House of Lords
Unpaid Carers: Patient Hospital Discharge
(1 day, 4 hours ago)
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Baroness Pitkeathley
To ask His Majesty’s Government what assessment they have made of the extent to which unpaid carers are consulted before a patient is discharged from hospital, and what plans they have to monitor this.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
My Lords, the Health and Care Act 2022 requires NHS trusts to involve patients and unpaid carers in discharge planning, reinforced by 2024 discharge guidance. However, this is not always done consistently and carer involvement is not monitored nationally. We will support better implementation by commissioning work from the LGA’s better care fund support programme this year. Care transfer hub guidance also promotes best practice by encouraging early identification and involvement of carers in planning.
Baroness Pitkeathley (Lab)
I thank my noble friend for her Answer. It was important, though not easy, to win for carers the right to be consulted at the point of discharge. I am sorry that better statistics are not being kept, but I am glad to hear the plans for improvement. The survey from Carers UK shows that the number of carers being consulted is decreasing rapidly. Although I fully understand the pressure on the NHS at the point of discharge and the difficulties of securing proper social care support, does my noble friend agree that it is very short-sighted not to consult carers at this point? If they break down from lack of support, the patient is readmitted and there is further pressure on the NHS.
Baroness Merron (Lab)
I completely agree with my noble friend that the involvement of and support to unpaid carers is crucial when a patient is discharged because, as she says, it is vital not just for patient recovery but for the whole healthcare system. I welcome the recent Carers UK report that was published last year, which focused on how government legislation and guidance is or is not being implemented and monitored in practice. That has been and will be very useful work for us to continue with.
Lord Young of Cookham (Con)
My Lords, further to the question from the noble Baroness, Lady Pitkeathley, there are 120,000 young carers aged between seven and 18, many of whom are the principal carer for a parent or sibling, accompanying them when they go into hospital. Although many hospitals are good about identifying the young carers, not all of them are. What more can be done to make sure that these young carers are identified right at the beginning of the process and fully consulted about arrangements for discharge?
Baroness Merron (Lab)
The noble Lord is right to emphasise the role that many children and young people have as young carers. The Children’s Social Care National Framework is statutory guidance for local authorities, which have duties to identify young carers who may need support and to assess their needs. I am well aware that young carers may not be aware of this, but there is a right to request assessments. Improving joint working between adult and children’s social care services, as well as health services, is key. Lastly, I hope that the electronic patient record would identify where there was a carer, including a young carer.
Lord Scriven (LD)
My Lords, I declare my interest as a vice-president of the LGA. The model of unplanned discharge places an immediate burden on unpaid carers. What assessment have the Government made of the financial impact on unpaid carers during this period? Specifically, will they consider a discharge support grant to provide immediate short-term funding for carers for the first four weeks following an unplanned or non-thought-through discharge?
Baroness Merron (Lab)
I know the noble Lord will be aware of the better care fund, to which there is a commitment of some £9 billion. It can be used in various ways, including in the way that he described. I look forward to the work of the LGA’s better care fund support programme that we will commission this year so that we can work with NHS and social care partners, because we need to strengthen the approach of not just involving but supporting unpaid carers. Discharge should not take place if carers are not able to fulfil the duties that it is assumed they can fulfil.
Baroness Andrews (Lab)
My Lords, it is good to hear that there is real awareness of the issues caused by this. It is one of the most acute problems in the whole provision of social care, and it falls hard on unpaid carers when they do not even know how or who to ask for help. It has been diagnosed many times as a big issue. There used to be co-ordinator discharge people in hospitals who would help with this process. Are there still such posts? The news about the LGA work is welcome in relation to co-ordination when it counts and support for unpaid carers, who are the experts here. They are not passive arbitrators; they need to have their own knowledge and expertise recognised in this process. Is there provision at the hospital level for this?
Baroness Merron (Lab)
My noble friend makes exactly the right points. We certainly recognise the vital role that unpaid carers play in supporting those who are to be discharged. Decisions about staffing and the approach—I emphasise that a multidisciplinary approach is clearly needed here—are a matter for local areas, but I can say in addition that there is a regular cross-government meeting, which is really important when it comes to joining up the approach, that looks at providing unpaid carers with the recognition and support that they need, as my noble friend said. We are also working towards publishing a cross-government action plan later this year. So in this area, including the LGA work, the kind of approach that my noble friend talks about will certainly be considered.
Lord Kamall (Con)
My Lords, I thank the noble Baroness, Lady Pitkeathley, for being a tireless champion of unpaid carers over many years and successive Governments. She quite rightly pointed out that Carers UK found that only 14% of unpaid carers were asked about their ability and willingness to provide care before hospital discharge. I want to follow up on the previous question from the noble Baroness, Lady Andrews. One of the problems faced by successive Governments is that trusts and what were previously CCGs and are now ICBs are very bad at learning from other parts of the system that do things well. For example, Northumbria has been known to have a really good discharge system: it embeds co-ordinators and works out how to get that discharge going. How can the Minister’s department improve learning across the system where there is good practice, take that best practice and appropriately transplant it into other areas so that we can really tackle this problem once and for all?
Baroness Merron (Lab)
The whole system needs to do better, as the noble Lord outlines. It will be helpful that we are also looking at commissioning research in this area to look at best practice, as well as barriers and solutions, regarding the involvement of unpaid carers—I think that has been somewhat overlooked, if I am to be honest with your Lordships’ House. We have regional teams that have issued very practical toolkits to help hospitals implement their legal duties; we should remember that there are legal duties in this response. In addition, that is why we are involving the LGA’s better care fund support programme, as I said, as well as seeking to publish a cross-government action plan. These will be steps in the right direction, but I very much acknowledge that we do not start in a good place.
Lord Patel (CB)
My Lords, although the better care fund is a help, its success depends on how hospitals and the LGA work together. Would the Minister agree that the fund is still used to fund short-term gaps, particularly winter pressures, and that the yearly funding cycle does not help for longer-term planning? Could that be improved?
Baroness Merron (Lab)
I can see the pressure and difficulties that can bring. There is a range of reasons why discharges do not take place in a timely fashion—not just processes but the interface between health and social care, and capacity. As we look at how we involve carers and improve discharge rates, matters of funding will be key.
Lord Kirkhope of Harrogate (Con)
My Lords, we live in a world where we have constant criticism, both of government—rightly, quite often—and of many individuals for their behaviour. But here we have a situation where the health service and, indeed, society are being saved many billions of pounds as a result of the work of people who volunteer to care for their relatives and others—those in the voluntary sector, in our hospice movement and all over the health service. Without these people, we would be in real trouble. Is it not marvellous, and can we perhaps commend them and approve of what they are doing both to save us resources and to show that people are basically good?
Baroness Merron (Lab)
I am very grateful to the noble Lord. I and the Government are certainly cognisant of the role that unpaid carers play. That is why, last year, we increased the carer’s allowance weekly earnings limit. This was the largest cash increase ever and means that 60,000 additional carers will qualify. That is part of our recognition, but I share the views the noble Lord has given and the comments about my noble friend Lady Pitkeathley and Carers UK—I am grateful to all.
Flood Detection and Prevention: Technological Assistance
(1 day, 4 hours ago)
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The Lord Bishop of Sheffield
To ask His Majesty’s Government what assessment they have made of the use of technological assistance for flood detection and prevention.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, the Environment Agency routinely uses technology to improve flood detection and prevention, including enhanced warning systems, drones, and digital tools to support early detection and preparedness. It is expanding the use of remote sensing and real-time monitoring to assess the condition of flood defence assets, strengthening forecasting and optimising maintenance. In 2025, the agency published a new national flood risk assessment outlining current and future flood and coastal erosion risks across England.
The Lord Bishop of Sheffield
I am grateful to the Minister for that Answer. The severe flooding that we have experienced again this winter makes it clear that increasingly urgent further action is surely needed to protect homes, businesses and communities. In south Yorkshire, where the River Don has flooded to devastating effect at least three times in the past six years, Rotherham council is trialling CCTV to monitor water levels in high-risk areas. It may not sound very sophisticated, but I gather that the early warning potential is real. What steps are the Minister and his colleagues taking to consult local government to harness the very best practice and deliver the most effective innovations at scale?
Lord Katz (Lab)
I thank the right reverend Prelate for bringing the actions of Rotherham council to our attention. He is absolutely right that the whole of south Yorkshire has been subject to severe flooding. As he said, sometimes, as in places such as Rotherham, basic and simple solutions are the best.
To address his wider point, we are working closely with local government to ensure that lessons from recent flooding and innovations that we are seeing across the country can be adapted at scale. The purpose of the Government’s Floods Resilience Taskforce is to improve co-ordination across the whole system and translate local experience into national practice. Recently, the taskforce met in Manchester to consider how case studies from local partners in areas such as Greater Manchester—and from devolved Governments, such as Northern Ireland, in the case of the meeting the other day—including innovation in forecasting, community resilience and emergency response, can be replicated more widely. Local partners are directly engaged through regional flooding coastal committees through local resilience forums, which ensures that local knowledge, such as in Rotherham, as cited by the right reverend Prelate, on innovations to reduce flood risk through natural flood management and sustainable draining systems, informs national decisions on how best to roll out new technologies and share best practice across regions.
Baroness McIntosh of Pickering (Con)
Does the Minister agree that some of the most natural, sustainable and environmentally beneficial projects are those such as Slowing the Flow at Pickering, which has prevented Pickering flooding in recent years? Will he use his good offices to ensure that farmers will be reimbursed through environmental land management schemes, and that upland farmers in particular will benefit from flood prevention money as a public good to the community, especially common land graziers and others who farm on common land?
Lord Katz (Lab)
The noble Baroness is right to point to the potential for natural flood management to improve the environment in a holistic way while providing sustainable flood defences. That can be through a variety of approaches, including restoring riverbeds, changing the way in which land is managed, as the noble Baroness says, to absorb more water, or creating salt marshes in coastal areas to absorb wave energy. That is why this Government have pledged to invest at least £300 million in natural flood management over the next 10 years—the highest figure to date for the floods programme—as well as work for other programmes, including environmental land management schemes, to ensure that farmers are properly part of the flood defence picture.
Baroness Grender (LD)
What additional steps are the Government taking to ensure that the benefits of new flood technology reach people in rented, social and low-income housing and are not confined to owner-occupiers who are better able to afford private resilience measures?
Lord Katz (Lab)
It is worth pointing out that a fair amount of work has been done, particularly by the Environment Agency, to improve community outreach and engage with the kinds of households that the noble Baroness describes. For instance, more than 1.5 million users are signed up to receive EA flood warnings in advance of flood incidents. The Environment Agency provides the online “check for flooding” service, which has recorded 2.2 million users and 30 million page views since September 2024. There is some great work going on around education. Together with Microsoft, the EA has worked in partnership to develop three national award-winning Minecraft game suites designed to teach key stage 3 pupils about flood risk.
Baroness Ritchie of Downpatrick (Lab)
My Lords, I thank my noble friend the Minister for clearly illustrating that the Government are already on top of this subject, but want to encourage him a little further along the way. With changing weather patterns that have resulted in persistent rainfall in winter periods over several years, and droughts now characterising our summer period, can he have discussions with his ministerial colleagues in Defra about a technologically innovative solution involving the storage of this water, which would help promote better land use management and food security?
Lord Katz (Lab)
I thank my noble friend for raising that interesting example. I will certainly go back and talk with colleagues about how we make sure that we adapt to changing environmental factors. We say that local flood risk management planning should follow this sort of adaptive approach over time, which takes account of climate change and other needs, such as demographic change and food security, and ensure that climate change protections are built into the design of new flood defences.
The Earl of Kinnoull (CB)
My Lords, no matter how good one is at detection and prevention, there will always be floods. That is why it is important to have insurance. The Flood Re scheme, which was generated some years ago and was time-limited, applies only to buildings that were built before 1 January 2009 and only to residential buildings, so anything that has a micro-business in it is not insurable. As so much time has moved on, and as it is important to support micro-businesses in flood-plain areas, does the Minister agree that it is time to look again at Flood Re to see whether the eligibility criteria could be expanded?
Lord Katz (Lab)
I will have to write to the noble Lord with details about our future plans for Flood Re. He is right that it is important that the Environment Agency focuses on outreach, not only to households but to businesses, to help them adapt to changing weather conditions and demographic changes, as well as to new developments which will have an impact on flood risk in their local area.
Lord Blencathra (Con)
My Lords, the United Kingdom has developed some excellent technological flood detection and prevention solutions, including FloodAdapt, Nautilus barriers, Floodstop, flood defence and others. The UK Government’s funding strategy of November 2025 promised to use public money to unlock additional contributions from public, private and charitable sources and to encourage joint working. Can the Minister tell us what progress has been made in bringing on board private finance to utilise some of our technological solutions?
Lord Katz (Lab)
The noble Lord is right to quote what we said in our funding strategy from last autumn to assist with flood prevention. To be clear, the new funding policy is designed expressly to unlock additional investment from public, private and charitable sources. The new rules simplify eligibility and prioritisation, so that more projects can attract external contributions. We are expanding opportunities for natural flood management and sustainable drainage systems, in which private and charitable contributions are already established, and the EA is working closely with local partners. However, it would be remiss of me not to mention at this point that, on Tuesday, the Environment Agency announced a record-breaking £10.5 billion for flood defences over the next decade. It is important that we combine that heavy lifting from government investment with investment from other sources.
Baroness Royall of Blaisdon (Lab)
My Lords, last year, Professor Peter Bonfield undertook an independent review for Defra on how to improve the resilience of people and properties to flooding. Defra produced a report last November, called FloodReady—An Action Plan to Build the Resilience of People and Properties. Has this plan been brought to the attention of citizens who suffer from flooding, as did the citizens of Monmouth last autumn, so that they know how best to cope with and prepare for future floods?
Lord Katz (Lab)
I thank my noble friend for raising that important report—an example of engaging with communities. Apart from building flood defences in the first place, the most important thing we can do is make communities aware of early warnings to ensure that they can cope when floods occur. The Environment Agency is pioneering a number of different projects, such as working with Hello Lamp Post—I am glad I have the opportunity to mention this because I could not quite believe it when I was told about it. That firm has worked with AI to develop Hello EA, which allows people to talk to flood defences using mobile text messages and AI. It helps individuals learn how structures work and how flood risks are managed.
Rail Infrastructure Resilience: Storms and Floods
(1 day, 4 hours ago)
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Lord Berkeley
To ask His Majesty’s Government what plans they have to improve the resilience of rail infrastructure against future storms and floods.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, my department’s climate adaptation strategy for transport embraces detailed work on the railway infrastructure by Network Rail. That organisation has produced weather resilience and climate change adaptation plans by railway region, looking out not only over the five-year control period to 2029 but further into the 2030s. Those plans identify priority sites for maintenance, renewal and enhancement. Beyond 2029, work programmes will be firmed up and funded in future control periods.
Lord Berkeley (Lab)
My Lords, I am very grateful to my noble friend for that Answer and to know how much work Network Rail is doing to mitigate the effect of global warming. But when we look at the south-west, we see most of it cut off for several days—weeks, occasionally—not just by high tides, which are going to get higher, but by river floods. We may get a situation where the whole railway between, say, Newton Abbot and Exeter is closed and not repairable, so is it not time to start a formal study into the viability of inland routes and how they could be developed? That would give people who live in the south-west some comfort that the long-term resilience of the whole rail network down there is being looked at and preserved.
Lord Hendy of Richmond Hill (Lab)
As an engineer, my noble friend will know that Brunel built the railway around the south Devon coast in 1846 and that it has been under attack by the tides and weather ever since. The most serious closure was of nearly 60 days in 2014, and that was remedied by a large-scale investment project that spent £165 million. That resulted in a railway that was sufficiently resilient to remain closed for only 36 hours earlier this year, despite terrible weather.
The citizens of Devon and Cornwall can be quite comfortable that the future resilience of the railway is being looked after. The alternative route, which stopped operation some 60 years ago, in fact closed temporarily for a much longer period due to the heaviest rainfall ever recorded in the south-west. It would not be a sufficiently resilient route, even if it could be afforded to be rebuilt.
Lord McLoughlin (Con)
My Lords, I start by wishing the Minister a happy birthday—
Baroness Pidgeon (LD)
My Lords, first, I wish the Minister a happy birthday. As we have been discussing, extreme weather is our new reality, leading to the Tarka line, which links Barnstaple to Exeter in the south-west, already being closed for 24 days this year as a result of the recent storms. Will the Government commit to increased investment to help our railways adapt to the new climate and to keep passengers moving, whatever the weather?
Lord Hendy of Richmond Hill (Lab)
I thank the noble Baroness for her good wishes. There have been quite a lot of birthdays in my life so far. The Tarka line is part of what was the Southern route around the northern edge of Dartmoor. The highest rainfall ever in the south-west of England closed the line for a long period of time simply because the bridges had to be inspected to make sure that they were safe for traffic. There was a terrible accident some 40 years ago in Wales, when a bridge collapsed due to erosion after a storm. I can reassure the noble Baroness that Network Rail is looking at some advanced sensor technology in order not to have to wait for rivers to subside sufficiently for divers to inspect the foundations of bridges. That is a fairly modest expenditure, and I think it will help the resilience of the lines to Barnstaple and Okehampton.
