, in a very simple way, enable this group of people to continue with that incredibly positive behaviour.
In this group, I will certainly support the amendments that the noble Baroness, Lady Neville-Rolfe, will choose to move. I want to make particular reference to the amendment from the noble Lord, Lord Leigh, on student loans. It is absolutely essential. The Government have recognised—at least, this is what I understood from the Minister’s responses in Committee and at Second Reading—that the Bill quite unintentionally puts serious additional costs on to graduates. I find it absolutely ridiculous that, having recognised that there is an unintentional impact and that it is problematic, the Government are not correcting it in this Bill. As far as I can understand, they are waiting for some future piece of legislation to make that change.
Lord Davies of Brixton (Lab)
May I just press the noble Baroness on the point she made about serious additional costs? Would she care to quantify what those serious additional costs are?
Baroness Kramer (LD)
Let me refer back to the example I gave in Committee. The noble Lord will be aware, on that additional contribution, that the graduates are paying the 8% additional in NICs but, on top of that, because it pulls them into scope of having to make repayments at the margin, the impact is 17%. It has a huge impact on graduates who are now just beginning to reach the level where they would have anticipated they would start to repay, and they suddenly hit this really serious spike. I think he has seen the numbers that some of the people have sent to us, and the Chartered Institute of Taxation could help him with those numbers if he wants to look at them. The Government, I think, recognise that problem but my answer is to fix it.
Lord Fuller (Con)
I think what the noble Baroness has just explained is that for those people with the greatest earnings potential, which our nation needs, there is an arbitrary cap on aspiration. There is a point which is just not worth going past. That is not just damaging for them, their families and their futures; it is also bad for the economy. That, I say to the noble Lord, Lord Davies of Brixton, is where the prejudice lies: it is on the individual, but the whole of society suffers by having the cliff edge effect that the noble Baroness is referring to.
Baroness Kramer (LD)
On this issue of students, I really think this is unintentional, taking the Minister and others at their words. That is why accepting the amendment from the noble Lord, Lord Leigh, and correcting the issue now is something that I consider to be very important.
As I said, there is no need for me to keep speaking. I have made it clear that I will support quite a number of the other amendments in this group if they are moved, because collectively they address a fundamental problem. I appreciate all the comments that have been made in support of the amendments in my name.
Lord Londesborough (CB)
My Lords, I support broadly all the amendments in this group, but specifically Amendments 12 and 26 in the name of the noble Baroness, Lady Kramer, to which I added my name. I will be genuinely brief. These amendments, by raising the cap to £5,000 per annum, would address a core problem in the Bill: the limiting or deterring of the so-called moderate earners we have heard about from contributing sufficiently to their pension pots, which, as we already know, are nowhere near sufficient for the vast majority to fund their retirements. We are talking about retirement periods of 25 to 30 years if demographic trends continue. As we have heard, this includes many in the early stages of their working lives who need to get into the habit of contributing to pensions at the formative stages of their careers.
I remind the House of a stat that came out in Committee. On average, our current workforce will outlive their pension savings by eight to nine years, and this funding gap is widening year by year. Clause 1 is, in effect, raiding pensions to keep the Treasury within its fiscal rules in three years’ time. It is another crude example of kicking the can down the road, leaving another generation to sort out another widening deficit.
I was interested to hear the comments from the noble Lords, Lord Leigh and Lord Ashcombe. They raised some pertinent questions over the revenue-raising forecasts. I also fear that the Treasury has wildly underestimated the level of accelerated salary sacrifice over the next three years in the run-up to these measures. I have witnessed a number of business plans in companies that I am involved in; I should, of course, declare my interests as set out in the register.
To conclude, I fully endorse the excellent opening comments from the noble Baroness, Lady Neville-Rolfe, and the comments we just heard from the noble Baroness, Lady Kramer. I encourage your Lordships to support their amendments should they decide to test the opinion of the House.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, I am very grateful to all noble Lords who have contributed to this first group of amendments. I turn first to Amendments 1 and 17 in the names of the noble Baronesses, Lady Neville-Rolfe and Lady Altmann, and the noble Lord, Lord Altrincham, which seek to exempt basic rate taxpayers from the Bill. As the noble Baroness, Lady Neville-Rolfe, noted, the vast majority—74%—of basic rate taxpayers using salary sacrifice will be unaffected by the changes in this Bill. Specifically, three-quarters of those earning up to £50,270 and using salary sacrifice will be entirely protected, and that rises to 95% when looking at those earning £30,000 or less who use this mechanism to save into their pensions. The minority of basic rate taxpayers with contributions above £2,000 will continue to benefit from employee national insurance relief worth £160 a year in addition to the full income tax relief they receive on their pension contributions. Half of those basic rate taxpayers contributing above £2,000 will face an additional national insurance contribution liability of less than £50 a year.
Exempting basic rate taxpayers would also be exceptionally difficult to operate in practice and would add considerable additional administrative burden on to employers. That is because, unlike income tax, national insurance does not operate on an annual aggregated basis, nor does it determine liability by reference to an individual’s final tax position. An individual cannot be confirmed as a basic rate taxpayer until their full income position is reconciled at the end of the tax year, taking account of potentially multiple employments and other sources of income. To apply a tax band-based exemption, employers would be required to undertake year-end reconciliations across employments and account for other sources of income as well that sit wholly outside the design of the national insurance contributions system. This would represent a fundamental departure from established payroll processes, imposing significant complexity, cost and risk on to employers and payroll providers.
Amendments 16 and 29, in the names of the noble Baronesses, Lady Neville-Rolfe, Lady Kramer and Lady Altmann, and the noble Lord, Lord Altrincham, seek exemptions for small and medium-sized enterprises, charities and social enterprises. Exempting small and medium-sized enterprises and charities in the way proposed by the amendment would add considerable complexity to the tax system and would not be proportionate to the limited impact this policy is expected to have on those businesses. The changes in this Bill primarily affect larger employers, which are significantly more likely to operate salary sacrifice arrangements and to have employees contributing above the £2,000 cap.
Small businesses are significantly less likely to offer salary sacrifice than larger businesses. Only 28% of employees in SMEs use salary sacrifice for pension contributions, compared to 39% in larger firms. When it comes to contributions above the £2,000 cap, the difference is even clearer. Only 10% of employees in SMEs make pension contributions through salary sacrifice that exceed the value of the cap, compared to 18% of employees of larger firms. This underlines that the largest benefits from uncapped salary sacrifice are concentrated in bigger firms, not smaller firms.
In practice, the changes in this Bill will level the playing field between small businesses and their larger competitors, ensuring that the national insurance contribution advantages of salary sacrifice are not disproportionately concentrated among employees in big firms. More widely, the Government recognise the importance of supporting small businesses and charities alike.
This leads me to Amendments 7 and 23 in the names of the noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Altrincham. These amendments seek clarity on the basis on which the Government consider certain employed earners to be higher earners for the purposes of the national insurance charge and how the contributions limit reflects that assessment. The Explanatory Notes for this Bill set out clearly that the Government’s objective is to limit the national insurance contributions relief available to higher earners on employer pension contributions made through salary sacrifice, while protecting lower-earning pension savers. These changes are about fairness and consistency across the labour market.
Additionally, groups who are most likely to be undersaving for retirement, such as those on the national minimum wage and the UK’s 4.4 million self-employed workers are completely excluded from using salary sacrifice altogether. The cap we are introducing through this Bill will protect the majority of basic rate taxpayers using salary sacrifice and ensure that the cost of national insurance relief on pension salary sacrifice is put on a fiscally sustainable footing.
I now turn to Amendments 5 and 21 tabled by the noble Lord, Lord Leigh of Hurley, and the noble Baronesses, Lady Altmann and Lady Kramer, which seek to exempt salary sacrifice pension contributions over the £2,000 limit from being included in the definition of earnings used to calculate student loan repayments for employees. Student loan repayments are calculated using the same earnings base as class 1 national insurance contributions. As a result, salary sacrifice currently reduces both national insurance contributions and the earnings used to calculate student loan repayments. Any change in student loan repayments arising from this measure is a mechanical consequence of restoring those earnings to the national insurance contributions base. It is not a change to student loan policy itself; rather, it flows from levelling the playing field between those who are able to use salary sacrifice arrangements to reduce their earnings for national insurance contributions and those who are not. Of those employees making pension contributions through salary sacrifice, younger people are far more likely to be protected by the £2,000 cap than those above the age of 30. Some 76% of those in their 20s—
Baroness Kramer (LD)
Can I just get some clarification? The Minister is making me believe now that I must have misunderstood previous comments. Is he saying that he will not be, or there is not an anticipation he will be, bringing in legislation to remove that impact on student loan repayments? I had understood—and I could have been totally wrong, but I think others have understood as well—that that was what the Government intended.
Lord Livermore (Lab)
I am afraid I do not know what led the noble Baroness to believe that. That is not in any way my intention at this point.
As I was saying, 76% of those in their 20s who use salary sacrifice are protected by the cap, compared to half of those aged 30 and above. The Government do not believe that this Bill is the appropriate vehicle through which to amend the basis of student loan repayments—
Baroness Altmann (Non-Afl)
Can the noble Lord explain to the House why it is okay for those whose contributions are lower than £2,000 to get this special advantage of salary sacrifice, while those not lucky enough to have an employer with salary sacrifice should be denied it? The issue seems to be the salary sacrifice itself. The noble Lord is saying it is an anomaly, but the fact that people are getting it because their employer is using salary sacrifice and then you are taking it away does not make things fairer, as far as I can see.
