Arrangement of Business
The Deputy Chairman of Committees (Lord Duncan of Springbank) (Con)
My Lords, welcome. If there is a Division in the Chamber, although we are not expecting one, the bell will ring and we will act accordingly. Let us begin.
Local Councillors: Recruitment, Retention and Well-being
(1 week ago)
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Lord Forbes of Newcastle
To ask His Majesty’s Government what assessment they have made of the impact of increasing abuse and intimidation on the recruitment, retention and wellbeing of local councillors; and what action they intend to take in response.
Lord Forbes of Newcastle (Lab)
My Lords, I am grateful to all noble Lords who have expressed a wish to speak in this debate. I draw noble Lords’ attention to my role as a non-exec director at MHCLG.
Four years ago, when I left local government, there was growing concern about the rising levels of abuse directed towards councillors and council candidates. I wish I could say that the situation has got better since then. Sadly, it is worse—much worse. My purpose in securing this debate is to continue to raise awareness of the scale of the challenge faced and to ensure that we do not simply accept it as the new norm for our democracy.
The evidence before us is stark: rapidly escalating levels of abuse and intimidation are having serious and detrimental effects on who is willing to stand for elected office, how long they wish to hold elected office and how they are being prevented from serving effectively during their term. An LGC survey last year revealed that online abuse and a lack of respect from the public are the biggest deterrents to people serving as councillors. When viewed alongside parallel evidence that women, LGBT people, Muslims and those from ethnic minority backgrounds face disproportionate abuse on social media, we should be extremely concerned at the chilling effect that this is having on the diversity and talent pool of those seeking to serve their local community.
This is not a theoretical challenge; it is happening now. One Labour councillor reports three colleagues taking time away due to abuse; one of them was
“very close to a breakdown”.
Another said:
“People are vile online … Facebook is particularly toxic”.
Women councillors report doxing, stalking and AI-manipulated images. The noble Baroness, Lady Grey-Thompson, president of the Local Government Association, relays multiple accounts of women facing the normalising of harassment, being photographed in public and having their locations posted online, with some now
“frightened to go to meetings”.
The LGA’s 2025 Debate Not Hate survey records many severe incidents: a councillor’s car firebombed; a parish chair’s predecessor assaulted and left with a fractured skull; death threats and slurs aimed at LGBT+ and Muslim councillors; and persistent co-ordinated misinformation and harassment on social media. Disorder and intimidation at meetings are escalating. Crowds menaced councillors, objects were thrown and serious damage was done to council buildings in Swale last December. In the same month, an effigy of council leader Councillor Alyson Barnes was burned in Rossendale.
Physical assaults on individual members are not rare outliers. In June last year, Councillor Jordan Tarrant-Short was repeatedly punched in the head in Rochdale. In September 2025, Councillor Paul Kendrick was assaulted in Norwich. In October 2025, Councillor George Finch, the leader of Warwickshire County Council, was assaulted and abused in Nuneaton town centre. Just a few months ago, during the election campaign in Kent, Councillor Thomas Mallon was attacked on a doorstep and suffered lasting nerve damage as a result.
I also wish to talk about two absolutely shocking incidents in the recent local election campaign in my home city of Newcastle upon Tyne. One late evening, a couple of weeks before polling day, Councillor Stephen Barry-Stanners had eggs thrown at his house. This was logged with the police, but it was only when he left the house the next day that he spotted, daubed in huge letters in red paint, the words “Peedos”—spelt wrongly—“live here”. Stephen said at the time that he was devastated by the incident, adding that
“the abuse has been escalating since this local election campaign started. It was initially just trolling and nasty comments, and soon I couldn’t post anything without getting the vile stuff under it, no matter what it was”.
On the Sunday, after losing her seat by just 22 votes, former cabinet member Juna Sathian’s home was pelted with eggs. She was not at home at the time, but her husband and two young sons were, and they were terrified by the experience.
Is it any wonder that a quarter of councillors tell LGC that they do not plan to re-stand, while many more are unsure? Women, younger people, minority ethnic, LGBT candidates and those with caring responsibilities are disproportionately deterred, especially when abuse mixes with deepfakes and pile-ons that never quite cross a criminal threshold but corrode well-being and mental resilience all the same.
The Government have tools to address this but, so far, consistency and pace are missing. Operation Ford created force elected-official advisers as single points of contact, yet support is patchy. The Elections Act 2022 created an offence of intimidation, but the bar is often too high to deter persistent harassment. The Online Safety Act is moving towards implementation, but risks overlooking activities that are “legal but harmful” at scale: doxing, synthetic sexualised images, targeted misinformation and co-ordinated trolling.
There are a number of steps that I would urge the Government to consider taking. The first is to make support consistent and accountable. They should establish a national councillor safety co-ordination unit, with real-time intelligence sharing and standards for forces, ending postcode lotteries in response. They should require every police force to provide a named, trained adviser for elected members, with service levels, escalation routes and Home Office oversight. They should also issue CPS and policing guidance to lower the practical threshold for action against intimidation around elections, so that swift and early intervention can prevent escalation.
The second step is to put teeth into online protections. Ofcom should be instructed, in its implementation of the Online Safety Act, to recognise elected local politicians as at-risk users and give them priority pathways for the rapid takedown of doxing, synthetic or sexualised deepfakes and impersonation. It should impose sanctions for repeat abusers and publish turnaround targets and league tables of how online and social media companies perform. It should develop a no-cost “trusted flagger” route for councils to escalate malicious content and impersonation accounts affecting members. It should also work with local government to establish proportionate mechanisms that address persistent, targeted harassment that stays just below criminal thresholds but drives people away.
The third is to protect meetings and democratic spaces. The Government should update the guidance to enable councils to provide proportionate security at meetings and give them powers to expel and bar those who demonstrate violent or persistently abusive behaviour. They should fund basic security measures for high-risk venues and members, including incident-logging tools, training and rapid liaison when threats spike.
The fourth is to support victims and prevent burnout. The Government should commission confidential mental health and trauma support for councillors, including post-incident care and 24/7 advice helplines. They should ensure that councils have the resources and training at induction to help people to take down offensive material.
The fifth step is to track this problem and our progress. The Government should publish an annual report to Parliament on councillor safety, recruitment and retention, disaggregated by gender, ethnicity, sexual orientation, disability and age, with force-by-force performance of the police against service standards. That would go a long way towards tackling this problem.
We need to act now to make policing consistent, online platforms accountable, public meetings safe and support for those affected accessible. Local democracy should be a calling, not a hazard. Let us make it safe to serve.
Lord Mott (Con)
My Lords, I thank the noble Lord, Lord Forbes, for bringing forward this timely debate and for his powerful opening speech. The growing abuse and intimidation aimed at those who serve in public life is a fundamental threat to our democracy and the integrity of our democratic processes.
Having spent much of my 30-year career in political campaigning, I know at first hand that councillors are at the heart of our communities and, very often, our political parties. Yet, unlike many of those in national politics, they often operate with little support. They work from their homes, make themselves readily accessible to residents and balance public service with careers and families. That openness is a strength of our local government, but it leaves councillors uniquely exposed. We must consider the chilling message that this abuse sends to those considering public life. Why would talented people put themselves forward if it means exposing families to harassment and physical threats?
This challenge cannot be separated from the increasingly polarised political environment in which many councillors now operate. While people should be free to express their views on conflicts, political disagreement must never become a pretext for racial or religious hatred, including the alarming rise in antisemitism in recent years. This has been compounded by the rise in single-issue independent campaigns dominated by toxic identity politics and international issues, even when the office sought is a local one.
I urge the Government to ensure that the Defending Democracy Taskforce further examines these local threats. We also need concrete action now. We cannot simply ask for more reports, more recommendations and more delay. Will the Minister set out what further practical steps can be taken now to protect councillors from increasing abuse and intimidation? If we do not act now, I fear that fewer and fewer people will step forward to serve, and our democracy will suffer.
Baroness Shah (Lab)
My Lords, I am grateful for the opportunity to speak in this debate, and I thank the noble Lord, Lord Forbes, for bringing it forward. I declare that I am the head of the Labour office at the Local Government Association and I have been a councillor for 12 years. I have literally just come from the LGA this morning where we were discussing this very topic.
I am making my remarks with immense personal sadness that we are having to have this debate at all. I will not lie: following the recent elections, there have been moments when I have shed tears about the abuse that people who I call friends have had to face in these local elections. That in 2026 we must stand here and discuss the abuse, harassment and intimidation of elected councillors is a damning indictment of where our public discourse has arrived.
Councillors are not distant figures in Whitehall. They are neighbours; they run food banks; they sit on planning committees and housing panels. They are the most accessible tier of our democracy, and that accessibility is now being weaponised against them. I have examples from councillors and candidates I know personally: cars set alight, sustained stalking campaigns, a candidate punched and knocked out recently on the doorstep. Just an hour ago I heard of a 74 year-old councillor in Plymouth being attacked in a stairwell. These are not abstractions; these are the lived realities of people who put their names forward to serve their communities.
I come here today with some solutions. Three things must change. First, our institutions must do consistently better. Operation Ford was a welcome step, but it cannot be a one-off. Returning officers and monitoring officers at local authorities must be properly equipped, trained and empowered to act when elected members face threats. The Electoral Commission must play a more active role in setting and enforcing standards of conduct around elections. The Home Office must develop a far deeper understanding of the specific nature of this threat. Without that, enforcement will always lag behind the harm. I welcome the recent government proposals and action on councillors’ addresses being public on websites.
Secondly, we cannot have this conversation without confronting social media. Misinformation spreads at scale and abuse is industrialised. Co-ordinated campaigns of harassment can be mounted in minutes or hours, targeting individuals with a ferocity that would have been unimaginable a decade ago. This is not only a safety issue but a democratic one. It puts people off standing for public office, and the evidence is clear that women are disproportionately targeted. We need robust, enforceable regulation of platforms, and the Online Safety Act was a start.
Thirdly, perhaps most uncomfortably, we must look in the mirror. Culture flows from the top. When politicians at the highest level trade in contempt, when opponents are not just wrong but become enemies and when inflammatory language is rewarded with column inches, we should not be surprised that it filters down. We have a responsibility—every one of us—to model the public discourse that we want to see. Just because we have the right to say something, it does not mean that we should. Local democracy depends on ordinary people being willing to put their names on a ballot. We are making that harder and more dangerous. We can and we must do better.
Lord Udny-Lister (Con)
My Lords, I add my thanks to the noble Lord, Lord Forbes, for initiating this important debate. Abuse of local councillors is not new; I am afraid it goes back a long time. I was a local councillor for over 25 years—I chaired various committees and was leader of the council for 19 years—so I will talk about a few personal examples. From the moment there was a change of control, there were demonstrations at the town hall. People ran a gauntlet of abuse and threats, and many council meetings were disrupted by order papers flying through the air from the public gallery, which was usually subdued only when demonstrators were removed by the police. For a long period, the police kept crash barriers at the town hall, as they were there so much.
For individual councillors, demonstrations outside their homes and threats through the letterbox were common. At that time I had small children, and I had to contend with being burned in effigy outside my home on many occasions. Of course, I was not there—I was at the town hall—so it was my young children and my wife who had to suffer it. One particular demonstration comes to mind: when it was finished and they had taken their photographs—this shows my influence—the people in the wheelchairs were all able to get up and push their wheelchairs away. Obviously, I had some effect: the power of a councillor.
I am using my own examples, but even today much of this is organised by people in mainstream political parties, so I slightly feel that we are also reaping a bit of what our own political parties have sowed in the past. Now it is so much worse with social media, because they do not even have to show a bit of courage by showing up outside your house and shouting at you; now they can just do it online under a fictitious name and you will never know who they are.
Public anger over policies is often driven by government policies coming down to councils to implement. For most people, the layers of government are totally opaque. Making hard decisions goes with the job of being a councillor—except, of course, when councils do not do that and we have poor councils as a result. We have all seen the result of those poor councils that do not make decisions. The police and judiciary must take seriously the threats, they must take action and they must penalise as necessary. It is not, and never can be, normal politics to abuse someone. This has to be treated with seriousness and there has to be a price for that kind of behaviour.
Finally, much of this will be much better with local government reform, greater fiscal freedoms and real transparent powers, which I believe would create clarity. If, at the same time, we get robust action by the law, this problem will decline. It will also decline because people will start to believe that councils are actually a little more relevant.
Lord in Waiting/Government Whip (Lord Lemos) (Lab)
I remind noble Lords of the advisory speaking time limit. If speakers run over, that will simply reduce the amount of time the Minister has to respond, because this is a time-limited debate. I would be grateful if speakers could stick to three minutes.
Baroness Wilcox of Newport (Lab)
My Lords, I declare that I am a vice-president of the LGA. In the LGA it was a pleasure to work closely with the noble Lord, Lord Forbes, as leader of the Labour group, and subsequently with the noble Lord, Lord Jamieson, as leader of the LGA.
When I became leader of the Welsh Local Government Association, I made a clear commitment: respect and equality would not be an option; they would come first. That commitment feels more urgent than ever, because intimidation in public life is not declining—it is evolving and getting worse. We have codes of conduct and processes, but process is not protection. People are staying silent because they feel intimidated, fear the consequences or are told that this is simply part of politics—it is not.
When abuse is dismissed as “banter” or ignored, it creates a culture that would not be tolerated in any other workplace. It does not stop at the council chamber door: it follows people home, online, anonymous and relentless. Many of us know that from personal experience. I have had paint thrown over my car and someone was arrested for threatening to kill me.
We say we want new voices in public life, but we are already losing them. Too often, it is younger councillors, particularly young women, who face the worst abuse and decide that it is simply not worth it. That is talent lost, representation lost and trust weakened. Leadership matters, culture matters and tone matters.
Zero tolerance cannot just be a slogan. It must be action in the moment—call it out, challenge it, stop it. Our systems must do more than just exist. They must be trusted to protect those who rely on them. I say to His Majesty’s Government: work with the devolved Administrations and local government to deliver stronger protections and real support. The reality is that if intimidation is tolerated, participation will fall. If participation falls, democracy is diminished. This is the test—act or allow that decline. That is a choice we cannot afford to get wrong.
Lord Young of Acton (Con)
My Lords, I am at a slight disadvantage in this debate. I am one of the few participants who has not served as a local councillor, so I do not have the coalface experience that others do. I will talk about this issue from the point of view of my work as director of the Free Speech Union. Since I set it up six years ago, we have taken 317 cases—I checked yesterday—coded “local government” in our case database. Of those, 141 were about members of the public who had been complained about by councillors or council employees.
The pattern we encounter again and again is that when members of the public say things that councillors find disagreeable but that would nevertheless be protected speech under Article 10 of the European Convention on Human Rights, they are complained about, sometimes with devastating consequences, on the grounds that what they have said constitutes harassment, misinformation or hate speech, even though it is clear-cut that their comments are protected.
I have time, so I will give one or two examples of people we went to bat for. Last year, two police officers from Greater Manchester Police paid a visit to a grandmother in Stockport who had posted in a Facebook group calling for the resignation of two local Labour councillors, after the Mail on Sunday had exposed comments in a WhatsApp group in which they expressed the hope that a troublesome member of the public in their ward would die. This scandal involved Andrew Gwynne when he was a Health Minister, and he had to resign as a result. Nothing she said could possibly have been perceived as meeting the threshold for harassment, yet two police officers, having been tipped off by the partner of one of these councillors, paid a visit to her house. There are countless such cases. In another case we are dealing with at the moment, a member of the public objected at a meeting of his parish council to the imposition of a 20 mph zone in his village. Two Green councillors promoting this proposal complained that they felt his comment was harassment.
We have to be careful in creating the various mechanisms that the noble Lord, Lord Forbes, proposed in his opening speech. How do we safeguard against them being weaponised for political purposes to suppress legitimate criticism of elected officials?
Baroness Royall of Blaisdon (Lab)
My Lords, like the noble Lord, I have not been a councillor, but I was married to one and am the mother of one. We have heard all the appalling facts and stats. As chair of the Jo Cox Foundation, I am deeply concerned about the impact that abuse and intimidation are having on councillors, their families and, ultimately, our society. No one should have to risk their safety to serve in public life, yet that is exactly what is happening across the United Kingdom, with damaging consequences for our democracy.
The political atmosphere is becoming increasingly hostile. Too many elected representatives and those considering standing are avoiding engagement, limiting their visibility or stepping away altogether because of safety concerns. Too many excellent change-makers are choosing not to stand in the first place. These pressures, as we have heard, fall disproportionately on women and those already underrepresented in our democracy—the very people whose participation makes our institutions more representative and resilient.
Our local councils should reflect the communities they serve, but instead this trend risks narrowing who feels able to take part. We are moving towards a culture where abuse is dismissed as part of the job, but it is not: it is a systemic problem rooted in wider inequalities and pressures across the political ecosystem, and it is worsening across democracies globally. If we fail to act, our councils will reflect an ever-narrowing section of society, with serious implications for the decisions made and the services delivered.
We need an inclusive democracy, one in which people feel safe and confident to participate in robust but respectful debate. Freedom of speech is a cornerstone of our democracy, but it must never be used to incite violence, spread hatred or justify harassment. We need a democracy that enables political parties to thrive. Councillors, who are the lifeblood of all political parties, are the people who are rooted in our communities.
The Jo Cox Civility Commission has made clear recommendations to address abuse, intimidation and violence, and there has been welcome progress, including Operation Ford, but more needs to be done. The Representation of the People Bill is a very positive step, and it is a great moment for us to amend that Bill where necessary. We need the Electoral Commission to publish and maintain candidate safety guidance and require returning officers to provide this to candidates as soon as possible; the Electoral Commission should have more powers for enforcement; and political parties must publish their codes of conduct and be held to them.
Finally, social media has amplified hostility. It did not create resentment towards politicians, but it provides a perilous platform to share it, with dangerous consequences. A clear code of practice under the Online Safety Act would help to provide consistent protection and give candidates the confidence to participate. I pay tribute to the LGA for all the work that it has done with councillors, but also with those who have lost their seats.