Lord McLoughlin (Con)
My Lords, what progress is being made on doing some of this resilience work outside just bank holidays and weekends? A programme was set in place by the previous chairman of Network Rail to ensure that this work is done at other times of the year. Is that still being undertaken, and what progress has been made on that front?
Lord Hendy of Richmond Hill (Lab)
I think the previous chairman of Network Rail recalls one of the previous Secretaries of State telling him to do something like that—and, as an obedient public servant, that chairman went off and did it. The lines north of Exeter to which the noble Baroness, Lady Pidgeon, referred are, rather unfortunately, closing for two weeks in just a few days’ time. They are being closed in the winter season, when use is less, although it will still be inconvenient, precisely because it is cheaper and much more efficient—and the work gets done better—to do large-scale track renewal and maintenance of drainage and other structures. That cannot be done everywhere but, where it can be done, the noble Lord is absolutely right that the railways should do more of it. The co-ordination that will come from Great British Railways will enable more of that sort of work to be done.
The Earl of Kinnoull (CB)
My Lords, Network Rail—being, of course, a state entity—does not buy third-party insurance from anywhere, but the insurance industry has an amazing number of modellers and information about the natural perils in the United Kingdom, particularly the sweet-water peril and the salt water peril that we are discussing. Can the Minister tell us whether the insurance industry is being tapped for its expertise in trying to manage and predict these perils?
Lord Hendy of Richmond Hill (Lab)
The noble Earl asks a very pertinent question, and I will write to him. I believe that is true, but I cannot say for certain. Following the Carmont disaster, when people were killed as a result of an earthworks failure, the noble Lord, Lord Mair, wrote a very powerful report on earthworks maintenance for Network Rail, and Dame Julia Slingo did similarly on the weather. During my tenure at Network Rail, it started by buying the cheapest weather forecast it could. Dame Julia has pointed out that you can now forecast the weather in two-kilometre squares throughout the country; that is what Network Rail now does, and it helps prevention. I take what the noble Earl says very seriously and will write to him to make sure that the knowledge in the insurance industry is used.
Lord Swire (Con)
My Lords, the Minister has a very reassuring attitude towards travel, particularly in the south-west, but I think it will be many more birthdays before he resolves issues such as Dawlish Warren and the current closures we have in south Devon. Does he understand that users of the Tarka line, of which I am one, are not just people like me? There are a lot of students travelling from places in the north of Devon, such as Barnstaple, and all the villages and communities in between, trying to get to places such as Exeter College for sixth form on a very regular basis. Very often, the buses that are put in place do not necessarily tie up, and it is extremely difficult for them, particularly when they are facing things such as exams.
Lord Hendy of Richmond Hill (Lab)
I absolutely recognise that. The prolonged closure after the recent flooding has meant that Network Rail’s attention has been very sharply drawn to the need for both the structures and the earthworks to be more resilient, and for the inspection process for bridges, which I referred to earlier, to be done in a more expeditious way. I entirely recognise that many communities in north Devon rely solely on that railway, and that it must perform better in the future.
The Lord Bishop of Southwell and Nottingham
My Lords, in light of the repeated flooding of key routes operated by East Midlands Railway in the area that I serve, particularly the Erewash flood plain near Ilkeston, as well as the Trent Valley, what assessment have the Government made of the cost effect on businesses from loss of trade and overall productivity, and the wider social costs that arise, when railways are not functioning properly due to persistent flooding?
Lord Hendy of Richmond Hill (Lab)
The right reverend Prelate is completely right that the real costs of an interruption to the train service are suffered by individuals and businesses. This Question has so far concentrated largely on the south-west, but the right reverend Prelate reminds us that this is prevalent throughout the country. The adaptation plans that I referred to in my original Answer cover the whole of Great Britain, including the railway in Scotland and Wales. They are designed to reduce, as far as possible, the risks posed by flooding and other weather events to the whole railway on a continuing basis, precisely because of the effects of an interrupted service, as the right reverend Prelate says.
Refugee Movements: Lebanon
(1 day, 4 hours ago)
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The Lord Bishop of Chelmsford
To ask His Majesty’s Government what assessment they have made of refugee movements following Israeli military action against Hezbollah in Lebanon.
Lord in Waiting/Government Whip (Lord Lemos) (Lab)
My Lords, the Government are gravely concerned about the conflict in Lebanon and the humanitarian impact. We strongly condemn Hezbollah’s ongoing attacks against Israel. These must cease immediately. The forced displacement of 1 million Lebanese people as a result of Israeli operations is unacceptable and could have further disastrous humanitarian consequences—900 people have died. The UK Government have committed an additional £7.5 million to support immediate humanitarian needs in Lebanon, on top of our existing support.
The Lord Bishop of Chelmsford
I am grateful to the Minister for that response, and particularly for his call for de-escalation in the conflict. I imagine that many of us are shocked by the Israeli Defence Minister drawing parallels with Gaza, and I know that Lebanese officials have expressed concern. Indeed, I was present at a meeting recently where the Lebanese ambassador to this country spoke with great anxiety about Lebanon as the new Gaza. This outcome must be prevented at all costs, although the Lebanese people are of course already caught in the crossfire of hostilities, as the Minister has said. The UNHCR now says that, officially, over 800,000 people have registered as displaced. So I welcome the Government’s commitment to increased humanitarian aid and diplomatic steps to prevent further regional destabilisation, but how will they sustain support for countries in the region hosting refugees? What progress has been made on the establishment of safe and legal routes to enable asylum seekers to apply to travel safely to the UK?
Lord Lemos (Lab)
We condemn Hezbollah’s attacks on Israel. Hezbollah is a proscribed terrorist organisation and must immediately cease its rocket fire. Israel must not expand this war further into Lebanon, and we are deeply concerned by the scale of Israeli military action. We are providing humanitarian funding in Lebanon, as I have said. Since 15 March, the Foreign Secretary has announced a total of £15 million in humanitarian support for Lebanon and other countries in the region. Of the total £15 million, half the funding announced will support organisations in Lebanon. We are sustaining political engagement with both Lebanon and Israel. Minister Falconer spoke to Lebanese Foreign Minister Rajji, and the Foreign Secretary has spoken to Prime Minister Salam and to Israeli Foreign Minister Sa’ar. The Foreign Secretary has been clear that we need diplomatic action to prevent this conflict widening and to respond to some of the wider concerns the right reverend Prelate raises.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
We have plenty of time. It is the turn of the Cross Benches.
Lord Hannay of Chiswick (CB)
My Lords, the Minister did not mention a joint statement last week by a number of middle-ranking powers, including the UK, calling for an end to the hostilities in the south of Lebanon and Beirut. That was very welcome. But what is that group of countries doing collectively, in addition to what they may be doing bilaterally, to enable the President of Lebanon and the Lebanese armed forces to apply correctly the old ceasefire, which has now broken down?
Lord Lemos (Lab)
I thank the noble Lord for that question. He is right to say that we are working with our allies and partners. As he knows, we are long-standing supporters of the sovereignty of Lebanon, and we welcome the commitments made by the Lebanese Government, including banning Hezbollah’s military activities. The UK has provided over £850 million in official development assistance in Lebanon since 2011, going back through several Governments, right back to the coalition Government. This includes humanitarian and development assistance to Syrian refugees and the Lebanese community hosting them—in response to the right reverend Prelate’s question—as well as support to the Lebanese security services. I can say more if noble Lords want to ask me about international co-operation to move forward on the Strait of Hormuz.
Baroness Morris of Bolton (Con)
My Lords, the Palestinian refugee camps have been particularly affected by the military action. I have visited Shatila and Ain al-Hilweh in Lebanon, and life was pretty fragile at the best of times. I understand that the Lebanese Government are doing all they can to help the people affected, but some of the Palestinian and Syrian refugees are unable to access all that the Government are doing. With the money the Government are very generously giving to help, is anything specifically being done at this moment, in very difficult circumstances, to help the Palestinian refugees who started off with very little?
Lord Lemos (Lab)
I recognise the picture the noble Baroness paints. I am very happy to find out more, and to take that back to the Foreign Office to see if we can learn more about the specific questions she raises about the refugee camps. As far as the humanitarian situation in Lebanon is concerned, the crossings are still open and commercial flights are still running—at least, they were when I last heard. I am very happy to come back on the specific point about the Palestinian refugee camps.
Lord Kennedy of Southwark (Lab Co-op)
We will hear from the Lib Dem Benches next, and then the Labour Benches.
Lord German (LD)
My Lords, I draw attention to my interests; I am supported by the RAMP organisation. Based on yesterday’s figures, one million people are displaced in a country that already takes more displaced people than any other country in the world. We are talking about a massive humanitarian problem. The United Nations refugee agency has drawn attention to the fact that it needs an extra $61 million in funding before the beginning of June. Can the noble Lord tell us whether the £7.5 million that is to be provided is part of that United Nations’ massive appeal to assist? More than that, this situation is a feeding ground for people smugglers. What actions are the UK Government taking on the ground to deter those who may be enticed to make these disgraceful and dangerous journeys to the United Kingdom? That is an issue we will face, as a country, if we are not willing action now.
Lord Lemos (Lab)
I thank the noble Lord. Existing bilateral programming continues to bolster preparedness and national response capacity. This includes a £1 million top-up in January to pre-position emergency supplies via the British Red Cross and the Lebanese Red Cross, as well as smaller reallocations by the UNFPA, IOM, UNICEF and others, to meet urgent needs. We will, of course, keep under consideration any requests for further help. We are very mindful of the situation in Lebanon. It is an enormous displacement: hundreds of thousands of people are homeless and are sleeping in temporary shelters on the seafront in Beirut. We will certainly take that forward. With regard to people smuggling, this is a fast-evolving situation, as I am sure the noble Lord knows. We will continue to monitor that, but we are very mindful of those dangers.
Lord Kennedy of Southwark (Lab Co-op)
I did actually say that we would hear from the Labour Benches next.
Lord Anderson of Swansea (Lab)
My Lords, the increasing turbulence in the Middle East—in Lebanon, yes, but also in Sudan, South Sudan and Iran—means many more humanitarian tragedies and many more people who technically qualify as refugees and asylum seekers. Are we prepared for this? What are we doing in consultation with our European allies to prepare for a greater influx of refugees and asylum seekers?
Lord Lemos (Lab)
My Lords, I have answered questions before at this Dispatch Box about the situation in Sudan and elsewhere. We are very mindful of the movement of refugees.
UK Energy Sources and Cost of Energy
(1 day, 4 hours ago)
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The Earl of Effingham
To ask His Majesty’s Government, following the recent military strikes in Iran and Qatar, what steps they are taking to secure UK energy sources and reduce the cost of energy for UK citizens.
The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)
I thank the noble Earl for his Question. The UK benefits from a strong and diverse range of energy supplies. The physical supply of fuel to the UK is stable. The only way to protect ourselves from these and future potential price spikes in the longer term is to get off international fossil fuel markets controlled by the actions of petrostates and dictators. That is what our clean energy mission for homegrown power that we control is all about.
The Earl of Effingham
My Lords, I thank the Minister for his response. Last night’s escalation proved that we should not be dependent on imported oil and gas and that the UK must make use of its domestic energy supplies. Given this and the fact that, by autumn, we could be producing enough gas to heat 1.6 million homes by simply approving production at the Jackdaw gas field, will the Minister today commit to approving Jackdaw for gas production?
Lord Whitehead (Lab)
The noble Earl will be aware that the present crisis is essentially a price crisis rather than a supply crisis. I emphasise again that the UK has a strong and diverse range of energy supplies and that the physical supply of fuel to the UK is stable. However, the Government have not been idle in this respect. Among other things, the Government have introduced transitional energy certificates for North Sea and associated producing fields that allow producers to engage in tie-backs, which is the development of fields additional to fields that are already in production. That is completely in line with IEA recommendations on how production can be increased in the not too distant future.
Earl Russell (LD)
My Lords, I welcome the measures that the Government have already taken, particularly around reducing the cost of heating oil. Does the Minister agree that it is important that we work with allies and partners to encourage all involved to stop targeting energy infrastructure?
Lord Whitehead (Lab)
The noble Earl is absolutely right that one of the key issues in the recent escalation has been the targeting by both sides of oil and gas installations. Clearly, this brings into a further spotlight the need to seek an urgent de-escalation of hostilities and the resolution of this crisis by negotiation rather than continued bombing of everyone’s oil and gas facilities.
Lord Alton of Liverpool (CB)
My Lords, in the light of the Times report earlier this week on energy links between the United Kingdom and Xinjiang, has the Minister read the Joint Committee on Human Rights report on supply chain transparency and modern-day slavery? Will he say when he last discussed with Great British Energy its compliance with Section 3(2)(e) of the Great British Energy Act, which was added following an all-party amendment in your Lordships’ House and prohibits the use of products, such as solar panels, made by slave labour?
Lord Whitehead (Lab)
I will have to write to the noble Lord on the specifics he mentioned. He should know that the UK Government are pursuing very robust measures to ensure that the supply of products such as solar panels is not the product of modern slavery. Efforts are under way on the diversification of supply and on the certification of panels to ensure they are not subject to modern slavery. The noble Lord will of course appreciate the difficulty of getting exact information on the sourcing of particular products, but the British Government are doing everything they can to ensure that they are not from the sources that the noble Lord is so concerned about.
Lord Anderson of Swansea (Lab)
My Lords, does the current crisis and the vulnerabilities that have been exposed lead the Government to re-examine the case for tidal power in the UK?
Lord Whitehead (Lab)
The noble Lord mentions what is potentially a very effective, long-term and secure method of homegrown energy. As I mentioned in my initial Answer, the long-term way to protect ourselves from these price spikes is to develop homegrown energy. Clearly, tidal range, which has a very stable supply of energy and a not particularly long period of development, could play a role in that process. However, I emphasise that we are very far at the moment from developing tidal range in the way that the noble Lord seeks to promote.
Lord Moynihan (Con)
My Lords, two days ago, the Chancellor of the Exchequer said that all countries must play their part in boosting oil and gas production. The Energy Secretary demonises and bans drilling for oil and gas in the North Sea. Who is right?
Lord Whitehead (Lab)
No, the Energy Secretary does not wish to see drilling for North Sea oil banned. What he is doing, as the noble Lord will know, is developing transitional energy certificates, which will enable tie-backs to take place in existing fields. The noble Lord will know that the existing structure of the North Sea fields largely consists of fields that have not been tapped—small fields that are adjacent to additional fields—and so the tie-back arrangement will ensure both production and drilling for those tie-back fields in association with the existing fields.
Baroness Hayman (CB)
My Lords, I declare my interest as a director of Peers for the Planet. Given what the Minister said about this being, in essence, a price security issue, what progress have the Government made on the issue of decoupling the price of other forms of generation from the price of gas? As we know, that is hugely volatile and has an enormous impact on both domestic and industrial consumers.
Lord Whitehead (Lab)
The noble Baroness is exactly right. As she will know, part of the price increases that are being suffered at the moment go into the market-making price of gas that secures the general price of electricity, for example, in our markets by marginal cost pricing. Certainly, the renewed and continuing volatility in international markets is likely to be a substantial driver of high price levels and price increases in the future. Therefore, the Government are actively looking at measures that could decouple the UK energy market, where it is green and low carbon, from that marginal cost pricing arrangement, which is still driven by gas in about 65% of settlements at the moment. That will be part of the UK’s drive for clean energy sources for the future.
Lord Robathan (Con)
My Lords, surely the issue is one of supply, and it is not the Government’s fault. However, there is one thing that is the Government’s fault: we do not have a single ship in the Persian Gulf that can assist with guarding the Strait of Hormuz. Does the Minister share my disappointment that we do not have anything in the Gulf that can assist?
Lord Whitehead (Lab)
The noble Lord will know that we do have quite a presence in the Gulf, not of ships but of other defence capacity which can play some part as far as the Strait of Hormuz is concerned. He will also know that the US has already indicated that it does not wish to have the UK and other NATO countries’ assistance in undertaking the clearance of the Strait of Hormuz. Nevertheless, we regard the opening of that strait as imperative as far as fuel supplies are concerned. As far as UK fuel supplies are concerned, only about 1% currently comes from sources relevant to passage through the Strait of Hormuz—for example, Qatar. We are not as internationally exposed to those supplies as a number of other countries.
Lord Mohammed of Tinsley (LD)
My Lords, following up on the question from my noble friend Lord Russell, who mentioned support for domestic users in particular of heating oil, my question is on highly energy-intensive industries, particularly steel. What support, if any, are the Government thinking of providing, particularly if this war continues for weeks and months rather than just ending in days, as we hope, for the steel industries in south Wales, Scunthorpe and South Yorkshire?