Lord Livermore (Lab)
I think it does make the system fairer. We discussed this extensively at Second Reading and in Committee. The Government intend to make the system both fiscally sustainable and fairer, and I think that is exactly what we are doing with this legislation.
As I have said, the Government do not believe this Bill is the appropriate vehicle through which to amend the basis of student loan repayments. As the Prime Minister said last week, the Government inherited from the previous Government a broken student loan system, and we will look at ways to make that fairer.
I turn, finally, to Amendments 12, 13, 14, 15—
Lord Leigh of Hurley (Con)
With respect, that is exactly what the noble Baroness, Lady Kramer, has asked. The Minister has said that he did not say that, but he has just read it out.
Lord Livermore (Lab)
I was asked whether I was today saying we would do anything to this legislation; no, we will not. Will we look at how to make the system fairer? Yes, we will. I think those two things are perfectly consistent.
Lord Leigh of Hurley (Con)
With respect, at either Second Reading or in Committee—I think in Committee—there was a statement that there would not be in this legislation, but other legislation, changes to the definition of earnings for students to get around the problem in this Bill.
Lord Livermore (Lab)
That was not a commitment I gave. What I said in Committee, and say again today, is this is not the right Bill to change the student loan repayment system. We will, however, look at ways to make the system we inherited from the previous Government fairer. That remains the position.
I turn, finally, to Amendments 12, 13, 14, 15, 26, 27, and 28, tabled by the noble Baronesses, Lady Neville-Rolfe, Lady Altmann, and Lady Kramer, and the noble Lords, Lord Altrincham, Lord Londesborough and Lord de Clifford. These amendments seek to increase the value of the cap or to uprate the cap by the percentage change in the consumer prices index or retail prices index. The purpose of the Bill is to cap an unchecked relief which predominantly benefits higher and additional rate taxpayers while protecting ordinary workers using salary sacrifice to make pension contributions. All employees using salary sacrifice will still benefit from national insurance contributions relief on £2,000 of contributions made via salary sacrifice. For a basic rate taxpayer, this is an additional £160 of relief relative to employees who do not use salary sacrifice.
The Government will keep the level of the cap under review, but we do not agree with the approach set out in these amendments, which seeks to uprate the cap in line with inflation. Automatic indexation of the cap would introduce a mechanism inconsistent with the treatment of other major pension tax reliefs, which are not routinely indexed. The Government’s view remains that the future level of the cap in the next decade and beyond is for Budgets in those decades. In light of the positions I have set out, I hope noble Lords may feel able not to press their amendments.
Lord de Clifford (CB)
Before the Minister sits down, my amendment would link the limit not to inflation but to the national insurance threshold. Therefore, if the Government wish to hold that threshold to raise more funds, they can. I just wanted to make that clear to your Lordships.
Lord Livermore (Lab)
I am grateful to the noble Lord. I think the position remains the same, though.
Baroness Neville-Rolfe (Con)
My Lords, I thank all noble Lords who contributed to this debate. I welcome the noble Lord, Lord Freyberg, to the fray and thank the Minister for his responses. He did not respond to the question raised by my noble friend Lord Ashcombe, the noble Lord, Lord de Clifford, the noble Baroness, Lady Altmann, and me about who high earners are and why those in the £40,000 to £50,000 band should pay 8% not 2%—four times higher. Indeed, why has the £2,000 limit been chosen in the first place?
On SMEs, on which I will also divide the House later, I think the lower incidence of the use of salary sacrifice actually makes the case for not imposing the complexities and administration of salary sacrifice on SMEs and charities. I will leave my noble friend Lord Leigh to wind up on student loans.
I am afraid that we on these Benches are unconvinced that the Government are meeting their policy objective of protecting workers on lower and medium incomes. As my noble friend Lord Leigh said, we are not sure that the Government are even going to raise the desired revenue. The Bill obviously hits those on lower and medium incomes and the protections are not in the Bill, which would ensure that the Government’s own policy objective is achieved. What is the hurry? I would like to test the opinion of the House on exempting basic rate taxpayers from the £2,000 cap.
Lord Fuller
“(6DA) Regulations made under subsection (6A) must make provision enabling an employed earner to carry forward any unused part of the contributions limit from the three immediately preceding tax years for the purposes of determining the contributions limit applicable in a subsequent tax year.(6DB) For the purposes of subsection (6DA)—(a) an amount is “unused” to the extent that the amount foregone in relation to benefits mentioned in subsection (6A) for a tax year is less than the contributions limit for that year,(b) regulations may make provision about the order in which unused amounts are to be treated as used,(c) regulations may make provision about cases in which an employed earner was not within subsection (6A) for the whole or part of a tax year, and(d) regulations may make such consequential, supplementary, incidental or transitional provision as HM Treasury considers appropriate.”Member’s explanatory statement
This amendment would require regulations to provide for a three-year carry-forward of unused amounts of the annual contributions limit, aligning the treatment of salary sacrifice pension contributions for National Insurance purposes with the existing three-year carry-forward framework in the pensions annual allowance regime in Great Britain.
Lord Fuller (Con)
My Lords, it is a pleasure to lead this group and to present my own amendments, Amendments 2, 3, 18 and 19, and the associated report requirement in Amendment 30. I will also speak to Amendments 6 and 22 in the name of my noble friend Lord Mackinlay. My amendments are superficially similar, but they contain important differences, as identified in the explanatory statements. They are designed to make these proposals consistent with the wider canon of the existing tax system, reducing confusion and improving long-term confidence in the whole idea of doing the right thing, saving for your future and reducing your reliance on the state in later life.
Amendment 2 and the reflecting one, Amendment 18, as the mirror for Northern Ireland, address the ability of employees to carry forward unused entitlements. This is entirely consistent with the three-year rule that already applies to pension contributions, of which more later.
Amendment 3, for Great Britain, and the associated Amendment 19, for Northern Ireland, seek to protect those with variable incomes, perhaps in seasonal or weather-dependent professions. They would allow an employee with an irregular income to enjoy averaging over three years to ensure they are not disadvantaged compared with those on salaried payrolls. This is not new news. The principle of averaging is already established as part of the tax system: just look at farmers and market gardeners. So, once more, my amendments seek to apply consistency across the entirety of this tax system, and within Great Britain and Northern Ireland.
Let me focus on Amendments 2 and 18, on the carry-forward and the three-year rule. I should say that, if push comes to shove and the opportunity to divide the House arises, I will seek to press Amendment 2 to a vote. So far as carry-forward is concerned, I am thinking of an employee engaged in seasonal work with variable pay but who wants to save a regular amount each month on salary sacrifice. How does he set his regular monthly contribution at the beginning of the year, not knowing whether he will bust his allowance at the end?
The three-year rule for pensions is helpfully explained on the GOV.UK website, which says:
“You can carry forward unused allowance from the 3 previous tax years. This … allowance only applies to pension savings made to your UK registered … schemes”,
and so forth. That exists because the Government know that people have irregular incomes and, especially for the self-employed, it can take months after the tax year to get your accounts done. So, to be consistent—and this is a pensions Bill—my proposals would allow any salary sacrifice allowance to be carried forward for three years, subject to the proviso that you cannot sacrifice more than you can earn, self-evidently. Frankly, it is as simple as that.
Lord Mackinlay of Richborough (Con)
My Lords, I am pleased to support my noble friend Lord Fuller, who has similarly reciprocated his enthusiasm for one of my amendments. Quite a few things come to mind in the amendment from my noble friend. One is the normality across other parts of the tax system. It is very normal, because life does not fit into a timeline of 6 April to 5 April every year. We could have a discussion about why we on earth we have 6 April to 5 April, but life does not fit within those dates completely cleanly. It changes on an annual basis: one might have a good year, then one might have a bad year. That is reflected in pension contributions for tax purposes. One is allowed to carry forward three years’ worth of unused allowance. Currently, £60,000 of pension contribution is allowable if relevant earnings are sufficient. In year 4, one could technically pay £240,000. It seems very normal, therefore, that we should apply a similar carry-forward of unused prior-year benefits, as my noble friend Lord Fuller has explained so eloquently.
The reason I have laid my Amendment 6 and Amendment 22, which is the mirror for Northern Ireland, is the total ambiguity that we heard in Committee last week. If this legislation has some flagship numbers and ideas, £2,000 comes to light as a key one. After the Minister was unable last week to assure the Committee whether this £2,000 was per employment or per employee, to manage for themselves, I have laid a very simple “beyond doubt” amendment so that we can perhaps flush out from the Minister what is intended. It will not be sufficient today merely to say that it will be sorted through regulation, advice and guidance in the future. We need this on the face of this Bill, because it is what the Bill is all about.