Lord Evans of Guisborough (Con)
My Lords, I express my gratitude to the noble Lord, Lord Forbes, for bringing this subject before us today. I was shocked to hear many of the incidents that he relayed to us. For the first time in many years, I began to think that perhaps my decision to give up as a councillor back in 2014 was not such a bad one. It is a decision that I have regretted, really, ever since I made it. I served five terms, and I very much enjoyed them. One of the reasons I decided not to continue was that I felt it was becoming acceptable to attack elected members. I felt we were having targets painted on our backs, and it was not a situation that I was prepared to continue to be a part of.
When I left local government at Havering Council, I was invited to go abroad to help advise councillors there and see their culture—in Fiji, as it turns out. I was phoned up shortly afterwards by the organisers, who told me there was no space left in Fiji, so in fact they were sending me to Basra—and could I come into the Foreign Office for my kidnap training on Tuesday? I went and did it, and I found councillors there who were very keen on helping their community, but they all constantly accused each other of corruption and all required bodyguards. It was a culture that I really would not want to see developing here, a future culture that we do not want: there was a constant churn, a constant change of members, no learning from previous experience and very little progress for the citizens of that city, quite apart from the elected members.
In the little time left to me, I will speak in support of a comment made by my noble friend Lord Udny-Lister about part of this being about the lack of power that councillors now have. People expect us to be able to achieve things and yet, very often, we are just relaying bad news to them. That is creating expectations and then letting them down, which is bound to lead to problems.
There is no excuse for bad behaviour, but I remember chairing a planning committee about expanding a sixth-form college in Havering. It was an excellent application, worth £60 million, from the Government. A mass crowd turned up and did not want it. I understood them: if I had lived next door to it, I probably would not have wanted it either. But it was a case of the greatest good for the greatest number—a really good facility, there for the future for all the young people of our borough. So we approved it, and we got a lot of abuse from the people who had come to the meeting. We got accused of corruption. When we had finally cleared the room out, gone away and signed the whole thing off, the Government came back to us just a few months later and told us they were withdrawing the money, so we could not have our sixth-form college after all. We had taken that massive reputational hit for nothing. That is something we want to avoid in future.
Lord Campbell-Savours (Lab) [V]
My Lords, for my contribution, I wish to place on record a statement by Councillor Lisa Hinton, deputy leader of Cumbria—one of Cumbria’s finest councillors—on the scale of abuse that she has been receiving:
“The abuse I receive online is not abstract—it is personal, relentless, and at times shocking. I have been called ‘stupid’, ‘not intelligent’, and subjected to constant comments about my appearance—told I am ‘too fat’, mocked, dismissed, and reduced to something less than human. I have read comments blaming me for serious crimes, including statements that if ‘anyone is raped by an illegal, it will be your fault’ or ‘You are a risk to our women’.
Now people are feeling braver and the abuse is to my face. I have sat in council meetings and heard people shout at me ‘traitor’, ‘you are on warning’ and ‘you have blood on your hands’. I’ve started to fear going. It has been getting worse over the last 6 months; we see the questions coming in mainly framed around immigration. The response from Council is more police, more security at the meeting—but no pastoral support for us. No thought to the wider implications on us as councillors and our mental health, because after hearing fifty people shouting, you still have to go home, put tea on, help with homework, and be a mum. But it stays with you. It hurts.
If this is what public service looks like, fewer people will choose it. Why would you? I could write thousands of words with examples of the hatred I’ve received over the last few years, abuse towards councillors needs to be tackled and stopped before anyone is seriously hurt”.
These are the words of Councillor Lisa Hinton. Lisa is calling for more support. I want more than that: I want action against the bully boys. No councillor should have to put up with this bullying and abuse. I rest my case.
Baroness Goudie (Lab)
My Lords, I thank my noble friend Lord Forbes for ensuring that we have this very important debate, at a time when so many councillors are seriously at risk. I am sorry to say that not many police forces really understand what is happening, particularly to women.
I will address a subject that both speaks directly to my own political beginnings and represents the core of our democracy. In the 1970s, I began my own public career in local government, as the youngest woman elected for the London Borough of Brent. During my years on the council, we worked to advance the important campaign for a housing aid centre and a law centre, and we founded a housing association for the borough. That opportunity changed the course of my career and my life and taught me that local councils are not the places to administer, as they are often perceived to be, but where we learn how to serve our communities and improve the daily lives of the families in them. As it was for many other women and me, as well as other people generally underrepresented in public life, the local council was the first door to go to.
At that time, local councillors were respected. That is no longer the case today. This has been brought about by awful people who hide away behind social media, letters and so on. It is a disgrace. That is why this issue matters so deeply and why everyone in government, no matter their party affiliation, has an interest in ensuring that becoming a councillor remains an appealing and possible career choice for capable, diverse and public-oriented people. If abuse and intimidation make that career path seem unsafe, we will lose good councillors before they even consider standing for election. We know that through various networks, as my noble friend Lady Royall said.
The Local Government Association’s 2025 survey found that almost three-quarters of councillors—73%—reported feeling personally at risk in the previous 12 months. A quarter had experienced a threat of violence or death against themselves or someone close to them. These are not the minor discomforts of public life; they are serious and harmful, affecting well-being, family life and the capacity of elected representatives to do their jobs.
I particularly want to address the impact on women. The same survey found that 84% of women councillors reported being personally at risk, compared to 73% overall. Women are most likely to report abuse and intimidation, and the figure of 78% should concern every part of the Chamber. If women are driven away from local politics, local government, the vehicle through which we carry on many fundamental services, becomes less representative.
Lord Sahota (Lab)
My Lords, I thank my noble friend Lord Forbes of Newcastle for bringing forward this important debate. It is a subject that matters deeply to me, not only as a politician but as someone from a ethnic minority background who has experienced these issues personally. This is not simply a political matter; it goes to the very heart of our democracy.
I speak not only from my principles but from my personal experience. I have been in politics for more than 30 years, with 22 years as a serving local councillor. I have witnessed at first hand the ugly reality of racial hatred in public life. At an election count, a returning officer would sometimes refuse to show me the spoiled ballot papers because they contained racial abuse directed at me. When I stood for Parliament some years ago, I received numerous racist email messages, and I quote just one of them. It said: “I’m not voting for that rag head”, referring to my turban and my Sikh faith. On another occasion, during an election campaign, a party stake board outside in my garden was vandalised with deeply offensive racial language scrawled all over it.
Despite everything I have experienced, I still firmly believe that politics is a noble profession. Serving the public and my community is the greatest honour of my life. Our democracy depends on ordinary people coming forward to represent their community. We should be encouraging more people from every background to stand for public office, not fewer. But that will only happen if they feel safe, respected and properly protected. Therefore, I ask the Government what steps they will take to strengthen the protection for councillors and candidates to tackle racial abuse, online harassment and intimidation, to ensure that those responsible for such behaviours are properly held to account. We cannot allow hatred and intimidation to become accepted as a part of political life. Our democracy deserves better.
Lord Murphy of Torfaen (Lab)
My Lords, it is 53 years ago to the month that I was elected to my local authority in Torfaen. I fought four elections and I can honestly say that I had no abuse during the whole time I was a local councillor. There was a time I can recall knocking on the door and a factory worker was woken up because he had been on shift overnight. On another occasion, a German resident asked me why there was not a Conservative candidate. I was obviously the Labour candidate and I said that it was not my job to put up a Conservative. But that was it. Fast forward all those years later to a few weeks ago, at the elections that we have had, in our case in Wales for the Senedd, and for councils in England, and the world has changed.
I thought I would have been used to abuse, having served as Northern Ireland Secretary, but it came as a terrible shock a couple of weeks ago when I heard the stories of people who had knocked on the doors in the weeks before the election. There were stories of terrible, personal abuse on the doorstep and of online abuse on social media and the internet—neither of which was present 53 years ago. Politics has become so polarised that it is reduced to soundbites and, therefore, people do not read newspapers any more. I have never seen this vulgarity and ugliness in politics in my political life. We have to do something about it.
I am grateful to my noble friend Lord Forbes for raising this issue today and I look forward to hearing from my noble friend the Minister what solutions the Government have on this issue, particularly with regard to the Representation of the People Bill but also other measures, which need to be replicated in Wales, Scotland and Northern Ireland. Abuse does not stop at the border. I look forward to what she has to say, but I repeat what many of your Lordships have said: democracy itself is imperilled if we cannot find candidates to stand as a consequence of the level of abuse that they now have to put up with. It is a cheapening of politics and it is extremely sad.
Lord Pack (LD)
My Lords, I join others in thanking the noble Lord, Lord Forbes, for bringing this important topic to our attention and putting it on the agenda today. We have heard many powerful and moving contributions from all parts of the Room, which reflects how this is a genuine cross-party issue that should concern us all.
The Local Government Association survey of councillors, although not UK-wide, provides a helpful benchmark. It is shocking that just under 70% of councillors who took part in the last set of elections reported receiving abuse or intimidation. As we have heard from several speakers, not only is it a shocking figure in totality but it tends to affect particular portions of our society, which hugely hinders what should be a common desire for us all to have democratically elected politicians who represent all corners of society. Shockingly, according to the LGA survey, more than one in five councillors have had to report one or more issues to the police. To bring that number to life: that would be the equivalent of 174 Peers among us in the House of Lords having to report something to the police. That is a shocking number.
It is fair to say that, so far, we have not always seen a brilliant set of responses to these problems. Operation Ford has a rather mixed reputation among those who have sadly had recourse to it. Indeed, in the LGA survey, under half of councillors who have reported an issue to the police say that their response has helped either greatly or even just moderately. But there is also a need for action from the Government, including on the legislative front. We have already heard today that there is a wide mix of solutions available out there to pick from. That includes, for example, from the Speaker’s Conference; although it focuses predominantly on MPs, it obviously has wider applicability. There is also the Government’s own previous consultation on a new standards framework for English local government, for example. The LGA itself has made recommendations, and we have heard other proposals such as those put forward by the Jo Cox Foundation.
I worry that this issue will once again be caught up in that perpetual pirouette of prevarication that we sometimes have in Whitehall. We have promises of action, consultations, recommendations and promises of legislation, but then an absence from a King’s Speech, a ministerial reshuffle, an election and maybe even a change of Prime Minister. Round and round we go in that cycle, while the misery for councillors continues and the action fails to happen. I know the Minister has a strong commitment on these issues, and I hope we will hear from her a clear timetable for the action the Government will take so that we do not simply go round and round yet again.
Lord Jamieson (Con)
I declare my interest as a councillor in Central Bedfordshire. This is an issue that I have spoken about many times with many people in this Room, particularly at the LGA. The terrible thing is that I cannot say it has got any better; it has actually got worse. I will not repeat all the terrible things that people have already mentioned, because I think we have all faced them. The one that has not been mentioned is the abuse of family members, particularly children. It is not just abuse of the councillor themselves; it goes beyond that. This is entirely and totally unacceptable.
When I first became a councillor—not 53 years ago but in 2009—most councillors were just good local people who wanted to help serve their communities. They wanted to get the bins emptied, fix the potholes, maybe build a new leisure centre and improve their town centre. They were not particularly political or politically motivated. They were motivated by their locale. I think we can all agree that most of those things are the sorts of things we should be doing. They are not very political issues; they are just desirable.
What has changed is that the whole firmament has become much more political with the advent of social media. It is a snowball effect. It is an echo chamber where anonymous or pseudonymous comment can spiral out of control. We are seeing national and even international issues being brought into local politics. This should not happen. The world has changed. Twenty-odd years ago, someone had to write a vitriolic letter. No one else would see it. You would get slightly upset, and you would throw it in the bin. Now, it is on social media, it is viral and it goes everywhere. A well-meaning councillor who is just trying to do the right thing will often, because of spurious or false information, be subject to huge abuse, which then spirals into the real world with physical threats, firebombing of cars and so forth. It is just not right.
Why would you become a councillor? You need real strength of character and motivation, and people are going off to do something else—very meritorious stuff. We need good councillors and we need to keep good councillors, so we need to protect them. The LGA did a lot of good work and I think the previous Government moved quite a long way, but it is not enough. My key question today for the Government is: what will we do to go further? What will we do to make it safe to be a councillor so that it becomes an attractive job where you feel safe, can serve your community and do those things—fixing the town centre, getting a new school built or whatever—without feeling that you and your family will be intimidated?
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, I am very pleased to respond to this Question for Short Debate. I am very grateful to my friend and my noble friend Lord Forbes for securing the debate and to all noble Lords for some very powerful contributions this afternoon.
First, let me be absolutely clear that abuse and intimidation of local councillors, whether online or in person, are totally unacceptable. I am going to briefly outline some of my own experiences, because they are relevant. Throughout my time as a councillor, particularly as leader of the council, I experienced constant abuse on social media, as many other council leaders do. I had fictional accounts of meetings with me published online, which were very difficult to deal with, and online misinformation about members of my family, which the noble Lord, Lord Jamieson, referred to. While I will put up with a lot myself, I do not think families should have to put up with this kind of treatment.
Lastly, I was a victim of a terrible incident that resulted in a court case. I have mentioned that simply because this is not just about the standards system or the policing system; it is also about the criminal justice system. If you feel victimised again when you get into the criminal justice system, that system is not working properly. So be assured that this Government will crack down on abuse in whatever form it takes—whether directed at an elected representative, a candidate or a campaigner.
Examples of abhorrent behaviour that councillors have been subjected to were given powerfully by my noble friend Lord Forbes, the noble Lords, Lord Campbell-Savours, Lord Udny-Lister and Lord Sahota, and the noble Baronesses, Lady Shah and Lady Wilcox. The particularly excruciating examples of racism given by the noble Lord, Lord Sahota, really strike home. The tales of terrible abuse on doorsteps given by the noble Baroness, Lady Wilcox, and the noble Lord, Lord Murphy, are blood-curdling and chilling. All the cases that have recently been picked up by the media are so disturbing. We have some very brave people in local government who continue in their roles, in spite of what we hear about.
The Minister for Security, Dan Jarvis, in his March statement on the Defending Democracy Taskforce, has already put on record the Government’s view that
“we must challenge at every turn, the notion that abuse, threats and intimidation are now an inevitability for those working in politics and public life”.
Nor should we tolerate incitement to violence or normalise it as part of our political discourse. These actions, and those who choose to perpetrate them, fundamentally undermine our democracy, and we should not tolerate it. We have a clear responsibility to protect and strengthen our democracy. Local government is the grass roots of this democracy and will thrive if conditions are right for talented people to feel confident to come forward and stand for public office.
Of the 136 councils that held elections in May, 79 changed control. Many newly elected councillors have likely got their first taste of the cut and thrust of front-line political life—I hope it has not been a painful one for them. A robust exchange of views is one thing—democracy thrives on lively debate—but, given the evidence that online and in-person abuse is on the increase, we must ensure that the expression of strongly held views does not sink into divisive and toxic conflict, personal abuse, threats and intimidation. We stand shoulder to shoulder with local government on this issue. As the noble Baroness, Lady Royall, said, we must not allow this toxic discourse to become normalised. As the noble Lord, Lord Udny-Lister, outlined, these actions can have a fundamental and dangerous impact on decision-making, with people not wanting to take the decisions they know are right for fear of reprisals.
Let me move on to what the Government have done and will be doing in relation to my noble friend’s Question for Short Debate. I will try to address as many of the points that have been raised in the debate as time allows.
First, Operation Ford and the Defending Democracy Taskforce were discussed by my noble friend Lord Forbes, the noble Baroness, Lady Shah, the noble Lord, Lord Mott, and others. We have committed funding as part of the Defending Democracy Policing Protocol to Operation Ford. This places a dedicated elected official adviser in every police force to provide security briefings and work with local authorities to co-ordinate appropriate security support where a heightened risk is identified. We must make sure there is a consistent and reliable response. I will take this back and find out what measures are being taken to ensure that this is not a patchwork across the country.
The noble Lord, Lord Young, and the noble Baroness, Lady Royall, both raised different issues about how we ensure that we have free speech. Freedom of expression and the right to protest are fundamental parts of a healthy democracy, and they are protected under law. The measures we are pursuing apply only to criminal intimidation or harassment, not to legitimate disagreement, protest or campaigning. It is important that we make that distinction. We are determined to ensure that people are not put off from campaigning and standing for public office, and we will continue to safeguard the strong legal protections on freedom of speech.
The noble Lord, Lord Pack, and others referred to the LGA survey, from which there was a very worrying and concerning set of outputs. I am pleased that, through the English Devolution and Community Empowerment Act, we have now put beyond doubt that a councillor’s home address should not be published by default. In practice, this means home addresses are not published unless the member requests it. This small but vital legislative change will help ensure that local councillors and their families can at least feel more secure in their homes.
The noble Baroness, Lady Royall, and others raised the issue of electoral reform. We are taking decisive action to tackle the harassment and intimidation of voters, electoral staff and campaigners. We are changing the law so that those convicted of intimidating or abusing electoral staff can be disqualified from seeking or holding elected office. This will bring electoral staff under the same protection already given to candidates, campaigners and elected representatives under the Elections Act 2022. The Representation of the People Bill will allow tougher sentences for those who abuse candidates, campaigners, elected representatives and electoral staff. In addition, we will remove the requirement for election agents, including candidates acting as their own agents, to have home addresses published on the notice of election agents.
Local government standards reform is a key issue, which was highlighted by my noble friend Lord Forbes and the noble Baronesses, Lady Shah and Lady Wilcox. The Government will reform the local government standards and conduct framework. In my brief I have the civil servant phrase, “as soon as parliamentary time allows”, but please be assured, colleagues, that I understand the importance of this and will be championing it to get it as soon as possible. The noble Lord, Lord Campbell-Savours, clearly illustrated the need for that in his very powerful contribution.