Lord Whitehead (Lab)
The Government are open to all eventualities as far as this crisis is concerned and are keeping the position under review on a very regular basis. The noble Lord will know that immediate support has been for heating oil, particularly for those customers who are off grid in the UK. The Government recently announced over for supplies of heating oil, with particular reference to Northern Ireland, where a substantial proportion of the population are dependent on oil for heating. Of that £50 million-odd, £17 million has gone to Northern Ireland for that purpose.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
We will hear from the noble Baroness, Lady Bennett.
Baroness Bennett of Manor Castle (GP)
My Lords, I am sure that the Minister will agree that the cleanest, greenest, cheapest and most secure energy is the energy that you do not need to use. France, for example, is far ahead of us in avoiding wasteful use of energy, with measures such as switching off the lighting for shops, ensuring that offices switch off lights during the night and taking measures to stop wasting energy, such as with video screens with advertising. What steps are the Government taking to reduce the wastage of energy, which will make us all more secure?
Lord Whitehead (Lab)
The first issue is, as the noble Baroness suggests, the efficient use of energy by more intelligent means and planning how that energy is deployed on a highly intelligent basis. That is activity that the Government are advanced on as far as the management of our energy system is concerned. The second point is, as the noble Baroness mentions, the energy security from energy that is not used. The Warm Homes Plan that the Government have recently introduced—a multi-billion programme over a number of years to increase the energy efficiency and resilience of people’s homes, particularly those in fuel poverty—will produce not only a win for fuel poverty but a substantial win for the efficiency with which energy is used and the amount of energy that is used in the domestic sphere.
Lord Kennedy of Southwark (Lab Co-op)
It is definitely the turn of the Conservative Benches.
Lord Fuller (Con)
My Lords, the crisis is immediate. What assessment have the Government made about the essential products that rely on gas—ammonia, CO2, aniline, soda ash, ethylene and sulphuric acid—without which a modern economy cannot exist and without which factories will close?
Lord Whitehead (Lab)
The noble Lord will know that we have recently engaged in an extensive conversation in corridors about the question of ammonia in the UK economy. This is related to the energy crisis, in as much as we do not have ammonia manufacturing sites in the UK and the manufacture of ammonia is highly energy dependent. One of the ways forward on that is to produce green ammonia, which he will know was a subject of our discussion just recently. That is one way to secure the future of ammonia supplies in the UK without resorting to high levels of fossil fuel in the process.
Further Education (Initial Teacher Training) Regulations 2026
Baroness Blake of Leeds
That the draft Regulations laid before the House on 22 January and 5 February be approved.
Relevant documents: 50th and 51st Reports from the Secondary Legislation Scrutiny Committee (special attention drawn to the second instrument). Considered in Grand Committee on 17 March.
Tertiary Education and Research (Wales) Act 2022 (Consequential Amendments) Order 2026
Renewables Obligation (Amendment) Order 2026
(1 day, 4 hours ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Whitehead
That the draft Order and Regulations laid before the House on 2 February be approved.
Relevant document: 52nd Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 17 March.
Data (Use and Access) Act 2025 (Consequential Amendments and Transitional Provision) Regulations 2026
Lord Leong
That the draft Regulations laid before the House on 2 February be approved.
Considered in Grand Committee on 17 March.
Pension Schemes Bill
(1 day, 4 hours ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
12:27 - Division on Amendment 49 - Ayes: 217 / Noes: 107 - Amendment 49 agreed.
13:16 - Division on Amendment 52 - Ayes: 217 / Noes: 113 - Amendment 52 agreed.
13:56 - Division on Amendment 77 - Ayes: 191 / Noes: 118 - Amendment 77 agreed.
14:28 - Division on Amendment 105A - Ayes: 184 / Noes: 118 - Amendment 105A agreed.
14:47 - Division on Amendment 115 - Ayes: 135 / Noes: 110 - Amendment 115 agreed.
Baroness Sherlock
Member's explanatory statement
This amendment corrects a consistency mistake.
Member's explanatory statement
This amendment corrects a consistency mistake.
Member's explanatory statement
This amendment corrects a consistency mistake.
Member's explanatory statement
This amendment corrects a consistency mistake.
Baroness Altmann
Member's explanatory statement
This amendment would only classify an unused pension pot as “dormant” if it had been left alone for at least three years, not just after one year.
Baroness Altmann (Non-Afl)
My Lords, I will not detain the House too long on this amendment. It is a small amendment, but it is very important for members of pension schemes in auto-enrolment, particularly women.
The proposal in the Bill is to move small pots, under £1,000, which are considered dormant—in other words, they have had no contributions paid in and no contact from the member with the provider for 12 months—to a consolidator scheme without member consent. My argument is simple: 12 months is simply not long enough to consider that a scheme that has not had contributions paid into it is dormant and that that member has no interest in the scheme. Imagine a woman, for example, who stops work for a period to care for loved ones or elderly parents, partners or children. They may stop contributions for quite a while longer than a year, but their pension could be moved if the provider had not been able to contact them, and their money would be put into a consolidator scheme approved by the regulator over which they had no control.
Amendment 49 would extend the period before which somebody’s pot could just be taken away from one year to three years; and Amendment 50 would extend it to two years. This would give time for the Government’s correct aim of improving data accuracy to take place. We know that most pension schemes have huge errors in their data and do not always know even how to contact a member. It would also allow time for providers and trustees to trace members and for the pensions dashboard to start and members to be able to find their pots themselves.
I understand that pension providers do not want these small pots and they may make a loss on them, but they should not just be able to get rid of them with such unseemly haste. I hope the Government may accept the spirit in which this amendment is meant, which is to protect members while obviously still allowing the pots to be moved once it is beyond doubt that they are indeed dormant. I beg to move.
Lord Fuller (Con)
My Lords, once again, we have another policy designed by civil servants sipping lattés in that rather agreeable ground-floor coffee shop at 1 Horse Guards Road, safe in the knowledge that that regular monthly salary, their generous taxpayer-funded pension and their ability to work from home a couple of days a week provide that comfortable lens through which they view the world outside.
But outside, in the real world, there are whole armies of people who do not do the nine to five; they live by their wits, self-employ and undertake seasonal work or term-time employment—the men or women for whom the Labour Party was established and who salt money away for their retirement when they can.
Many of them work hard and ask their accountant to do the books at the end of the year. It might take some time. Neither the worker nor the accountant work to strict 12-month timescales. It might take three months to finalise the numbers in one year, nine months in the next. That is the untidy way in which the real world works.
To legislate to confiscate someone’s pension after 12 months, as if it was fly-tipped by the side of the road to be swept into the dumpster of some poorly performing default scheme, amounts to theft and an abuse of trust that undermines confidence in the pension system.
I totally endorse Amendment 49 in the name of my noble friend Lady Altmann for another reason as well: throughout the canon of pensions legislation, we have a three-year carryback, where people can make up their pension deficit over three years. This amendment is entirely consistent with that. Consistency, simplicity and understandability are the watchwords with which we should proceed.
Baroness Coffey (Con)
My Lords, I also support my noble friend Lady Altmann’s amendments. Whether she chooses Amendment 49 or Amendment 50 on which to divide, I will support her by voting with her.
The important point here is that people’s lives are unpredictable. One reason why we are extending this even now is that the pensions dashboard is so late in helping to get people informed. Those are the sorts of issues that we are still dealing with. The sooner that people can be better informed, the more agile they will be able to be in consideration of contributions that might need to be made in the future. So, this is an important amendment.
I gently say to my noble friend Lord Fuller—how can I put it?—Caxton House is not as glamorous as the Treasury pitch that he sets out. I know that officials have been working carefully on aspects of this, but it is the wrong move. It was the decision of Ministers rather than civil servants to make this recommendation. That is why I am sure that we will all be in the same Lobby.
Lord Palmer of Childs Hill (LD)
My Lords, in a less confrontational way than the noble Lord Fuller, from these Benches, I confirm that we support Amendment 49. The Government should not fail to support this. It is in the name of noble Baroness, Lady Altmann, and it would increase the time before a pot was considered dormant in order to provide greater flexibility for savers such as mothers, those on sabbatical or mature students, who may not add to their pots for one to three years. We have no hesitation on these Benches in supporting amendment in the name of the noble Baroness, but not in quite such confrontational terms as the noble Lord, Lord Fuller.
Baroness Stedman-Scott (Con)
My Lords, in continuing the spirit of good grace, I wish our Deputy Chief Whip a very happy birthday today.
I will speak briefly in support of Amendment 49 in the name of the noble Baroness, Lady Altmann, which I was pleased to sign. Fundamentally, the amendment is about ensuring that we do not move too quickly to classify pension pots as dormant and, in doing so, risk making decisions on behalf of savers before they have had a fair opportunity to act for themselves.
By extending the period before a pot was treated as dormant, the amendment would delay when pots became eligible for automatic consolidation. That is important, because it would reduce the risk of pots being moved prematurely, perhaps at a point when an individual was between jobs, was taking a short break, on maternity leave or simply had not yet re-engaged with their savings. It would also give savers more time to re-engage with their pension, to make further contributions and to take an active and informed decision about what they want to do with their savings.
If we are serious about putting savers at the centre of this system, we must ensure that pots are not automatically consolidated after only a short period of inactivity. The new period proposed by the noble Baroness, Lady Altmann, seems to be eminently sensible. I therefore hope that the Minister will give it careful and serious consideration, and I hope she will adopt it. If not, we will be pleased to support the noble Baroness, Lady Altmann, if she chooses to test the opinion of the House on the amendment.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, I thank noble Lords—at least, most noble Lords—for their contributions to that little debate. It is probably worth saying at the outset what this is about. Anyone who listened to the noble Lord, Lord Fuller, would assume, first, that theft was involved; secondly, that pots were being taken away from people; and, thirdly, that they were being taken away from hard-working, self-employed businesspeople. None of those things is true. These are pots where people have had a series of jobs, they have moved on and they have left small-value pots scattered around in different places, on which they are paying often quite significant charges, and the value of those pots is diminishing.
The policy was consulted on not by civil servants sitting in Horse Guards Parade but by the previous Government in 2023. This is the proposal that was consulted on by the previous Government and I happen to think that they got this right. So too did the range of opinion that was consulted, and I will say more about that in a moment.
The intention behind the policy is to capture the rights-dormant small pots and have them transferred to a consolidator, which will be clearly classified by the regulator as being one that has been classed as having value for money, and only to such a pot. The intention is to capture the right small pots that are genuinely dormant while avoiding transferring pots belonging to members who remain actively involved with their pension saving. Of course, no eligibility test will operate perfectly in every circumstance, but we believe the current 12-month period provides the right balance between effective consolidation and member protection. I shall explain why in a moment.
The noble Baroness, Lady Altmann, wants to extend the period to 24 or 36 months. That would significantly extend the period during which a pot remains dormant. This is not about industry; it is about risking detriment, both to individual members, who would continue to face charges for longer, and to the wider scheme membership, who, in practice, subsidise these small deferred pots. Either of those extensions would delay the consolidation of genuinely dormant small pots, leaving inefficiencies in the system for longer, resulting in—
Baroness Altmann (Non-Afl)
If a pot has been forgotten about for many years, this problem will not exist even with my amendment because it will have been dormant for over three years, if it was left behind from a long time ago. I am concerned about the people who are working at the moment who may take some time off, and to give them a better chance.
Baroness Sherlock (Lab)
If the noble Baroness could have just a bit of patience, I am just coming to that. I ask her to bear with me for a moment.
Either of the noble Baroness’s proposals to extend the period of dormancy would delay the consolidation of genuinely dormant small pots, leaving inefficiencies in the system for longer, resulting in higher costs for schemes and for members through higher charges.
Where someone holds several small pension pots across multiple schemes, they will find themselves subject to multiple sets of charges over a number of years. The longer the dormancy period, the longer that members will face those charges. It is well recognised that many schemes apply a flat-fee charge structure, particularly those most affected by the proliferation of small pots, and that can compound the issue. For example, a saver with three separate small pots held across three schemes, each applying its own annual flat-fee charge, could see those charges accumulate over an extended dormancy period. If the period were lengthened to 36 months, they could face four more annual charges. Given the relatively low value of many small pots, such cumulative charges represent a significant risk of detriment to the member.
On the point about people taking a career break with the intention of returning to work, in the majority of cases such members will be adequately protected by the 12-month dormancy window. The noble Baroness, Lady Stedman-Scott, mentioned maternity leave. This was looked at carefully during the consultation. Where someone is on paid maternity leave, employers should carry on paying pension contributions. Where contributions are being made, the pots are not dormant, so any period of dormancy would not start until no contributions were paid, and those pots would not be subject to dormancy criteria and would not be consolidated.
Anyone taking an unpaid break that lasts longer than 12 months would find that the system included various safeguards. First, every member will get a transfer notice before consolidation takes place, giving them a clear opportunity to opt out if they judge that consolidation is not in their best interests. As we develop the delivery design, we will look to explore different forms of communication to understand how they can best support members’ engagement with the process.
Secondly, under Clause 115, the Government are taking a power to require employers to provide updated information to schemes periodically. We will consult on how that should operate, but if subsequent evidence shows that career breaks present a genuine issue, we could simply require employers to notify schemes where a break was planned or under way. Where appropriate, that would allow such pots to be made exempt from consolidation under regulations made under Clause 25.
However, the current evidence does not indicate that this is expected to be a widespread problem. As I said earlier, the 12-month timeframe formed part of the proposal consulted on with stakeholders across the pensions industry and consumer representative bodies in 2023 and represents a supported middle ground—long enough to ensure that pots are genuinely dormant, but not so long as to delay consolidation unnecessarily. It is essential that the policy maintains the right balance between operational efficiency and member protection. Just to be clear, the Bill currently requires the regulations to set a minimum of 12 months for a pot to be classified as dormant. That means that if evidence suggests that extending the period is necessary, that period could be set at a higher level or it could be extended subsequently through secondary legislation.
We all want to avoid negatively impacting individuals who take periods of unpaid leave, but if we think about it, applying a blanket extension to the dormancy criteria cannot be the right way to provide that protection. A more appropriate approach is to design the policy framework with the necessary safeguards built in from the outset, and that is what we have done. Introducing a universal increase to the dormancy period would exacerbate the risk of detriment for everybody involved.
Finally, government Amendment 51 is a minor and technical change. It replaces “specified” with “prescribed” in Clause 23 to ensure consistent terminology throughout the Bill. The amendment improves clarity and brings the clause into alignment with the drafting used elsewhere in the measure. In the light of what I have said, I hope that the noble Baroness will withdraw her amendment and that the House will support government Amendment 51.
Baroness Altmann (Non-Afl)
My Lords, I thank the Minister for her reply. What she describes sounds very good in theory. My amendment is designed to address the issue that that theory does not work in practice in the kind of pensions world that we have right now. There will be improvements, but they are not in place yet. There is no compensation for a member whose pot is moved away to a worse scheme. They may have higher fees or they may have lower fees. They may get better performance, they may get worse performance. It should be incumbent upon all of us to make sure that there is as much protection as possible. If somebody has not paid in for years, the three-year limit will be fine because they will have exceeded it. Therefore, I wish to test the opinion of the House on Amendment 49.
Baroness Sherlock
Member’s explanatory statement
This amendment corrects a mistake.
Baroness Bowles of Berkhamsted (LD)
My Lords, we debated Clause 40 and the new FSMA Section 28C issues thoroughly in Committee. I am grateful to all noble Lords who contributed and to those who have spoken to me since. The amendments in this group would remove the reserve power that would allow the Government to mandate asset allocations for workplace pension savers. We will vote on Amendment 52, which is a consequential amendment, but it carries with it the business amendments—the thing that it is really about. These are Amendment 78, which would delete Section 28C, and Amendment 96, which would delete the now redundant savers’ interest test and all associated references.
My objection here is one of principle. Why should government override trustees? We all know that UK pension funds have invested too little in UK assets and private markets, but we also know why: regulatory interventions, the charge cap and pressure into low-cost indices and gilts have made it difficult to invest in anything that requires governance or research. The track record of intervention is not good, yet this clause proposes more intervention. It is described as a back-up to the Mansion House Accord, to be used if industry does not deliver. But if industry does not deliver it will not be out of obstinacy; it will be because the opportunities are not there at the right price or at the right risk. Mandation does not solve that; it simply overrides fiduciary and professional judgment. Even the threat of mandation is intended to do the same.
If regulated for, this clause would reverse the burden of proof and raise the evidential bar for trustees. Trustees, who already must act in members’ best interests, would additionally have to show the regulator that the mandated allocation would cause material detriment to be exempted from allocation. That is a very high bar, flying under the guise of a savers’ interest test. We would be placing trustees under a new adjudicator of fiduciary duty that has no fiduciary responsibility itself, and a Government with an inherent conflict of interest—and, if I may say, no technical or regulatory qualification. Spending workers’ pensions instead of raising taxes is not fiscal discipline; it is concealment.