There are numerous thresholds in the national insurance regulations. We have the primary threshold; we have then the secondary thresholds; we have upper earnings limits; we have special thresholds for under-21s, for apprentices up to 25, for employees in freeports and for employers and employees in investment zones, and special exemptions for veterans. The employee need not worry about the complexity of those arrangements because they are all worked out by the employer on a per-employment basis. If an employee is in multiple employments, which is not uncommon these days—the circumstances might be, for example, that one was getting paid at the lower limit—the accumulation of benefits of national insurance payments, even though they may be at 0%, would apply across each of those employments, so, technically, no national insurance might be paid in certain circumstances. Surely, then, something similar will need to apply for these regulations and the £2,000 threshold. If it does not, we will have some extreme complications, which the Minister explained and said he wanted to avoid in respect of Amendment 1 on which we have just voted in favour. In opposing that amendment, his claim was about the complexity across employments and the employer not knowing whether the employee in question would be a basic rate taxpayer or a higher rate taxpayer. Similar complexity seems to be an ambiguity within this Bill, which I am now trying to solve. It surely must be per employment.
There is also an issue of GDPR. Why should a primary, secondary or tertiary employer have the right to know what an employee is earning elsewhere? That is a matter of secrecy, of privacy, of confidentiality and certainly of GDPR. If the idea within this legislation is that this is £2,000 per employee, I struggle to understand how the confidentiality that the employee is entitled to can possibly be allowed to stand. Perhaps this will come out in the rules and guidance later.
My amendment is one of ease, of getting this into the open now so that the complexity that would apply across multiple employments does not come to pass. We may otherwise be left with the grave fear that national insurance is going to become yet another tax. Many of us have thought for a long time that it really is a little bit of another tax, but its operation is very different, which makes it not a tax. We need to get this rounded down, because otherwise we will start to wonder whether the next stage, across all those different rates that I have described within the national insurance administration rules, is then going to apply for multiple employments, so national insurance becomes cumulative, a little bit like tax. That will be the fear: that to take national insurance as a new tax is the Government’s new plan.
As a chartered accountant and chartered tax adviser who is still practising, I could go on about this for some time. In brief, however, this legislation is a sledgehammer to crack a nut that does not even exist. As was so ably mentioned by the noble Lord, Lord Altrincham, why are we considering this today, on the basis of 51 replies out of 250,000 employers? Surely leave this a year or so, get a better sample—rather more than 51—so that we can base government ideas on some facts rather than on guesswork.
Lord Leigh of Hurley (Con)
My Lords, I shall speak principally to my Amendment 20 in respect of optional alternative arrangements. I thank the Minister for his letter of last night setting out the position on optional remuneration arrangements. I think it is fair to say that was already in the public domain and raises questions on second reading. The letter does not provide any illumination on interpretation of what an optional remuneration arrangement is in certain scenarios; we have discussed those scenarios at previous readings. Perhaps the one to highlight is collective bargaining. It is disappointing that there are not many Labour Peers here with a union background as there were earlier this afternoon.
Imagine a collective bargaining situation where there are two options on the table. First, a 5% pay increase with employer pension contributions staying at 8%, and, secondly, a 4% pay increase—lower than 5%—but with an increased employer pension contribution of 10%. If the workers take the latter option, is this an optional remuneration arrangement? I think, by the definitions given, that it is. Are the unions ready for this? Be assured that, if the Bill goes through, we will pursue this, and unions will find, to their horror, that their members are paying national insurance, which they did not think would be the case.
Lord Ashcombe (Con)
My Lords, very briefly, I support Amendments 6 and 22 from my noble friends Lord Mackinlay and Lord Fuller. As we have heard, the practical application of the £2,000 cap per person must be clearly defined in primary legislation. Leaving such a significant distinction—whether the cap applies to an individual or to each job they may hold—to secondary legislation would create profound uncertainty.
The administration of salary sacrifice schemes is already complex. It is unreasonable to expect each employer to know whether their part-time employees have additional jobs elsewhere, let alone what they earn in those roles. Many of these additional jobs may be sporadic or seasonal, with even the employee unsure of when work will arise or what their pay will be, particularly if it is commission based. It is difficult to believe that the Government intend individuals with multiple jobs to track their own cumulative salary sacrifice across different employments; nor, I suggest, is it remotely feasible for HMRC to monitor such arrangements effectively. From a practical standpoint, this amendment is simply common sense.
I turn quickly to those amendments that address the affirmative procedure. As I mentioned earlier, it is widely recognised that pension legislation is, at best, complicated, and particularly important to individuals when they retire. It is only right that changes in legislation that concern so many people and so much capital should be subject to proper parliamentary scrutiny. This is not a political issue but one of immense importance; it should therefore be subject to affirmative procedure.
Lord Freyberg (CB)
My Lords, as mentioned in the previous group, the creative industries are defined by workers holding multiple short-term contracts with different employers across a single year. The central question that this group addresses, and which has been repeated several times today, is one that was put to the Minister in Committee and remains unanswered: is the £2,000 contributions limit £2,000 per person across all employments, or £2,000 per employment? The Minister was asked precisely this question in Committee by the noble Lord, Lord Mackinlay of Richborough, who has repeated it today. The Minister’s answer was:
“That intention will be set out in the regulations once we have fully consulted relevant employers”.—[Official Report, 24/2/26; col. GC 365.]
I have no doubt that that consultation will be thorough, but for workers planning their finances now, and employers designing payroll systems well before 2029, that leaves a gap that the Bill itself should fill. Amendments 6 and 22 would fill it: the limit would apply in relation to each employment.
Even with that resolved, a second problem remains. As we have heard from the noble Lords, Lord Fuller and Lord Ashcombe, when a worker moves between employers mid-year, no mechanism exists for tracking what has already been sacrificed or reporting it to the next employer. Amendments 36 and 39 would address this by making commencement conditional on the Government first publishing guidance that answers both those questions.
There is a further complication that has not been addressed by debates in either House. Many creative workers are engaged by the BBC under schedule D terms as self-employed contractors with no access to salary sacrifice. However, under the off-payroll rules that have applied to public sector bodies since 2017, the BBC must assess whether each such engagement is “employment in substance”. Where the BBC concludes that an engagement is employment in substance, the worker is deemed an employee for NIC purposes, yet they have no actual contract to vary. Salary sacrifice requires a varying employment contract; deemed employment, created by statute, is not a contract. The worker acquires the NIC liability of employment without access to its benefits. That same worker may also be genuinely self-employed with one employer and employed in an ordinary sense with another all in the same year, with no framework in the Bill to accommodate any of it.
These amendments would not change the policy or the 2029 commencement date. They would ensure that, when the Act comes into force, the people it affects know how much it applies to them. I will therefore be supporting all four amendments.
Baroness Kramer (LD)
My Lords, I will slightly anticipate the noble Baroness, Lady Rolfe, moving Amendments 9, 10, 24 and 25, which would require affirmative resolution for key elements of the Bill. Frankly, I do not think I have ever seen a Bill for which affirmative action was more required. In the other amendments, which have been brought forward so eloquently from across this House, we have some flavour of the extraordinary complexity.
I suspect that decision-makers at the top of the Government thought that this was something really simple, and that they were just going to put a cap on, with the rest being relatively easy to manage. However, the actual management of this is a complete nightmare. I cannot believe that a Bill that has been through the House of Commons already is on Report in the House of Lords, and yet we still do not know if the cap is going to apply to each employee or to each employment—which, to my mind, is two different Bills.
I completely agree with the noble Lord, Lord Leigh. I can see the nightmare of people wondering, “If I say this sentence, will I be caught by operational remuneration? Do I have to pretend, wink, or make sure I do not put anything down in an email?” We should not be putting people into situations where they have to try to work out how they handle this whole range of arrangements. The noble Lord, Lord Freyberg, knowing the creative industry so well, has thrown further complication into this. I very much suspect that the Government had absolutely no idea of the mare’s nest they were getting themselves involved with. I wish these issues had been teased out before this point.
The response brought forward by the noble Baroness, Lady Neville-Rolfe, of at least having affirmative resolution gives us some possibility of trying to scrutinise what has happened. This is an extraordinary situation. We do not know the core character of this Bill, so we will be dependent on those working through the affirmative resolutions to decide how on earth they will deal with what will turn out to be the form that eventually comes before us.
Baroness Neville-Rolfe (Con)
My Lords, I begin by thanking noble Lords with amendments in this group—my noble friends Lord Fuller, Lord Mackinlay and Lord Leigh and the noble Baroness, Lady Altmann—for their proposals, and for their forensic questions on the detail of the schemes and on any guidance that the Government might issue to minimise errors and problems.
There are numerous shortcomings in the Bill around operational detail and how everything will apply in practice. The reality is that we have very little clarity on how the Bill will work. It is designed to apply to a very narrow and limited set of employment and remunerative circumstances, and anyone who falls outside that definition has to wait for regulations, which will not be subject to the affirmative procedure.
We have no clarity on how the policy will apply to people working in numerous jobs. Is the cap per employment or per person? If it is per person, it will be very difficult to administer. We also need to know where responsibility for enforcement lies. There is no clarity about people with fluctuating remuneration: will they be penalised for saving during higher income periods because they hit the cap in some years and have no income to pay into pensions in others? What about anyone who has an unconventional pattern of remuneration for their job or jobs? How will it work for them? We have heard already that the arrangements for student loans are unclear, even after recent discussion, and we heard from my noble friend Lord Mackinlay about GDPR and from the noble Lord, Lord Freyberg, about the off-payroll rules. That is quite a lot of detail that has to be worked out.
My amendments in this group would help to deal with that by ensuring that all regulations would be subject to the affirmative resolution procedure, aside from those designed to increase the cap—that would be positive if it goes up, and you would not need to have an affirmative resolution because it would be beneficial. I am very grateful to the noble Baroness, Lady Kramer, and my noble friend Lord Ashcombe for their understanding and their vocal support for having this extra scrutiny.