We consulted last year on a suite of proposals and published the response in November. The overarching aim of the reforms is to strengthen ethical standards in every type and tier of local government. We will also make sure that authorities have the right levers to deal with misconduct swiftly, fairly and transparently. I have very much taken on the point made by the noble Baroness, Lady Wilcox, and the noble Lord, Lord Murphy, about the devolved Administrations. We will liaise with our colleagues on that.
The noble Lord, Lord Evans, gave us the illustration of an experience in Basra; we need to act now to stop the slide into instability. I was with a group of planning officers this morning. If ever a group of council officers suffer this kind of harassment, it is our planning officers. That has to stop. They need to be able to do their job and their consultations without risking harassment and intimidation and be able to make decisions according to law and their professional expertise without fear of harassment.
In conclusion, I reassure the Committee that I and this Government are committed to doing all we can to prevent abusive, intimidatory and threatening behaviours. For democracy to thrive, we need to make sure that we attract the widest range of people to seek to serve their communities. They should be able to do so without fear of intimidation or abuse. This is a shared responsibility that we must all embrace. The noble Baroness, Lady Goudie, said that serving as a councillor is the gateway to serving our community. I completely agree. As the Security Minister set out to the House on 12 March, we must draw a clear line together; by leading with respect, calling out unacceptable behaviour and working collectively, we can ensure that our politics remains open, resilient and worthy of public trust. I thank all noble Lords across the Committee for their contributions to this important debate. I look forward to working with them all as we move this forward.
National Arts Bank
(1 week ago)
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Lord John of Southwark
To ask His Majesty’s Government what consideration they have given to establishing a national arts bank to act as a guarantor lender for those theatres, performance venues, galleries and arts teaching colleges which require capital funding in order to operate.
Lord John of Southwark (Lab)
My Lords, I declare my interests as a member of the president’s circle at the Central School of Ballet and a trustee at the Old Vic Theatre. I want to talk today about a proposition for a national arts bank, which comes from my experience as leader of Southwark Council and the financial support that we were able to give to three cultural and educational organisations, which, frankly, made the difference to them being able to progress with significant capital projects. I should say that the Table Office somewhat edited the end of my Question so that its full meaning may have been lost, because my debate is essentially about capital funding.
Let me talk about those three organisations which were helped in Southwark. The Mountview Academy of Theatre Arts had been based in Wood Green, Haringey, since its inception in 1945. A leading producer of West End stars and actors in musical theatre working around the world, it had been looking for a new home in Wood Green for many years when it began a conversation with Southwark. In short order, we identified a site for it in the heart of Peckham which was suitable for a brand-new and purpose-built theatre school. We recognised that it was going to be a significant addition to the cultural offer in that part of our borough. The problem was that Mountview had some way to go on its fundraising campaign to deliver a new building. Based on a business case put forward by the academy, Southwark agreed to lend that final part of the funding that it needed, but the secured loan facility that we offered was flexible as to the repayment of interest and capital over the lifetime of the loan and was made at or below Public Works Loan Board rates. As a result, Mountview was able to proceed with planning and entered into building contracts so that the new building was opened within three years of the initial conversation—an amazing result.
The Central School of Ballet, one of the handful of classical ballet schools in the country, had identified a new home in Blackfriars, moving from its home of many years on the edge of the City of London. Central had a fundraising target of £9 million for its fit-out, but it was short by several million pounds. Again, that meant that it could not enter into contracts to progress that fit-out and move to its new home. Once again, Southwark—under inspired leadership—stepped forward and agreed to act as the lender for that final element, again on terms that provided flexibility as to the repayment of interest and capital. Again, that commitment meant that final contracts could be entered into and works completed, and the new school opened in 2020.
Finally, the Old Vic Theatre opened its new Backstage building last October. Straddling the boundary of Southwark and Lambeth, it had already demonstrated an outstanding commitment to the community over many years through its outreach work with schools and residents of all ages. Having set an ambitious fundraising target before it could start work on the new building, it was about 25% to 30% away from that target when it approached Southwark Council and Lambeth Council and sought a loan for that final element, so that it, too, could proceed to enter into contracts and get work started. The boroughs agreed to jointly lend up to £7.5 million, again at or below Public Works Loan Board rates and with flexibility as to the repayment of interest and capital over 20 years. In the event, the Old Vic did not need to draw down all the loan facility, and it is or will shortly be in a position to repay, in full, the money lent. But the fact of that facility means that, today, we can enjoy the educational facilities provided by the Backstage building, rather than waiting two or three years with ever increasing construction cost inflation.
In all three of these examples, the loans were supported by robust business plans and cases, and the organisations were already on the road to reaching their fundraising targets. But they also represented the local authority recognising the massive benefit that these important cultural organisations were bringing to the borough by investing in them. In all three cases, the terms of the loan agreement included service level agreements for ongoing and increased community and schools work. For the Central School of Ballet, that means that, each evening and on Saturdays, the school is filled with local children and residents finding out about the world of dance; and the Old Vic has redoubled its work programmes with schools in Southwark and Lambeth. So successful has the Southwark model been that I am working with another important classical music venue to help it to reach a similar deal with its local authority.
As I reflected on these examples, it struck me that this model could work right across the country—in places where arts venues and cultural schools and institutions are being held back from increasing their community work and impact because they still have outdated buildings or facilities. Despite their best efforts, they are struggling to achieve that last mile or so of fundraising needed, and a commercial loan is not a viable option. We all know that there are countless examples across every part of the country of an arts venue that needs significant capital funding. This model could make that happen.
My hope is that the Minister and the Government consider taking this idea forward within the context of a national arts bank to act as that last-mile loan guarantor. Too often, the relationship between the arts and government is that of receiving a grant or handout. This is different; it represents a mature and respectful relationship. Unlike some Arts Council funding, it is more flexible and can take account of local circumstances.
This is money that will be repaid, but it is money that makes a world of difference not just to the individual organisation but to those many people in the community, young and old, who will benefit from an improved cultural offer from that organisation. It also offers the prospect of increased employment and economic benefit—I know that my noble friend Lady Hyde will talk about that more in due course.
The cultural sector is at the heart of this Government’s industrial strategy. A national arts bank fulfilling the role that I have described would be a clear statement of the Government’s support for their own priorities and strategy. I ask my noble friend the Minister to promote this idea and hope that it may appear in a Budget in the near future.
Baroness Gill (Lab)
My Lords, I congratulate my noble friend Lord John of Southwark on securing this debate and introducing the concept of a national arts bank—capital for our culture. He has already outlined his first-hand experience of implementing similar initiatives at a local level and I believe that he is well placed to lead on this project in your Lordships’ House.
It is widely acknowledged that our cultural institutions are starving for capital. Theatres, galleries and art colleges face a crisis. Commercial banks reject them as too risky and traditional grants offer only short-term relief. We need a permanent structural solution and I think that that solution is a national arts bank.
While I welcome the funding that the Government have outlined under the Arts Everywhere project, it is limited to five years and we need longer-term solutions. We know that artistic venues are vital public infrastructure, yet they are struggling to secure commercial loans. Older theatres require urgent structural modernisation, galleries need high-tech climate control systems and colleges require cutting-edge digital media equipment. Private lenders do not understand creative revenue. They see seasonal ticket sales as unstable. Consequently, as I said, our cultural foundations are crumbling.
I recognise that, 18 months ago, the Government set up the ACE review, under the leadership of my noble friend Lady Hodge. That report highlighted:
“The UK spends less on culture than most of the countries in Europe. In 2022, public investment in culture in the UK was 0.25% of GDP, the lowest across a … list of European countries for whom there is comparable data (including France, Germany, Italy, and all of Scandinavia), and only higher than Greece”.
The Campaign for the Arts has also reported that the UK ranks among the lowest spenders on culture, both as a percentage of GDP and per person, in comparison with various European countries. The sector reports that some local authorities have completely cut their spending on culture. The British Council has curtailed its investment in culture. Nesta, a research and innovation foundation, which had a £250 million government-funded endowment for the creative arts, has pulled out of funding the arts. As I said, local authorities have almost completely given up.
We need to expand our horizons and look for new solutions, and we also need to include the film sector in that. The capital gap that we are speaking about is not exclusive to live stages. Consider our booming, yet vulnerable, film sector: local production studios require massive upfront capital. I have some second-hand knowledge of this; my son is a screenwriter and director, so I hear a lot about this sector. They need virtual production walls and sound stages. Without advanced facilities, international investment tends to go elsewhere.
I believe an arts bank would secure loans for independent film infrastructure. It would allow local studios to compete on a global scale because, as we know, infrastructure is the foundation of modern storytelling. That is why countries such as France, where there is an institute for funding cinema and creative industries, operates two financial tasks: a bank guarantee and a loan, similar to what the noble Lord, Lord John of Southwark, outlined.
I wonder whether we could also link this to another topical question that we have all been tackling this week: the NEET crisis. I know that capital funding could directly impact our youth unemployment crisis. Thousands of young people are NEET—not in education, employment or training—but I have seen that the creative industries are a proven magnet for reengagement. When I was in the West Midlands as an MEP, I visited a lot of FE colleges, and I saw the level of engagement for young people who did not want to continue studying. They were happy to go into a music studio, drama or anything to do with creative arts. So I think this could be a way of reaching that goal too. I again stress that we need state-of-the-art facilities to run apprenticeships, and we could benefit across the whole sector by having a skilled creative workforce.
By investing in capital, we also drive up educational enrolment. The infrastructure itself becomes a motivation to learn. A national arts bank would make a change. It would not replace commercial financial markets; it would act as a powerful guarantor. This would be an investment, not charity. This model protects hard-earned taxpayer money. Grants disappear once a venue spends them. Guaranteed loans must be paid back fully. Venues build sustainable, long-term business models. The arts generate massive economic ripple effects. Every pound invested would boost nearby hospitality. It would create jobs for technicians, builders and creatives.
To conclude, I believe it would bridge the gap between finance and culture. It would transform state funding from charity to investment. Let us secure our venues and colleges. Let us back the creators who inspire us.
Baroness Wheatcroft (CB)
My Lords, it is a pleasure to follow the noble Baroness, Lady Gill, and I agree with everything she said. The impact that something like this could have on NEETs, for instance, has had no attention but really deserves it. I applaud the suggestion of the noble Lord, Lord John of Southwark. It is a great idea and something we should go ahead with. It is something that this House could support and would cost us nothing, so what is not to like?
London benefits at the moment, but this Question talks about outside London as well, which is important. Let us not forget that London has quite recently had the benefit of two new theatres, which has happened because of commerce, not because of anything other than money being lent commercially. The most recent is @sohoplace, which has come about on the site of the old Astoria music hall and is there because it is part of the magnificent new development around Crossrail, the revamped Tottenham Court Road. Without a far-sighted developer in the shape of Derwent, @sohoplace would not be there.
Conversely, the Bridge Theatre over at Tower Bridge, which has produced some fantastic work, is an entirely private sector operation—but do not let anybody think that this is easy. The Bridge Theatre is currently seeking outside investors because it needs more money. Being involved in the arts does not come cheap. Although the suggestion from the noble Lord, Lord John, is an excellent one, let nobody be persuaded that every arts organisation can make a profit and pay back money. It is important that we put this in context. It would have a really useful role, but those who borrow from it would need to look, in many cases, to philanthropy to fill the gap that would enable them to pay back the money that they have been loaned.
The fact is that underfunding has undermined the arts in the UK for the last decade—actually, much more than that. Although we all know the importance of the arts, not just in creating a healthier, happier society but in building a thriving economy, this is a difficult time to argue the case for a big increase in government spending on what, in some quarters, is still regarded as unnecessary, bordering on the frivolous. We can only look at the fact that the Government are apparently currently considering cutting down the amount of money they dictate to defence spending in the defence spending review that we have been waiting a long time for. If we cannot afford the money that we should be spending on defence, public pleas for money for the arts will find it very hard to succeed, even though we know the long-term benefits.
We should be very grateful not just to the noble Lord, Lord John, but to the noble Baroness, Lady Hodge—already quoted by the noble Baroness, Lady Gill—who has produced a report that is not full of whinging about the future of arts funding and has come up with some really positive ideas. They are all worth taking note of. Wonderfully, the Government have adopted every one of her recommendations. Let us not be fooled: adopting recommendations is not quite the same as doing anything, but one lives in hope and I am sure some things will result. It is a positive start, at least. The noble Baroness, Lady Hodge, came up with some very positive ideas, not least about the importance of philanthropy and what the Government might do to encourage more of that into the sector. We have already heard about France’s novel ideas on funding the arts, but it has also done some really good things in encouraging philanthropy. Tax breaks of 60% might not be acceptable in this country but, nevertheless, it has made a huge difference and the money that has flowed from corporate giving as a result, much of it into the arts, would certainly go down well here.
We need to do more. The Government have agreed to look at it, but there are innovative ideas for encouraging philanthropy that are well worth examining. At the moment, the Arts Council does not have the benefit of donations but it could, if one looked at it, have means of activating that. For instance, if it had the endowment fund that the noble Baroness, Lady Hodge, is suggesting should come its way, with the benefit of the £250 million that Nesta is not spending, there is a suggestion that the Arts Council would have to match every pound of that endowment fund with money that it raises. That could be a really positive move for the arts. We need to look at other things. We need to give the Arts Council a trading arm; that would make a huge difference. Some publicly funded bodies have made a lot of money by doing great productions that go commercial. Some of that money could go back to the Arts Council, if there were a means of getting it there. We need to find a way of doing that. The Arts Council could do much more to encourage philanthropy, particularly outside London.
The other thing that the noble Baroness, Lady Hodge, bravely said—I think it is something we all ought to take note of—is that we need to get braver about standing up to boycotts. If the arts are to flourish in this country and if money is to be available to pay back the loans to the new bank, which we all want to support, we will have to look to the commercial sector and be braver about who is tolerated—and indeed encouraged—to become a sponsor. I should declare an interest as a former deputy chairman of the British Museum, and I have to say I was disappointed when it decided that BP should no longer be allowed there. BP is looking for alternatives to just oil, and the money was very useful.
Baroness Hyde of Bemerton (Lab)
I thank my noble friend Lord John for tabling this debate and welcome the contributions from noble Lords so far. I will particularly focus on theatre, having spent about a decade working in that industry and having trained at Guildford School of Acting. I welcome the suggestion of an arts bank, particularly to address the tricky matter of capital funding for some of these important and, in many cases, historic buildings.
Many theatres and cultural venues operate from listed buildings that are technically outdated. Trying to repair them and ensure compliance with accessibility requirements and decarbonisation becomes a very difficult and costly matter. The Government’s Purcell report from January 2026 estimated that about £7 billion in repair, maintenance and renewal was needed across publicly and third-sector owned cultural buildings, with about £3 billion of that being urgent and about £2 billion being needed in terms of the current funding deficit.
Specifically around theatre, a 2024 survey from the Society of London Theatre and UK Theatre’s members demonstrated that one in five of their venues needed at least £5 million over the next decade just to continue operating. Again, this is capital funding to do with buildings. This has nothing to do with the mounting of productions or supporting creators; it is just to continue the buildings operating. Without major capital investment, about 40% were at risk of closure and 40% could become unsafe to use.
Despite these challenges, as my noble friend Lord John alluded to earlier, the theatre sector still delivers significant social and economic benefits. It supports over 100,000 jobs and civic infrastructure. It makes towns and cities exciting and vibrant places to live, work and visit. This research estimates that every pound spent on a theatre ticket generates a further £1.40 for the local economy. The Society of London Theatre and UK Theatre have done further research that demonstrates that support for capital investment would mean that 54% of venues could provide more jobs. As my noble friend Lady Gill alluded to, that is a significant part of the argument for an arts bank and further capital funding. It would mean that 62% of these venues would increase their outreach work—again, a brilliant benefit for the community—and 100% of venues said it would improve their environmental sustainability. For those buildings built in the Victorian era, 100% would be able to ensure real accessibility for all patrons.
As has been stated, theatre finances rely on quite a mixed model of funding—philanthropy, sponsorship and, in some cases, public subsidy. Venue operators have to supplement that with their programming, catering, hiring and a variety of means, so financial resilience really depends on how those streams interact with each other. Earned income now accounts for 58% of the total income of subsidised organisations, with just 17% coming from contributed sources—for example, the Arts Council. Growth has really stalled, and competition for what support there is has intensified. Even large organisations are really struggling to secure multiyear commitments at scale, and smaller venues that are not in major cities face even starker barriers.
Theatre really struggles to access suitable commercial finance for capital works. Repayable finance requires predictable cash flows, but theatre income by its nature is backloaded, with ticket revenue arriving only once productions are open and production costs have been recouped. So it is brilliant that DCMS announced a £1.5 billion cultural capital package in January this year. It is the most significant intervention in cultural infrastructure in a generation. It included £425 million through the creative foundations fund, which has already been mentioned, for around 300 capital projects in arts venues. That is really welcome. It feels like the beginning, not the end, of the story about capital investments for the arts. This suggestion of a national arts bank would make that public funding go further to build a far more financially resilient arts estate, with all the benefits that we know it would have.
The financial model of many theatres can make it really difficult, and this arts bank would provide repayable grants to de-risk that investment proposition for investors who may not otherwise have the risk appetite to support arts venues. It is a really easy way for backers to get involved: it simplifies and de-risks it, and I commend the idea to your Lordships. It is also key to ensuring that our rich theatrical heritage is able to enrich lives and the economy for many years to come.
Baroness Warwick of Undercliffe (Lab)
My Lords, I thank my noble friend Lord John for securing this debate. It is a welcome opportunity to highlight the difficulties faced by our theatres, galleries and arts venues, and there has been unified support for it across the Grand Committee.
I found it fascinating to hear of his experience at Southwark Council and of how, under his leadership, the council took steps to address some of these difficulties. The examples he shared of a local authority being able to bridge the gap between fundraising targets and money raised, future-proofing those organisations and benefiting their local communities, are instructive and inspiring. I welcome the foresight of his specific proposal, and support him in urging the Government to think about how financial agreements such as the ones he outlined could be applied more widely. In the current bleak economic climate, we must do all we can to consider new funding models for our cultural and arts organisations, so my noble friend’s suggestion is worthy of serious consideration by all those who want to see a flourishing arts sector.