The power itself is extraordinarily broad. There is no time limit, no percentage, no end date, and a rather dodgy exemplary asset list—available to any future fancy. Nothing prevents a Government from choosing their preferred assets, including those that no one else will touch, and compelling 22 million savers to invest in them. That is not the route to pension security.
For all these reasons, the only responsible course is to remove this power, and I intend to test the opinion of the House. I beg to move.
Baroness Altmann (Non-Afl)
My Lords, I fully support everything that the noble Baroness, Lady Bowles, said. I am very sad to be in the position of needing to do so, because I support the Government’s aim of helping pension schemes to put more money into UK investments and growth. However, the way in which it is being done is the issue here, with unlimited powers and not incentives but diktats. If you threaten a pension scheme that, unless it does what you want, it cannot auto-enrol workers in this country then clearly that is not any kind of carrot; it is just a big stick. Incentivisation is normally what we do to encourage pension investments, and it is what we should be doing. One of my amendments would achieve that, but if the noble Baroness, Lady Bowles, is successful with Amendment 52, we will not need to go into those details.
I hope that the Government, even at this late hour, will rethink their approach to have a two-step approach: to have a voluntary agreement and commit to do certain things, but then the second step would be, if the voluntary agreement was not stuck to or if schemes did not do any of the things that they said that they were going to do, that they would force schemes to do what they wanted anyway. That is not the way to make the best of people’s pensions, and I hope that the Government will think again.
Lord Vaux of Harrowden (CB)
My Lords, when you are trying to solve a problem, it is best to try to understand the root causes of the problem and then resolve those causes—diagnose and treat the disease, not the symptoms. That is why I have repeatedly asked the Minister why she believes UK pension funds have been so reluctant to invest in so-called UK productive assets. I know she gets frustrated with me asking this question regularly, but she has never answered it. She always responds, as she did again on 11 March, by explaining what the symptom is: that UK pension funds invest a much lower proportion in UK productive assets than international comparators. She is right, and, as noble the noble Baroness, Lady Altmann, just pointed out, I do not think any of us disagree with that, but that does not answer the fundamental question. Why are UK assets apparently so unattractive to UK pension funds? What are the barriers to investment that we need to remove?
The Minister has often told us that the mandation power is just a backstop to the voluntary Mansion House agreement and probably will not be used. That is precisely the problem. It does not need to be used; its very existence is, in effect, mandation. As the Times pointed out so clearly on Saturday:
“A voluntary agreement … ceases to be voluntary … if it is underwritten by the promise of compulsion”.
Even if the power is not used, it still creates a fiduciary duty problem: the trustees are still, in effect, being forced to act in a way that they might not believe to be in the best interests of members, but they will not even have the defence of ,“We were only following orders”, if it turns out badly. The Minister has never given an adequate response to the question of who should bear the risk if the government-mandated assets result in poor performance.
On 11 March, the Minister said:
“This power does not direct schemes into specific assets or projects. What it does is set a broad framework aligned with the industry’s own voluntary commitments under the Mansion House Accord. Trustees retain full discretion over individual investment selection and the balance between asset classes”.—[Official Report, 11/3/26; col. 279.]
But that is not what the Bill says. What it actually does is give the Government power to require that an undefined and unlimited percentage is invested in qualifying assets, which are defined as
“an asset of a prescribed description”.
I stress that it says “an asset”, not just a class of assets.
There is no limit in the Bill on what those assets can be, except that they cannot be listed on a recognised exchange. Contrary to what the Minister has told us, specific assets or projects can be prescribed. Nor does the Bill require them to be in the UK; they can be anywhere in the world. The first regulations to define the asset allocation are subject to the affirmative procedure, but after that, any future Government can prescribe any asset, anywhere in the world, on any percentage, under the negative procedure.
As the noble Baroness, Lady Bowles, pointed out, a scheme can apply for an exemption, but it is an incredibly high hurdle. A scheme must prove that the asset allocation requirement would cause
“material financial detriment to members”.
That is extraordinary—not just that it is “not in members’ interests”, but “material financial detriment”.
Contrary to the Minister’s assurances, this unlimited mandation power can be used to direct trustees to invest in classes of assets or specific assets. It fundamentally undermines the fiduciary duty of pension trustees. This dangerous power must be removed from the Bill. Instead, the Government should, as I said at the beginning, focus their efforts on identifying and removing the underlying barriers to UK investment.
Lord Johnson of Lainston (Con)
My Lords, I speak in this mini-debate in full support of this amendment. I am extremely concerned about the principle of government directing any form of investment. I do not think any Government have a strong record on making investments, and to compel pension funds to make such investments would be incredibly dangerous. As the noble Lord, Lord Vaux of Harrowden, has so wisely said, we are setting ourselves a very dangerous precedent here that we will all—as people who want to retire at some point—live to regret.
My second point is a technical one, which the noble Lord, Lord Vaux, touched on but is worth exploring slightly further: namely, the description of what a directed investment is. What is a UK investment—the sort of thing we would be told we have to invest in? Is it a company where the headquarters is domiciled in London, or that employs a certain number of people, or that does a certain thing in the UK specifically related to certain asset classes?
The reality is that you will have enormous problems if you try to force money into certain parts of the economy. You will get crowding out and excess price. An example could be to force these pension funds to invest in infrastructure. You would have a crowding out of other investments into infrastructure projects that would be mispriced, and that would create problems when it came to trying to generate returns. We should be very careful about that. Prescription over investment is one of the worst things a Government can possibly do, and I think we should acknowledge that in this House.
As has been mentioned, why are we talking about forcing people to buy things that other people do not wish to buy when we should be trying to create an economy that people want to invest in? I call upon the Minister to put that as the priority, rather than trying to force people to do things they do not wish to do, which will cause enormous problems in the long term.
Lord Wolfson of Aspley Guise (Con)
My Lords, I begin by declaring an interest as chief executive of NEXT plc, a company that has over 20,000 colleagues enrolled in an auto-enrolment pension.
I want to convey to the Government just how worried people are at the idea that the Government are planning to mandate how their pensions—their life savings—should be invested. To be told that a percentage, as yet to be determined, should be invested in certain classes of assets, as yet to be defined, by Ministers who can give no indication as to what they want to do with these powers is deeply worrying.
Good investments do not need to be mandatory. In fact, there is the inherent suspicion that investments which are compelled are unlikely to be very good investments. It is worse than that, because if the demand for certain asset classes is artificially increased then the returns are likely to fall further. Why pay a healthy return to an investor who has no choice but to invest in your class of asset?
It might be argued that while mandated investments are not so good for pensioners, they will be good for the nation as a whole. This is a dangerous precedent, and it is not credible, because the Government are not well placed to allocate capital in this way. They are subject to political pressures, the competing priorities of their Back Benches, the media and the polls.
I join other noble Lords in saying that the Government are not wrong to worry. The British pension funds show an alarming tendency to avoid investing in UK businesses, but there are better answers than this—reform the regulatory regime, make the UK a more attractive place to invest in. Compulsion is the worst possible solution, and it is that compulsion that goes to the heart of my concerns, and those of many others, about this power.
The greatest risk of this power is that the Government abuse it—that in the thick of some political storm, under pressure to boost the economy and to serve some interest group, they mandate large-scale misguided investment in some part of the economy as a last roll of the dice. I stress that I completely accept that this Government would not abuse the power. However, can the Minister be so sure that all future governments, perhaps led by their political opponents, will not abuse it?
Other noble Lords have rightly spoken about the breadth of these skeleton powers. They are not quite Henry VIII powers but, to me, they look very much like Robert Maxwell powers—the power to control and direct the investment of other people’s hard-earned savings for purposes other than their benefit. Back then, we said that never again would we put the savings of so many people in the hands of so few powerful people, or risk people’s life savings being invested for anything other than their benefit. This power takes us back in the wrong direction. It should not stand. I support the amendment tabled by the noble Baroness, Lady Bowles.
Lord Fuller (Con)
My Lords, those people who have done the right thing and saved for retirement have made a bargain with the state: in exchange for a little help on the way in, the state will be relied on a little less on the way out—that is the deal. The responsibility for finding people to look after your money lies with the individual and the trustee or investment managers they appoint. On that simple truth, London has developed global leadership in asset and investment management, and the entire City ecosystem has created a tax gusher that pays for defence, schools and hospitals. We should not place it or its reputation under threat.
We have heard a lot from the Dispatch Box over the last 12 months or so about the sort of investments that the Government think we should invest in. We need to learn some lessons from history. One such investment is green schemes, forgetting that when they tried this under political direction in Sweden it created the $5.8 billion Northvolt disaster and all the public sector pensioners lost their shirts. The Minister from the Dispatch Box lionised the large Canadian public sector schemes as the model that should be followed. Last year, their investment returns went down by 5%, at the same time as our own LGPS went up by 9%.
Ministers want schemes to backfill UK infrastructure, and perhaps steel, which we now learn could cost us over £1 billion in a little over a year—money that will never be seen again—or carbon storage and passive funds, which, by arithmetic, lead you into bubbles or into high-risk private assets. At 5 am this morning, the Financial Times published an excoriating demolition of the claims that private equity funds do as well as the Chancellor claims, especially as the J-curve gets stretched out beyond 10 years. I could go on, but I will not.
The point is that, while Ministers want to pick winners, they have been selling lemons. The pound shop pundits are trying to force-feed the riskiest parts of the market—the bits the other professionals turn their noses up at or consider are not right for the man in the street—down the throats of those for whom taking excessive risk is not necessarily the right thing. The Government’s job is to create the environment for the best and most attractive investment ideas to come forward, not to beat pensioners with a stick and strong-arm them into financing their high-risk pet projects, with high fees and uncertain returns.
But, worst of all, if mandation does come, it will create the sort of value-sapping moral hazards and conflicts of interest that will allow the most poorly performing managers to have a “get out of jail free” card—“It was that Torsten Bell chap what told me to do it, guv”—while trashing the global reputation of the UK asset management business and imperilling that tax gusher we all rely on. But, ultimately, it will be the little guy who pays the price, poorer long after Rachel Reeves and Torsten Bell have become a footnote in history. It is our duty to stop this, and we must.
Lord Ashcombe (Con)
My Lords, I declare my interest as an employee of Marsh, whose sister company Mercer is a pension consultancy, master trust provider and signature to the Mansion House Accord. I speak in strong support of this group, beginning with Amendment 52, which would remove the power to mandate asset allocation while preserving the requirement on scale. This is a targeted, proportionate change. It keeps the legitimate objective of ensuring sufficient scale in the market without stripping trustees of the fundamental responsibility to make investment decisions.
I have never supported—and it has become abundantly clear in recent weeks that the bulk of industry does not support—the Government’s proposed power to mandate asset allocation. I have listened carefully over the past weeks to Ministers in both Houses, who say that these clauses are simply a reserve power intended to ensure that the Mansion House Accord operates. Even accepting that characterisation, the House should not lose sight of two important points. First, the schemes that signed up to the accord did so in good faith and with trustee agreement. Secondly, those signatories did so on the basis of explicit caveats—caveats that recognised trustees’ fiduciary duties, the necessity of a reliable pipeline of assets and the imperative that the market shifts from a narrow focus on cost to a broader assessment of value across the whole investment chain, including by clients.
It is therefore deeply disappointing to see the Government invoke the Mansion House Accord agreement as though it represents blanket industry support for intervention in private finance and trustee decision-making. It does not. Conflating a voluntary conditional industry commitment with a license to centralise investment allocation decisions risks doing grave damage to good governance and to member outcomes. For these reasons, I urge noble Lords to support these amendments, remove the dangerous power to mandate asset allocation, keep the focus on scale and let trustees, acting with their fiduciary and statutory duties, continue to determine the investment strategies that best serve their members. These amendments achieve that balance.
Baroness Coffey (Con)
I signed Amendment 52 in the name of the noble Baroness, Lady Bowles of Berkhamsted, because—let us be candid about this—this is not the Government’s money. There seems to be an attitude that, because the Government use tax relief in other ways to encourage people to invest in private pensions, all of a sudden they are somehow going to tell people what to do with their cash—instead of putting government taxpayers’ money into those projects—just because that cash is not being invested in projects the Government want.
Even auto-enrolment, which has been a force for good, is not mandatory; people can opt out. There has always been a recognition that it is somebody’s salary, and so it is their choice what they do with their take-home pay. The approach in the Bill goes completely against that because—I will not use unparliamentary language—the Government are almost blind to the fact that it is not their money.
My particular concern is that there never was a human rights impact assessment. I have written to the Attorney-General to understand that, because I think this could well be covered, in effect, as personal property under Article 1, Protocol 1 of the ECHR. Yet the Government seem quite happy to say that this meets the human rights test. We have never seen that backed up, so I would be grateful if the Minister could publish any assessment they have done before we get to Third Reading.
To be straightforward, this is the wrong approach. The voluntary accord is the right approach, which is why I will support the amendment if it is tested.
Lord Lucas (Con)
My Lords, we know that a much higher percentage of pension fund assets could happily be invested in UK assets; indeed, that was the case when I was managing pension funds. It is not the case now entirely because of what politicians have done to the system. We should seek to undo that, not fudge it, as the noble Lord, Lord Vaux of Harrowden, said.
My recommendation to the Government is that, rather than giving themselves power, they should give pensioners and investors in pension schemes power. There are structures in the Bill that allow pensioners to express their opinions on what their money is being invested in, but nothing that gives any effect to that. I suspect that most of us receive our annual returns from the pension funds we are part of and put them straight in the bin, because there is nothing we can do with them. We ought to be in a position to do something that would have an effect. I recommend that the Government choose that route rather than the one they have chosen.
Baroness Stedman-Scott (Con)
My Lords, of all the amendments we have tabled and discussed on this Bill, for me, this group is the most important. Mandation is, rightly and understandably, the most contentious part of the Bill. I am grateful to all noble Lords who have helped raise awareness of this issue, which, as I am sure the Minister is aware, has garnered a lot of attention—and criticism—outside of this place.
The ABI has written to the Minister in the other place, Torsten Bell, to warn him of its “serious concerns” about the mandation power, saying that it is “not necessary” for the Government to mandate investment. It has asked the Government to withdraw this part of the Bill. Pensions UK has been unambiguous on this point. It too has called on the Government to remove this power from the Bill, warning that it would harm
“free and open market competition aimed at driving better saver outcomes”.
It has said that mandation would
“put those outcomes at risk”.
More recently, Paul Johnson, formerly of the IFS, wrote strongly against mandation in an article in the Times. Just the headline and strapline will give the Minister all the information she needs:
“Telling pension funds where to invest will not end well. The government’s desire to boost UK assets is understandable, but overriding the fiduciary duty of trustees crosses a line”.
The industry is clear, the experts are clear and much of this House is clear that the Government should not be directing private sector investment. It is obvious that this power overrides the fiduciary duty of trustees. This is a radical step, and it establishes the principle that it is appropriate and desirable for Governments to tell schemes how to invest to meet their own political objectives. The Government are right to want investment in UK assets—indeed, I am sure that no one in this Chamber would not welcome more money in UK assets. However, if the picture is not where we want it to be, the question for the Government is: why? Why is the UK not attracting that capital? What barriers exist? What reforms are needed?
Instead of doing that work, the Government have reached for a shortcut, a reserve power that is really a threat to compel investment. This is reckless. It sets a dangerous precedent, and the Government’s central defence—that they do not intend to use the power—raises two unavoidable questions. First, if they never intend to use the power, why are they legislating for it? Secondly, how can the Minister assure us that the power will not be used when they will not be in office for ever? This power is going into law, and I am afraid it will outlast the Minister and indeed all of us. The noble Baroness cannot speak for future Administrations, or indeed political parties such as Reform, God help us, which has signalled a great willingness to direct investment. The Government are handing this power not merely to their own Ministers but to future Ministers.
I will not detain the House any further than to say that this power must be removed. It is a massive overstep from the Government and, despite all the assurances of the Minister, no one is yet convinced that this can remain. Industry rejects it, experts have expressed serious concerns about it, and the Minister must remove it. I am sure she has listened to all noble Lords’ contributions. As my noble friend Lord Wolfson said, we must remove this Robert Maxwell power. We on these Benches, and I am sure others, will support the noble Baroness wholeheartedly if she seeks to divide the House on this matter.
Baroness Sherlock (Lab)
My Lords, as we have heard, the combined effect of these amendments would be to remove from the Bill the Government’s reserve power to require certain pension schemes to hold a prescribed percentage of their assets in qualifying assets. As the noble Baroness, Lady Bowles, indicated, we explored this territory in some depth in Committee, and noble Lords made a number of detailed and considered arguments. It has been good to have an opportunity to talk to a number of colleagues since then and to discuss their concerns. The Government have reflected but continue to regard the asset allocation reserve power as a necessary part of the reform package that this Bill introduces, and I will set out why.