When the regulations are developed, they will apply the cap to thousands of people and businesses who will be drawn into complications for the first time. My proposals would not impose a cost on the Exchequer or undermine what the Government are trying to do; they would simply ensure that, when the Treasury comes up with an answer to the questions that have been raised today, we will get a meaningful chance to debate and scrutinise the answers, as we are doing with the Bill at the moment. The Government really should have put the detail in the Bill but, in the absence of that, my amendments would ensure that we retain as much oversight as possible as the detail comes through. I can think of no reason why the Minister would not adopt the affirmative resolution if he cares about oversight, due process and the scrutiny of a policy which will affects millions of people. There are 7.7 million people using salary sacrifice and Amendment 9 should be an obvious amendment to support.
Lord Livermore (Lab)
My Lords, I am grateful to all noble Lords who have spoken in this debate. I will begin by addressing Amendments 6, 22, 36 and 39, tabled by the noble Lords, Lord Mackinlay of Richborough, Lord Fuller, Lord Leigh of Hurley and Lord de Clifford, and the noble Baronesses, Lady Altmann and Lady Kramer, which seek clarity on the operation of the cap. I listened carefully to the requests made in Committee and again today to provide further reassurance to employers, payroll providers and individuals. Having put noble Lords’ concerns to officials in HMRC and the Treasury, I am pleased to confirm to your Lordships’ House that the cap will operate in line with other limits and thresholds within the national insurance regime. That is, the £2,000 cap will apply to each employment an individual undertakes.
To be clear, each employment will be treated separately for the purposes of the contributions limit for national insurance contributions. Any individual who has more than one employment and who sacrifices salary in more than one of those jobs will be able to do so independently in each case. Only 2% of those using salary sacrifice for their pensions have more than one job, and not everyone in this small group can or will use salary sacrifice in both their jobs. None the less, the approach I am confirming today provides clarity, aligns with the existing principles of the national insurance regime, and avoids the operational and administrative risks and burdens that could arise from attempting to operate a single cap across multiple employments. I confirm that this will be set out in legislation in subsequent regulations. The Government will also continue to engage with employers, payroll providers and other stakeholders to work through the detail of the policy ahead of its implementation.
I turn to Amendments 2 and 3 and the corresponding Northern Ireland Amendments 18 and 19 from the noble Lord, Lord Fuller, which each seek to introduce a carryover mechanism for any unused amounts of the cap allowance, including for those with fluctuating earnings.
Baroness Altmann (Non-Afl)
Can the noble Lord clarify a connected point: if somebody changes jobs within the year, does that mean they will start a new £2,000 accrual of the exemption?
Lord Livermore (Lab)
Yes, I believe it will, because it is per job.
I will make three main points in response to the amendments from the noble Lord, Lord Fuller. First, the changes proposed would impact only a minority of those in receipt of salary sacrifice. The vast majority of people using salary sacrifice undertake traditional employment on stable contracts: 85% have been in their job for over a year, 88% work full-time and 97% have a permanent contract.
Secondly, although the cap we are introducing will be based on each employment, the Government are committed to continuing to engage with stakeholders as we design the detailed operation of the cap and provide for it in secondary legislation. That engagement will enable us to test how different approaches affect those with uneven salary patterns and ensure that the policy is introduced in the least burdensome way.
Thirdly, on the point made in Amendments 2 and 18 on the pensions annual allowance, that allowance limits the amount of pension savings that can benefit from tax relief in any given year. It is set at £60,000 for the vast majority of individuals. The purpose of the allowance is to deal with exceptional or uneven patterns of pension saving, including one-off spikes or fluctuations in defined benefit accrual. It is specifically not designed to deal with day-to-day saving. The allowance also relies on individuals holding accurate records across multiple years in order to track eligibility and usage. That may be manageable in a pensions tax context, but it would be wholly unsuitable for a national insurance cap that must operate through real-time payroll systems. This also applies to other mechanisms proposed by these amendments that look to roll an allowance over multiple tax years.
For these reasons, the Government believe that introducing a carryover in this Bill would create significant complexity, and consequently administrative burdens, for individuals, employers and payroll providers.
I turn now to Amendments 4 and 20, tabled by the noble Lord, Lord Leigh of Hurley, and noble Baroness, Lady Altmann. I begin by setting out clearly that these provisions operate squarely within the existing framework of the optional remuneration arrangements, or OpRA rules, introduced in 2017. The Bill relies on that existing statutory concept rather than creating a new or expanded test. As a result, its reach is already constrained by well-understood boundaries that are routinely applied in both tax and national insurance contexts. Under that framework, the legislation is engaged only where remuneration is structured in a way that offers the employee a genuine alternative, typically between receiving cash earnings and receiving a pension contribution. It is that element of choice which brings an arrangement within scope. Where no such alternative is presented, for example, where pension contributions are made as a fixed and non-negotiable part of the remuneration package, those arrangements simply do not meet the statutory definition.
Lord Mackinlay of Richborough (Con)
This is an important point in many ways. The Minister will be aware that within an owner-managed director business, the director has absolute discretion about how he or she may take their overall package, whether that is dividends, usual PAYE employment or, quite normally, the company making a pension contribution. Would such a situation fall within these rules because the director is effectively the be-all and end-all making that option and discretion themselves? No other party is deciding whether thou shalt have this or that. Can the Minister give his early impressions about how that situation may be dealt with?
Lord Livermore (Lab)
It sounds to me, although I realise it is an odd phrase to use because you are negotiating with yourself, that that is established as a negotiated contract and, therefore, that is not an option that arises for you after that contract is negotiated. I think that in the example the noble Lord gives it would not be, but obviously that will be set out very clearly in guidance going forward.
The Government’s view is that the Bill already draws the appropriate and proportionate boundary. It addresses arrangements involving a choice between cash and pension provision, while leaving ordinary, non-optional employer pension contributions wholly outside scope.
Lord Leigh of Hurley (Con)
Will the Minister clarify my question on collective bargaining? In view of his earlier comments, will he clarify the situation where a person moves company within a group, which is quite common? Is that a new employment for this purpose?
Lord Livermore (Lab)
If it is a new employment contract, it is a new employment. It is a new job. I think that should be fairly clear. On his point about collective bargaining, it is my understanding that it would be outside of scope. Again, that will be set out clearly in guidance.
Finally, I turn to Amendments 9, 10, 24, 25, 30 and 41 from the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, and the noble Lords, Lord Altrincham and Lord Fuller, which relate to parliamentary scrutiny and propose an impact report on the contributions limit.
The core policy is set out in primary legislation to provide certainty for employers, with detailed operational matters deliberately dealt with through regulations to allow time to engage with employers. The approach we have taken follows long-standing precedent in national insurance legislation and ensures that the design is workable, fair and consistent with the wider national insurance contributions framework.
Early and sustained engagement with industry is central to the Government’s approach. The regulations will set out the detailed operational framework, including matters such as administration, process and interaction with payroll systems. These are best informed by technical expertise from employers, payroll providers and software developers themselves. Building on that engagement, the Government will consult on the regulations ahead of implementation. This will allow stakeholders to scrutinise the detailed design, raise practical concerns and begin preparing well in advance. It is through this process of consultation, guidance and industry engagement that employers will gain the clarity they need on how the system will operate in practice.
I also remind the House that a tax information and impact note has already been published, setting out the expected impacts of the policy on individuals, employers and the Exchequer. As with other tax measures, the Government will continue to monitor the operation of the policy as it is implemented and informed by ongoing engagement with Parliament and external stakeholders. Additionally, I assure the House that the Government intend to lay the regulations in good time before they commence. This will both support employer readiness and ensure that Parliament has a proper opportunity to scrutinise the regulations before they take effect.
The Bill draws a clear and appropriate distinction in relation to what matters should be dealt with by way of affirmative and negative procedure. Where regulations reduce the generosity of the £2,000 cap and increase Class 1 national insurance liability, they are subject to the affirmative procedure, ensuring full parliamentary scrutiny where contributor liability is increased. By contrast, regulations that implement the policy framework, set out administrative and operational detail or increase the cap so that less national insurance is payable are subject to the negative procedure. This reflects long-standing practice in national insurance legislation, where secondary legislation under the negative procedure is used for the operation of reliefs and matters of administration.
I also remind noble Lords that the Delegated Powers and Regulatory Reform Committee has scrutinised the Bill and raised no concerns about the proposed level of parliamentary scrutiny. Taken together, this approach provides robust parliamentary oversight where liabilities increase, while reflecting the well-established precedent for legislating for administration and reliefs through secondary legislation subject to negative resolution.
For these reasons, the Government do not believe that additional statutory requirements are necessary. In light of the positions I have set out, I hope that noble Lords will feel able not to press their amendments.
Lord Fuller (Con)
My Lords, I have written plenty down, but I am not going to say very much of it. I thank the Minister for accepting most generously the principle that this Bill was not ready to be passed into law, and I accept the reassurances he has given so far concerning the amendments I laid. It was absolutely right that we challenge the principle: criminal penalties should not come through regulation; they need to be in the Bill. The complexity has been outlined and, in light of the other amendments before us, I beg leave to withdraw Amendment 2.