I have spoken to Joshua McTaggart, CEO of Theatres Trust, which is the DCMS public body tasked with ensuring that all theatres across the country, no matter their size or location, are equipped to serve communities and artists long into the future. Theatres Trust agrees that access to loan finance from public and private sources is a key opportunity to support theatres to secure their future operations.
To add to my noble friend’s example of the Old Vic, I will mention—closer to my own home turf—the former Bradford Odeon, which now operates as Bradford Live. It received a £12 million loan from Bradford Council, which ensured that the £50 million renovation could begin. Having seen it in its previous state, I was delighted to hear that.
Another cultural centre in the north, Morecambe Winter Gardens, secured a £107,000 loan from Lancaster City Council, which enabled the venue to unlock over £2.5 million of grant funding. Last year, the Kenton Theatre in Henley-on-Thames took a £100,000 loan from the town council that enabled it to navigate operational challenges and report a budget surplus this year.
There are also significant examples of successful cultural spaces benefiting from loans via Nesta, as has been mentioned. The arts venue EartH, in Hackney, secured a £2.1 million loan in 2017 and is now a prominent cultural space in London. Birmingham Rep secured a £500,000 bridge loan, which allowed it to unlock further local enterprise partnership funding, and £400,000 for the Mercury Theatre in Colchester enabled the theatre to manage working capital while it carried out major renovation works. It can be done; let us see it more widely done.
As Theatres Trust sees it, the challenge is twofold: there need to be more sources of these loan finances, but also the arts and culture sector needs access to sound financial advice on how to maximise these opportunities and not see a loan as a negative decision or fundamentally bad business.
In these economically challenging times, the question of who pays for the arts—and, just as importantly, how—is more urgent than ever. Indeed, the question resonates through the recent independent review of Arts Council England led by my noble friend Lady Hodge. In her review she reminds us that, between 2009-10 and 2022-23, public spending on culture by ACE and local authorities fell in real terms by 18% and 48% respectively, with some local authorities completely cutting their spending on culture. She notes the “stark capital crisis” facing the cultural sector, with more than three-quarters of arts centres unable to complete planned building work and 60% not having undertaken any significant refurbishment in over a decade.
We know this. It is why the £270 million arts everywhere fund announced last year included the creative foundations fund, aimed at urgent capital works to keep venues up and running. It was a welcome boost for struggling arts venues, museums, libraries and the heritage sector, with Kate Varah, executive director of the National Theatre, saying that this much-needed capital investment
“will begin the task of enabling arts venues in towns and cities across our country to upgrade their facilities, providing more jobs and training … and offering more opportunities for young people and communities”,
as my noble friend Lady Gill so powerfully set out.
We know that investing in the arts is an investment in our communities, our creativity and our future. The arts are a huge driver of economic growth and employment—the creative industries are worth £124 billion to our economy—and help skills development in young people, training the future labour market to be creative and to challenge old ways of thinking.
But while the Hodge review notes the
“existential threat to the health and vibrancy of the arts and culture sectors”
caused by a decade of cuts in public funding, it also acknowledges that fiscal constraints limit the Government’s ability to increase grant-in-aid funding for culture and the arts. No matter that the
“modest resource needed to secure the long-term sustainability of the sector would have a disproportionately positive impact on the cultural sector, economic growth and the life of the nation”.
Instead, in the current climate we must put our efforts into finding other, innovative ways to invest in our arts, as my noble friend Lord John is initiating here.
To that end, like others I commend the Hodge review’s recommendations—all accepted by the Government, I am delighted to see—not least that we support a strong Arts Council England, free from political interference. I hope the Minister can assure us that the Government will explore the various funding ideas put forward in the review as a matter of urgency, including committing to longer funding rounds, cultural tax reliefs and incentivising philanthropy. At the same time, can the Minister provide any further detail of the £425 million creative foundations fund supporting some 300 capital projects in arts venues across the country?
Finally, like others I was interested to learn from our Library briefing of the French initiative between public authorities and the main banks to offer individually tailored financial solutions to creative and cultural industries in the form of a bank guarantee and loans. It has helped more than 2,000 cultural companies and has been going since 1983, so it is high time we caught up.
Baroness Bonham-Carter of Yarnbury (LD)
I join noble Lords in thanking the noble Lord, Lord John, for this inspired debate. I do not know quite a few of the noble Lords here. This is a different forum, so noble Lords might not appreciate that I am the Liberal Democrat spokesperson.
On our Benches, we believe there is a strong case for exploring mechanisms that improve access to affordable capital for cultural organisations, particularly those with significant civic value but limited or no ability to secure conventional lending on viable terms. Cultural organisations are very enterprising, as many noble Lords know. They exist in a mixed economy of grants. If they are lucky and live in Southwark, they are from local councils, but they are also from organisations such as the Arts Council, trusts and foundations, as the noble Baroness, Lady Hyde, said. They also seek sponsorship and philanthropic giving. There is direct income from membership schemes, commercial activities such as ticket sales, and revenue from gift and coffee shops.
Owning a building is obviously an asset for a cultural organisation but it comes with huge financial exposure. Today there are rising energy costs, the impact of wars, inflation and, previously, the pandemic. I declare an interest as a trustee of the Lowry in Salford, where I have seen this at first hand. I say to the noble Baroness, Lady Wheatcroft, that I am experiencing it outside London.
Noble Lords have mentioned the excellent report on Arts Council England by the noble Baroness, Lady Hodge. She put it starkly when she said that arts organisations are facing a
“capital crisis, the scale of which is threatening the very fabric of the country’s cultural infrastructure”.
The last big injection of capital took place 20 years ago and, as she says:
“The boilers and lifts installed then now need to be replaced”.
There are literally cracks in the walls and buckets in the corridors and backstage, as I am sure the noble Baroness, Lady Hyde, knows.
The noble Baroness, Lady Hodge, recommends that the Government urgently find innovative ways of responding, and there has been a response. Earlier this year the Government announced capital investment funding distributed through Arts Council England, which will provide financial assistance to invest in
“buildings, equipment, digital infrastructure and technology”,
but much more is required, as the noble Lord mentioned in his introduction. The scale of capital need across the cultural sector is now so substantial, as the noble Baroness, Lady Gill, said, that demand for support, even in the form of loans or guarantees, is likely to exceed the available capacity. The question therefore becomes not simply how capital is distributed but what outcomes it is intended to achieve.
The most important criterion should be not just remedial capital investment in isolation but investment that demonstrably improves long-term resilience and sustainability. In other words, support should ideally prioritise projects that help organisations adapt successfully to future operating conditions, whether through energy efficiency, modernisation, diversified income generation, audience accessibility, digital capability, workforce development or more flexible use of buildings and assets.
Then there is social capital. Many noble Lords have mentioned NEETs, and I return to the Lowry. It is more than a building, theatres and a gallery. Through vigorous learning and engagement work, it helps and inspires young people into the creative sector. Over the years, it has forged almost 30 community partnerships across Salford and Greater Manchester and has contributed a deep, diverse and long-lasting impact on local lives through educational, volunteering and community engagement programmes. It is at the heart of its community. Many other cultural organisations are the same, but they need to have a stable and safe roof over their heads to provide outreach work, inspiration and future careers for the next generation, as so many have said.
In the past, Nesta, which the noble Baroness, Lady Gill, mentioned, set up an arts impact fund by bringing together public, private and charitable funding. It provided repayable finance to arts organisations with ambitions to grow, to achieve great artistic quality and, crucially, to impact in the specific area of social value. Does the Minister agree that social capital should be considered as leverage for raising financial funds?
Most theatres, galleries, performance venues and arts training institutions are carrying significant pressures around capital maintenance, infrastructure renewal and cash flow. A national arts bank could help unlock investment where organisations are fundamentally sustainable but constrained by the risk profile perceived by commercial lenders. There will of course be key questions around scope, governance and strategic prioritisation—as the noble Baroness, Lady Wheatcroft, mentioned—but if designed well, such a mechanism could strengthen the sector’s resilience and preserve important cultural infrastructure and places. We agree with the noble Baroness, Lady Hodge, that, without that, arts organisations are facing a crisis.
Lord Parkinson of Whitley Bay (Con)
My Lords, I thank the noble Lord, Lord John of Southwark, for securing this debate and for outlining it so powerfully. I congratulate him too on the impressive record that he and his colleagues in Southwark were able to rely on. I am a Southwark resident myself—in fact, it was the strong cultural offering of the borough that attracted me to the area—so I have the benefit of seeing some of the fruits of his hard labour.
The noble Lord mentioned Mountview, the Central School of Ballet and the Old Vic in his opening speech. There are too many cultural venues in the borough to mention, but I will single out two that are celebrating significant anniversaries this year: the Southbank Centre, Europe’s, largest arts centre, which turns 75 this year, and Theatre Peckham, closer to where I live, which turns 40. I congratulate him on the pioneering work that he did and agree that other parts of the country could look to Southwark as a model.
I am glad that they will be able to think about culture much more proactively because of the concession the Government made during the passage of the then English Devolution and Community Empowerment Bill. In your Lordships’ House, we added culture as an area of strategic competence, which I hope will encourage more local authorities, particularly the metro mayoralties, to look seriously at this area.
The noble Baroness, Lady Warwick of Undercliffe, mentioned the work of the Theatres Trust as an arm’s-length body. The Government are looking at the planning system and the role that bodies such as the Theatres Trust have. Is the Minister able to say any more at this point on the powers they have on planning? I hope that they will be able to continue their work in encouraging local authorities to think about theatres and other cultural venues.
I am proud of the record of the previous Conservative Government. I had the pleasure of serving in the final three years as Arts Minister. In addition to securing a modest increase in the last Arts Council investment programme, I am proud that we expanded, and then made permanent, the tax reliefs available to theatres, orchestras, museums and galleries, which support them in innovative work and particularly in touring them around the country. However, the noble Lord is right that the capital needs of our cultural sector are pressing. As the noble Baroness, Lady Bonham-Carter, and others said, our cultural infrastructure is creaking. The noble Baroness, Lady Hyde of Bemerton, mentioned the figures by SOLT and UK Theatre for theatres alone.
A game-changer for our cultural life in this country was of course the creation of the National Lottery by the Conservative Government of John Major. That brought a huge influx of investment into our culture and heritage. We saw that first wave of lottery investment at the turn of the last century: everybody’s boiler, roof and building are now leaking and need fixing at the same time. There is a pressing backlog of work for our cultural sector. These are the unsexy things to fundraise for. It is much easier to get a new wing of something built than it is to replace a boiler, to improve the lavatories, and so on. Our cultural sector wants to take a lead in being more environmentally sustainable, and brilliant organisations such as the Theatre Green Book are helping them to do that. They want to be proactive in the changes that they make to their buildings.
The previous Government had a series of funds—the museum estate and development fund, the cultural development fund, the towns fund, the UK shared prosperity fund and the levelling-up fund—all of which gave grants to cultural organisations around the country to help them do some of that work. I had the pleasure of visiting some of the beneficiaries, including one in Southwark—the Old Operating Theatre, near London Bridge—where a grant of £157,000 helped it replace the Georgian skylight that looks down on the old operating table at St Thomas’ Church, part of what is now St Thomas’ Hospital.
The noble Lord and other noble Lords who have spoken today are right: we need to look at innovative ideas in the round. The noble Baroness, Lady Wheatcroft, singled out the success stories of @sohoplace and the Bridge Theatre. As I understand it, the Bridge Theatre benefited, in part, from Section 106 money. Part of the development done in that part of London allowed the creation of a brilliant new theatre, thanks to the brilliant pioneering work of people such as Nick Hytner, Nick Starr and Nica Burns in the case of @sohoplace. We should be looking at organisations such as Figurative, which are looking at new funding models for arts and culture, and cultural leaders such as Sir Vernon Ellis, who is looking in great detail at how we can encourage more place-based giving.
As noble Lords have said, we should all be reading very well-thumbed copies of the report by the noble Baroness, Lady Hodge of Barking. I am very glad the Government have accepted all her recommendations. There are many good ideas in there. We have heard some of them. On the idea that the Arts Council could be given more powers to have a trading arm to benefit from some of the investment that it gives, would that require a change in its royal charter? If so, I do not know whether the Minister can say anything on how the Government might implement these recommendations, but we hope to see these ideas bearing fruit soon.
I was struck in the noble Baroness’s report by the French example of the loi Aillagon, brought in by Jean-Jacques Aillagon, who was the Culture Minister of France in 2003, which gives generous tax deductions of up to 60% for French corporations that make donations. When I was Arts Minister here, we saw a work by Gustave Caillebotte saved for the French nation—a £43 million painting going to the Musée d’Orsay—thanks to a donation from LVMH, a corporation. It was able to claim 90% of that back in tax relief, a very generous allowance that unlocks philanthropy.
I agree with the noble Baroness, Lady Wheatcroft, that we need to be much bolder in the face of boycotts. Like many, I regret the departure of Baillie Gifford from literary festivals. At the Hay Festival, I am afraid to say, two Labour politicians from both Houses were among those who pulled out. We all need to be strong in the face of boycotts and stand up and thank those companies that are generous with their money in support of arts and culture in our country.
The noble Baroness, Lady Bonham-Carter, was right: we benefit here from a mixed model of funding. It is not quite the subsidised model of the European continent and not quite the philanthropy of the United States, but a blend of both. When I was Arts Minister, people were very clear with me that individuals and businesses will give, but only if the Government are seen to be doing their part as well. Does the Minister agree that we benefit from that mixed model? Clearly, the innovative thinking in Southwark has done so, and I am very glad that we have been able to have this debate to look at new ideas to encourage people in other parts of the country, too.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, I join other noble Lords in congratulating my noble friend Lord John of Southwark—if anybody was in any doubt as to why he took the place designation of Southwark, I think we are clear on it today—on securing this really important debate and thank all noble Lords for their thoughtful and constructive contributions today. I share the view of the noble Baroness, Lady Bonham-Carter, that it has been quite inspiring. It is a really nice end to my week of parliamentary engagement to have something on which I can actually say, with huge enthusiasm, that I will have a lot of things to think about over coming days, and I will take some of those points back to the department.
Our theatres, galleries, performance venues and arts colleges are the bedrock of our national story. They drive local growth and expand opportunity. The Government are acutely conscious of the severe financial and physical pressures these institutions face, particularly as they navigate historical underinvestment and inflation. Like the noble Lord, Lord Parkinson, I congratulate my noble friend on his own track record of delivering in this area. As his opening contribution made clear, during his tenure leading Southwark Council, he championed many pioneering local partnerships to fund major capital developments, including the Central School of Ballet, Mountview and the Old Vic. These projects show how creative local collaboration and—in my noble friend’s own words—inspired leadership can deliver truly world-class cultural spaces.
It is particularly inspiring to hear of how that can open up arts venues to young people throughout local communities. My noble friend Lady Gill highlighted the contribution that such venues and investment can make to employment. I was pleased that my noble friend Lady Hyde highlighted the benefits to local communities, and it was also useful to hear of northern councils following suit from my noble friend Lady Warwick of Undercliffe. As she said, this shows that it can be done. It was also inspiring—in a very inspiring debate—to hear from the noble Baroness, Lady Bonham-Carter, on the work of the Lowry and its contribution in Salford. It shows how rich a vein of cultural contribution we have across the country.
My noble friend Lord John’s proposal of a national arts bank is thought-provoking. I can see that a guarantor lender for the arts could have some strong hypothetical benefits, namely unlocking favourable loan rates where commercial lending is not viable. However, it was welcome to hear about new commercial theatres in London from the noble Baroness, Lady Wheatcroft, reminding us that, occasionally, commercial loans can be a good way forward. As my noble friend Lady Hyde said, most arts organisations—I think she cited theatres—need a mixed model of finance.
I appreciate that the debate has focused on guaranteeing capital, so I want to speak briefly on how the Government are directly investing in the arts. By focusing on direct, non-repayable capital grants rather than debt, we are taking the most direct route to tackling the critical maintenance backlogs that threaten the long-term viability of our cultural estate. As my noble friend Lady Hyde highlighted and others mentioned, this Government are delivering up to £1.5 billion in capital investment over this Parliament to secure and revitalise England’s cultural infrastructure. This historic package is designed to protect more than 1,000 cherished arts venues, museums, libraries and heritage buildings from damage and, in some cases, even closure.
We agree, however, that public funding can be only part of the solution. Our creative and cultural sectors depend upon a mixed funding model, in which private philanthropy, corporate support and individual giving play a vital role alongside earned income. I was pleased to hear the noble Baroness, Lady Wheatcroft, highlight the role of philanthropy in investment in the arts. This Government’s vision is to build an ambitious, long-term partnership with philanthropists to deliver tangible national renewal within our communities.
In relation to whether cultural institutions should accept sponsorship from companies on a case-by-case basis, I share the Secretary of State’s view that boycotting sponsors serves only to damage the cultural sector. Philanthropy and corporate sponsorship are long and valuable traditions in our country’s history of support for culture, and we undermine that at our peril. I would say, however, that decisions on commercial and philanthropic donations are rightly for the staff and trustees of those organisations, which typically have policies in place for donations and ethics.
In April, we launched Our Place to Give, our new plan for growing place-based philanthropy. This represents a fundamental shift towards a partnership model that treats philanthropy as a strategic partner in innovation. Key initiatives from the plan include investing £1 million to strengthen fundraising capacity in places, convening regional philanthropic ambassadors to broker better links between donors and communities and adopting a “think philanthropy” approach across government to ensure that public investment acts as a catalyst for wider giving. I was pleased, as Gambling Minister, that the noble Lord, Lord Parkinson, mentioned the contributions made by lotto players through the lottery. It all counts towards that mixed model.