The headline case is that there is strong evidence that savers’ interests lie in greater investment diversification than we see today in the DC market, and there is probably broad agreement on that. DC pension providers themselves have recognised this. A small allocation to private markets, as part of a diversified portfolio, offers the potential for better risk-adjusted returns over the long term. But despite that recognition, many providers are not yet acting on it. That is not because diversification is against savers’ interests. It is in significant part because of competitive dynamics, the pressure to keep headline costs as low as possible in order to win and keep new business from employers, and the difficulty of any single provider moving ahead of the market. This is not just the Government’s view. It is what the industry has said repeatedly.
Lord Wolfson of Aspley Guise (Con)
My Lords, does the Minister not recognise that in most industries, moving ahead of your competitors is an advantage, not a disadvantage? It is certainly not a reason not to move in the right direction.
Baroness Sherlock (Lab)
It depends on how the market is structured. The decision-makers here are employers. Let us look at what happened under the Mansion House Compact, the predecessor of the accord, brokered under the previous Government. The words were that
“‘too much focus on cost’ remains the key barrier”.
In other words, we have a market in the employment sector where the focus has been for too long on cost, not value. The noble Lord shakes his head, but we have heard this from around the House. Indeed, in Committee many people who do not agree with this power accepted the underlying diagnosis, and that is the basis on which the Government are proceeding.
The Government want the industry to invest in the full range of assets. One of the reasons, I suspect, that the Mansion House Accord is moving together is to make sure that it is clear that the market is going in that direction. That is the problem, we think: there is a risk of a failure of collective action. The accord is a commitment. The power gives providers assurance that the whole market will move so that they will not then be in a position where somebody faces a competitive advantage by reverting back to focusing on cost and not on value.
Lord Vaux of Harrowden (CB)
As I understand the noble Baroness’s argument, the focus on cost is the problem. This Bill solves that with the value-for-money framework, so why do we also need the mandation power?
Baroness Sherlock (Lab)
This all comes as a package. A lot of attention is focused on this particular reserve power, but in fact it is the combination of all the elements of the Bill that we discussed in some detail in Committee over recent weeks: the question of the investment in scale, the need for the value-for-money framework, the need for the option to consolidate small pots. All these things come together to create the conditions in which this will work. This reserve power is to address a particular question, the risk of collective failure. I fully accept that the noble Lord does not agree with it, but I want at least to have the opportunity to make the argument as to why the Government are proposing to do it in this way.
The Mansion House Accord represents a voluntary commitment by 17 of the UK’s largest DC pension providers to invest 10% of their default funds in private markets, at least half of that in the UK, by 2030. We continue to be encouraged by progress, but the risk of a collective action failure in this market has long been recognised. As I said, individual providers face strong commercial incentives to keep costs low and to defer action until others move first. The reserve power exists as a backstop to ensure that if voluntary progress stalls, the Government have the means to act. Its presence in the Bill sends a clear signal that the commitment to change is underpinned by more than good intentions, and it helps to give each provider confidence that the rest of the market will move too.
At earlier stages we discussed a range of issues around safeguards and other things, which I thought would come up in later groups but that will obviously depend on what happens next. First, the power is time limited. The noble Baroness, Lady Stedman-Scott, thinks this power will outlive us all. I hope it does not, because if it has not been used by the end of 2035 it falls away, so I very much hope that it will not outlive the noble Baroness and me, although obviously we are in the Lord’s hands: should we be called home, what can we do? If it has not been used by 2035, it falls away. If it has been used, any percentage requirements in place cannot be increased beyond that date.
Secondly, the Bill establishes a savers’ interest test. Pension providers will be able to apply for an exemption from the targets where they can show that meeting them would cause material financial detriment to their members. Thirdly, the Government must consult and publish a report on the expected impacts, both on savers and on growth, before exercising the power for the first time, and a post-implementation review must follow within five years. Finally, the regulations implementing any requirements will be subject to the affirmative procedure, so Parliament would have its say.
I will respond to some specific questions. There was a question about how to define UK assets. This would be done in regulations were the power ever to be used. Consideration would have to be given to the characteristics of different asset classes. The Mansion House Accord is accompanied by some high-level guidance on how a UK investment should be identified within each of the different asset classes. That asset class by asset class approach to establishing the location is also the one that the FCA has taken as it consults on the upcoming value-for-money disclosure requirements, which will require firms to provide UK overseas asset allocation split. If the Government ever came to exercise these powers, we would expect similarly to take an asset class by asset class approach.
Questions were raised about a future Government and how this might be used. The noble Baroness, Lady Coffey, prayed in aid the European Convention on Human Rights, and I commend her on that. First, on the question on property rights, this applies to default schemes and people can choose to opt out, but she raises a relevant point. Obviously I hope there will never be one, but if there ever were a Government of a different persuasion, were they to seek to use it in a way beyond what is here, I think they would run into problems. This Government have made it quite clear, in Committee in this House and in the other House, that the purpose of the power is to assure good outcomes for savers and the economy, recognising diversification benefits and the potential for higher returns. It is not an instrument for channelling investment into pet projects or specific companies.
The noble Lord, Lord Vaux, quoted me on this point. It was marvellous—“What he said” is what I would say. That is the Government’s view, and I have spoken about the various safeguards, but even if a future Government wanted to use these powers to do something either much broader or much more specific, of course they would have to abide by established principles of public law, including the requirement for Ministers to act rationally, ensuring procedural fairness and compatibility with ECHR rights when making secondary legislation.
The Government are under no illusions about the significance of this power. It is a substantial intervention and, if we ever found the need to use it, we would have to proceed with great care. I understand the strength of feeling on this. These powers, alongside the scale provisions, the value-for-money framework and the consolidation measures, are a package. Together, they are designed to deliver a step change in outcomes for millions of pension savers. If we remove the reserve power, we remove the mechanism that gives the rest of this framework its teeth when it comes to investment diversification.
For a long time, successive Governments have recognised the need to channel pension capital into productive assets. Auto-enrolment has brought millions more people into saving. We now have a responsibility to ensure that those savings are put to work properly to deliver better long-term returns. But the question before us is whether the Bill should contain the backstop at all. In the Government’s view, the answer is yes. Without it, the voluntary commitments made by the industry would rest on good faith alone. The experience of previous attempts to shift investment patterns in this market suggest that that, on its own, may not be enough. For those reasons, I respectfully ask the noble Baroness not to press her amendment.
Baroness Bowles of Berkhamsted (LD)
My Lords, I thank all those who have spoken. The overwhelming view is still that this power goes too far. Many of the issues on which the Minister comments are around cost but, as I said, the whole focus on cost has been brought about by regulation. Changing to value for money will, I hope, adjust that, although I have concerns that it will still be too bound up. But the more I listen to the Minister, the more I hear that there is a deliberate intent for market manipulation and control. That really worries me, because it does not seem to be at all market sensitive or prepared to use what is supposed to be one of the strengths of this country—its asset management.
I think this is dangerous and market distorting, even without any legal effect. As has been eloquently said, it is the wrong direction of travel—I thank the noble Lord, Lord Wolfson, for that reminder. I wish to test the opinion of the House.
Member’s explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member’s explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Baroness Noakes
“(c) able to demonstrate that they deliver investment performance which exceeds that achieved by the average of all Master Trusts which hold an approval under section 28A in respect of a main scale default arrangement.”Member’s explanatory statement
This amendment allows Master Trusts which deliver good investment performance to be excluded from the scale requirements.
Baroness Noakes (Con)
My Lords, Amendment 55 is in my name and those of my noble friends Lady Stedman-Scott and Lady Neville-Rolfe, and the noble Baroness, Lady Altmann. I will also speak to Amendments 60 and 94 in this group.
This group of amendments concerns the so-called scale requirement in Clause 40. In practice, the Government’s proposals concentrate only on size, with a vision of the DC pensions provision landscape comprising 20 or so schemes with assets of over £25 billion. I have no quarrel with the proposition that the current pensions landscape is too fragmented, which may well have contributed to investment returns for some pension savers that have not been good enough. It is, however, a massive and unwarranted logical leap to move from that proposition to the proposals in the Bill, which mean that virtually all schemes with below £25 billion of assets will cease to exist in a few years’ time. The plain fact is that investment returns do not correlate with the size of assets under management.
When the Government produced their report on pension fund investment and the UK economy in November 2024, it was disarmingly honest. It said:
“The evidence linking pension provider scale and gross investment returns is mixed … Across the AUM spectrum, there are examples of small, medium and large-sized schemes with both high and low gross returns”.
It also said that studies suggested broadly a wide range of benefits of around £25 billion to £50 billion, in particular the ability to invest in certain asset classes. But it did not claim, as it should not, that that amounted to a guarantee of superior returns.
Lord Fuller (Con)
My Lords, the Government are obsessed with size, but everyone knows that it is not about size but what you do with it. That point was made forcefully in the Financial Times this morning, which discussed the fact that the larger funds are not necessarily better performers, with the sub-headline:
“Seeking size for its own sake can distract fund managers from focusing on clients and shareholders”.
There is so much I can say, but I will restrict myself to one substantive point. When schemes get large, their normal market investment size gets bigger too. They do not have the time, capacity or need to go away from the big global stocks, most of which are, by their nature, overseas. It limits the constellation of investment ideas, so they chase the same MSCI stocks, creating a value-destroying bubble and systemic risks by all chasing the same thing. It becomes all about speculation.
That is not necessarily what capital markets are for. Capital markets exist to provide capital so that smaller companies can become big ones. Right now in the UK, there are lots of smaller companies with bright ideas and great prospects that could become bigger if only they were relevant to the funds—a few million pounds here, perhaps a few tens of millions there. But they are all but invisible to the superfunds, for which anything less than half a bar is a rounding error.
The problem for the UK is that, while Ministers are worshipping the false icons of scale, they will actually make it harder for the stock market to invest in small British businesses at home. If the schemes are forced to bulk up, they simply will not have the time to look for or after the small fry. British companies that are crying out for long-term patient capital will go hungry, which directly contradicts the Mansion House objectives. Once again, the Government have been suckered into a position by the big boys, understandably keen to cut out the competition, visiting harm on the UK economy and especially on small British firms we all want to see do well. As the Financial Times says today:
“A substantial body of evidence in academic research suggests that mergers in financial services frequently lead to prolonged periods of underperformance. Revenue synergies often fail to materialise and cost synergies tend to be overstated”
—quite.
The Lord Bishop of Hereford
My Lords, I speak in favour of Amendment 55, in the name of the noble Baroness, Lady Noakes. There is a questionable theory of change in the Bill—that bigger pension schemes are necessarily better, suggesting the minimum scale of £25 billion. While scale certainly creates advantages, Australian experience suggests that funds can be run at less than this size and still provide value and good outcomes for members. However, concentrating the market into a few megafunds introduces a new system of risk, of schemes that become too big to fail and so are effectively the state’s problem.
Also, megafunds are unlikely to allow for nuance and specialism, such as faith-based funds. Unfortunately, the understanding of faith-based funds in the commentary on the Bill seems to be limited to Sharia-compliant funds and exclusions. The understanding of and engagement with the nuances of faith-based investing in the Bill commentary are superficial at best. There may be perfectly good arrangements with faith-based or ethical distinctiveness; such arrangements may perform well for members in financial and non-financial terms and be significantly smaller than the threshold envisaged. The distinctiveness that they offer might easily be lost in generic megafunds. This amendment makes the important point that absolute size and performance for members need not be correlated.
Baroness Altmann (Non-Afl)
Obviously, I support Amendment 55 and a number of the other amendments in this group, but I urge the Minister to consider the dangers of trying to engineer a few large schemes while at the same time knocking out new entrants and competition. From now to 2030, if a scheme is not yet at the £25 billion scale requirement, it will find—and it is finding, such as in the case of Penfold—that it cannot get new business. The employer cannot be confident that it will reach the £25 billion in time, and knows that it could potentially have to change provider. This requirement is undermining innovation and competition in the market right now, and may continue to do so. I hope that the Minister will recognise the dangers.
I apologise to the House, as I should have declared my interests. As stated in the register, I am a non-executive director of a pensions company and an adviser to a pension master trust.
Lord Palmer of Childs Hill (LD)
My Lords, I think that everybody in your Lordships’ House wants good investment, whichever side of the House we are on. If you are investing, with apologies, sometimes faith is not enough—you have to see what happens in the market. It is about the choices that are made.
These amendments would allow pension schemes to demonstrate a strong investment performance or innovation in members’ services and administration to be exempt from the scale requirements set out in the Bill, and would introduce greater flexibility on how scale is assessed, including recognising assets held across multiple arrangements.
The amendments reflect concerns that the Bill places disproportionate emphasis on size rather than outcomes, risks disadvantaging smaller or newer entrants and may reduce competition and innovation in the pensions market without clear evidence that larger schemes consistently deliver better returns for members. Amendment 77 would allow exemptions to scale requirements if the regulator deemed that there was no evidence of improved outcomes for members in the case of a proposed merger to meet the scale requirements. This would make sure that members’ interests are protected. On these Benches, we support Amendment 77, and if it comes to a vote, we will support it.
Viscount Younger of Leckie (Con)
My Lords, I thank all noble Lords who have amendments in this group, which broadly seeks to refine the Government’s scale requirement as set out in the Bill to reflect the fundamental principle that size is not everything. We have heard a lot about that in this short debate. For the sake of brevity, I shall limit my remarks to my Amendment 77. The scale requirement as currently framed is too blunt an instrument. It risks prioritising size over quality, process over performance and structure over outcomes—in other words, it risks innovative and high performing funds merely because they are small. These remarks have been echoed by the noble Baroness, Lady Altmann.
The central question we must always ask in pensions policy is: does this improve outcomes for savers? This was the essence of my noble friend Lord Fuller’s remarks. If the answer is no, then we should think very carefully before proceeding. When this power comes into force, it will bring into scope schemes that are already delivering strong outcomes—schemes that are well run, well governed and performing effectively for their members. In such cases, forced consolidation is not just unnecessary but may be actively harmful. It risks disrupting successful investment strategies, increasing costs and ultimately undermining the very outcomes that we are seeking to improve.
This amendment would introduce a vital safeguard. It would give the regulator the discretion to recognise where consolidation would not benefit members and to treat such schemes as meeting the scale requirement. It would ensure that the policy is applied intelligently and does not run roughshod over schemes that are already doing what the Government want. Crucially, it would also reinforce fiduciary duty: trustees and managers must act in the best interests of their members, not in pursuit of arbitrary thresholds set by the Government. This amendment would ensure that they are not compelled to take actions that run counter to that duty.
Scale should be a means to an end, not an end in itself. Where scale improves outcomes, it should be encouraged, but where it does not, where schemes are already delivering for their members, we should not force change for its own sake. This amendment would simply ensure that savers remain at the centre of the policy, and therefore when this amendment is called I will seek to test the opinion of the House.
Baroness Sherlock (Lab)
My Lords, Clause 40 delivers the Government’s commitment to ensure that DC workplace pension savers benefit from the advantages that flow from scale and consolidation. The framework that the Bill establishes for scale is integral to securing better member outcomes, improved access to productive investment and stronger in-house capability. Evidence shows that scale can bring the ability to invest in diversified assets as well as lower member fees and investment costs. There is also evidence that scale can enable greater investment and governance capability in running a scheme. As DC schemes become more complex, these things will drive improved member outcomes and support the delivery of an income in retirement.
We had a debate on various issues in Committee, and one of the questions was about scale and competition in the marketplace. I reassure the House that the Government have considered this. Our analysis suggests that, once the scale measures have taken effect, there will be 15 to 20 master trusts and GPP megafunds operating.
There are a number of amendments in this group, and I will try to say something briefly about each. First, on the amendments that seek to add further exemptions to scale, the Government’s policy in this area is to allow day one exemptions that are based on a scheme’s permanent design characteristics. In other words, it should be as clear as soon as the regulations are in place whether a scheme meets an exemption, rather than it being subject to regular assessment. That is important because it is about providing certainty and stability for members and employers.
Amendments 55 and 60, from the noble Baroness, Lady Noakes, would create an exemption to allow master trusts and GPPs to be excluded from the scale requirements where they deliver investment performance that exceeds the average achieved by all master trusts or GPPs that meet the scale conditions. While I hear the noble Baroness’s arguments, I am concerned that this would undermine the Government’s objective: a market of fewer, larger and better-run schemes where economies of scale deliver sustained benefits for members.
Baroness Noakes (Con)
I am going to disappoint the Minister. There is just a fundamental disagreement: the Government think that size is the most important thing and most of the rest of us think that the judgment on which schemes should be allowed to survive the initial cull that consolidation will require should be much more nuanced and based on what is good for savers. If schemes are delivering for savers and have the capacity to deliver for savers, they ought to be allowed to stay within the population of pension schemes that will continue.
The Government seem not to trust their own value-for-money test, which should deliver over time. If schemes that are allowed through at the moment disappoint over time, the value-for-money test would deal with that. We think that taking scale out will, with the value-for-money test, in the long term produce exactly what the Minister requires, which should be good returns for pension savers.