Lord Leigh of Hurley
“(6DA) In cases where the contribution limit is exceeded, regulations must make provisions for such amounts not be treated as earnings by virtue of the Education (Student Loans) (Repayment) Regulations 2009 (S.I. 2009/470), Part 4, Regulation 41.”Member's explanatory statement
Income for student loan purposes is defined on an NI basis. This amendment exempts salary sacrificed pension contributions over the limit from being included in student loan repayments definitions, and so aligns with other benefits in kind.
Lord Leigh of Hurley (Con)
I wish to test the opinion of the House because I do not think students can wait for subsequent legislation to be brought forward to this House, and there is a risk it might not be. Students need absolute clarity that they are not going to be punished unfairly by this Bill.
Baroness Kramer
“(6DA) Before making regulations under this section, the Secretary of State must lay before Parliament a statement confirming that the requirements in section 1(3) of the National Insurance Contributions (Employer Pensions Contributions) Act 2026 have been complied with.”Member's explanatory statement
This amendment, connected with another in the name of Baroness Kramer, creates a number of criteria by which the Secretary of State has to abide, before enacting the provisions in subsection (6A).
Baroness Kramer (LD)
My Lords, this group has just two amendments: Amendments 8 and 11. While the former is just a paver for the latter, it is apparently required for Amendment 11 to go into the Bill. I make it clear that I am speaking in order to get the contents of my speech on the record; I do not intend to press either amendment, even though I think they are important.
It has been clear from the debate so far that the Bill fails to provide Parliament with the information it needs to assess the legislation. I am very glad that we have now passed the language on affirmative resolution. I also thank the Minister for giving us clarity now on how the cap operates: it is per employment rather than per employee. That is hugely important clarification.
Throughout the debates on the Bill, there has been confusion over the numbers and consequences. To get greater clarification, my former colleague and pensions expert, Sir Steve Webb, submitted an FoI request to obtain the numbers that can explain the conclusions of the Budget Red Book of November 2025 and the OBR’s supplementary analysis of 2026 as it refers to the impact of the Bill. Sir Steve’s request was answered in part, but key requests were refused. Therefore, I am trying to capture those requests in Amendment 11.
The amendment seeks the estimates used by HMRC of the number of basic rate taxpayers using salary sacrifice arrangements above £2,000; a similar disclosure for higher and additional rate taxpayers; the expected number of employers expected to reduce their pension contributions in each group; and the contribution to the revenue numbers in the Red Book from increases in employers’ NICs—and, separately, employees’ NICs—as a consequence of the Bill. With that information, we can make a reasonable judgment of the impact of the Bill on workers, employers and pensions, and get a grip on the likelihood of the revenue outcomes forecast in the Red Book, which at present look exceedingly doubtful, as others have said.
Sir Steve was not denied the disclosures he requested because they do not exist—quite the opposite. HMRC said in its letter to him, “We can confirm that HMRC holds the information you have requested. The reason for the denial is to protect the integrity of the policy-making process and to prevent disclosures that would undermine this process”. Apparently, transparency
“needs to be weighed against the public interest in avoiding the disclosure of information which may inhibit the decision-making process”.
The information—noble Lords have heard me list it—is not commercially sensitive; it does not deal with state secrets. We are not looking for transcripts on advice but simply for basic numbers that any person would require to assess the Bill. I begin to think that, if the numbers were shown the light of day, the policy might collapse. I greatly fear that we really should be aware of them, and I want to be sure that no regulation can be put in place until Parliament has seen and scrutinised this information. I very much hope that the affirmative action resolution we passed a few moments ago will help us do that.
This is simply a statement to the Government: they need to give Parliament the information and numbers it needs to assess a piece of legislation properly. Scrutiny is meant to be our job, and we cannot scrutinise if the appropriate numbers are not provided. I beg to move.
Baroness Altmann (Non-Afl)
My Lords, I have added my name to the amendment tabled by the noble Baroness, Lady Kramer. It would be helpful if the Minister could explain a little more about what the Government believe the intention and the outcome of this policy will be. He did not answer my question earlier on why there is a rush to get this measure through Parliament so fast. Have the Government quantified the extra employer costs of the higher 15% national insurance contributions from the employer, and the 8% or 2% extra national insurance contribution per member, and quantified it in money terms and in what it will mean for pension provision and future pensioner poverty?
Lord Altrincham (Con)
My Lords, I thank the Minister for listening so carefully, as ever, and considering the comments made by our Benches. The amendments in the name of the noble Baroness, Lady Kramer, are well written and would ensure that, before regulations are made to implement the cap, the Government must publish the relevant information on how many basic rate taxpayers are affected. The policy rests on a concept of excess savings—or at least tax advantaged excess savings—and it may catch a whole range of taxpayers who have insufficient savings.
It is very useful for us to tease out the difference between these two outcomes. That is possible only if we have much more information on the distribution impacts of the policy, which the Government should be comfortable sharing with us. As we debate this, we have heard a range of observations on who is affected. The noble Lord, Lord Davies, gave a colourful description of it affecting people with enormous bonuses. That is one perspective. The noble Baroness, Lady Altmann, reminds us that it goes against policy for very large numbers of people to have insufficient pension savings. In other areas of government policy, we are trying to rebalance that, so the policy is dissonant on pension savings. The Government should be open and happy to share this information with us.
As the noble Baroness, Lady Kramer, pointed out, the Government already have this information. That may well be sufficient evidence for us to appreciate that the incentives are rather marginal and that the gains could be rather small. Based on the numbers that we have had in the debate, the number of basic rate taxpayers who are supporting this policy would be quite small and the contribution would be extremely small to the tax take. It might be useful for us to reflect on whether it is worth destabilising pension savings for that purpose.
The noble Baroness has done a good job of setting out the rationale for her amendment. I do not want to intrude further on your Lordships’ House by repeating her arguments. These amendments are sensible and chime well with the amendments that we have tabled from these Benches, which would require the affirmative resolution procedure for most regulations. A debate on those questions will be greatly aided by the information that the noble Baroness has set out. We will be listening carefully to the Minister’s response.
Lord Livermore (Lab)
My Lords, Amendments 8 and 11, tabled by the noble Baronesses, Lady Kramer and Lady Altmann, seek to make commencement of the Act conditional on publication of estimates relating to the distributional impacts of the policy.
The Government agree on the importance of transparency. However, we do not believe that additional publications are necessary to achieve that objective. A number of documents have already been published which set out the distributional impacts of this measure. The Government’s budget document sets out that 74% of basic rate taxpayers currently using salary sacrifice will be unaffected by this change. This means that 26% of basic rate taxpayers would pay more. Of those, half will face a modest annual additional NICs liability of less than £50. I have confirmed previously that 87% of pension contributions made via salary sacrifice above £2,000 are forecast to come from higher and additional rate taxpayers.
The tax information and impact note was published alongside the introduction of the Bill. This sets out that an estimated 7.7 million employees currently use salary sacrifice to make pension contributions. Of these, 3.3 million sacrifice more than £2,000 of salary or bonuses. This means that 44% of employees using salary sacrifice for pensions would be impacted by this measure, while 56%—around 4.3 million people—are protected by the £2,000 threshold.
The tax information impact note sets out the expected equality impact of the measure. It notes that employees with salary sacrifice contributions are estimated to be of typical working age. The 52% who are aged 31 to 50 are estimated to be overrepresented compared with the prevalence in the employee population in general, of 44%. It notes that men are estimated to be overrepresented in the population making salary sacrifice pension contributions compared with the prevalence in the UK adult population.
The tax information impact note sets out the number of employers expected to be impacted by this measure—290,000; the one-off costs, including familiarisation with the change, the training of staff and the updating of software; and expected continuing costs, including performing more calculations, and recording and providing additional information to HMRC where salary sacrifice schemes continue to be used. This equates to a one-off £75 and an ongoing £99 per business per year.
Baroness Kramer (LD)
My Lords, we have important votes ahead of us, so I beg leave to withdraw.
Baroness Neville-Rolfe
Member's explanatory statement
This amendment and others in the name of Baroness Neville-Rolfe would make most regulations subject to the affirmative procedure, except those solely increasing the contributions limit. They ensure parliamentary scrutiny of the policy’s operation, particularly in relation to people with irregular earnings, multiple jobs or atypical remuneration patterns.
Baroness Neville-Rolfe
My Lords, I beg leave to test the opinion of the House.
Baroness Neville-Rolfe
“(b) after subsection (1), insert—“(1A) Subsection (1) does not apply to regulations under section 4(6A) which make provision only for increasing the amount of the contributions limit for a tax year.””Member's explanatory statement
This amendment and others in the name of Baroness Neville-Rolfe would make most regulations subject to the affirmative procedure, except those solely increasing the contributions limit. They ensure parliamentary scrutiny of the policy’s operation, particularly in relation to people with irregular earnings, multiple jobs or atypical remuneration patterns.
Baroness Kramer
Member's explanatory statement
This amendment changes the initial contributions limit to £5,000 in Great Britain.
Baroness Neville-Rolfe
“(5) The amendments made by this section do not apply where the employer—(a) is a small or medium-sized enterprise, or(b) is a charity or social enterprise which meets the conditions in subsection (6).(6) The conditions are that—(a) the employer meets the definition of a small or medium-sized enterprise in section 465 of the Companies Act 2006 (companies qualifying as medium-sized: general), and(b) the employment is carried out wholly or mainly for the purposes of that charity or social enterprise.(7) In this section—“charity” has the meaning given by section 1 of the Charities Act 2011; “social enterprise” means an undertaking which—(a) has as its primary purpose the achievement of social or environmental objectives, and(b) principally reinvests its profits for those purposes;“small or medium-sized enterprise” has the meaning given by section 465 of the Companies Act 2006.”Member’s explanatory statement
This amendment exempts small and medium-sized enterprises, and small and medium-sized charities and social enterprises, from the provisions of the Bill in Great Britain.