While direct grant funding is our primary tool, the Government are actively exploring how to build a modern, resilient funding model for the arts that goes beyond traditional subsidised structures. We have already seen excellent proofs of concept in this space, such as the Arts Council’s Incentivising Touring scheme, which offers repayable grants and has demonstrated how public capital can be recycled to support more productions and wider audiences.
My noble friend Lady Gill, like most noble Lords, highlighted the work by my noble friend Lady Hodge of Barking in her review of Arts Council England. It focused particularly on exploring new ways to bring more funding into our cultural sector through a variety of innovative solutions. The Government confirmed in our response, published earlier this year, that we will consider all these recommendations. This work is being explored with the Arts Council through targeted engagement with financial experts and relevant sector stakeholders to ensure we identify viable high-quality options that fill policy gaps. I would be very happy to talk to noble Lords in greater detail about this in person, if not in a debate in your Lordship’ House—so let us have more debates on DCMS matters.
As we look into these innovative ideas, we will of course proceed responsibly. Any successful new model must satisfy a number of essential conditions. For example, it will require robust governance and sufficient sector capacity to manage repayable instruments. Fundamentally, any future approach must be affordable within our current fiscal constraints and wider budgeting decisions. We must also recognise that a robust financial ecosystem already exists. This includes deploying a portion of the £4 billion secured for priority sectors and exploring how businesses, including those in the creative industries, can secure loans using their intellectual properties, such as copyrights and designs, as collateral. This would give commercial lenders the confidence to back asset-light creative firms, providing an important pathway to finance for creative founders.
Today’s debate has illustrated the depth of expertise and passion for this in your Lordships’ Committee and the passion that I share for making sure that our arts and cultural organisations have the capital funding that they need to succeed and for finding creative solutions to do this. I hope I have demonstrated that this is a passion that the Government share. It is a debate I would be more than happy to continue. I look forward to future discussions, both with my noble friend Lord John and others, to work collaboratively for the shared goal. I have not answered all the questions; I will write to those noble Lords to whom I have not had a chance to respond.
UK Electricity Prices
(1 week ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Lilley
To ask His Majesty’s Government what assessment they have made of why UK electricity prices are among the highest in the Organisation for Economic Co-operation and Development.
Lord Lilley (Con)
My Lords, it is a great privilege to open this debate, especially with the high calibre of people proposing to participate in it.
The basic science of global warming is rock solid, but we have been told fairy tales about its economics ever since the Climate Change Act 2008. We all love fairy stories. The essence of most of them is the same: the country faces enormous challenge that can be overcome only at huge cost and sacrifice. Then our hero, through determination, clear-sightedness and a magic wand, finds a way to defeat that challenge which, far from involving cost and sacrifice, makes everyone better off and they all live happily ever after. The climate change version of this fairy tale is that, to avoid human extinction, we must eliminate wicked fossil fuels. This looked as if it would involve daunting costs and sacrifices, but along came Prince Miliband who announced that his magic wand—renewables—would not merely banish emissions but give us cheaper, reliable energy and green growth so that we can all live happily ever after.
The United Kingdom has been one of the first countries to embark on the quest for renewables. We have gone further and faster than most other countries. Our emissions are back at the level they were at in 1879. Two decades on, we have the highest electricity prices in Europe, and Europe has the highest electricity prices in the developed world. Far from enjoying green growth, we have seen our energy-using industries decimated, a third of our refineries closed, chemicals and fertilisers thrashed, aluminium and steel shattered, ceramics, bricks and cement rendered uncompetitive.
We are all told that these high electricity costs are a temporary phenomenon, entirely caused by the wars in Ukraine and Iran and our reliance on gas. High gas prices have exacerbated our problems, but even in 2019, before those wars and the pandemic, when gas prices were at the fairly typical level of the previous two decades, our electricity prices were the third highest in the OECD. Why is this? Surely sun and wind are free. That is true but, unfortunately, they are intermittent and capital intensive. Solar is now a competitive source in sunny countries because the main variable demand there is for air conditioning, which is perfectly correlated with the sun shining. Alas, in the UK the sun does not shine when we need the power most: in winter, in the evenings and at night.
That leaves us with wind. In 2024 Prince Miliband, newly reinstated in his palace—I mean his office—as Secretary of State, assured us that new offshore wind was now cheaper than new gas. Unfortunately, that year’s offshore wind auction set the CfD price for wind at £80 per megawatt-hour in 2021 pounds. His own department’s estimate for the levelised cost of new gas was £55 per megawatt-hour, pre-tax.
There is a respectable case for imposing a tax on fossil fuels to pay for the external costs that global warming will impose on the world. Unfortunately, DESNZ has stopped estimating the social cost of carbon because the conventional estimate, used by the Americans and others, of $20 per megawatt-hour was insufficient to make gas appear uncompetitive. Now DESNZ, in assessing the relative costs of different modes of generation, imposes a theoretical policy cost on fossil fuels, which is calculated as the tax necessary to render fossil fuels less competitive than renewables. I kid you not—that is the methodology. Even then, it is on a levelised cost basis, which takes no account of intermittency. Since the wind often does not blow for quite long periods over the whole UK and much of Europe, we need back-up capacity roughly equal to the wind capacity. At present, that can be only gas. If we then have to eliminate emissions from that gas, we will need an equivalent capacity of carbon capture and storage. That is a threefold investment in capital expenditure for one lot of electricity.
Unfortunately, wind blows best in the wrong places: the North Sea and the Scottish highlands, so a major factor is building additional transmission lines, which already add about a tenth to the final price of electricity. Until those transmission lines are built, we often cannot get the electricity from the north to where the power demand is in the Midlands and south. We have to pay the wind farms for the electricity they cannot produce and simultaneously pay for gas-fuelled power.
The Climate Change Committee and the Government themselves insist that the cost of new wind farms is coming down and will come down further. As it happens, we do not need to rely on guesstimates and campaigners’ forecasts. We can find out the true costs of wind farms already built and those under construction because each wind farm is usually owned by a special purpose vehicle, which has to publish its audited accounts. Professor Gordon Hughes, the professor of energy economics at Edinburgh University, has gone to the trouble of analysing 247 wind farm special purpose vehicle accounts and found that their capital costs are not falling in the way the Climate Change Committee predicts or the Government wish. Moreover, as fields age, operating costs rise significantly and the output of a field falls.
I put down a Question to the Minister asking whether the Government had analysed this data; after ignoring it, the Minister said that estimating prices was not a matter for his department but the responsibility of the independent National Energy System Operator, NESO. It too initially ignored the question, but, after I persistently put it again, it eventually admitted this: “We do not draw on the information from SPV accounts. We used data published in the Government’s electricity generation costs”. The Government imagine that NESO is producing independent figures, and NESO is actually recycling figures produced by the Government.
What is to be done? Unfortunately, we cannot undo foolish and costly past commitments. We heavily subsidised the cost of renewables when they were still immature technology. As Professor Dieter Helm has estimated, that premature subsidy for immature technologies has cost us up to £100 billion. The renewable obligation, which we entered into as part of that subsidy process, still accounts for nearly 10% of prices to energy users. If we want to have the cheapest, most reliable energy in future, we should stop offering subsidies—then we will get the cheapest price available. We should remember Dieter Helm’s remark that Governments are not very good at picking winners but losers are very good at picking Governments. We should require firms to bid firm prices—to offer a contract including paying for the back-up dispatchable supply needed to offset their intermittency—and we should base policy on audited facts, not educated guesses. Above all, we should stop believing in fairy tales.
Lord Frost (Non-Afl)
My Lords, it is a pleasure to follow the noble Lord, Lord Lilley, but also a problem, as he has said almost everything that needs to be said on this subject already, and in a style that few of us can imitate.
In the time available, I want to critique one particular argument that we hear quite a lot nowadays: that we just need energy abundance. The argument runs: “We just need more of everything—nuclear, gas, wind and solar. Let’s just get building—it doesn’t really matter what. Let’s just get on with it”. In a way, it is a good thing that we hear this argument. I think it is put forward precisely because people sense that there is something awry with the arguments for renewables but do not want to follow the logic through to its conclusion. Indeed, the argument sounds superficially logical: let us maximise our ability to use everything—the wind is free, so let us use that when we can, and use other things when we cannot. It is said that building lots of everything makes sure we can do that.
There are two problems with this. The first is the best-known one: intermittency. You cannot control when the wind blows, so you have to have enough capacity to replace all your renewables capacity when there is zero wind and zero sun. The more renewables you have on the system, the more back-up you need and the bigger your problem is. Having more renewables requires even more capacity overall, and that brings more cost.
The second problem is perhaps less intuitively obvious but still crucial. It does not matter that the marginal cost of wind is free; it still needs a system to deliver it. After all, rain is free, but we still pay for our water because we need a system to get it to us. It is the nature of this system, and the cost that goes with it, that is the problem. Renewables are a low-density inefficient system; they require a grid that is fundamentally different in nature to the grid that conventional generation needs. It is much more diffuse, much less efficient and much more difficult to get the power to where it is needed, even when it is being generated.
To illustrate the point briefly, compare Hinkley Point to same electricity generated via wind. Hinkley Point C will generate 7% to 10% of the country’s electricity demand on a site roughly the size of Regent’s Park—reliably, all day and all night. To generate the same amount with renewables requires an area half the size of a county such as Nottinghamshire or Leicestershire. In practice, of course, it is much more spread out and much greedier in terms of land use than that.
Such a diffuse and intermittent system requires extra engineering to provide capacities that come automatically with a conventional grid: inertia, voltage support and system strength. All this comes with cost: grid balancing, vast transmission costs, curtailment and, as the noble Lord, Lord Lilley, said, subsidy and price support. Optimising a grid to do these things is difficult and expensive—that is just the physical reality of these things.
This is why “just build more of everything” is a fallacy. You cannot lower electricity prices by adding more of the very technology that increases the costs. “More of everything” just multiplies the most expensive and complicated part of the overall bill. That is why “build more of everything” is not a strategy; it is a refusal to be intellectually honest and a reluctance to face up to what is necessary if we are to get costs and prices down. What is necessary is not layering renewables on top of gas or nuclear but halting renewables expansion altogether, before any more damage is done.
Lord Redwood (Con)
My Lords, industrial electricity prices are four times the level of the United States of America’s and more than three times the level of China’s. It is no wonder that we face a disaster of deindustrialisation accelerating under this Government with the closure of the oil refineries, ceramics plants and others that the noble Lord, Lord Lilley, rightly mentioned.
This is all avoidable damage. It is self-harm on a huge scale that the Government should be ashamed of. We have signed up for dearer electricity—it was not just this Government, but this Government have signed up to it, doubled the signature and worsened the terms, making it so much worse than even the position they inherited. It was always going to be the case that, if you put on more renewables, you would have dearer electricity. It is completely wrong to suggest otherwise, because you need to pay for two systems: you need the wind power as well as 100% back-up, because on some days, particularly cold, difficult days in winter, there is no wind power at all. So you are paying twice with the back-up.
It was always going to be the case that the more renewables you put on the system, the dearer your cheapest form of energy production, which is gas generation, becomes. When you switch from gas being on baseload to gas being interruptible and brought in only occasionally when there is no wind, it works much less efficiently. The efficiency of the power station drops from over 60% to around 40%, so there will be even more carbon dioxide per amount of energy produced. Of course your costs go up dramatically, because your overhead costs for the gas power station are defrayed by a limited number of days instead of being defrayed by operating every day of the year apart from occasional maintenance. It was baked into the system that this would be less efficient and work less well.
Governments, particularly this one, have then compounded the problem by saying that gas must incur very high carbon tax charges. Of course our electricity was going to get dearer, because customers had to pay additional taxes on the gas. Why are there additional taxes on the gas? It is mainly as the noble Lord, Lord Lilley, implied: the gas was too competitive and was still cheaper even on some of the interruptible runnings that they were proposing. So you needed a big carbon tax to say to people, “This really is the dearest part of the power system, which is why we are trying to get rid of it”.
So the Government go out and sell to the public this unbelievable idea that we have uniquely dear electricity because we are producing some on gas—gas which is diminishing in volume because, when we have windy days now, there is more wind power available, so the amount on gas has reduced proportionately. They are not coming clean with the public that a series of levies and carbon taxes are the cause of very high energy prices in the United Kingdom.
The Government offered £300 off people’s bills as a lovely election offer. We all thought that that meant our bill would go down by £300, but we now learn that their down payment is £150 off a rise, so the bill still goes up. The sting in the tail, which we were not told about, is that we have to pay the £150, but out of general taxes instead of our electricity bills. For most people who go to work and pay taxes, that is no advantage at all. The Government are kidding themselves and undermining their own popularity, industry and commerce by a policy which is all self-harm.
Lord Harrington of Watford (Non-Afl)
My Lords, I declare an interest as chairman of Make UK, which represents 26,000 manufacturing businesses in the UK. I declare it not just because it is in the register; I am speaking in this debate because the unfair policy for pricing energy is affecting every one of those 26,000. Our members pay 25p per kilowatt hour. French and German companies in exactly the same field pay 12%.
Lord Harrington of Watford (Non-Afl)
Sorry, I stand corrected: 12p. The noble Lord is right. In China, it is 3p. What does this really mean? Is it just a number? Having been on a presentation with the chief executive officer of Nissan, I can tell the Committee that that company pays more for electricity in Sunderland than in any of its other plants globally. Tinsley Bridge Ltd had to shut its automotive division in Sheffield because of energy prices—110 skilled jobs and £20 million of work went to France. That was because of energy prices. Another company, one of our members in Yorkshire, has seen its bills go up from £1.2 million to £2.4 million, not because of Iran or anything else recently but because of the cost of energy.
Why is this? International oil and gas prices are much the same everywhere. It is the price. This is the Government’s choice. Five different levies make the difference. That is policy; it is a choice that can be made. This is what makes the difference. Domestic prices are regulated, I assume for electoral reasons, but industrial prices are not and there are 150,000 small companies in this country that do manufacturing.
I had the pleasure of working with the Minister, the noble Lord, Lord Whitehead, when I was Energy Minister and he was my shadow. He is very smart and understands all these arguments, but I ask him not to respond to this debate by talking about the supercharger. That is an attempt to lower prices, very successfully, for 400 heavy users. I also ask him not to rely on BICS and its subsidies. This was announced after extensive lobbying by Make UK a year ago, when Jonathan Reynolds, then Secretary of State for Business and Trade, phoned up with glee to say that he had won a big argument around the Cabinet table and that there would be this scheme for manufacturing, affecting thousands of businesses and reducing their prices to the levels of those in France and Germany. A year later, what have we had? We have had consultations and arguments about who is included. Ed Miliband’s department tells us that it is the Treasury; the Treasury tells us that it is Ed Miliband’s department. Our members do not care: they get their bills, which are going up and up. Where is this?
I remind the Minister, who is a student of history, that every industrial revolution has been based on cheap power: water, steam, coal and oil. What now? We cannot allow the deindustrialisation of this country because of inept—I do not use the word easily—energy policy which is penalising jobs, employment and, as the Government are always mentioning, growth.
Lord Mackinlay of Richborough (Con)
My Lords, I put on record my registered interest as the director of the Global Warming Policy Foundation.
Let me restate what Labour’s manifesto said. It promised to get power bills down by £300. The latest price cap is £294 higher than in those lofty days of July 2024, and even that has been fiddled because the average has shrunk from the previous average, as households are using less because they simply cannot afford to use more. So, like for like, it would be even higher. We are now more than £600 adrift from that manifesto promise. I have always brought to politics the principle that a promise made is a promise to be kept, but that promise is simply not being kept.
I do not want to pre-empt what the Minister might say, but I guess it will be something along the lines of, “Gas is the problem”. The answer should be, “Thank heavens for gas, even better if it is domestically derived”. The price cap for gas is 5.74p. For electricity, it is 24.67p, so gas is just 20% of the price of electricity. As I attempt to heat my home, gas is infinitely preferable on price, as it is for many. Gas sets the price, which I am sure the Minister will say is an indication that the market no longer works. Gas is used as the last resort after renewables have failed to provide the required electricity and after interconnectors are at full tilt—and after the wood-burning fiasco that is the Drax formula of energy generation, using imported wood pellets that have come across the Atlantic. That is the sham of the net-zero fairy tale, as the noble Lord, Lord Lilley, said very clearly.
The nature of renewables is in their intermittencies. Some might say that I do not know very much, but I do know one thing: the sun does not shine at night, so solar does not work very well at night. At our latitude in the UK, somewhat north and with Atlantic-influenced weather, it is not particularly good even on the best of days. Wind is similarly unreliable. In every energy debate, I try to get in the wonderful German word Dunkelflaute, which refers to long periods, usually in the middle of winter, when there is an anticyclone, no wind and—obviously, in the winter—very little solar. As we bulk up on renewables, we simply bulk up on cost, as we are seeing on an annual basis. We have a choice: either create loads more renewables, then create storage systems so that we have enough energy to get us across those Dunkelflaute periods, or use batteries and elevated reservoirs for gravity hydro, or we consider hydrogen. All are abject failures on the thermodynamic pathway. They are all poor. They lose energy at every step and all are horribly expensive.
We are now trying to recreate a perfectly good grid around this low-density electricity production. We are making redundant the perfectly good grid that we used to serve our high-density, high-inertia power stations. That new grid requires steel, aluminium, copper, concrete and transformers, and it simply destroys our beautiful countryside—all to chase the pipe dream of net zero. Surely this Government are aware that more industry will close and household budgets will be further squeezed as we perpetuate high prices for energy. This madness must stop.
Lord Rogan (UUP)
My Lords, I want to make some brief comments in relation to the situation in Northern Ireland.
As noble Lords may be aware, energy prices in Northern Ireland are not controlled by the energy price cap. We all remember that global prices of gas, electricity, oil and other fuels began to rise dramatically in the summer of 2021. Prices then shot through the roof after Putin’s illegal invasion of Ukraine in February 2022. Later that year, the Conservative Government provided support for customers in Northern Ireland, which resulted in the largest electricity supplier in the Province cutting prices in November to a rate below those in the rest of the United Kingdom. However, a reduction in that support from April 2023, and its removal from July 2023, led to price rises in Northern Ireland. Since September 2023, the cheapest prices from Northern Ireland’s largest supplier have been higher than prices under the cap in the rest of the UK.
