Grand Committee
Civil Aviation (Consumer Protection and Regulatory Reform) Bill [HL]
(1 day, 4 hours ago)
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Lord Moylan
“Purpose(1) The purpose of this Act is to—(a) promote the international competitiveness of the United Kingdom aviation sector;(b) support economic growth in that sector;(c) protect the rights and interests of consumers of air transport and airport services.(2) The Secretary of State must, in taking any actions under the provisions of this Act, have regard to this purpose.”Member’s explanatory statement
This amendment inserts a purpose clause into the Bill requiring the Secretary of State and the CAA to have regard to the promotion of the international competitiveness of the United Kingdom aviation sector and economic growth in that sector.
Lord Moylan (Con)
My Lords, this Bill represents and achieves an astonishing transfer of power away from Parliament and away from the scrutiny that your Lordships and Members of the other place have customarily brought to regulation and legislation pertaining to the field of civil aviation. Some of this is a necessary transfer of power to the Minister since we have left the European Union. One bears in mind that much of the regulation in the field of consumer protection was made by the European Union, but that is no longer the case and any changes that we might want to make to it now need to be made by a different mechanism. This Bill provides that mechanism, but it does so in a way that is not adequately scrutinised by Parliament. The Bill does other things, one of which is that it makes a massive and unprecedented transfer of power to the Civil Aviation Authority. We will discuss that in a later group and we will want to probe it, because it will be wholly outside the remit of parliamentary scrutiny.
Those are the key constitutional and legal issues, it seems to me, at the heart of the Bill and we must probe them forcefully, even though I completely understand that other noble Lords will bring forward particular measures that they feel would improve the operation of civil aviation. Those are, for the purposes of this Bill, secondary, because the intention is that this Bill does not make those decisions; it is to provide a framework to allow them to be made by other routes. The crucial thing is ensuring that those other routes are under proper parliamentary control.
My Amendment 1 would insert a purpose clause. I know that Governments do not particularly like purpose clauses; they do not want to disclose to the rest of the world and to Parliament what they are actually trying to achieve with a piece of legislation. None the less, I put one in to probe the Government on what they are trying to achieve with this. The Government’s own impact assessment says that the Bill is designed to
“unlock the benefits of airport expansion … help the UK aviation sector to grow … reinforcing the UK’s global leadership in aviation”.
If that is in fact their purpose, I do not see that they can object to a clause that says as much in the Bill, which is the effect of my Amendment 1.
The amendment would insert a purpose clause stating that the Act should
“promote the international competitiveness of the United Kingdom aviation sector … support economic growth”
and
“protect the rights and interests of consumers”.
They are not in conflict with each other, and they should not be treated as if they are. A strong aviation sector needs passengers to have confidence in their rights, but it also needs airlines, airports and investors to have confidence that regulation will be proportionate, predictable and pro-growth. Amendment 23 is intended to make sure that, when the Secretary of State makes regulations under Clause 1, the impact on growth is considered at the start, rather than as an afterthought.
In other words, Amendment 1 would apply to the whole Bill, and Amendment 23 seeks to apply the same effect to Clause 1, which relates in particular to consumer rights. It is obviously vital that consumers are properly protected, but they should be protected in a way that supports demand for aviation, encourages investment and allows aviation businesses to grow. The Government have repeatedly said that economic growth is their number one priority. I fully realise that, depending on the day of the week, there will be a different number one priority. But, at various times, growth has occupied that slot, so the Government should be prepared to apply that test to the regulations made under the Bill. The amendment is simply asking the Minister to take seriously the economic consequences of the powers that they are seeking.
Amendment 24 concerns alignment with EU law and international standards. I was appalled when I read the large final-stage impact assessment document. By page three it is already talking about aligning with European Union legislation. We know that the European Union at the moment is in the midst, or maybe approaching the end, of a contested argument about changes to consumer protection rights. We can take it, with some degree of certainty, that there will be changes to aviation consumer protection rights in the European Union as a result of those discussions.
Already, the department is thinking not what is best for Britain, what is best for the growth of the aviation sector, nor what is best for passengers. It is simply thinking the way it has thought for 47 years: what are we going to do to align with the European Union? To prevent that from being the lodestar of how regulation develops in the future, Amendment 24 would put in certain trip-wires in any case where the intention is to align with European Union regulations. I object to the assumption that the United Kingdom’s ambition should be merely to mirror what the European Union does next.
Amendment 25 concerns the Government’s own target to reduce the administrative cost of regulation on businesses by 25% by the end of this Parliament. That is a noble ambition, to which I can give every level of support. It is an ambition where it is difficult to see, even though the Government have now been in power for about two years, that progress has been made in those first two years. The Public Accounts Committee has warned that the Treasury and the Department for Business and Trade do not have a robust plan to deliver the 25% reduction in administrative burdens. It has also said that the Treasury does not even know if the Government are on track.
In light of that, it is important that in any Bill that is to do with business, there is a requirement that the Government meet their own target on the reduction of the effects of regulatory burdens. Of course, it is open to the Minister to say that that is no longer the Government’s target, and that would be an interesting policy development. But if it is the Government’s target, it is about time that they started meeting it. This amendment is aimed directly at that.