Baroness Neville-Rolfe (Con)
My Lords, I wish to test the opinion of the House on this amendment relating to SMEs and charities.
Baroness Neville-Rolfe
Member's explanatory statement
This amendment would exempt basic rate taxpayers in Northern Ireland from the £2,000 cap.
Lord Leigh of Hurley
“(6DA) In cases where the contribution limit is exceeded, regulations must make provisions for such amounts not be treated as earnings by virtue of the Education (Student Loans) (Repayment) Regulations 2009 (S.I. 2009/470), Part 4, Regulation 41.”Member's explanatory statement
Income for student loan purposes is defined on an NI basis. This amendment exempts salary sacrificed pension contributions over the limit from being included in student loan repayments definitions, and so aligns with other benefits in kind.
Baroness Neville-Rolfe
Member's explanatory statement
This amendment and others in the name of Baroness Neville-Rolfe would make most regulations subject to the affirmative procedure, except those solely increasing the contributions limit. They ensure parliamentary scrutiny of the policy’s operation, particularly in relation to people with irregular earnings, multiple jobs or atypical remuneration patterns.
“(11ZZB) Subsection (11ZZA) does not apply to regulations under section 4(6A) which make provision only for increasing the amount of the contributions limit for a tax year.”Member's explanatory statement
This amendment and others in the name of Baroness Neville-Rolfe would make most regulations subject to the affirmative procedure, except those solely increasing the contributions limit. They ensure parliamentary scrutiny of the policy’s operation, particularly in relation to people with irregular earnings, multiple jobs or atypical remuneration patterns.
Baroness Kramer
Member's explanatory statement
This amendment changes the initial contributions limit to £5,000 in Northern Ireland.
Baroness Neville-Rolfe
“(5) The amendments made by this section do not apply where the employer— (a) is a small or medium-sized enterprise, or(b) is a charity or social enterprise which meets the conditions in subsection (6).(6) The conditions are that—(a) the employer meets the definition of a small or medium-sized enterprise in section 465 of the Companies Act 2006 (companies qualifying as medium-sized: general), and(b) the employment is carried out wholly or mainly for the purposes of that charity or social enterprise.(7) In this section—“charity” has the meaning given by section 1 of the Charities Act 2011;“social enterprise” means an undertaking which—(a) has as its primary purpose the achievement of social or environmental objectives, and(b) principally reinvests its profits for those purposes;“small or medium-sized enterprise” has the meaning given by section 465 of the Companies Act 2006.”Member's explanatory statement
This amendment exempts small and medium-sized enterprises, and small and medium-sized charities and social enterprises, from the provisions of the Bill in Northern Ireland.
Baroness Neville-Rolfe
“Review of impact on small and medium-sized enterprises(1) The Secretary of State must, within 12 months of the passing of this Act, lay before Parliament an independent report assessing the impact of the provisions of this Act relating to employer National Insurance contributions on small and medium-sized enterprises, including social enterprises in Great Britain and Northern Ireland.(2) The report under subsection (1) must, in particular, assess the impact on—(a) administrative and compliance costs arising from changes to payroll, pension and benefits administration,(b) the complexity of operating salary sacrifice and workplace pension arrangements,(c) the operability of these changes for those in receipt of irregular remuneration, those with seasonal working patterns or those with multiple employments(d) employment costs, and(e) the ability of small and medium-sized enterprises to attract, retain and reward staff.(3) The report under subsection (1) must assess the impact of this Act in the context of the cumulative impact of changes to employer National Insurance contributions affecting small and medium-sized enterprises since July 2024.”Member's explanatory statement
This amendment requires the Treasury to commission and lay before Parliament an independent review of the impact of the Act’s employer National Insurance provisions on small and medium-sized enterprises and social enterprises, including administrative complexity and employment costs, and in the context of the cumulative effect of recent changes to employer National Insurance contributions.
Baroness Neville-Rolfe (Con)
My Lords, Amendment 31 is in my name and that of my noble friend Lord Altrincham. I thank the noble Baroness, Lady Altmann, and the noble Lord, Lord Londesborough, for putting their names to it. I will also speak to Amendment 33 in the name of the noble Baroness, Lady Sater, a charity professional in the best meaning of the word. She is very sorry not to be here today. Her amendment is in the same spirit as ours, and she is right that the impact on charities is very important and should be kept under review.
His Majesty’s Official Opposition will continue to be a voice for small and medium-sized enterprises. We have heard, time and time again, from small businesses about the weight of burden that this Government continue to pile upon them—tax after tax, regulation after regulation. The Minister did not even answer my question at Question Time this morning about whether he would consider options for exempting SMEs from the burden of regulation. This amendment presents such an opportunity for the Government and would demonstrate that they listen; to show that they take seriously the mountains of complexity heaped upon small businesses and small social enterprises; and to provide some measure of relief and some acknowledgement publicly that these cumulative pressures cannot be ignored indefinitely.
The Minister suggested in Committee that only some 10% of employees in small and medium-sized enterprises have pension contributions through salary sacrifice that exceed the proposed cap. That may well be the case today, but with public awareness, more SMEs may introduce it. We on these Benches would like to see that figure grow, as saving for a pension is one of the most desirable and cost-effective methods of saving, as I am always explaining to the next generation. Salary sacrifice is also one of the few tools available to a small employer competing against a large corporation for talent and productive workers.
An independent review over a year would allow us all to consider the impact of the changes on SMEs and charities. I beg to move.
Baroness Altmann (Non-Afl)
My Lords, I have added my name to Amendment 31, and I support Amendments 32 and 33. All these amendments seek to help the Government to recognise that there is a serious impact if this Bill goes through as currently proposed, particularly on employers in smaller and medium-sized companies. I believe that the Minister confirmed that some 99% of employers in auto-enrolment are SMEs. The costs of complying with pension auto-enrolment have already been significant. Some of those employers have been advised that it is a “no-brainer” for them to use salary sacrifice as a way of mitigating some of the extra costs involved in having to provide pensions for their staff who want to stay in them.
We have imposed these extra costs on employers already; some employers have been good enough to put in more than the auto-enrolment minimum. What this Bill would do is to pile extra costs on to them, because if they are using salary sacrifice, they will have to renegotiate employment contracts, change payroll software systems, change the information that they give to their workforce about their pension arrangements and answer lots of questions that are bound to arise as a result of any of the changes that are proposed.
It should therefore be incumbent on the Government—indeed, it is quite astonishing that this was not already done before we got the legislation—that there is a proper, independent review of the costs imposed on smaller and medium-sized employers as a direct result of this legislation. That should inform the way in which the legislation is implemented, so that we try to do whatever we can to avoid the kind of problems that we have seen, where there are implications for employment levels, salary levels and indeed for pension investment and provision as an unintended consequence of perhaps well-meaning legislation, or legislation designed to hit an entirely different target, that is potentially going to fall on both employers and their workforces. We have seen that the extra national insurance costs have had an impact on employment levels already. I ask the Minister again: what is the rush in getting this legislation on to the statute books before we know its implications and what it will mean in practice for the corporate sector? First, can the noble Lord explain the rush and, secondly, consider putting this on hold until the full implications are better understood?
Lord Freyberg (CB)
My Lords, I rise to support Amendment 31. It is of particular relevance to the creative industries and would require an independent review of the Act’s impact on small and medium-sized enterprises within 12 months of its passing. It would specifically require that review to examine the impact on those with “irregular remuneration”, “seasonal working patterns”, or “multiple employments”.
That language almost exactly describes the working pattern of a freelance editor, a set designer or an editor moving between short-term contracts across a year. Many of the production companies, commercial houses and independent studios that engage those workers are themselves SMEs. Amendment 31 would ensure that Parliament receives evidence of how the Act operates in practice for both the workers and the businesses that depend on them. I therefore urge the House to support it.
Lord Leigh of Hurley (Con)
My Lords, I support these amendments. I declare an interest in that I am involved with a number of small and medium-sized enterprises. These amendments mirror amendments that we tabled to the then Employment Rights Bill, because we thought that the Government wanted to help and protect small and medium-sized businesses. That turned out not to be the case, which was very disappointing. Representations were made, and have been made in this instance, by the bodies that represent such small businesses that they do not welcome this.
Lord Davies of Brixton (Lab)
I have just two points. First, I am perhaps the only person in the House who believes in the National Insurance Fund. I am in favour of the National Insurance Fund in principle. It is a fund into which people pay contributions and accrue entitlement to benefits. I am therefore against a detached look at a very small part of the overall operation of national insurance; that would clearly be a mistake. You have to look at the whole thing together. I am not necessarily against that. I suspect that the Treasury will not be keen but, in principle, it is time for it.
However, my second point is that that makes sense only if we look at the tax treatment of pension schemes, which is the electric third rail of pensions politics. There has been a lot of discussion in the think tanks about the tax treatment, and proposals such as flat rate relief have been made. It is a massive subject—one that it is time to review. For the same principle, it would be wrong to look at this tiny part of the overall structure. I am therefore against the amendments, but the general principle—that the issue needs to be looked at—is a good one.