All Northern Ireland households will shortly receive a £30 annual reduction on their electricity. On the face of it, this is welcome news, until you learn that households in Great Britain will receive £150 per year. I understand that the discrepancy is because one of the two environmental levies being removed from bills by the Chancellor of the Exchequer does not exist in Northern Ireland. However, given the higher price of electricity in the Province which I have just explained, surely that should be taken into account as a means of redressing the current cost imbalance between the two parts of the kingdom.
There is another problem. According to Northern Ireland statistics, approximately 61% to 68% of households in the Province use oil rather than gas as their primary method of central heating. This equates to roughly 500,000 homes, with the reliance on heating oil jumping to over 80% in rural areas. An analysis by the Consumer Council for Northern Ireland found that, in March, following the US-Israeli attack on Iran, heating oil prices in the Province rocketed by 92%, with 500 litres costing consumers an eyewatering £627. I ask the Minister to consider what further support His Majesty’s Government can make available.
Finally, a word on business. While electricity prices for Northern Ireland household consumers are high, the situation for local firms is equally challenging at best, given that large energy users currently pay around 60% more than the EU median. Businesses in the Province are already tied up in knots, with additional costs caused by the ongoing Irish Sea border fiasco. Last month, Trade NI—the alliance of Hospitality Ulster, Retail NI and Manufacturing NI, representing the three largest sectors of industry and the majority of businesses in Northern Ireland—sent a delegation to Westminster. While here, they met Ministers and other key decision-makers to outline some of the practical interventions needed to support Northern Ireland’s competitiveness. I am unaware of whether the Minister was part of these discussions but, if not, I gently ask that he receives a full brief from his officials on the initiatives raised and considers how he and his department might best assist Northern Ireland.
Lord Griffiths of Fforestfach (Con)
My Lords, when I was a student at the London School of Economics, there was a thing called the London fog. When it descended, visibility went down to 10 to 20 yards. I must say, as I prepared reading for this debate, I felt that I was entering pure fog. It was confusion and darkness—you were frankly nervous about where you were going.
I will make just three points. The first has already been made, but I want to emphasise it. That is the cost of intermittency. You frequently hear, as the Secretary of State has said, that renewables are nine times cheaper than fossil fuels and gas. In a way, he is right. They are if you consider the price of fuel in connection with them as zero but, on the other hand, intermittency requires enormous investment. Dieter Helm suggests that, in the past, we needed about one-third more capacity to deal with peak demand. Now, he says, we have reached a position where we need twice the capacity to deal with peak demand. In the future, if we are to get the benefit from AI, greater electric vehicles and so on, we need a factor of three. This simply cannot be done from renewables. The enormity of the cost has simply not been recognised by the Government.
My second point is that we have a present grid that is totally out of date. The grid was built to deal with some very large generating companies. I do not know why there were so few. Whenever an economist looks at a few companies, you immediately think of restriction of competition. In the past, there was that small number. Today, you have wind farms and solar parks, and many more access points are needed. The grid is simply not compatible, and we do not have, like other countries, something to fall back on. China and Germany can fall back on coal. France can fall back on nuclear. The US can fall back on oil and gas. We fall back on wind, light and sun. It is really crazy.
My third point is on overregulation. Why should we have one price for power throughout the whole country? Why can we not have a regional pricing of power? If, in Scotland, offshore wind farms and so on are cheaper, why can Scotland not be allowed to attract to the area industries that depend heavily on power? We need much less regulation in this respect and much more flexibility. That is something only the Government can do.
In the 20 years past years, I think we have seen a complete shock in deindustrialisation in this country. If we have any ambition to benefit from things such as AI and to regain the power that we once had, we have to recognise the cost of intermittency. We have to recognise that the grid is out of date and needs restructuring. There is unnecessary government regulation, and we need regional price variation.
Lord Moynihan of Chelsea (Con)
My Lords, it is a great pleasure to follow such an excellent speech by the noble Lord, Lord Griffiths. I declare my interest in new nuclear technology in the United States.
We have the highest electricity price in the world. Why? The Secretary of State claims that this is solely due to the gas price. The gas price does affect prices, but why and to what degree? Certainly, if the price of gas goes up, the electricity price goes up. But when the gas price goes down, will the cost go down? The devil in electricity prices is intermittent renewables. They are the cause, not just of high electricity prices, but of high prices that will persist in this country for almost the next two decades. While other countries will see their electricity price going lower and lower, we will be left high and dry.
Why is that the case? First, the old renewables contracts ensured not just very healthy profits for the operators but a huge extra and entirely unnecessary bonus when gas prices went up. It is another example of blundering negotiation by a zealous Civil Service under—I do agree—a Government run by my own party, which resulted in the Government being absolutely trounced by far better negotiators to achieve that wonderful upside benefit for the operators. That blunder was finally spotted, and now we have new contracts where the renewables operator does not get anything extra if gas prices go up. That means that, with these new contracts, it is just not true, as Miliband claims, that the gas price rules. Whatever the price of gas, what we pay for that large source is impervious. Note that the only way the Government managed to make even that happen—again in their blundering negotiations—was a very high price guarantee in the first place with very long contracts. The problem will persist, literally for a decade and a half or two, regardless of the cost of gas. Why were these very rich deals seen as necessary? I do not believe they were, but they were seen as necessary. It is because intermittent technologies are medieval.
What are we to do? If we let people drill for gas in the North Sea and by fracking—and the same all over the world—then the supply of gas will inevitably rise to the marginal cost of production, and the cost of gas will lower, say, to what it is currently in the United States, which is a tiny fraction of what we pay here. We are told by the Secretary of State that the price of gas rules our price of electricity, so, when the gas price starts to decline, will the price of electricity go down? No, it will remain high for 15 or 20 years, because there is this enormous renewable subsidy forcing up the price of electricity for contracts going on into the 2040s. For industrial competitiveness, this is dreadful, as everybody else’s price goes down and our does not. This is the disaster that will go on disastering.
In the US, the moment Trump got in last year, he slashed a bunch of useless regulations in nuclear. Within a year, the US has over a dozen safer and cheaper new nuclear plants and technologies being built. Within 15 to 20 years, America will be dominating those technologies while we flounder.
We should stop intermittent renewable contracts now, slash regulation on nuclear—the type that requires a nuclear power station to have less radiation in it than you get by walking down the road—and use our great scientific know-how to become leading in nuclear. Yet, only once we have got through the next awful two decades that face us, with all these intermittent high-cost renewable contracts, will we once again be able to have cheap electricity.
Earl Russell (LD)
My Lords, I thank the noble Lord, Lord Lilley, and all those who have contributed. On these Benches, we support the energy transition and reducing our energy bills. They are in fact fundamentally linked, but we must be honest about the cause and the solutions.
UK industrial electricity prices remain among the highest in Europe, as the noble Lord, Lord Harrington, so ably put it, and household costs continue to be significantly more for electricity than gas. Prices have fallen from their peak in 2022 but are still well above pre-crisis levels, and this is having serious impacts.
Once again, instability in the Middle East shows our exposure to unreliable and volatile fossil fuels is the cause. Since the start, the UK has avoided around £1.7 billion in gas import costs, thanks to record wind and solar generation. Clean power improves energy security and shields consumers from fossil fuel shocks.
The Conservatives’ explanation of high prices is that it is driven by renewables and net zero madness. These arguments have been made consistently by many speakers, including the noble Lords, Lord Lilley and Lord Mackinlay, but the arguments do not stand up. The core issue lies in the structure of the electricity market. Under marginal pricing, the most expensive generator sets the price. Even when cheaper renewables are generating power, consumers still pay the price linked to gas. The gas price problem is passed directly to bills. Wholesale prices and, above all, continued reliance on gas are the real drivers. Blaming renewables does not explain or resolve the problem.
It is also a fantasy to argue that North Sea drilling provides the answer or would reduce our energy bills. Domestic production is in inevitable and terminal decline; gas is traded internationally. The North Sea will not impact the international markets, reduce bills or provide energy security.
We have already seen the consequences when these markets turn against us. Reliance on fossil fuels cost the UK economy £183 billion in the four years following Russia’s invasion of Ukraine. This is the cost of structural energy vulnerability. As long as we remain exposed to fossil fuel volatility, we will continue to pay.
This is why the seventh carbon budget is so important. A transition to clean energy is not just environmentally necessary but economically advantageous, reducing bills, strengthening security and attracting investment. The Government’s own analysis suggests that emissions reductions of 87% by 2040 could deliver economic benefits of around £865 billion. This is a real opportunity for stability, resilience and growth. The clean energy sector supports over 1 million jobs, and renewable projects capable of powering the equivalent of 23 million homes have already been secured by this Government, and we support that work.
At the same time, the cost of renewables has fallen sharply, with recent auctions delivering prices well below those for new gas generation. The Government have acknowledged the need to break the link between gas and electricity prices, including through adjustments to the generator levy and encouraging fixed-price contracts for existing low-carbon generation. We support those moves. They are welcome steps, but they must be part of a broader and more urgent programme of reform.
Further electricity market reform is needed and must be accelerated. As long as gas sets the price, consumers will not see the full benefit of low-cost renewables. We need a government strategic gas reserve, outside the market. We must address the imbalance in levies. Electricity wrongly continues to carry a disproportionate share of policy costs, despite electrification being central to decarbonisation. We need greater resilience to future shocks. There must be proper, long-term targeted support for bill payers. A permanent, targeted social tariff is needed. We must move faster on electrification, with heat pumps, electric vehicles and grid infrastructure. The direction is right, but the pace insufficient.
Lord Moynihan (Con)
My Lords, I declare my interest as chairman of Amey, Acteon and Buckthorn Partners, three companies focused on delivering energy transition.
This has been an excellent debate. Since my noble friend Lord Lilley referred to Dieter Helm, and having just heard the speech from the noble Earl, I think it is important to quote in full what Dieter Helm, who is respected by both the Labour Governments of Blair and Starmer, said only last week:
“The industrial consequences have been dire. High electricity prices have contributed to the closure of Grangemouth refinery, the Exxon refinery in Scotland, one of the Hull refineries, the closure of most of the steel industry, the closure of the fertiliser and fibreglass industries, and severe problems for pottery and for glass-making. Car manufacturing is back to the 1950s’ levels”.
As we have heard:
“There is devastation amongst the SMEs, aggravated by the increase in employer national insurance contributions, enhanced workers’ rights, and increases in the minimum wage. The unfunded welfare spending has increased the cost of capital, with record gilt costs. Energy policy has reduced economic growth, not increased it”.
On these Benches, we believe in reducing household bills, strengthening energy security and increasing UK energy independence by prioritising cheap and reliable energy over net-zero constraints, expanding North Sea production significantly, repealing the energy profits levy and scrapping green subsidies, including carbon price support, which are no longer needed.
Ministers consistently refer to “clean energy”, which they define as homegrown. It is neither of these things. The con trick is to pretend that emissions should exclude the integrated lifecycle costs, as pointed out by my noble friend Lord Frost, while pretending naively that, because the wind blows and the sun shines, there is no impact on the environment. We are responsible for creating the demand for Chinese solar panels. Over 90% of the constituent parts of our solar panels come from China; they are not homegrown or clean. We create the demand for polycrystalline. We are accountable for the emissions belched into the atmosphere by Chinese coal-fired production of solar panels—a country, by the way, with which the Secretary of State has created a specific bond between DESNZ and the Chinese state through his secret MoU which encourages these Chinese imports. In this decade alone, China has pumped more CO2 into the atmosphere than this country has in total since the industrial revolution.
Yet, we have our own gas reserves, which we are shutting down. This is not economic security. As the new AI technologies unfold, no data centre is going to find Britain’s high-cost economy for a highly intermittent-based electricity system an attractive competitive advantage. Why should it, when 60% of the operating costs of a data centre come from its electricity costs?
The central question for any electricity system in an economy is how good it is at delivering firm power at the lowest possible cost. It is not optional. A modern competitive economy is 100% dependent on firm, low-cost energy. We have a crisis. We have a crisis in British industry: as a result of the highest prices in the developed world, we are uncompetitive. We also have a crisis in affordability for households. Tragically, as this debate has shown, the Secretary of State is doubling down on both crises with the delusion of a zealot heading blindly for a go-for-broke strategy, which is the definition, as my noble friend Lord Redwood said, of economic self-harm.
The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)
My Lords, I congratulate the noble Lord, Lord Lilley, on securing this debate. It is a very important debate not just on our present energy crisis as a result of events in the Middle East but to review, among other things, how the energy market has developed in the UK over a long time and what has gone into it.
I, maybe naively, constructed my remarks on the basis of the Question, which addresses why the UK has among the highest energy electricity costs in the OECD area. That is undoubtedly true, although we need to make a number of caveats about how different countries manage their energy markets. Looking at other countries is significant in that respect.
However, I am sorry, but not surprised, that the debate this afternoon has been on a much wider basis. It would require all of us to get around the table for about three hours to talk all these things out, and it would certainly take me more than the 10 minutes that I have this afternoon to remotely address all the points that have been made.
As a general point, I had wanted with my closing speech to address what is being done now about a number of things which I think between us we can agree have been problems and distortions in the UK energy market over a number of years, which need rectifying in the future. But—this is where we come to fairy tales—we know that climate change is real and not a fairy tale. We cannot address the problems and difficulties of the UK energy market and its prices without factoring in what we are doing about climate change. Otherwise, the best thing to do would presumably be to dig a whole load more coal mines and start coal mining again. In our situation, we have to deal with climate change as a central part of our energy economy.
We do that on the basis of a UK energy system in which, for example, more than half of the CCGTs presently in operation are likely to go out of commission within the next few years—a maximum of 10 years, because they are beyond their lives. That is real; it is not a fairy tale. As the noble Lord, Lord Moynihan of Chelsea, informed us, we have a grid system that is completely clapped out and was originally built for an entirely different energy system—not a modern energy system based on climate change and delivering things where they need to go. Whatever the situation, we would have put a great deal of effort in replacing the grid, so that it is up to modern standards and purposes, particularly as far as digitalisation is concern. That is not a fairy tale either.
As the noble Earl, Lord Russell, mentioned, it is also not a fairy tale that, as it works at the moment, the system is based on marginal cost pricing. That means that whatever you do in terms of cheaper power in the system, the most expensive element of the system when the bidding process comes in is the one that sets the marginal cost for the entire system. That marginal cost price is still dominated by gas—marginally less so than previously, but it is still a very long way from being resolved.
None of these is a fairy tale. These are things we have to address now with the energy system that we have. I think it was again the noble Lord, Lord Moynihan of Chelsea, who mentioned that one of the early mistakes that the previous Government made was to generate low-carbon power on the basis of the renewable obligation system, which gives rewards to the 30% of the system still run by renewable obligation-based energy over and above what you would expect it to get because of the volatile price of gas going into the system. But we have it in the system and we have to deal with it. What do we do about it? How do we get those elements out of the system and get a system that really reflects the cheapness of the power coming out of it for the future?
When we look at other energy markets, one answer to these questions is that various other countries are not exposed to those marginal prices and the gas input of 30% or so into the UK system that we are. In France and Canada, for example, it is only a few per cent based on gas. Even in Germany, there is a higher proportion but it is still much lower than us. People may like to say that this is what I would say this afternoon, but it is overwhelmingly the case that the present high electricity prices in the UK market are based on our being very high users of gas in the system to create electricity, and therefore our costs in the system go along with the volatility and changing prices of gas.
There are two more non-fairy tales, of course: the invasion of Ukraine and the situation in the Middle East at the moment. It is true that gas prices have come down a little since the peaks during the invasion of Ukraine, but they are still considerably higher than they were before it. That is the system we are dealing with at the moment.
What are we trying to do to deal with that? First, we have to make sure we get off gas in the system. Part of the mission to achieve clean power by 2030 and accelerate net zero is to place gas on the margins of the system so that it produces a relatively small amount, as has been stated, backing up the system rather than being a central part of it as a whole.
We have indeed brought in price caps, as noble Lords will know, to ensure that price rises are kept in check over a period. The Government never said that energy bills would all come down as a result of price caps or as a result of the transfer of some of the legacy things, such as the renewables obligation or the energy company obligation, away from levies and into the Exchequer. We did not say that would necessarily bring down bills; we said it would make sure those bills would go up rather less than they would otherwise. That is not a fairy tale but an actual fact—that is what has happened with, for example, the reduction in the Ofgem April price cap and the effect on the price cap coming up fairly shortly.
As noble Lords have mentioned, the Government are trying to make sure that prices come down for the industry. Mention has been made of the supercharger, which will cut businesses’ electricity costs by up to £420 million per year, which particularly relates to discounts on electricity network charges for businesses in sectors such as steel, cement and chemicals from 60% to 90%. That will make a real difference.
The Chancellor also announced in April that the Government will cut electricity bills by up to 25% for over 10,000 manufacturers from April 2027 through the British industrial competitiveness scheme. We are working hard to make sure that there is downward pressure on those bills, both domestic and industrial, through the moves that we are making against the background of the electricity system we have at the moment. At the same time, we have to tackle the structural problems that we have in the electricity system for the longer term. It is not just a question of putting more renewables on to the system; it is a question of revising the whole system so that the benefits of those renewables and low carbons come through and that the things that are a cost to the system go to the margins. That is why we are seeking to delink the cost of electricity from management by gas, particularly by taking action against the renewable obligation bodies that still make up quite a considerable portion of the energy market. We think that will produce a considerable reduction in the hold that gas has over the market over the next period. There will be fixed-price contracts for eligible generators, and we will be delinking from gas prices and protecting consumers from future crises.