I said that I would not move my amendment because my noble friend on the Front Bench will be moving his Amendment 77. On that basis, I beg leave to withdraw.
Member's explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member's explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member's explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member's explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member's explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member's explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Viscount Younger of Leckie
“28BA Exemption from scale requirement(1) The Secretary of State may by regulations provide that the Regulator may determine that a relevant Master Trust or a group personal pension scheme is to be treated as meeting the scale requirement in section 28A or 28B if the Regulator is satisfied that the condition in subsection (2) is met.(2) The Regulator must be satisfied that there is no reasonable evidence that consolidation of the scheme into another arrangement would be likely to improve outcomes for members.(3) In determining whether the condition in subsection (2) is met, the Regulator must have regard to—(a) net risk-adjusted investment performance;(b) governance quality and operational capability;(c) whether the scheme benefits from integrated, pooled or cross-scheme investment arrangements not reflected solely in the total value of assets counted under section 28A(4) or 28B(4); (d) whether the scheme invests wholly or substantially in a default arrangement operated by another scheme or manager meeting the scale requirement;(e) whether the scheme derives material investment benefit from participation in a wider asset management group of substantial scale.(4) Regulations under this section may make provision about—(a) the duration, renewal and withdrawal of a determination under subsection (1);(b) reporting and disclosure requirements.”
Viscount Younger of Leckie
My Lords, I have spoken to my amendment and as warned in my remarks, I wish to test the opinion of the House.
The Deputy Speaker (Baroness Bull) (CB)
I must advise the House that if Amendment 78 is agreed to, I cannot call Amendments 79 to 92, by reason of pre-emption.
Amendment 78
Member’s explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Baroness Sherlock
“(7) Regulations may make provision of a kind mentioned in section 28A(10) or (11); and for this purpose a reference in those provisions—(a) to an approval under section 28A is to be read as a reference to an approval under this section; (b) to a relevant Master Trust is to be read as a reference to a relevant Master Trust or a group personal pension scheme;(c) to the trustees or managers of a relevant Master Trust is to be read as a reference to the trustees or managers of a relevant Master Trust or the provider of a group personal pension scheme.”Member’s explanatory statement
This amendment correct a consistency mistake and provides for regulations about approvals under inserted section 28E of the Pensions Act 2008 to make equivalent provision to regulations about approvals under inserted section 28A of that Act.
Baroness Sherlock
“(3) Regulations may make provision of a kind mentioned in section 28A(10) or (11); and for this purpose a reference in those provisions—(a) to an approval under section 28A is to be read as a reference to an approval under this section;(b) to a relevant Master Trust is to be read as a reference to a relevant Master Trust or a group personal pension scheme;(c) to the trustees or managers of a relevant Master Trust is to be read as a reference to the trustees or managers of a relevant Master Trust or the provider of a group personal pension scheme.”Member’s explanatory statement
This amendment correct a consistency mistake and provides for regulations about approvals under inserted section 28F of the Pensions Act 2008 to make equivalent provision to regulations about approvals under inserted section 28A of that Act.
The Deputy Speaker (Baroness Bull) (CB)
I must advise the House that if Amendment 96 is agreed to, I cannot call Amendments 97 and 98, by reason of pre-emption.
Amendment 96
Member’s explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member’s explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member’s explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member’s explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
The Deputy Speaker (Baroness Bull) (CB)
I must advise the House that if Amendment 102 is agreed to, I cannot call Amendments 103 and 104, by reason of pre-emption.
Amendment 102
Member’s explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Baroness Noakes
“(a) after subsection 1, insert—“(1A) In making regulations under section 20(1A), 20(1C), 26(7A), 28A, 28B, 28E, 28F and 28J the Secretary of State must have regard to—(a) the encouragement of innovation in the design and operation of pension schemes, and(b) the benefits of competition among providers of pension schemes.”;”Member’s explanatory statement
This amendment would require regulations concerning the operation of the scale provisions in clause 40 to have regard to innovation and competition.
The Earl of Kinnoull (CB)
My Lords, the noble Baroness, Lady Noakes, has graciously allowed me to intervene briefly. Earlier today during Question Time there were two Questions which involved insurance. I forgot to mention my insurance interests in the register. I would like to update the House’s record for that.
Baroness Noakes (Con)
My Lords, I am sorry for forgetting having agreed to that intervention.
In moving Amendment 105A, I will also speak to Amendments 114 and 115 in this group. I thank my noble friends Lady Stedman-Scott and Lady Neville-Rolfe for adding their names. In the previous group, we concentrated on size not being everything when determining which pension schemes will be allowed to live on after the consolidation enforced by the scale requirements. My noble friend’s Amendment 77, which the House has just agreed to, has modified the size test. However, even with that important change, the scale requirements will represent a major market intervention by the Government. It is the DC schemes market that I am addressing with these amendments.
My amendments focus on the role of competition and innovation. The one thing that we really need in the long term is a market that will continue to evolve and work for the interests of pension savers. The one thing that we do not need is a mature market consisting of a limited number of large players untroubled by the potential for market disruption. Mature markets can still be competitive and there would be incentives to innovation within a mature market, but that innovation tends to focus on incremental and often process-based improvement. The plain fact is that factors such as incumbent inertia and investment in legacy systems act as counterweights. Disruptive innovation is typically associated with new entrants that spot underserved markets, structural rigidities and the opportunities to harness technological breakthroughs. They do not all succeed but often end up reshaping mature markets, such as is happening with fintechs.
The rules that the Bill sets out for pension schemes must ensure that the benefits of competition and innovation, which ultimately deliver better returns for pension savers, are kept alive and well in the new pension scheme universe that the Bill will deliver. My Amendments 105A and 115 focus on the regulation-making powers surrounding the new scale requirements in Clause 40, and the new entrant and consolidation powers in Clauses 42 and 44. They would both require those making the regulations to have regard to
“the encouragement of innovation in the design and operation of pension schemes, and … the benefits of competition among providers of pension schemes”.
These regulation-making powers will be operated in part by the Secretary of State and in part by the FCA and the Pensions Regulator. The important thing is that, when deciding on the regulations, the person making them must keep competition and innovation in mind as relevant factors for shaping how the detailed rules are framed and will affect how the market develops over time. This is especially important in relation to the Pensions Regulator, whose statutory responsibilities are very narrowly drawn and do not extend to the pension provision market as such.
My other amendment in this group, Amendment 114, would add competition and innovation to the matters to be addressed by the review of non-scale default arrangements as required by Clause 43. I am currently minded to test the opinion of the House on the two amendments seeking to affect the regulation-making powers—Amendments 105A and 115. I beg to move.
Baroness Neville-Rolfe (Con)
My Lords, I support Amendment 105A and the proposed new clause in the name of my noble friend Lady Noakes, to which I added my name. It is essential, in my view, to require the regulations to be pro-innovation and pro-competition rather than over-exclusionary. The £25 billion minimum provided for in the Government’s reforms seems set to deter innovation. My noble friend Lady Noakes has explained the case and the reach of our proposal very well, so I will not speak at length.
I was a trustee of the pension fund at Tesco, which at the time was worth less than £25 billion. We were innovative: we invested in private equity, including US private equity, when others did not, and we had part of our portfolio in housing—just the sort of innovation that the Chancellor is seeking to encourage. However, today that would not be seen as innovation. I am sure that my successors are looking at today’s innovative investments: fintech, quantum, space, rare earths, new types of weapons and other types of disruptive innovation. I have also been struck by the arrival in the pensions market of online-only operators. They started small, made good returns and are a growing part of the market.
Lord Palmer of Childs Hill (LD)
My Lords, this degrouped set of amendments is very narrow in drafting but, we believe, important in principle. Amendments 105A, 114 and 115 would require the Secretary of State and the reviews and regulations under these clauses to have regard to innovation and competition in the design and operation of pension schemes and in the treatment of non-scale default arrangements.
On these Benches, we strongly agree with the proposition that pension legislation should not inadvertently—this is the problem—freeze the market in favour of the largest existing players. Whenever the Bill pushes schemes towards fewer, larger structures, we believe that Parliament must ask what happens to specialist providers, digital entrants, more tailored propositions and competitive pressure generally. A market that is tidy—tidy is not always right—for Ministers but closed to challengers does not necessarily serve savers well.
This concern was expressed repeatedly in Committee. The critique of the Bill’s scale provisions has been not simply that small is beautiful but that innovation can come from schemes that do not yet meet an arbitrary threshold and that competition itself is one of the mechanisms by which member outcomes improve. I have spoken in this vein on earlier parts of this Bill, warning against an overemphasis on size, which may crush newer entrants and reduce competitive discipline in the market.
There is nothing radical about asking Ministers to have regard to innovation and competition. It is a modest discipline, not a veto. It would not prevent consolidation where consolidation is justified; it would simply ensure that regulations and reviews must notice what might be lost as well as what might be gained. In our view, it is an entirely reasonable request. A well-functioning pensions market should be safe, well-regulated and member-focused, but—this is important—it should also remain open to new ideas and new providers. These amendments would do something to help that balancing view, which is why we on these Benches support them.
Viscount Younger of Leckie (Con)
My Lords, I thank my noble friend Lady Noakes for her amendments in this group and I am grateful for the helpful remarks made by my noble friend Lady Neville-Rolfe and the noble Lord, Lord Palmer.
These amendments recognise an important point: a rigid, one-size-fits-all approach risks crowding out innovation, flexibility and ultimately better outcomes for savers. Schemes are not identical, nor are their members, and it is entirely right that providers should be able to design different default arrangements to meet different needs.
Amendment 105A is especially important in this regard. It would require regulations concerning the operation of the scale provisions in Clause 40 to have regard to innovation and competition. The Government have said time and again that they are pursuing a growth mission and that growth will underpin their ability to fund day-to-day spending. Yet what we have seen instead is very different: an ever-greater reliance on taxation to plug the gap, something that is not only economically damaging but ultimately unsustainable for the country.
The noble Lord, Lord Palmer, put it well. If the Government are serious about growth, then they must be serious about fostering innovation and competition in sectors such as pensions. Recognising and ensuring that innovation is not stifled is a practical and constructive way to support that mission.
This amendment does exactly that. It ensures that, in shaping the regulatory framework, the Government actively consider the importance of a competitive and innovative market—one that delivers for savers and contributes to wider economic growth. For those reasons, the Government should accept this amendment. Should my noble friend Lady Noakes wish to test the opinion of the House, we would be glad to support her.
Baroness Sherlock (Lab)
My Lords, I am grateful to the noble Baroness, Lady Noakes, for introducing her amendments. The Government think it essential that pension schemes remain competitive post scale and we expect that schemes with scale, as well as market disruptors, will continue to innovate and drive competition. We actively encourage competition through the provision of the new entrant pathway to allow new innovative schemes to enter the market.
The scale measures place a requirement for a main scale default arrangement at the centre of the scheme, to deliver scale and the benefits that that can bring. Amendments 114 and 115 relate to measures on consolidation and addressing fragmentation within schemes that are in the market. There is currently significant fragmentation within the market, with high numbers of default arrangements that do not ultimately serve member outcomes.
While I recognise that much of the fragmentation is a product of history in contract-based schemes, we have seen that the number of default arrangements is increasing across the market and in a number of master trusts. We do not want to see the same issues arising over time as exist in GPPs, where members are in too many default arrangements that do not offer value.
Let me be clear: the measures in Chapter 4 do not cap or limit the number of default arrangements, nor do they impact on the ability of a new entrant to enter the market. What we want to see is default arrangements being created where this meets and continues to meet genuine member or employer need in tandem with the scale measures. That is why we are introducing measures to prevent new default arrangements from being operated without regulatory approval and carrying out a review into current arrangements to establish where they should be consolidated or the reasons for them to continue.
Amendment 114 seeks to require the review of default arrangements to consider the extent to which arrangements contribute to innovation and competition. I agree with the spirit of this amendment, but I do not think that it is necessary. The review must already consider the circumstances where it is appropriate for non-scale default arrangements to continue operating and it is right that competition and innovation will be part of that work. The review will consider how competition and innovation have driven the operation of non-scale default arrangements and what they are expected to deliver for members.
Amendment 115 seeks to require that regulations under Clauses 42 and 44 will have regard to competition and innovation. Again, I agree with the intention behind the amendment, but it is unnecessary. I shall explain why. It is reasonable to expect that the regulations that set out the criteria in which regulators can approve new default arrangements will include innovation and competition. Indeed, we expect these arrangements to meet a specific need or offer something different to the market. It is also reasonable that these will be considerations in setting out where non-scale default arrangements will have to be consolidated. However, as the Bill sets out, those regulations already have to take into account the conclusions of the review, and that will consider competition and innovation.
Amendment 105A seeks to require regulations across the scale measures to have regard to innovation and competition. I reiterate the Government’s support for an innovative market, and we expect providers to continue to innovate. The amendment is not needed to achieve that but, although well-intentioned, the duty that the amendment would introduce ignores the policy objectives of the scale measures and the benefits they are expected to bring. To be clear, the benefits of scale include lower charges, diversified investments and improved governance. We are already creating space in the market for innovation through the new entrant pathway and, as previously outlined, we still expect the market to be competitive.
More than that, though, we need to remember something crucial about the nature of the DC market. A competitive market is vital but we also have to recognise that the ultimate beneficiaries—the members—do not select their scheme. That is done by the employer. Employers are the decision-makers on pension provision. They are the buyers in this market and they will try to do the best for their workforce, but ultimately, of course, their focus will be on current rather than past employees. We therefore need to drive schemes to deliver for all members, not just those who are actively contributing, and too narrow a focus on competition and innovation will not do that. The needs of members should be paramount.
Baroness Neville-Rolfe (Con)
Before the Minister proceeds, could she tell us whether competition and innovation feature at all in the Bill?
Baroness Sherlock (Lab)
My Lords, there is, of course, an innovation pathway; innovation therefore clearly has to be in that. The innovation pathway is the innovation pathway, so it clearly is in that. I have set out on the record my expectation of what will be considered in the review and the fact that the regulations will have to take account of what the review says. I hope that satisfies the noble Baroness.
The needs of members should be paramount. It is right that the Government are acting to protect them and to drive schemes to have the capability and capacity to deliver better outcomes. I hope that the noble Baroness, Lady Noakes, can see that we share the same overall objectives and that the Bill as drafted accommodates the intent of her amendments. I hope she feels able to withdraw the amendment.
Baroness Noakes (Con)
My Lords, the Minister, as usual, talks a good story on competition and innovation. Our concern is that the Bill as drafted makes it difficult to see that the virtues of innovation and competition are in fact reflected throughout it. In particular, there is no mention of innovation or competition in the regulations restricting the creation of new non-scale default arrangements in Clause 42. That would be addressed by my Amendment 115.
Those who are exercising the extensive powers in the Bill to circumscribe the way in which the markets are allowed to develop need to have competition and innovation absolutely in their focus, but the Bill does not achieve that. The Minister could cite only the innovation pathway, but the Bill is much more than that. That is why I believe we need to make changes to the Bill. As I mentioned, I will seek to press both my amendments, but I will start by begging to move Amendment 105A.
Member's explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member's explanatory statement
This amendment is connected to another amendment in the name of Viscount Younger to insert new section 28BA into the Pensions Act 2008.
Member's explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member's explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member's explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Member's explanatory statement
This amendment, connected to others in the name of Baroness Bowles of Berkhamsted, seeks to remove provision on the asset allocation condition from Chapter 3, while preserving provision related to the scale condition.
Baroness Altmann
Member's explanatory statement
This amendment, and another in the name of Baroness Altmann, seeks to ensure pension schemes are not excluded from the market for going beyond ‘one-size-fits-all’ approaches and can design arrangements for different cohorts of membership. It also seeks to clarify the language used in relation to these arrangements.
Baroness Altmann (Non-Afl)
My Lords, Amendments 112 and 113, which I shall not press to a vote, are designed to ensure that we try to keep the needs of pension scheme members at the heart of all the policy changes that we make. For me, pensions have always been about people; they are not just about money.
In relation to the clause that concerns restricting the creation of new non-scale default arrangements, these amendments seek to permit default arrangements below scale—for example, where a company seeks to identify different types of member and put together a default arrangement that is specifically suited more to that type of member than to the traditional one-size-fits-all policy that pension schemes so often seem to be based on, and that certainly do not suit many of the members who are put into them.
I hope that the Minister will help me understand why the Government want to have just one default arrangement—potentially with just one common investment strategy—rather than encouraging more of a pension market that can serve individual groups of members with different needs. That could include those who are in poor health and who might need a different approach, or those who may not know when they are going to retire and therefore a life-styling fund that takes them out of higher return investments would not be appropriate for them.