Lord Londesborough (CB)
My Lords, I support Amendment 31 in the name of the noble Baroness, Lady Neville-Rolfe, to which I have added my name. I also add my vocal support for Amendment 32 from the noble Baroness, Lady Kramer, which I should have added my name to but did not. Both amendments concern the impact on SMEs. I am more concerned about the “S” part of that acronym, because medium-sized businesses with payrolls of over 100 staff are a lot better equipped to deal with the provisions of the Bill. I heard the Minister saying that only 10% of this group apply for salary sacrifice, which is a glass-half-empty argument. It is precisely because of that that we should be very concerned about the 90% who are missing out entirely on salary sacrifice.
When we go back to Amendment 31 and look at the impact, the employment data this year for SMEs is utterly dire—on vacancies, payroll and employment, part-time and full-time. I will not go through all the data, but I remind your Lordships that only 10 days ago, the Federation of Small Businesses wrote a letter to the Chancellor of the Exchequer warning that one-third of its members are planning either to shut down their business this year or to reduce their headcount, and that should send a real chill down the spine. I simply do not believe that the Government understand what it is to develop and foster a thriving SME ecosphere, on which, at the bottom of the pyramid, our economic growth utterly depends. I therefore throw my support behind these two amendments.
Baroness Kramer (LD)
My Lords, Amendment 32 is in my name. I realise that Amendment 31 is a broader amendment, and I have no objection to it whatever. It was written in response to a particular issue identified by the Federation of Small Businesses, which is that small businesses that use salary sacrifice regard it as one of the perks they can offer, in a very competitive market, for particular skill sets. Churn is a major problem for small businesses, so to be able to keep people and keep them happy really matters. It is tough for a small business, particularly when it is looking for a person with highly desirable skills, to compete against big businesses, which can offer perks of many different kinds. They may not offer salary sacrifice to the same degree, but they can offer other kinds of perks and advantages.
I am very concerned about the competitive impact on small businesses. I strongly agree with the noble Lord, Lord Londesborough, that this group is the foundation of our economy and its condition currently leaves us worried. At a time of a big push for growth, many of the unicorns will fall into a sector where they are in a battle for skills against large existing companies. My Amendment 32 would review within 12 months the impact very specifically on SME recruitment and retention. I hope the Government will pay serious attention to this area.
Lord Livermore (Lab)
My Lords, Amendments 31, 32 and 33, tabled by the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, would require a review of the legislation’s impact on small and medium-sized enterprises, charities and social enterprises. As set out earlier, the Government agree on the importance of transparency, and a number of documents have already been published which set out the impact of this measure. As I said on Amendments 16 and 29, the Government fully recognise the importance of supporting small businesses and charities alike. In practice, the changes in the Bill primarily affect larger employers, who are significantly more likely to operate salary sacrifice arrangements and to have employees contributing above the £2,000 cap.
Charities and their donors benefit from a wide range of reliefs and exemptions across multiple taxes, including VAT, inheritance tax, stamp duties and gift aid. Ahead of the cap taking effect, the Government will continue to work closely with employers, payroll providers and other stakeholders, including representatives of the charity sector, to ensure that changes are implemented in a clear and proportionate way for organisations of all sizes that operate salary sacrifice arrangements. In light of the position I have set out, I hope that the noble Baronesses will feel able not to press their amendments.
Baroness Neville-Rolfe (Con)
My Lords, I thank noble Lords for their contributions to this debate, which is an important one, and I am grateful to those who spoke in support. We heard from the noble Lord, Lord Freyberg, about the positive implications for the creative sector, and of course my noble friend Lord Leigh, who is very much in touch with trade representative bodies and charities, supported the amendment. The noble Lord, Lord Londesborough, raised again the question of data, which we were talking about at Question Time, and his concerns about the demise of SMEs under the burden of red tape.
Finally, I strongly support the noble Baroness, Lady Kramer, and the Federation of Small Businesses, which is such a useful source of information, on the need to be able to keep employees happy and to retain them. The same is true in charities and social enterprises, as I am sure my noble friend Lady Sater would say if she had been able to be with us today.
The case for a comprehensive and independent impact assessment of this legislation on small and medium-sized enterprises and social enterprises could not be clearer, nor, I am afraid to say, could the Government’s failure to undertake one. We have heard today of the depth and breadth of concern, and that is why we have voted and agreed on an exemption for SMEs and charities. But there is a risk that this will be rejected in the other place, in which case this review will be even more important.
Although some documents have been published, as the Minister said, the Office for Budget Responsibility’s own analysis points to significant uncertainty surrounding the effect of these measures. That uncertainty is not a reason for the Government to look away; it is precisely the reason that they must look more closely. When the OBR itself signals uncertainty, the duty falls on the Government to acknowledge what they do not yet know and to commit to finding it.
That brings me to an important matter which the Minister may want to comment on or follow up, perhaps in the next group. The Government announced last year a commitment to reduce the administrative burden on business by 25%. I remember welcoming that announcement. It was not a quiet aspiration buried in a footnote; it was a public commitment made with fanfare. Yet if the Government’s answer whenever we ask about the administrative impact of a specific policy is simply that such an impact cannot be measured, one must ask how precisely the Government intend to meet that target.
I fear there are only two conclusions. Either the Government have a means of measuring administrative impact, which they have chosen, curiously, not to deploy on this occasion, in which case they should do so, or the commitment to reduce the burden on business by a quarter was an empty promise from the outset.
But we have had a good debate today, and time is getting on. In the circumstances, I beg leave to withdraw my amendment.
Lord Ashcombe
“Publication of relevant documents and reports(1) HM Treasury must maintain a single, publicly accessible location on a Government website in which all documents relevant to the operation and implementation of this Act are published.(2) Documents to be published under subsection (1) must include—(a) any Tax Information and Impact Notes relating to this Act,(b) any guidance issued to employers or employees relating to the operation of section 4(6A) of the Social Security Contributions and Benefits Act 1992 (as inserted by section 1) or section 4(6A) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (as inserted by section 2),(c) any consultation documents, technical notes or policy papers relating to regulations made under those provisions,(d) any reports or reviews concerning the operation, impact or effectiveness of this Act, and(e) any regulations made under section 4(6A) of those Acts and any accompanying explanatory memoranda.(3) HM Treasury must ensure that any document falling within subsection (2) is published in the location described in subsection (1) no later than the day on which it is laid before Parliament or otherwise made publicly available.(4) HM Treasury must ensure that the location described in subsection (1) is clearly advertised and regularly updated.”Member's explanatory statement
This amendment seeks to require the Treasury to publish all documents, guidance, consultations, regulations and reviews relating to the Act in a single, publicly accessible location to ensure transparency and ease of access for Parliament and businesses.
Lord Ashcombe (Con)
My Lords, I speak to my Amendment 34 in this group, and I am grateful for the support from the noble Lord, Lord Londesborough. Pensions legislation is, as many of your Lordships appreciate, inherently complex and difficult to understand. It is also currently undergoing further refinement in this House, which will inevitably bring more change. My amendment seeks to make life easier for those who provide pensions and those who invest in them. Its purpose is straightforward: to require the Treasury, should this Bill pass, to publish all documents, guidance, consultations, regulations and reviews arising from the Act in a single, publicly accessible and advertised location. This would support transparency and ensure that both Parliament and business can easily find the information that they need.
In Committee last week, the Minister referred to at least four different documents containing differing information and mentioned them this morning or this afternoon as well. This week, we learnt in the Times that Sir Steve Webb made a freedom of information request asking for a more detailed breakdown of the composition of the £4.5 billion to be raised in 2029 as a result of this Bill, who will be affected and how employers are expected to react to the changes. HMRC indicated that the information requested would “undermine” the policy-making process. Is it not our duty to ask the questions and expect a proper response in order to hold the Government to account? This would, of course, have added another document to those that would be publicly accessible.
In my professional life, I work for Marsh, a global company whose code of conduct for the greater good includes two principles that are particularly relevant to this debate—the code, of course, is written with the regulators in mind. They are that we treat customers fairly and we that communicate honestly and professionally with investors and the public. I am not convinced that the current approach to information accessibility meets either of these standards. It is difficult to imagine customers or investors being satisfied if told that essential documents are scattered across multiple websites and must be hunted down individually. Yet this is precisely the situation facing those who wish to understand the documents associated with this Bill. Why should the Government not be held to the same standards as the private sector? This amendment is simply about ensuring openness and transparency. It would create a single, reliable point of access for all relevant material, replacing the current scramble to locate information needed to make what are often complex and consequential decisions. I beg to move.
Lord Londesborough (CB)
My Lords, I have added my name to Amendment 34 from the noble Lord, Lord Ashcombe, and I offer my support. It is entirely pragmatic. I would also throw into this documentation reservoir the OBR’s forecasts, which I found quite confusing in relation to the impact of the Bill. What is being suggested in this amendment does not apply only to the National Insurance Contributions Bill, and many of us as parliamentarians—certainly I as one—find the paperwork around Bills often baffling and confusing, and to bring this together in a far more coherent way would make us better legislators. But let us spare a thought for the CEOs, the finance directors and the CFOs, two of whom have come to me and asked me to explain how the Bill is going to impact their businesses, and I struggle to do so.