These amendments are not about weakening passenger rights. They are about making sure that passenger rights sit within a regulatory framework that strengthens the aviation sector rather than holding it back. I beg to move.
Lord Davies of Gower (Con)
My Lords, I will speak to Amendment 113. It has been on a bit of a circuitous tour of groupings, but I am pleased to say that it is back in group 1. I declare my membership of the Aircraft Owners and Pilots Association. I am vice-president, and I apologise for not mentioning that at Second Reading.
My Amendment 113 is very clear. It seeks to require the Secretary of State and the Civil Aviation Authority, when exercising functions under this Act, to
“have regard to the need to promote and encourage general aviation”.
To achieve this, the Secretary of State and the Civil Aviation Authority
“must consult such persons representing general aviation as they consider appropriate”.
Given the importance of the general aviation community within the UK aviation sector, one would have thought that it would have at least merited an appearance in the Bill, but no. There is not even the tiniest of mentions.
The Minister will recall that, at Second Reading, my noble friend Lord Kirkhope and I spoke passionately about the relevance of general aviation. I even asked questions of the Minister, to which his response was:
“The noble Lord, Lord Davies of Gower, asked about general aviation. This Government support general aviation. They see the connection, particularly with training pilots and so forth, and will continue to maintain their interest in general aviation. They note the importance of general aviation in airspace modernisation and will continue to consult it”.—[Official Report, 2/6/26; col. 827.]
I was very grateful for that short response. However, I am not persuaded as to how this will be achieved. Indeed, it takes two to tango, and I am not currently convinced that, for general aviation, what is on offer at present sufficiently demonstrates that the DfT and the CAA are willing dancing partners.
There is also a belief—I have heard it said—that this is not an appropriate Bill in which to raise the issues of general aviation. I disagree vehemently with that notion. The Bill is clear in its intention: it is a Bill
“to make provision about airspace change, air traffic and air navigation services”,
which are parts that GA is very interested in, and
“to confer power on the Civil Aviation Authority to make rules”
and
“to make provision about aviation offences”,
which GA is extremely interested in and subject to the effect of. These, I suggest, are extremely relevant to general aviation, and we need a recognised voice.
As a vital part of the aviation community, general aviation plays a hugely significant role. I pointed out at Second Reading that, at the last count, it contributes £4 billion to the UK’s economy and supports some 40,000 jobs. Yet it is treated as a peripheral, regarded as nothing more than hobby flying. The current Government, unlike the previous one, do nothing to recognise the value of the sector, having disposed of the general aviation unit within the DfT—an issue I asked for confirmation about at Second Reading, but I did not get a response. Martin Robinson, the chief executive of the Aircraft Owners and Pilots Association, put it well when he said that general aviation
“should be recognised as a strategic national asset and … should be reflected in the Secretary of State’s priorities for the CAA”,
but there is not a mention of it in the Bill.
General aviation underpins much of UK aviation. It is where most pilots begin their careers and is the first step on the ladder to becoming a commercial pilot or an aero engineer. General aviation supports business aviation, the emergency services, aerial surveying, engineering skills and a whole lot more. Yet, as I have said, there is no mention of it in the Bill. Again, I am reminded of Martin Robinson’s words:
“The challenge is not hostility so much as a persistent institutional mindset that prioritises airline operations, major airports, and commercial air transport”,
leaving general aviation struggling to be heard. Although I am afraid that the worm is making a very strategic turn, to be ignored in a Bill of such importance is foolhardy and contradicts any aim of making the UK the best place in the world for general aviation as a flourishing, wealth-generating and job-producing sector of the economy.
My amendment is well intentioned. If we are to create an environment which enhances safety and encourages compliance then, without the voice of general aviation being heard at the top table, we are likely to endure overly complex regulation, which will create unnecessary barriers, particularly for smaller organisations with limited resources. I urge the Government to accept my amendment, and I commend it to the Committee.
Lord Berkeley (Lab)
My Lords, I start with an apology. I could not be here for Second Reading because I was gale-bound on the Isles of Scilly due to the failure of the air services. Therefore, it seems an appropriate time to look at the whole subject of general aviation, as the noble Lord, Lord Davies, said, to see what can be done. I have been lobbying hard for improved navigation and improved services to the Isles of Scilly, where I live most of the time, for about 10 years; I shall come to that in later amendments. It is 10 years since we left Europe with Brexit and cancelled our membership of EGNOS, which I shall come to later.
It is important that general aviation is included in the Bill, and I support much of what the noble Lords, Lord Davies and Lord Moylan, have said. I am not sure about the European Union amendment, but we will come on to that later. It is worth reminding ourselves that the long title of this Bill says that it is to:
“Make provision for the protection of purchasers and users of air transport and airport services”,
and it then mentions
“air traffic and air navigation services”,
all of which are part of general aviation, just as much as they are part of the rest of the aviation world. It is right to have something at the start of the Bill which demonstrates that this is an important subject which needs full consideration.