The idea of pension companies asking members about themselves, beyond just looking at their chronological age, seems to be rather alien. However, I hope it could become much more common, given the digital enabling that is available to pension companies. That would allow them to ask two or three relevant questions, including about someone’s health or whether they have a final salary pension alongside this scheme that they could rely on instead. That is the intention behind these amendments, and I look forward to the Minister’s response.
Viscount Younger of Leckie (Con)
My Lords, this amendment speak to a principle that we on these Benches have returned to throughout our consideration of the Bill: the framework we are putting in place must reflect the reality of outcomes, not simply a rigid set of predetermined requirements. This amendment recognises that many schemes quite properly design different default arrangements for different cohorts of members. That is not a weakness; it is a strength. It reflects an understanding that savers are not all the same, and that good outcomes often require a degree of tailoring.
Where such schemes are performing well and delivering strong outcomes for their members, they should not be penalised simply because they do not conform to a single uniform model. In that sense, this amendment is important. It does not undermine the objective of improving scale where that is beneficial, but it ensures that we do not lose sight of the ultimate goal, which is—returning the same theme—better outcomes for savers.
Baroness Sherlock (Lab)
My Lords, I thank the noble Baroness, Lady Altmann, for introducing her amendments. I covered quite a bit of this ground in my response to the previous group, which was quite long, so I will not repeat that—I hope that the noble Baroness will not mind.
As I set out in the previous group, Chapter 4 of the Bill relates to default arrangements and the fragmentation in schemes that are in the market. To reiterate, the measures in this chapter do not cap or limit the number of default arrangements, nor do they impact on the ability of a new entrant to enter the market. I previously mentioned innovation, which features in the new entrant pathway, but what we want to see is default arrangements being created to meet member needs. That is why we are introducing a range of measures for them to need regulatory approval before they begin to operate.
On Amendment 112, I understand that the intent is to allow a scheme to have
“several non-scale regular arrangements”.
However, it is not clear what is meant by a “regular” arrangement in the description, as it is not defined.
Baroness Altmann (Non-Afl)
I did not go into detail for reasons of time. However, my intention with the word “regular” was to get away from the standard industry jargon of “default fund”, which has quite negative connotations for an ordinary member. Therefore, having the word “regular”—or “standard”, or whatever we want to call it—would be much better for the pensions industry than the negative term “default”. Most people would ask, “Why would I want to default on my money? I want to do something good with it”.
Baroness Sherlock (Lab)
The noble Baroness should not worry about time—it is only 3.45 pm. We have all the time in the world, so I am very happy to carry on debating this.
Baroness Sherlock (Lab)
Tell me about it. To pick up on the point the noble Baroness made, we have had the discussion about language before, and I am completely with her on how we describe things when we are facing customers and individual savers. However, language that goes into Bills has to be precise because it gets litigated, and therefore things have to be capable of being defined. That is why definitions matter. It is not about a desire to obscure or put things in language that is not easily understood. The key is to be precise in legislation, and in member-facing communications to be as clear as is necessary.
Baroness Altmann (Non-Afl)
I thank the Minister for her response, and I beg leave to withdraw the amendment.
Baroness Noakes
“Innovation and competitionIn making regulations under sections 42 and 44 the appropriate authority must have regard to—(a) the encouragement of innovation in the design and operation of pension schemes, and(b) the benefits of competition among providers of pension schemes.”Member's explanatory statement
This amendment would require regulations dealing with non-scale default arrangements to have regard to innovation and competition.
Baroness Noakes (Con)
Amendment 115 is a mirror to Amendment 105A which I moved successfully earlier. I move this amendment formally.
Baroness Sherlock
Member's explanatory statement
This amendment ensures that default pension benefit solutions must be designed and made available to deferred members (as well as active and pensioner members).
Baroness Sherlock (Lab)
My Lords, in moving Amendment 116 I will speak also to government Amendments 117, 118 and 119. These are all minor and technical amendments.
Amendment 116 to Clause 49, concerning guided retirement, makes a technical change needed to ensure that the legislation functions as intended. The amendment provides greater clarity that deferred members—those no longer actively contributing to the scheme but who are not yet drawing their pension benefits—are considered eligible members. This ensures that the framework covers the broad range of individuals for whom it was designed and reduces the risk of misinterpretation. The amendment does not change the policy; it simply provides the clarity needed for effective implementation, consistent with the policy intent.
Government Amendments 117, 118 and 119 will help to ensure that well-funded superfunds will not be forced to wind up when they still provide a high level of security to their members. Under the superfund supervisory framework that will be established through the Bill, a breach of the technical provisions threshold may result in the capital buffer being released to the scheme’s trustees, whereas a breach of the protected liabilities threshold may result in the superfund winding up.
In drafting this policy, we anticipated the upside-down situation which can arise within a superfund in certain circumstances when the protected liabilities threshold is breached before the technical provisions threshold. We have therefore taken powers in Clause 85(4) to determine that a breach of a threshold may not take place in specified circumstances. However, further engagement with industry and changing market conditions have indicated that the previously little-known occurrence in which these thresholds swap could be more common in future. Therefore, we need to build more flexibility into the forthcoming regulatory framework. As I said in Committee, it is important that we recognise that higher benefit levels in the PPF are good news for members of all schemes supported by the PPF.
The protected threshold has an important purpose: to ensure that members are protected in the rare instances where superfunds are deemed to be failing. Retaining the threshold will help the Pensions Regulator monitor the risk of a superfund failure. However, we recognise that forcing a superfund to wind up in instances where its technical provisions are lower than its protected liabilities would not be in members’ best interests if the scheme were otherwise able to meet its liabilities.
These amendments therefore seek to create further flexibility to ensure that superfunds are both secure for members and commercially viable. Other approaches may risk tying superfunds to absolute requirements before experience, insight and evidence can clarify the appropriate approach to take. We need to consult fully on superfunds’ funding thresholds, which will be set out in regulations, with a particular focus on this very issue. I hope the House can accept these amendments. I beg to move.
Baroness Altmann (Non-Afl)
My Lords, I have the pleasure of supporting these amendments. I am very pleased that the Government have made the decision to improve flexibility and help the working of these new superfunds. We do not yet know quite how they will go, so I thank the Government and fully support the amendments.
Viscount Younger of Leckie (Con)
My Lords, I shall speak briefly to this group of amendments. At the outset, I recognise that a number of these amendments are either technical or consequential. It is entirely right that the Bill should be internally consistent and operable in practice.
However, Amendment 117 raises a more substantive issue on which I would be grateful for some clarification from the Minister. This amendment alters the way in which the protected liabilities threshold for superfunds is determined, moving to a model in which the threshold is defined as a percentage set out in regulations. I know that we are on the cusp of closing proceedings on the Bill today, but I am afraid that I have a number of questions on this.
First, will the Minister set out clearly what problem this amendment seeks to address? What deficiency has been identified in the current approach? Secondly, what assurance can the Minister give that this change will not weaken the level of protection afforded to members? Is there any scenario in which this more flexible, percentage-based approach could permit lower funding levels than would otherwise have been required? Thirdly, how does the Secretary of State intend to determine the appropriate percentage? Will there be a minimum floor or is this entirely to be left to future regulations? Finally, given the importance of this safeguard, can the Minister explain why it is not being set out in the Bill and what level of parliamentary scrutiny will apply to the regulations that determine it?
Flexibility can be valuable, but when it comes to member protection it must be accompanied by clarity and by robust safeguards. I look forward to the Minister’s response.
Baroness Sherlock (Lab)
I am grateful to the noble Baroness, Lady Altmann, for her support. I know that she recognises the problem that this is designed to solve and why the Government have done this.
In response to the noble Viscount, Lord Younger, obviously I completely failed, but I thought that my speech explained the problem that this was designed to solve. Let me try again. If I say it again slowly, that might help—that is a comment on my speed, not on his comprehension, if I may say so.
The Bill is establishing a permanent supervisory framework for superfunds—there is only an interim arrangement at the moment. There are two different issues. A breach of the technical provisions threshold can result in the scheme’s buffer being released to the trustees, whereas on the other hand, if you breach the protected liabilities threshold then that can result in the superfund being wound up. If those end up being breached in not the traditional order, the superfund could end up being obliged to wind up, when in fact it could meet its liabilities other than because of this issue. That is the problem. I have tried to explain it more simply, and I apologise that I did not do so more clearly at the start. We discussed the problem in Committee, when the noble Baroness, Lady Bowles, tabled an amendment and we had a conversation about it. That is the problem we are trying to solve.
I said at the time that it cannot necessarily be in members’ interests to force a superfund to wind up when its technical provisions are lower than its protected liabilities, if it could otherwise meet its liabilities. I said that there was an option to use a clause in the Bill to deem that a threshold had not been breached, but if it is potentially going to be a more common problem, it makes more sense to deal with that in the way we have. The way we have set the threshold is about providing flexibility to make sure that schemes are not wound up unnecessarily.
We currently do not expect to set the threshold below PPF levels of benefits—I suspect that that is what the noble Viscount was aiming at. That is not what we intend. The focus is on ensuring the best possible member outcomes and protecting the PPF. Until the evidence gathering is complete, it would not be appropriate for me to speculate on precisely where that will be set, but I can say to him that that is the case.
On how it will be provided, there will be regulations. The superfund regulations will therefore be subject to the affirmative procedure. When those come back here, there will be every opportunity for the House to discuss them. I hope that answers the noble Viscount’s questions. If there is nothing else, I beg to move.
Baroness Sherlock
Member’s explanatory statement
This amendment would provide for the protected liabilities threshold in Part 3 (superfunds) to be met if the total value of the assets of the relevant scheme and the capital buffer exceeds a percentage of the scheme’s protected liabilities specified in regulations made by the Secretary of State.
Member’s explanatory statement
This amendment is consequential on the amendment in the name of Baroness Sherlock to clause 71 at page 86, line 24.
““specified” means specified in regulations made by the Secretary of State;”Member’s explanatory statement
This amendment is consequential on the amendment in the name of Baroness Sherlock to clause 71 at page 86, line 24.
Middle East
(1 day, 4 hours ago)
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The Earl of Courtown (Con)
My Lords, I thank the Minister for giving the House the opportunity to ask questions on this Statement. Before I say anything else, I thank the men and women of our Armed Forces who are serving in the region and who stand ready to support operations there, as well as all the officials and diplomatic and consular staff who are working under great strain. I also thank our Gulf Cooperation Council allies for all they have done to support British nationals in the region.
Can the Minister provide the House with an update on the support being provided to British nationals in the region? The case of Craig and Lindsay Foreman has been raised on a number of occasions in your Lordships’ House. The impact of the ongoing Middle East conflict is clearly extremely worrying for them and their family. Can the Minister please provide a further update on the work Ministers and officials are doing to support them, and redouble our efforts to secure their release?
Turning to the conflict itself, Iran has attacked our military bases, currently holds British nationals captive, has indiscriminately attacked states across the Middle East and is blocking the Strait of Hormuz. In that context, we cannot be silenced. Iran’s actions have implications all over the world, and they will, in particular, affect every British household through higher energy prices. Earlier this week, it was reported in the Times that the Prime Minister was weighing up the legality of whether Britain can join the US military operation to reopen the Strait of Hormuz.
On the issue of international law, can the Minister confirm whether it is the view of His Majesty’s Government that Iran has violated the UN Convention on the Law of the Sea, which includes the right to transit? While we are on this subject, can he say whether Iran’s indiscriminate strikes across the Gulf region are lawful? Finally, if international law serves to protect rogue states, does he accept that international law will have failed?
Iran is seeking to hijack the global economy. My noble friend Lord Effingham asked the Energy Minister earlier today about the steps to protect British households from rapidly rising energy costs as a result of Iran’s actions. Can the Minister update the House on the work Ministers are doing with our international counterparts to ensure the smooth transit of vessels through the Persian Gulf?
Reopening the Strait of Hormuz must be the priority, but we must develop and secure our domestic supply of fuel. Will His Majesty’s Government approve the Jackdaw gas field development?
Finally, we must not forget the appalling conduct of the Iranian regime. It has murdered its own citizens in droves simply for calling out for democracy, it has refused to cease its pursuit of nuclear weapons, and it has been responsible for unacceptable, illegal state-sponsored activity on our shores. I look forward to the Minister’s response.
Lord Purvis of Tweed (LD)
My Lords, I join the noble Earl in commending the commitment to our country of our service men and women. It is a deep regret that they are in a position where they are having to risk their lives on an unlawful and unwarranted conflict. On 2 March in this House, the Leader of the Opposition said that when President Trump called the UK should have answered and that the UK should have been fully involved in all the offensive actions in this unlawful conflict unleashed by President Trump with Prime Minister Netanyahu’s Government. If we had heeded that, the UK would currently be bombing civilian areas in Tehran and targeting energy installations. Because of the impact on the Strait of Hormuz, we would be seeing the consequences for the UK as a result.
Seeking to tie us directly with President Trump’s decisions was a major strategic error on the part of the Conservative and Reform opposition, especially in the context that more than two weeks into this war we still do not know what the justification was and see no clarity on any endgame and a lack of strategy about what will be next. The Opposition asked us to be fully part of the measures for regime change two weeks ago. They are now silent on this issue. It is appropriate for them to state their position. However, this is the Government’s Statement, the Minister will answer for the Government and I will have a number of questions in a moment.
One of the consequences today is that we are seeing concerns about energy prices in the United Kingdom. This was a wholly predictable outcome. Earlier, we heard questions about seeking greater UK domestic production to try to mitigate this. This is a fundamental misunderstanding of how the global energy market works and how the United Kingdom is part of it. There is no direct correlation between greater North Sea production and greater domestic consumption. Even if there were, North Sea product is traded on the global market. Therefore, the impact on the global oil and gas market has a direct consequence on the United Kingdom. We export almost as much oil as we produce from the North Sea because of the complexities of the UK energy market.
Given all this, what action will the Government take to prevent some of the extremes if the trajectory of energy prices is up? What package of support can there be, particularly for the most vulnerable who need fuel and those living in rural areas? What is the latest with regard to our Government speaking with other like-minded countries that are seeking to mitigate what could potentially be even worse consequences? Can the Minister state whether any British Ministers have visited the region since the start of this conflict? If so, who have they met and what are our priorities for that diplomatic dialogue?
Turning to something of great concern in Lebanon, the noble Lord, Lord Lemos, on behalf of the Government spoke very clearly this morning at the Dispatch Box. I agreed with everything he said with regard to the Government’s position on the concerns for Lebanon. It is extremely worrying to hear senior political figures within Israel talk about cleansing part of Lebanon and creating buffer areas. It is becoming apparent that the tactics that have been used in Gaza may well become the tactics used in Lebanon. The consequences of that, given the UK’s support for sovereign territorial integrity for Lebanon, should be significant.
What consequences would there be for the Netanyahu Administration if indeed there were territorial incursions into Lebanese territory? What are the UK Government doing to ensure that civilians are protected? This should not be discretionary in conflict. The protection of civilians is mandated under the United Nations in international humanitarian law. We are seeing far too many civilian areas targeted. What is now becoming apparent is the potential for collective punishment of certain parts of the Lebanese population, which we have seen elsewhere.
If I had asked the noble Lord, Lord Lemos, a question earlier, it might have been, just to follow through what he accurately said, on the fact that the UK has been a very major supporter through official development assistance for Lebanon over many years—£850 million, I recall him saying. The next sentence, however, is that our current level of capacity is an 88% cut in what the UK is providing to Lebanon for a humanitarian crisis, which is now almost on a par with what it was in 2014. The £30 million of humanitarian support, which has been uplifted with a further amount, is less than a quarter of what the UK provided in 2014. So, the UK is simply, in many respects, not at the table when it comes to humanitarian support.
There is also the very considerable concern that there is likely to be an ongoing cycle of violence and trauma of civilians. That includes the Israeli population, which is having to withstand unjustified attacks from Iran, but we are also seeing continuing violence within the Palestinian territory of the West Bank. What is the latest from the Minister with regards to our representations to the Netanyahu Administration on the West Bank? Have we warned them that there will be repercussions if attempts are made for full annexation? Former Prime Minister Olmert has warned of this, and we should equally be warning of the consequences of it.
Finally, the Minister will probably not be surprised to hear me make an appeal to the Government on the associated issue of Sudan. Much of what is happening in the Middle East and Iran has consequences for the world’s worst humanitarian crisis in Sudan. What are the latest actions taken by the UK, as the penholder, to seek an end to that war and sustainable civilian government for the country?
Before I sit down, I want to close by saying that whatever our differences—and perhaps on this conflict, compared to previous ones, there are differences across this House—these Benches are resolute in believing that the Jewish population in this country should not be held to account for an external, foreign Government, and there should be no excuse for antisemitism on our streets in the United Kingdom. Some of the incidents that we have seen recently are deeply troubling. Likewise, the growth in Islamophobia, especially against young Muslim children in this country, is utterly unacceptable. I wonder whether the Minister would seek to convene cross-party talks, because even worse incidents are likely. We need to be united across this House to ensure that both those are considered to be completely unacceptable and are stopped.