As many noble Lords know, I am a bit of a productivity disciple and our productivity in this area is really poor. Part of the reason for that is that the publication of relevant documents is so scattergun. If you do not have a legal training, as most of us do not, it is a challenge not just in terms of legal language but often in numeracy. In Committee, we often found that we did not know whether the Bill applied per person or per job. We now have a clarification, for which I thank the Minister. But that is pretty damning in itself, is it not?
So I wholeheartedly support this. There is no controversy. I think Governments of all colours need to do a far better job of explaining the thrust of their legislation.
Baroness Altmann (Non-Afl)
My Lords, I rise briefly to speak to my Amendments 35 and 40 in this group, which seek to do similar things in different ways from the other amendments in this group, all of which I support. I certainly think that the suggestion from the noble Lord, Lord Ashcombe, on the publication of relevant documents and reports makes significant sense, and having a repository of information would certainly be helpful.
This group of amendments is yet again trying to help the Government see that they are premature in laying the legislation and there is not enough understanding of what the impacts in practice will be for employers and workers. In Amendment 35, each area on which I ask for an independent report to be produced is itself a complex area of pensions administration that needs to be understood before we make the kind of change that sounds simple but in practice will be anything but.
It sounds as if it will not make much difference, but in practice, it could cost significant sums to employers, as well as having this significant potential impact on making pension provision worse across the country. At the very time when we are talking about perhaps making state pensions a bit less generous or delaying the age at which they will start, it makes private pensions even more important for anyone in poor health who cannot wait until the ever-rising state pension age. The idea is for them to have something to fall back on to bridge the gap, at least.
I hope the Minister, for whom I have enormous respect and who I know is very well intentioned and understands these issues, will take back to his department the deep unease across this House at the lack of preparedness and information that we have been given. Once again, could he help explain—and if not today, perhaps he will write to me—the seemingly inordinate rush, within just a few weeks, to bring in this legislation, which is not due to start until 2029, so that we have a better understanding of what the Bill’s impacts would be?
Lord Freyberg (CB)
My Lords, I support Amendment 35 in the name of the noble Baroness, Lady Altmann, which would require the Government to commission an independent review within 12 months of passing the Act, covering a comprehensive range of impacts. Among the items it would have to consider are, explicitly, “workers with multiple jobs”, and
“workers who change jobs during any tax year and have made pension salary sacrificed contributions”.
Those two categories define the working life of a freelance creative. The Government’s answer throughout the Bill has been that these questions will be resolved in regulations. Amendment 35 would at a minimum ensure that Parliament sees independent evidence of whether that resolution has worked in practice.
Amendment 40, also in the name of the noble Baroness, Lady Altmann, would go further and make commencement conditional on a review of the Act’s practical feasibility. Given the complexity we have heard about and that I have described for workers with mixed employment statuses, including those engaged by the BBC under off-payroll rules while simultaneously working for other employers, that is not an excessive precaution. Therefore, I support both these amendments.
Baroness Kramer (LD)
My Lords, I shall be exceedingly brief. The amendment proposed by the noble Lord, Lord Ashcombe, is, quite frankly, genius. We have all had a struggle trying to get our hands on information that is scattered in so many different places, and I am fairly sure that if this was put with a secret ballot to civil servants they would all sign up because they struggle as well. It makes it very difficult when new policy comes through to try to work out what on earth the consequentials are, what numbers to look at, how to weigh these issues and how to understand distribution of impact, so I support his amendment.
This is such a complex Bill. When the instructions went down to put the Bill in place, I am sure there was absolutely no sense of the complexity that was going to be entangled in it. Amendment 38 in my name was triggered particularly by the OBR publication, again in response to an FoI, Costing of charging NICs on salary-sacrificed pension contributions, which was a supplemental analysis. The word “uncertainty” appeared in so many parts of it that we began to have a sense that no one could have huge confidence in the final numbers that were appearing, and it was very honest of the OBR to make it clear that there were vast uncertainties underpinning large parts of this work.
Very much like the noble Lord, Lord Leigh, I still do not think that we have bottomed out the problem with optional remuneration arrangements. It is easy to assume that we can distinguish between a negotiation where we are choosing between cash and a pension and having a negotiation that involves cash and a pension. But can we claim that the two are not related to each other, so that we do not get trapped by OpRa? There is a lot in here, and a review is the least we should do to make sure that we have a grip on these things and that Parliament gets to see it when it is still in a position to make some decisions.
Lord Altrincham (Con)
I thank the Minister for his usual courtesy in hosting the debate. The amendments in this group all underscore another substantial shortcoming in how the Bill has been approached: its effects and impacts have not been properly assessed in advance. I suspect that the Minister does not have the information on how the Bill will affect pensions saving adequacy, which I highlight in my Amendment 37, and how it will affect employer costs, pensions adequacy and workers’ take-home pay, which the noble Baroness, Lady Altmann, raises in her amendment.
These are serious questions. As was noted in Committee, if the Treasury had done better work in preparation for the Bill, it would already be able to give us the answers to the questions that these amendments raise. These are the questions that businesses, employers, savers and industry are asking. As my noble friend Lord Ashcombe highlighted, the information must be in an easily accessible format in a single place, because it will be relevant to more than just policymakers and parliamentarians: businesses and employers will be trying to understand what all this means for them, as well as employees saving for their pensions, who will be trying to understand how they could be affected.
My amendment raises the question of pensions adequacy. People are not saving enough for their pensions and the Government are worsening incentives to do so with the Bill. The Minister should consent to a review of this matter before the Bill comes into force. The Government must make sure that they know the facts, so that we can ensure that they do not inflict unintended harms. As a point of good governance, the Minister should accept this and the other amendments in this group.
Lord Livermore (Lab)
My Lords, I am grateful to noble Lords for their contributions to this debate.
Amendments 35, 37 and 40, tabled by the noble Baronesses, Lady Neville-Rolfe and Lady Altmann, and the noble Lord, Lord Altrincham, cover the impact of the future Act on pensions adequacy and on pension-saving behaviour and participation. As I have already set out, the Government agree on the importance of transparency, and a number of documents have already been published that set out the impacts of this measure.
I turn to the principled point raised about the impact of this policy on pensions adequacy and savings behaviour more specifically. As we discussed in Committee, salary sacrifice existed in the 2000s and early 2010s, yet there were falls in private sector pension saving during that period. The key factor that has led to an increase in saving in recent years is automatic enrolment. As a result of that, over 22 million workers across the UK are now saving each month.
Although we all share a commitment to improving pensions adequacy, many groups at highest risk of undersaving, including the self-employed, lower earners and women, are not the most likely to benefit from salary sacrifice. Only one in five self-employed people saves into a pension but they are entirely excluded from salary sacrifice. Low earners are most likely not to be saving, but higher earners are more likely to be using salary sacrifice. Many women are undersaving for retirement, but many more men use pensions salary sacrifice. The pensions tax relief system remains hugely generous and there remain significant incentives to save into a pension. The £70 billion of income tax and national insurance contribution relief that the Government currently provide on pensions each year will be entirely unaffected by these changes.
Amendment 38, tabled by the noble Baroness, Lady Kramer, would require the Government to lay before Parliament a formal review of the Office for Budget Responsibility’s supplementary forecast information release of 5 February 2026, and specifically its analysis of behavioural responses by organisations to the provisions in the Bill. The OBR’s economic and fiscal outlook and its supplementary forecast publication set out how behavioural responses have been considered in certifying the costings. A summary of these behavioural assumptions was also published in the policy costing note accompanying the Budget. The supplementary forecast information was drawn from analysis and data—
Baroness Altmann (Non-Afl)
It would be helpful to have on record some idea of who is responsible, when talking about behavioural response, for reporting to HMRC and for compliance, and who will face penalties for any national insurance contributions that are due which were wrongly deducted. Is it payroll providers? Is it employers? Is it the members? If any of those groups are on the line for paying penalties, would not the limit itself perhaps put paid to salary sacrifice? Is that something that the Government have considered?
Lord Livermore (Lab)
All those points will be set out in regulations, and I am more than happy to confirm that to the noble Baroness in writing.
The OBR’s economic and fiscal outlook and its supplementary forecast publications set out how behavioural responses have been considered in certifying the costings, as some of these behavioural assumptions were also published in the policy costing that accompanied the Budget. The supplementary forecast information was drawn from analysis and data supplied to the OBR by the Government ahead of Budget 2025, in line with a standard process by which the OBR scrutinises and certifies costings. The Government’s published costings therefore already reflect these behavioural effects. The OBR has certified these costings in the usual way. Given that the material referenced is already publicly available and has been fully reflected in the certified policy costings, the Government do not believe that it is necessary to review the OBR’s supplementary forecast.
Lord Ashcombe (Con)
My Lords, I thank the Minister for his responses and thank those who have taken part in this short debate. I am not sure that we have unknown unknowns, because the Minister has again stated where these various documents are scattered around, but we have an unresolved unresolved. As noted by the noble Lord, Lord Londesborough, this will reappear time and again as we go through different Bills in the Chamber.
Looking to the amendments other than my own, over the last month or so, as we have debated this complex subject, an awful lot of unknowns have appeared. Therefore, we should have clear thought put into, and publications on, what is going to happen, prior to the Bill being enacted—because it does not come into force until 2029—and subsequently on whether there is any degree of similarity after that, as I am not convinced. Having said that, I beg leave to withdraw my amendment.