I am aware that, as I had predicted, I have not been able to take in the entire sweep of this afternoon’s debate in one go. I warmly hope that the noble Lord, Lord Lilley, will secure a further two or three debates so that we can debate a number of the other issues.
To conclude, the Government are determined that families and businesses cannot be left at the mercy of volatile fossil fuel markets on an international basis. That is why we must press on with the transition not just for climate change purposes but for the good management purposes of having secure, homegrown power that will ultimately bring bills down for good.
AI Regulation Bill
(1 week ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Holmes of Richmond
To ask His Majesty’s Government what assessment they have made of the case for a cross-sector AI regulation bill.
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to bring this QSD to the Grand Committee for debate. In doing so, I declare my interests as set out in the register, variously as adviser to the Crown Estate, Endava plc and Simmons and Simmons LLP. I thank all noble Lords who have signed up to speak, and I look forward to their quick-fire contributions.
I have been given eight minutes to open this debate, but I can do it in one word: is there a case for a cross-sector AI Bill? Yes. To expand somewhat on that, the Prime Minister has described AI as:
“The defining opportunity of our generation”,
yet the Government are largely taking a wait-and-see, voluntary and so-called domain-specific approach. I am not sure that wait and see is ever an optimal approach to any issue, particularly one as significant as AI. But do not listen to me; let us consider, on its own merits, how the Government’s approach is going. Harms are unaddressed. Young people are not getting shortlisted for jobs, without even knowing that it is AI that is kicking them out of the process; even if they knew, there would be little, if any, redress at this time. Job seekers, benefit claimants, teachers and teenagers are all suffering the harms of AI that are currently unaddressed. Similarly, vast opportunities are being unoptimised for the UK. Wait and see has really led to partial, piecemeal and voluntary action.
Why have the Government taken this approach? Let us take just two of the elements that are offered. The first is that it is too soon to legislate; they will stymie, stifle or stop progress. Not a bit of it—we know exactly what we need to do to put in place the right-sized legislation and regulation. The second is a falsehood that recurs with tedious inevitability: you can either have regulation or innovation, but you cannot have both. We all know bad regulation—there is a deal of it about—but that does not mean for one second that regulation, of itself, is bad. Right-sized and right-touch regulation is good for citizens, creatives, consumers, innovators and investors alike. We know how to do this. Just look back to the telco regulation of some decades ago. Was it stopping an industry? Far from it: it was a key enabler of Great British telco business.
What do we need to do? What anyone needs are clarity, consistency and coherence. This is currently not the case. We have such an opportunity because we have the great good fortune of common law, which is agile, adaptable and ideal for the task at hand. We need to bring forward principles-based, outcomes-focused, inputs-understood legislation. Those principles are trust and transparency; inclusion and innovation; interoperability and international outlook; accountability, assurance and accessibility—and we need to put those principles on a statutory footing.
We need to look to AI responsible officers across business. We need labelling to address the IP challenge, which currently continues to be kicked down the road, with creatives’ work taken—unremunerated, unrespected and unconsented to. Crucially, we need public engagement across this if we are going to enable all the opportunities from AI. We know what to do. We have the legislative capability, knowledge and history of how to do this.
Do not just listen to me. Let us take the great Ada Lovelace Institute, which variously describes the Government’s approach as chronically insufficient and, in a glorious understatement,
“increasingly out of step with public attitudes”.
If the Government want growth and public trust in AI and optimal outcomes across the whole of society, we need to end this wait-and-see, voluntary, partial, piecemeal approach. For economic, social, democratic and psychological reasons, we need a cross-sector, principles-based, outcomes-focused AI regulation Bill now. We need this for citizens, creatives, consumers, innovators and investors all to be enabled and empowered to say full-throatedly together, “Our data, our decisions, our AI futures”—our human-led, inclusive AI futures.
Lord McNally (LD)
My Lords, my first duty is to thank the noble Lord, Lord Holmes, for that introduction. He and I are members of the Lords Communications and Digital Committee. We have both benefited from discussions and hearings about AI held by the Select Committee under the shrewd guidance of our chair, the noble Baroness, Lady Keeley.
Our briefings seemed to come from two directions. First, the tech sector sees the onward march to artificial intelligence to be a unique opportunity to achieve unprecedented leaps in productivity, problem-solving and efficiency—the very combination of which successive Governments have been seeking since the great financial crash of 2008. There are counterarguments, coming mainly from the creative industries and from people such as the most reverend Primate the Archbishop of Canterbury and the Pope, who see the risks and dangers associated with AI as enough to give us pause before we decide on the direction to take.
If the AI revolution is already on the way—I believe it is—our first task is to ensure that our machinery of government is fit for purpose. The noble Lord, Lord Holmes, suggested a cross-sector AI Bill. I would go further and establish a cross-party, pre-legislative scrutiny committee of both Houses to take evidence on the proposals in such a Bill. I was on the committee for the Communications Act 2003. It was one of the great experiences of my life, in exchanging and hearing ideas.
Something else that has been suggested is the setting up of a COBRA-type committee. I also served on COBRA in the past. AI calls for the kind of committee that is able to look forward, anticipate problems and advise on what we are doing.
These would be two useful first steps in making the AI revolution less painful and destructive to the lives of working people than other tech innovations have in the past.
Baroness Alexander of Cleveden (Lab)
My Lords, I too thank the noble Lord, Lord Holmes, for securing this debate. I will echo some of his themes.
Cross-sectoral regulation will come. The question is simply: when? This week, the Trump Administration issued an executive order compelling new AI frontier models to be submitted for review. All general-purpose technologies require regulation—electricity, rail and nuclear. Like nuclear, AI is both a general-purpose technology and a dual-use one. But unlike early nuclear, AI innovation is occurring in private companies and not in government labs, which partly explains the regulatory squeamishness. The US fears falling behind China; the UK fears impeding growth and points to Europe, where regulation has damaged innovation. As the noble Lord, Lord McNally, said, into this debate stepped the Pope, the most reverend Primate the Archbishop of Canterbury and a host of lesser luminaries, including the head of MI5, the founders of Anthropic and military chiefs—all agitating for action both locally and nationally.
Regulation is not antithetical to growth and to realising the upsides of AI. The Government are delivering cross-sectoral legislation on cybersecurity but have hesitated on a comparable approach to AI safety. I invite the Minister, when summing up, to share when the Government will launch their consultation on AI regulation. Will they consider regulation at the point of development and not simply at the point of use? Will they mandate pre-deployment testing of high-risk AI, as the US has now done? Do they accept the case for an AI regulatory oversight body?
These are robust questions for my own Government. Yet these issues are too big for us to play politics with. I note that I am to be followed by the noble Lord, Lord Harper, who is unquestionably the master of robust challenge. Yet his Government also wrestled with the growth versus regulation dilemma; Rishi Sunak counselled caution as recently as last week about us being a first mover. I welcome the call of the noble Lord, Lord McNally, for a cross-party approach. The nation and the world are looking to us for actions that match our moment. This requires an inclusive discussion, debate and direction. It is time to act.
Lord Harper (Con)
My Lords, I thank my noble friend Lord Holmes for securing this debate, which has given us the opportunity, albeit briefly, to talk about this subject. I also thank the noble Baroness, Lady Alexander, for what I think was intended as a kind remark.
I support a principles-based approach, which is not surprising since that was the approach set out by the Government of which I was a member. A number of principles should be adopted by existing regulators—I do not support having a single AI regulator—balanced against their existing duties on growth and innovation. This is important because, while there are absolutely risks with AI, it will be one of the biggest potential drivers of growth and innovation if we get it right. We need to balance those two things.
I also want to focus on the thing that we are doing well—the AI Security Institute, which we set up and the current Government have retained. I was listening to Matt Clifford the other day, an apolitical official who is experienced in this sector. He was brought in by Rishi Sunak and retained by the present Prime Minister. He made the point that this is world leading, enabling us to robustly test AI models and approaches to make sure that we deal with the risks. It is very successful at enabling us to be a global leader. We are never going to be like the United States, the centre of all these things, but outside of the US and China we are a leading player in this area.
I support a principles-based approach and a relatively short piece of legislation that would give the duty to existing regulators to adopt those principles. However, we need to move at pace and not do what happened with the Online Safety Act—still talking about the legislation in seven years’ time, when, frankly, the world will have moved on at pace.
Lord Tarassenko (CB)
My Lords, I too congratulate the noble Lord, Lord Holmes of Richmond, on his commitment to AI regulation and on securing today’s QSD. In the time available, I will follow the noble Lord, Lord Harper, and concentrate on AISI, the AI Security Institute.
When Claude Mythos Preview was released by Anthropic to a select group of launch partners a few weeks ago, AISI was the only non-American government organisation to receive access to the model for safety testing. However, should the UK Government in three years’ time have the same view of AI governance as the current US President, AISI’s future would be under threat. The Government could decide overnight to repurpose it or even shut it down altogether.
I therefore proposed a Private Member’s Bill, not drawn in the ballot, which would establish AISI as an independent statutory body. It would make provision for its functions in relation to the testing and evaluation of advanced AI systems, including pre-deployment and post-deployment assessment of risks, and for the institute to give advice to the Government and Parliament. Putting AISI on a statutory footing, beyond its current status as a unit within DSIT, would signal to the international community that the UK’s commitment to AI safety was permanent.
We cannot wait: Anthropic is predicting that there is a greater than 50% probability that AI self-recursive improvement will be achieved by 2028. If AISI has become an independent statutory body by then, it will be able to provide regulatory advice on whether AI designed by AI is safe to use or whether it should be banned in the UK. Expert-driven regulation based on advice from an independent AISI, using Henry VIII powers if required, is the best option for AI safety in the UK. I urge the Minister and the Government to allocate some bandwidth to thinking about this critical issue.
Baroness Harding of Winscombe (Con)
My Lords, I too thank my noble friend Lord Holmes for bringing this debate. The fact that so many of us wish to speak today shows that this really needs to be properly debated as a society, not just in a series of two-minute soundbites.
I think we all agree that good regulation and economic growth are not a trade-off—they go hand in hand. In order to get good regulation, you have to go through quite detailed and thoughtful work. My question—I have asked the Minister this before in a Question—is: why are the Government not initiating a commission along the lines of the Warnock committee that looked at human embryology and fertilisation in the 1980s?
This single hour shows that there are really important moral, social and economic issues about AI that we need to think through. With the greatest of respect to my noble friend beside me, I genuinely do not think that individual regulators on their own can sort that out. We have to have a proper societal debate about this, and we have the democratic tools to do it. That is not a hurried piece of emergency legislation; it is a proper commission, a Green Paper and a White Paper. It is about building the societal trust that we need for this ground-breaking regulation.
I urge the Government to think carefully, because at the moment we are doing nothing, and that is really dangerous. Nothing takes us to the same place that we are in with social media, which is a huge amount of harm done, no action and then calls to ban the technology. Banning the technology is a really bad idea; regulating it well is where we should be going.
The Lord Bishop of Hereford
I too congratulate the noble Lord, Lord Holmes, on securing this debate. Given the pace of AI development, it could not be more timely. As Pope Leo said in his recent encyclical:
“Each generation inherits the task of shaping its own era, of guiding history to become a place where the dignity of every person is safeguarded, justice is promoted and fraternity is made possible”.
Regulation does not of necessity stifle innovation. As David Epstein argues in his recent book Inside the Box, creativity, innovation and problem-solving are often improved by constraints rather than exhortations to “think outside the box”. The need for regulation in this space, however, goes well beyond this. One cannot divorce current technological advances from the moral framework which underlies them. Every advance reflects a moral vision and an ideological bias. There is—in some quarters of the AI industry at least—a dehumanising conviction that evolution drives us towards perfection. AI, it is argued, will be better than us at many things, so why not harvest the best of us and move on? As recent debates about social media use by under-16s demonstrate, large technology companies motivated exclusively by profit do not necessarily have our best interests at heart. Such utilitarianism is not a basis for a human ethical framework.
Regulation is ultimately about the restraint of such power for the common good. There are underlying systems which power many of the applications with which we are familiar, and it is these that need to be regulated. As many noble Lords have said, it is insufficient to do this piecemeal by sector when the risks that experts warn about are not sector specific. They are systemic, and potentially catastrophic. Noble Lords in this debate have already suggested many methodologies for bringing that into practice. I urge His Majesty’s Government, in collaboration with other nations, to introduce guardrails at the point of development.
Lord Black of Brentwood (Con)
My Lords, I declare my interests as deputy chairman of the Telegraph Media Group and chairman of the News Media Association. The vast, unaccountable technology companies would have us believe that any attempt at regulation in this area would stifle their growth and damage the economy. That is nonsense, of course. The truth is that legislation, even of the most modest sort, is long overdue to protect public safety, ensure transparency, tame untrammelled market power and protect content and intellectual property.
I have two points. First, there is already legislation on the statute book that, as a starting point, simply needs to be enforced. Rather than trying to rip the guts out of the CMA, the Government should actively direct it to encourage greater competition in digital markets. Google’s announcement yesterday that it will give publishers greater control over use of their work globally, after the CMA introduces binding conduct requirements on search, not only demonstrates that big tech will not flee if we introduce proportionate regulation but shows that the UK has an opportunity to lead the way.
Secondly, the Government should act now to ensure that existing copyright law is meaningfully enforced. For news publishers, indeed all content publishers, whose content is routinely scraped—or stolen—without consent or remuneration, simple transparency over the identity and purpose of the “crawlers” accessing that content would provide the basic information required to assert their rights and be rewarded for them. It is not a radical demand and falls well short of proper regulation, but it would be a start as a practical measure to make existing law effective. Yet even this has been kicked into the long grass, despite consistent demands from this House for action.
We should not accept political paralysis on this vital issue. AI can be a great force for good but, to serve all of society, laws must be enforced and fresh regulation put in place at speed. Unless we act now, history will taunt us with its most feared words: “too late”.
Lord Watson of Invergowrie (Lab)
My Lords, the noble Lord, Lord Holmes, has done us all a favour by facilitating this discourse, but it should not be necessary. In the 2024 King’s Speech, the Government committed to placing binding regulations on the developers of the most powerful AI models. Almost two years later, we still await legislation to fulfil this commitment. I therefore hope that my noble friend will be able to explain why that important policy has been dropped in favour of a weaker approach through targeted regulation at the point of use.
This ignores the warnings by experts developing superintelligent AI and leaves a major regulatory gap because recent models, such as Claude Mythos, have exposed the serious risks that originate at the point of development. On this occasion, the developers decided not to release the model to the public owing to its dangerous capabilities, but a more blindly profit-driven company or hostile actor in the future may not, and we cannot afford to rely on private companies doing the right thing to avoid national and global security threats.
It has been said that the pace of technological change is greater today than it has ever been, but never again will it be as slow as it is today. Companies are investing in what is known as recursive self-improvement, which means AIs autonomously developing more AIs. That would be the point at which we as humans lose control—a truly frightening prospect. MI5 director-general Ken McCallum recently commented that
“Artificial intelligence may never ‘mean’ us harm. But it would be reckless to ignore the potential for it to cause harm”.
I declare an interest of sorts, because I am one of more than 100 parliamentarians in both Houses who have joined ControlAI’s campaign on raising awareness of superintelligence and calling for binding regulation on the most powerful models. British mathematicians and scientists have done much to advance Al technology and the leading ones—the Nobel laureates and “godfathers of AI”—are loudest in their calls for proper regulation. It is past time that the Government took note and acted decisively.
Lord Taylor of Warwick (Non-Afl)
My Lords, I, too, thank the noble Lord, Lord Holmes of Richmond, for securing this important debate. Innovation and technology have brought solutions to everyday problems. Britain can be proud of the fact that it started the Industrial Revolution, but we are now in the fast-moving AI revolution. Either we regulate or we stagnate.
It was my Bill that, in 1997, established Britain’s first ever comprehensive DNA database. However, without DNA regulation, we would not have experienced that positive DNA revolution. As a result, we became the first nation in the world to embrace this ground-breaking technology. Nearly 30 years later, the DNA database has positively transformed the effectiveness of medicine, forensic science and research science. Some 175 of the 195 nations in the world now utilise DNA profiles.
There was no mention of an AI regulation Bill in the King’s Speech. Meanwhile, AI is being monitored in pieces through the Online Safety Act and a patchwork of policies in various sectors. This is not the same as a coherent framework for the development, deployment and use of AI. It seems to me that clear regulation on the basis of established common-law principles is not the enemy of innovation. Can the Minister please indicate when we are likely to see an AI regulation Bill?
The Cyber Security and Resilience (Network and Information Systems) Bill is long overdue. In recent months, we have seen airports such as Heathrow, retail chains such as Marks & Spencer, and large manufacturers such as Jaguar Land Rover all be immobilised by hacking. Two days ago, President Trump created a framework, or clearing house, for federal government to vet powerful new AI models before they are released. This stemmed from Anthropic’s warning that it has developed an AI tool, Claude Mythos, which is an advanced cyber security threat. Will the Minister follow this policy but go one step further than the Americans and make a UK AI clearing house mandatory, not voluntary?
For 10 years, I had the privilege of being the vice-president of the British Board of Film Classification. We regulated films and videos from all over the world, including the “Star Wars” epics. Unless we introduce effective AI regulation now, AI could become less Luke Skywalker and more Darth Vader.
Lord Young of Acton (Con)
My thanks go to my noble friend Lord Holmes for securing this debate.
The last thing that one of the few sectors in the British economy that is growing needs is more regulation. The example of Anthropic referring Mythos to the AI Security Institute in order to do a safety evaluation shows that AI companies have a commercial incentive to prioritise safety. That is not an argument for a cross-sector regulator. I am concerned that more red tape will favour well-resourced incumbents who can afford compliance departments and penalise scrappy upstarts.