The Deputy Leader of the House of Lords (Lord Collins of Highbury) (Lab)
I thank both noble Lords for their questions and contributions. I join both of them in acknowledging the service of our people in the region, covering a range of services. It is not just military people; the diplomatic and consular staff are doing an amazing job.
On the last point made by the noble Lord, Lord Purvis, on our community cohesion, we addressed that issue on Monday. It is important that we speak with one voice and say that the rise of antisemitism is absolutely unacceptable, and that also applies to Islamophobia. Sadly, we heard some comments from members of the Opposition recently about people praying in public, which were totally unacceptable. We need to come together to ensure community cohesion, because there is no way that anyone alone can be responsible for something such as what is going on at the moment.
The noble Earl mentioned the opinions on our response. I agree with the noble Lord, Lord Purvis: the Opposition, and certainly the leaders of Reform, have gone from saying very strongly that we must take action to them now reconsidering their position. The Prime Minister has been absolutely correct on this. As he said on 16 March, leadership is about standing firm for the British interest, no matter the pressure. I believe that time will show that we have taken the right approach—on the economy, on the cost of living, on defence, on energy and on this war—in the best interests of the British people.
On the Strait of Hormuz, we continue to work closely with our allies on a range of options to support commercial shipping through the strait as the threat picture develops. As the Prime Minister said today, alongside partners, we are ready to contribute to appropriate efforts to ensure safe passage through the strait. We know the impact that it is having on the global economy, the global energy markets and, more importantly, our communities here—people. I repeat to the noble Lord, Lord Purvis, what the Prime Minister announced yesterday: we are providing £53 million to support those households who are most exposed.
We are not just working with allies on the Strait of Hormuz. The Energy Secretary has spoken to BP, Shell and National Gas in the last few days. As noble Lords would expect, their primary concern is the safety of vessels passing through the strait and their duty of care to their employees in the face of ongoing threats from Iran. More broadly, the DfT constantly monitors UK shipping and, as I say, we are working closely with allies and providing advice and guidance where necessary.
As part of their work, the Chancellor and the Economic Secretary to the Treasury have both spoken with Lloyd’s of London over the last week to ensure that appropriate insurance cover is available for operators in the light of the ongoing conflict, including policies to cover businesses for losses and disruption caused by the war, civil war and revolution.
I also stress that we are absolutely focused on our consular work. As the noble Earl said, over 101,000 British nationals have returned to the UK since the start of the conflict, including those who returned on the six UK Government charter flights from Muscat and Dubai. We will continue to work with airlines to increase commercial capacity and volume for British nationals. Commercial options have certainly increased. On Sunday, we saw 35 flights, carrying over 8,000 nationals, arrive back home. There is an estimate of a further 300,000 remaining in the region and, obviously, we will provide what consular support we can. I reassure noble Lords that we are making every effort to support the couple who have been arrested and detained. We are doing everything we can through our consular support.
The question from the noble Lord, Lord Purvis, related to that from the noble Earl. Obviously, our diplomatic relationships with Iran ensure that we can make those clear representations. I am aware that my honourable friend the Minister for MENA, Minister Falconer, has called in the ambassador here to make those representations strongly, as well as trying to provide consular support.
The noble Lord, Lord Purvis, asked what ministerial engagement we have had. Minister Falconer has been constantly engaged with the commissioners and the embassy here, but also in many phone calls. The Foreign Secretary visited Saudi Arabia on 12 March to demonstrate our support for regional allies and particularly the Gulf Cooperation Council. We are with them absolutely. She saw the defensive support that the UK is providing in response to the immediate Iranian strikes, and discussed how the UK and Gulf states are working together to address threats to energy and civilian infrastructure. Our priority is to make sure that we keep the economy moving, because it helps us back at home. Our Saudi partners are certainly playing a critical role in protecting critical infrastructure and civilians, including the more than 25,000 British nationals who call Saudi Arabia home. The Foreign Secretary has also spoken with leaders across the wider region, including G7 partners, about that.
I turn to the humanitarian situation, particularly in Lebanon, which was mentioned by the noble Lord, Lord Purvis. As we discussed earlier with the Oral Question to which my noble friend Lord Lemos responded, it is a critical situation. We not only announced £5 million initially but have added another £10 million to make £15 million of humanitarian assistance to Lebanon and neighbouring areas. As we have heard, the situation is incredibly dire—the infrastructure and the bombing.
We have certainly made our position very clear: we have condemned the escalation and the Foreign Secretary has been very clear with all sides that further escalation of this conflict is in no one’s interest. Hezbollah must cease its attacks on Israel. We have also been clear with the Israelis that they must not expand this war further into Lebanon, but must do everything to protect civilians and comply with international humanitarian law.
I appreciate the noble Lord, Lord Purvis, mentioning Sudan. This conflict is taking our eyes away from the current situation there. We heard from President Zelensky, who was in Parliament this week, who made it absolutely clear that Putin must not benefit from this conflict. We have been very clear about that. We also must understand that many of the sides within Sudan’s conflict have had support from the players who are now involved in this conflict. We must ensure that we do not forget Sudan and that we keep it high up the agenda.
I do not doubt that we will cover more points, but I conclude that we are engaged in supporting our allies and determined to do what we can through defensive measures to protect our interests. We will continue—the Defence Secretary visited Cyprus earlier this week—to take all possible actions to do that.
Lord Anderson of Swansea (Lab)
My Lords, the key justification of President Trump in launching this war of choice was that it was a pre-emptive action on his part because Iran was poised to produce nuclear weapons. Has not that claim been blown out of the water by the evidence just given to Congress by his Director of National Intelligence, Tulsi Gabbard, that Iran had not sought to enrich uranium since the massive attacks last summer, and that therefore there was no justification for pre-emption, as suggested by the President? Does this not justify our Prime Minister in his cautious response to the US demand for assistance and his tilt towards closer co-operation with our European allies?
Lord Collins of Highbury (Lab)
As I said in my initial response, the Prime Minister has been absolutely correct in ensuring that we focus on international law and on our interests. We should not underestimate the threat of Iran—it is a serious threat to us. That is why the previous Government and this Government have put so much effort into ensuring that it does not get nuclear weapons. With our E3 partners, we have engaged in extensive negotiations in the lead-up to snapback, and Iran chose not to accept our demands; faced with Iran’s continuous nuclear escalation, we were compelled to trigger that snapback, and we ensured that we got decisive UN Security Council support for that. We are absolutely clear about the requirement to ensure that Iran does not develop nuclear weapons remains—it is a threat that is serious. We also need to understand its actions in the region, not only to do with its proxy facilities but even in what this terrible regime has been doing to its own population. We should be clear about the threat that Iran is to the whole of the world.
Lord Waldegrave of North Hill (Con)
Would the Minister accept that many of us applaud the caution of the Government in this situation? I was proud to visit, in a previous generation, the Armilla patrol, but the situation is entirely different from then. Forcing the Strait of Hormuz against organised opposition would be an extremely dangerous undertaking. If anybody wants to cast their minds back into history, they will see that we have a precedent for that from almost this month 110 years ago. Will the Minister accept that we should be very careful in engaging in military action to clear the Strait of Hormuz before there is an operative ceasefire of some kind?
Lord Collins of Highbury (Lab)
The Foreign Secretary and the Prime Minister have been very clear that the most important outcome is a negotiated settlement and agreement to achieve the end of this war. The Strait of Hormuz presents us with a problem. We are in detailed negotiations with our allies because, as the noble Lord accepts, what we are facing now is very different from what we faced 10 or 20 years ago. Technology has changed. As the Foreign Secretary said in the other place, we have not just air drones but sea drones and other different things—it is not just about guns along the bank. It is important that we understand that. We are actively working with our allies to see how we can address this.
Either the noble Lord, Lord Purvis, or the noble Earl—by the way, I should have said happy birthday to him; dealing with this Statement at the end of the week is not a birthday occupation—referred to international law and the law of the sea. The law of navigation and trade is the number one priority for the UK and our ability to trade and be economically viable, so we are going to continue to work with our allies. The noble Lord is right that in the end we need a negotiated settlement.
Baroness Uddin (Non-Afl)
My Lords, I thank the Minister for the Statement. I associate myself with the constructive and thoughtful way in which he has responded and with the comments made by other noble Lords, particularly the noble Lord, Lord Purvis of Tweed, because of the issues that he raised on Sudan.
Does the Minister accept that there is no hierarchy of wrongs, whether we are talking about the attack by the US and Israel in an unprovoked war on Iran and its population or about Iran itself conducting a blatant disregard of human concerns and pouring wars on its neighbours? I utterly condemn both those actions. Does the Minister accept that there was a peaceful solution in place, according to the Minister from Oman, and that it would have been possible if international laws had not been broken?
I have two questions. First, can the Minister assure this House that in our measured action—and I congratulate our Government on the way they have conducted themselves so far—no support is provided for killing innocent civilians in Iran? Secondly, the Minister will be aware that the al-Aqsa mosque has been closed to Palestinian Muslims for prayers at this auspicious time. Tomorrow is Eid. Has he had any opportunity to make representations to the Israeli Government to say that the mosque should be open?
Lastly, I wish Eid Mubarak to all those who are going to celebrate the end of the month of Ramadan.
Lord Collins of Highbury (Lab)
I certainly join the noble Baroness in her last comment in wishing everyone a successful conclusion to Ramadan.
It is not a question of simply saying, “That’s wrong and that’s wrong”. What we have faced in relation to Iran is a state that has committed crimes across the globe, even here in this country, and we need to be aware of that. We are facing a situation where tens of thousands of civilians have been killed in Iran for standing up for their democratic rights.
The Prime Minister was clear why we made the determination in terms of our view of international law and not putting our forces in any doubt about their role. But once Iran started indiscriminately bombing and attacking its neighbours, which had not participated in the first attack, that was when we needed to ensure decisive defensive action, which we will continue to do. I come back to what I said to the noble Lord just now. At the end of the day, we want to see a negotiated settlement and something that is sustainable, but it cannot be on the basis that Iran can continue to develop nuclear weapons or to pose state threats.
Baroness Altmann (Non-Afl)
My Lords, I too thank our Armed Forces and echo the greetings “Eid Mubarak” to all who are celebrating tomorrow, but I want to pick up on what the Minister has already said. The Iranian regime, through the IRGC, has cracked down violently on its own people, killing tens of thousands. Via its proxy, Hezbollah, it has attacked British interests at RAF Akrotiri. Can I ask about the threats of Iranian-linked activity on British soil? Twenty IRGC-linked plots are being monitored and four recent arrests of people conducting surveillance on Jewish sites have been made. The pro-Iran regime vigils and demonstrations have added to the sense of threat felt by the Jewish communities in this country—and I declare my interest as a proud British Jew. When will the Government proscribe the IRGC?
Lord Collins of Highbury (Lab)
I think I have indicated the nature of the regime in Iran and the way that it has undermined and attacked people not only within its own country but across the globe. That is why the UK now has over 550 sanctions against Iranian-linked individuals and entities, including, let us not forget, the IRGC, which has been sanctioned in its entirety. Over 220 designations have been imposed since this Government came into office. It is a long-standing position under successive Administrations, as the noble Baroness knows, not to comment on the detail of security and intelligence matters, including whether a specific organisation is being considered for proscription. But we recognise, as she rightly pointed out, the threat posed by the IRGC and will not hesitate to take the most effective measures against the Iranian regime. A separate list of proscribed terrorist organisations is kept under review, and the threats to the UK are kept under review. I remind the noble Baroness that we have made a commitment: Jonathan Hall KC, as the Independent Reviewer of Terrorism Legislation, has examined how the UK’s legal framework should address hostile activity by state actors and entities, and we are committed to taking his recommendations forward.
Lord Barber of Chittlehampton (Lab)
My Lords, I thank the Minister for this Statement and applaud the Prime Minister and the Government for the way that they have responded to the crisis in the Middle East all the way through, both in relation to British people abroad and the entire international situation. I speak as the FCDO envoy on Palestinian governance; I have been there regularly over the last couple of years. I am trying, in a small way, to assist the Palestinian Authority to build an effective Palestinian state, with the rule of law, for the future. This is fundamental work if we want a two-state solution in the future.
I am grateful to the noble Lord, Lord Purvis, for raising the issue of the West Bank in his remarks. The West Bank is suffering quite significantly from a tightening economic stranglehold, where the tax revenues are collected by the current Israeli Government and not transferred regularly to the Palestinian Authority, so most public sector workers are on a small proportion—25% or 30%—of their salary. In addition, there are a thousand checkpoints across the West Bank and, in some cases, there is aggressive settler violence. That is making the growth of the economy, never mind the governance of the West Bank, ever more difficult. But there are some very powerful, effective, thoughtful and constructive Ministers in the Palestinian Authority, and I am delighted that the British Government are doing their best to help them. Does the Minister agree that this is a time, with all the other distractions in the Middle East, to continue that work to strengthen the Palestinian Authority and, if possible, to make its work even stronger and more effective?
Lord Collins of Highbury (Lab)
I thank my noble friend for his comments and agree completely with him. When the Foreign Secretary presented her Statement in the other place, I think she said that we must redouble our efforts in focusing on and supporting a two-state solution. I acknowledge the work that my noble friend undertakes to support the Palestinian Authority. We made that support clear, which is why we took the decision to recognise Palestine, because we need to ensure that that is the focus.
The Foreign Secretary responded to a number of things. When I last visited the West Bank, I saw the groups of thugs—I do not call them settlers—who sit on top of the hills above Palestinian villages. They do not just harass people: the most horrendous case that we saw this week was a family returning from the shops, and young children being shot. We have made representations and are asking for clear investigations into this. The rule of law applies to Palestinian people too. They deserve the opportunity to be able to live and work in peace.
Lord Mohammed of Tinsley (LD)
My Lords, I echo the words of the noble Lord, Lord Purvis, particularly around how conflicts abroad should not result in hate on our streets. I fully back his call for a cross-party meeting of senior Members of your Lordships’ House to look at how we can work together to ensure that antisemitism and Islamophobia are not allowed to spread, given what is happening in the Middle East.
I also wholeheartedly back the Minister’s comments about what is happening in the West Bank. Those incidents, such as individuals being attacked, are heartbreaking. Often it is not just the young but the elderly who are brutalised and beaten up for no reason other than the fact that they live there. Your Lordships’ House should be very clear that the Government of the United Kingdom will take strong action against anyone who is involved in that, including sanctioning further individuals.
One point that has not been mentioned so far is the Houthis in Yemen. At the moment they have stayed out of this conflict, but what assessment have His Majesty’s Government made about the impact, particularly on trade, if the Houthis were to enter this conflict? There is huge attention on fuel at the moment, and the fact that energy prices are both affecting us domestically and, as I mentioned in the earlier debate, affecting energy-intensive industries such as steel, in places such as south Wales, south Yorkshire and Scunthorpe.
Lord Collins of Highbury (Lab)
On the comments about the rise of antisemitism and Islamophobia, we all have a duty, across political parties, to ensure that we focus on greater community cohesion. That is fundamental, because there is no doubt that there has been an increase in both Islamophobia and antisemitism, and we need to address that. My noble friends across Whitehall have been working on how we can work across government to deal with that issue. The idea of discussions is something that the usual channels could look at; it is certainly worthy of consideration.
The noble Lord discussed Yemen. We have seen a huge humanitarian crisis there as a consequence of the actions of the parties, particularly the Houthis. We constantly review the situation and work with our allies: we have had discussions with Saudi Arabia in particular, but our focus at the moment is on the whole region. This conflict is destabilising the whole region; we need to ensure that we give support to our allies so that they can defend their position.
Lord Forbes of Newcastle (Lab)
My Lords, I congratulate the Government on avoiding the pull towards an illegal and pointless conflict in the Middle East, despite the pressure brought to bear from some national and international corners. We have heard much about the impact of the conflict on oil and gas supplies. What we have not talked about quite so much has been the impact on our diplomatic efforts in the region, and no doubt there will have been a large impact and much disruption to those diplomatic matters. Your Lordships’ House has heard and asked questions in previous weeks about the conditions for Craig and Lindsay Foreman, the two Brits jailed in Tehran a few weeks ago, just before the conflict began. Can my noble friend the Minister update us on the diplomatic efforts that are continuing to be made to secure their safety, security, health and ultimate release, despite the devastating impact of the conflict on the usual diplomatic channels?
Lord Collins of Highbury (Lab)
I thank my noble friend. The noble Earl raised the Foremans in his contribution and I responded by saying that we are making every effort through our consular services and maintaining that diplomatic link. My noble friend is right to focus on the importance of diplomacy. We talk about the need for defence and for ensuring that our allies have the appropriate support, but the sort of dialogue that we have been engaged in is vital, and we will continue to do that. Our thoughts are very much with the Foremans and with their family. It must be incredibly concerning to be in this situation, and we are making all efforts to provide consular support and make representations to ensure their release.