The UK is currently third in the world in the AI arms race. How long will it retain that position if we introduce heavy-handed regulation to the UK, which would put us at a competitive disadvantage? I urge the Government not to think about creating a cross-sector AI regulator but, instead, to think about the transnational regulation of AI and to engage with some of our trading partners on developing a transnational regulatory framework that could be built into trade agreements. The natural trading partner to begin that conversation with, if you are not having it already, is the United States, which is the leading developer of AI in the world. I would prefer a transnational regulatory system for AI to be based on the principles of the first amendment and developed in partnership with the United States—perhaps with Switzerland, too, as another non-EU European country—rather than favouring the model in the EU’s AI safety Act, which, like the EU’s Digital Services Act, prioritises safety over liberty and innovation to far too great an extent.
Baroness Antrobus (Lab)
I, too, thank the noble Lord, Lord Holmes, for this debate and for my first opportunity to speak in Grand Committee. I want to dwell on two connected examples that demonstrate both the potential benefits and dangers of using AI on the battlefield, including why defence needs a bespoke approach. In doing so, I acknowledge the excellent research of Katrina Manson and Kevin T Baker on the US development of AI in warfare under the auspices of Project Maven.
In 2011, a friendly fire incident took place, killing US marines fighting in Afghanistan. The troops were mistakenly identified as the Taliban and targeted by a US drone. However, the way in which the marines were arranged, prone on the ground, was not the way the Taliban fought. This motivated senior US officers to push for the increased use of AI in order to prevent human error and was a key factor in the journey that the US military took in developing Project Maven.
In March this year, US weapons hit a primary school in Minab in southern Iran, killing more than 150 people, mostly schoolgirls. The knee-jerk reaction was to blame AI, but people had built a system that was fast enough to make a failure to update the target database lethal. Nobody searched the database to check that the target was legitimate because, with the Project Maven system making 1,000 decisions an hour, nobody could.
I offer as a conclusion that the use of AI in warfare does not lend itself to cross-sector regulation; in fact, I am much persuaded by the approach suggested by the noble Baroness, Lady Harding, more generally. In the defence context, a question that remains unanswered is whether AI is a tool, with humans at the helm, or a killer in its own right. The ethical implications relate to the tension between reducing adherence to the law of armed conflict and risking unintended outcomes, or losing in warfare because the enemy has no qualms about those risks. There is no time now to dwell further on this important moral challenge, but perhaps we should debate it further in the House in future.
Lord Thomas of Cwmgiedd (CB)
My Lords, I also thank the noble Lord, Lord Holmes, for obtaining this debate, and more so for his singular and determined leadership and focus on this issue. The need is becoming even more urgent for the Government to end their current policy of “just wait and see”. They should go for an overall scheme and unified set of principles, preferably with a single regulator.
I agree with the noble Baroness, Lady Harding, that regulation is needed to underpin growth and development. Great though the common law is, on its own it is not enough. I illustrate this with reference to the legal sector, which, to the advantage of the United Kingdom, has a significant international lead at present. The sector is making major investment in AI, with real change to the way in which lawyers have trained and work is under way. This is now having a marked effect on the business of the courts and arbitration, and to the competitiveness of the industries it serves, particularly our leading financial services sector.
The issues that arise in the legal sector are many. To list but a few, they include confidentiality, transparency, integrity, copyright, automatic decision-making, protection from bias and discrimination, equal treatment, training, storage of data and ensuring the competitive market for AI. These are exactly the same as exist elsewhere and should be guided by a single set of principles with sectoral adjustment where necessary. Such a uniform set of principles is, in my view, essential to the maintenance of the leading edge of the legal sector in its international position in what is a fiercely competitive international market. There is much to be said for transnational regulation, but we should start it by our own set of principles.
Lord Rees of Ludlow (CB)
My Lords, the smartphone, the web and ancillaries would have seemed magical just a generation ago. There is no gainsaying their benefits to billions worldwide. It is welcome that machines supplement, if not replace, white-collar jobs, routine legal work, accountancy and even surgery. This clearly needs regulation at a national level.
However, looking ahead, we must keep our minds open, or at least ajar, to transformative advances that may seem exhilarating today but are frightening too. LLMs will surely confront us, writ large with the downsides of existing social media—fake news, photos and videos of unmoderated extremist diatribes and so forth. Social media can spread panic and rumour, and psychic and economic contagion, literally at the speed of light.
Experts such as Geoff Hinton speak of “human extinction”. This may be an exaggeration. My concern is less the science fiction scenarios of a takeover by superintelligence, but rather the risks of breakdowns or sabotage of interconnected networks, electricity grids, GPS, the internet et cetera, which could cause a societal breakdown that cascades globally. Regulation for this is harder. The Atomic Energy Authority works because building an atom bomb requires large-scale conspicuous facilities. It is not so easy to control developers of rogue viruses or, indeed, cyber criminals, and that is the problem we face.
There needs to be a balance to enable innovation to continue but also display a method of doing all we can to prevent such spreads, which could be catastrophic. To quote a well-known proverb, although this is unfamiliar, it is not improbable, and the biggest scare we face in coming decades is this one.
Baroness Uddin (Non-Afl)
My Lords, I am grateful to the noble Lord, Lord Holmes, for his persistent leadership in this debate. As the Government consider cross-sector AI regulation, I draw your Lordships’ attention to the work I have witnessed as a co-chair of the All-Party Parliamentary Group on Digital Identity and a member of the All-Party Parliamentary Group on Cyber Security and Business Resilience, which frequently fill committee rooms with UK experts and businesses highlighting the opportunities presented by AI and its profound implications for sovereignty, security, democratic accountability and workforce development.
The Government have chosen—perhaps unwisely, in my view—to favour cross-sector regulation rather than introducing a comprehensive AI framework, for which the noble Lord, Lord Holmes, and others have called. Coming as I do from a local government management background, fragmentation was often regarded as a source of inefficiency, inconsistency and risk. Yet AI systems now operate across our healthcare, finance, education and public services through outsourced and disparate technology providers. What assessment have Ministers made of its effectiveness? Has there been a cost-benefit analysis of these proposed, fragmented regulatory approaches?
Other jurisdictions are moving more decisively. The EU has the European Artificial Intelligence Act, with a common framework based on risk and accountability. Singapore has a national AI governance model that combines innovation with oversight, while, as has been said, the United States has been aligning AI development with national security and sovereign capability.
Against this backdrop, what assessment have the Government made of the UK’s position in the Sovereign AI Power Index, which was launched in the UK and which measures national capability across compute, data, talent, energy, research and governance? Do the Government regard strengthening sovereign AI capability as a strategic national priority? Do they consider the stewardship of strategically important data sets under UK sovereign control to be critical to national resilience and security, given the increasing role of global technology companies in managing public infrastructures and sensitive public sector data—including in the NHS and HMRC—in partnership with companies such as Apple, Google and Palantir? They may bring expertise and innovation, but what safeguards exist to ensure that the UK’s most valuable public data assets remain subject to British law and sovereignty, ultimately in the interests of British citizens? I look forward to the Minister’s reply.
Lord Clement-Jones (LD)
My Lords, I declare an interest as an adviser to DLA Piper on AI policy and regulation. We should all thank the noble Lord, Lord Holmes, for his consistent advocacy for regulation, the need for which is clearly shared widely around this Room.
Geoffrey Hinton, the Nobel laureate and godfather of AI, and Yoshua Bengio, the world’s most cited computer scientist, are not alarmists about AI. They are the people who built it, and now, of course, they are our religious leaders. When they call for binding regulation, the Government should listen. Moreover, the Ada Lovelace Institute has found that 89% of the public support an independent AI regulator with enforcement powers, and that 48% reject lighter rules to keep pace with other countries.
This is a manifesto commitment abandoned without explanation. Binding regulation was promised in 2024 and reaffirmed in the King’s Speech thereafter, but it has gone by 2026. The Government say that the existing frameworks suffice. We have the CMA’s conduct requirement for Google but, in other areas, Amazon’s cloud businesses, say, remain unregulated under the Digital Markets Unit after years of investigation. The existing frameworks are not sufficient, and now the competition reform Bill further threatens the independence of the CMA.
On the regulating for growth Bill, the King’s Speech briefing notes make clear that successful sandbox pilots could lead to law being permanently disapplied. This risks becoming a Henry VIII power grab. We await the Bill text, but the stated intention alone should alarm us.
On copyright, 274 commercial licensing agreements between content providers and AI developers already exist. The myth that legal licensing is impossible has always been false. The Government know this, yet even requiring web crawlers to identify themselves has been sidelined. I ask a Minister one question: the Government have the legislative moment, the mandate and their own manifesto; why not bring forward the cross-sector framework that the House, the public and the experts have all called for? The window is still open but, in my view, not for long without huge risks to our society.
Lord Markham (Con)
I add my thanks to my noble friend Lord Holmes for bringing this debate forward today. It is a complex area, and we would all agree that it is difficult to do it justice with such limited time. I think we also all agree that there are some areas where we definitely need controls on AI: safeguarding against suicidal ideation, imparting dangerous knowledge on biological and other weaponry, and nudification of people, to name just a few areas.
However, we also see that there are dangers to overregulation and tying our hands behind our back. Unfortunately, whether we like it or not, AI is a winner-takes-all world. In the area of defence, as the noble Baroness, Lady Antrobus, mentioned, we need only to see a small technologically advanced Spanish army defeating a much larger Aztec army to learn some of the lessons—we do not want to be in that position as we go forward. Unless we can get every country in the world—and every terrorist group—to sign up to the same set of regulatory rules, we are danger of being on the wrong side of history. I would much rather make sure that we are at the forefront of AI development, rather than at the mercy of others, by tying our hands behind our back with regulatory restrictions.
It is with this knowledge that the Conservative Government took the approach they did, setting up the AI Security Institute to try to safeguard and test models for the reputable producers of AI, so we can make sure they are working in the way we want them to. In combining that with an agile regulatory framework, as my noble friend Lord Camrose previously noted, the priority was to ensure coherence across existing regulations while having a period of non-statutory implementation. AI will touch every aspect of our lives: business, social, health, education, defence and media. I believe it is impossible for one AI regulator to act across all those fields, but much more manageable to make every regulator responsible for their part of AI in that area.
I am afraid, however, that I do not know what this Government’s approach is. Do they intend to continue with the current framework or a more cross-sectoral model? It is vital to get this right to ensure that the UK is at the forefront of AI, so I look forward to hearing from the Minister the Government’s approach.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)
My Lords, I am pleased to respond to this Question for Short Debate and I am thankful to the noble Lord, Lord Holmes, for initiating this debate, and for the wide variety of contributions made so concisely. It is such an important topic that if I fail to respond, I will of course follow up in writing.
The Government believe that AI has transformative potential for the UK: from scientific innovation and public sector reform, to increasing productivity to drive economic growth. To realise these benefits, we need to make sure that AI is used in a secure and controllable way. Our approach to regulation must enable innovation and protect our citizens from the risks that emerge as AI capabilities develop.
Recognising the point that noble Lords have made, that regulation and growth are not a trade-off, our regulating for growth Bill was announced last month in the King’s Speech. It is an example of how we will make the UK’s regulatory system fit for the future, so that it plays a full role in delivering growth and supporting innovation, including in AI, safely and sustainably. The Bill will create cross-economy sandboxing powers, so that businesses can test cutting-edge new products and technologies safely, prove what works, and then scale up delivery of these changes more quickly. That is how we regulate well and within a controlled environment.
As noble Lords have asked, we do believe that AI is a general-purpose technology with a wide range of applications, which is why the Government believe that most AI systems should be regulated at the point of use. Following the AI Opportunities Action Plan, the Government are committed to working with regulators to boost those capabilities. As a part of this, the Government issued letters to 19 regulators in January 2026, asking them to publish a plan setting out how they will enable safe AI-powered innovation. These regulators cover several high-potential sectors for AI innovation, including life sciences.
In addition, the Regulatory Innovation Office, which was launched in 2024, delivers targeted funding for regulatory experimentation through the regulators’ pioneer fund and the AI capability fund to support pilots, sandboxes and new regulatory pathways. For example, the MHRA is developing an AI-based tool to analyse drug-to-drug interactions in cardiovascular patients, and this will enable MHRA regulators to safely analyse the implications of proposed new drugs quickly and more effectively.
To respond to the question asked by the noble and learned Lord, Lord Thomas, we believe that AI in legal services is a multifaceted area and that a single AI regulator in legal services would risk duplicating existing regulatory functions, creating uncertainty. As I said, we have also written to the Legal Services Board asking for its plan on how to regulate AI safely.
As my noble friend Lady Antrobus mentioned, the issues of defence are complex. AI in defence is moving very fast. It is becoming a defining feature of modern warfare and, as she mentioned, a critical enabler of defence capability. We have an updated strategic approach to AI in defence, which reflects the more operational delivery-focused model. We are prioritising AI-enabled war-fighting advantage and enterprise transformation, strengthening governance and accountability, and ensuring that ambition is backed by the data, compute, skills and partnerships needed to scale at pace while taking a disciplined approach to frontier AI and maintaining robust standards. We also remain firmly committed to context-appropriate human involvement, which centres on humans as the accountable actors in the use of force. The role of any human intervention is therefore to ensure that responsibility and accountability are also clearly retained by people and not machines, to one of the important points my noble friend raised.
The noble Baroness, Lady Uddin, made a very important point about the fact that regulation does not happen without the context of the other measures we are taking to support the development of UK-based AI. We have launched our sovereign AI fund, supporting the development of AI capability here, as well as our support for the AI growth zones, as noble Lords will know. In addition, we are investing in the skills of people in this country. Effective regulation will only go hand in hand with a workforce, regulators and everybody being skilled to understand the risks and the judgments that have been taken day to day—including in media literacy, being able to take that discerning view about what people are seeing and consuming as part of media.
On the important points made about the fact that this is a global set of developments, and on the important role the UK has taken in the past and continues to take in shaping the passage of key international AI initiatives, we have indeed led on initiatives such as the Global Dialogue on AI Governance and the Independent International Scientific Panel on AI at the UN, and the Framework Convention on Artificial Intelligence in the Council of Europe. These are really important initiatives. Earlier this week I was at the OECD, where we as the UK were supporting the dissemination of principles for AI policy-making. It is very important that all countries apply regulation and policy effectively, as noble Lords have said. This is a globally developing set of initiatives.
Many noble Lords, including the noble Lords, Lord Harper, Lord Tarassenko and Lord Markham—and I heartily agree with them—mentioned the AI Security Institute. This is indeed an institute that the Government are proud of. It is world-leading and a centre of expertise, and has been analysing AI systems for two and half years. It is in an extremely unusual position globally, in that it has close collaboration with AI labs and has tested over 30 models to understand their potentially harmful capabilities. Leading industry players, including Anthropic and OpenAI, have made changes to strengthen AI model safeguards based on the institute’s findings.
This foundational research—to discover methods for building AI systems that are beneficial, reliable and aligned with human values—is essential, and these findings are shared with the Home Office, the NCSC and other national security organisations, enabling the UK to stay one step ahead of the risks brought by AI capabilities. We are committed to giving the institute the funding it needs through the spending review.
Noble Lords have highlighted the speed of development of AI models, and earlier this year Anthropic announced that Mythos represented a significant step-up in AI cyber capabilities. This is being monitored carefully by AISI and the NCSC, and they have published their findings on that. We have given further guidance to businesses and regulators on the measures that need to be taken to prevent and mitigate the risks of these further developments.
The noble Lord, Lord Taylor, mentioned the Cyber Security and Resilience (Network and Information Systems) Bill, which is moving to Report in the other place this month. It is designed to protect the services that the public rely on, and those regulations take an all-hazards risk-based approach that requires organisations to manage cyber security, physical security and broader operational risks, instead of specifying particular risks of technologies, in order to stay up to date and take into account further developments in technologies of the future.
I fear that I am not going to do justice to the topic of copyright.
Lord Harper (Con)
Just before the Minister sits down—we have seven minutes left before the debate runs out—can I ask her a question? My noble friend Lord Holmes drew attention to the Government’s original commitment to legislate for a cross-sector approach, and he referenced how the Government have now dropped that commitment. The only bit of legislation that the Government are doing is, as the Minister said, in the regulation for growth Bill, but I have not heard the Government explain why they have changed their approach from the one they originally set out. Can the Minister, in the seven minutes we have left, set out for noble Lords the reasons why the Government have done that? That would be helpful.
Baroness Lloyd of Effra (Lab)
Our view is that AI is a general-purpose technology with a wide range of applications, and also that regulators understand well the sectors they are regulating. They understand the risks that are present and understand, as many noble Lords have raised in the debate, the specific applications that AI is bringing, the potential risks to consumers and the nature of the competitive landscape—the balance between competition, incumbents and new entrants. That is the reason we are taking the approach to regulate at the point of use and using those regulatory frameworks.
We also already regulate AI in the UK—for example, in the Online Safety Act or under the GDPR—and, in some areas, across sectors. There are some areas in which legislation applies to the application of AI technologies.
Lord Holmes of Richmond (Con)
On that question of going domain-specific, what occurs in situations where there is a domain with no competent regulator? Similarly, how do the Government assure clarity, consistency and coherence of approach? As a citizen, you may come across AI—as noble Lords have rightly identified—in defence, education, health, tax and benefits. If you do not some sense of a guiding mind or horizontal direction, how can you possibly deliver consistency and clarity for people wherever they may come across AI?
Baroness Lloyd of Effra (Lab)
In all regulation, there is obviously a balance between consistency and context-specific, appropriate regulation. It is not always the case that consistency is the most appropriate or first-order principle. It may be that, as we have been discussing, there are many issues: a focus on growth, a focus on consumer protection or, for the energy markets in particular, a motivation towards decarbonisation. That is why the regulator, for whichever market we are talking about, is very well placed to look at how their objectives, as set out in their statutory duties, are best applied in the context of this new technology, which provides different functionalities and the opportunity for new innovation.
That is one reason we have also given these sandboxing powers. We realise that the current set of statutory frameworks was set up assuming that humans would always, for example, be in vehicles or crew vessels. We may need to adapt that in order to take account of the potential new innovations that AI brings, while doing so in a safe and secure way.