Much of what is in the Bill is really good, but, as the noble Lord, Lord Davies, said, all the issues relating to general aviation need discussing, such as training, access to small airfields—on the islands or different parts of the country—and how things compare with what has been going on in Europe. I support the amendment from the noble Lord, Lord Davies, and certainly part of the amendments from the noble Lord, Lord Moylan, and look forward to discussing these issues more in subsequent amendments.
Lord Harper (Con)
My Lords, I declare my interest, as set out in the register, as non-executive chair of RVL Aviation. I strongly support the purpose clause which my noble friend Lord Moylan has set out because I think most of the discussion on the other amendments will look at passengers by talking about airlines and concentrating on the experience of passengers. I draw attention to the fact that his Amendment 1 also talks about the international competitiveness of the sector, economic growth and the rights of those who purchase air transport services. My understanding of his amendment and of Clause 1 is that the definition of air transport services is not just passengers but those people who purchase freight and cargo services. I see the Minister is nodding assent.
That is important because it is critical to the growth of the economy. Air freight accounts for over 40% of non-EU trade by value, even though it is only about 1% of freight by volume. That is incredibly important to the overall economy, especially for some sectors, such as pharmaceuticals and high-end manufacturing, where we are particularly competitive, and it contributes to our balance of payments. An amendment that means that Ministers, when making regulations, have to ensure that our international trade remains competitive would be extremely valuable.
That is important, because the conversation about rights and the regulatory burden on airlines is often had while not thinking about the cost of those regulations. It does not mean that you do not make regulations if they have a cost; it just means that when you think about regulating, you have to think about the cost, look at the benefit and balance those two things. You also have to look at them cumulatively. My noble friend Lord Moylan touched on that when he talked about the Government’s target to reduce the cost of administrative burdens by 25% over this Parliament.
It is worth putting on the record—this is why the competitiveness of the sector is important—that overall, in 2024, European airlines had a net profit margin of around 3.9%. They are also expected, once all the results are in, to have had a net profit margin of around 4.4% in 2025, with a profit per passenger of around $8 or $9. I accept that that varies hugely by carrier, but it means that we have to think carefully about the costs that we load on to the industry so that we ensure that it remains competitive for both freight and passengers.
Lord Moylan (Con)
Does my noble friend agree that, as the European Union has said, for European airlines the cost of regulation to date is approximately €8 per ticket?
Lord Harper (Con)
I note that point; it is important when you look at the margins. It is clear that relatively small changes to the regulatory burden will have a direct impact. Businesses with relatively low margins have a relatively low ability to absorb those extra costs, which means that they flow through on to ticket prices and fall on passengers and those who use freight services. The briefing from Airlines UK, which I suspect all Members have received, makes the point that the cost remains the single biggest barrier to flying, which is why it is important that we keep the cost burden as low as we can. Pricing people out of flying is not, ultimately, very sensible.
Let me touch briefly on the other amendments tabled by my noble friend Lord Moylan. Amendment 23 is specifically about the desirability of promoting economic growth. The Minister was nodding but it would be helpful if, when he responds, he sets out that that encompasses not just passenger transport but freight providers. A significant amount of freight goes in the belly of passenger planes, of course, so those two services are absolutely interconnected. It would be helpful if the Minister could confirm that.
On Amendment 24, I strongly agree with my noble friend. This seems a very unobjectionable amendment to me. In effect, it would ensure that Ministers have to be transparent. It would not mean that they could not align our regulations with those in the European Union, but it would mean that they have to think about why they are doing it first. It would also mean them having to set out their rationale for us all to see and having to be transparent about the costs and benefits of doing so. There may be good reasons why we may wish for our rules to be aligned with those in the EU, in which case Ministers should have no problem with setting out the rationale for doing so and why they have decided to make the changes that they have, so that we can all see them.
I agree with my noble friend Lord Moylan that what we do not want is an automatic, knee-jerk approach where, as soon as the European Union changes its rules, we assume that we have to change ours as well, even if we are not clear about the benefits and costs of doing so. This is a transparency measure, basically, and I cannot think of a good reason why the Minister could not accept it—or why, if he does not think that it is drafted well enough, he could not come back on Report with a similar amendment of his own.
My final point concerns the Government’s target to reduce the administrative costs of regulations. I am not sure what exactly they are using as the definition of “administrative costs” but of course—I am not going to rehearse this argument now—this Government have already increased the costs for businesses significantly through the Employment Rights Act. Their own impact assessment said that that Act had a cost to businesses of around £5 billion. It means that, if they are going to reduce the administrative costs for businesses by 25% over this Parliament—I assume that that is a net reduction—if they increase costs in one area, they will have to reduce costs by more than 25% in other areas in order to hit the overall cost reduction target of 25%.
Again, this is a transparency measure that insists that the Government have to track how they are doing against that target and whether they are on track. If we are two years through a five-year Parliament, we should be able to look at the 25% target; that is roughly 5% a year and, if the Government have not already reduced costs and are not on track to reduce them by 10% by this point, they clearly do not have a hope of doing so by the end of the Parliament. This is a welcome piece of transparency, which is why I support it.
Finally, I think that my noble friend Lord Davies is right explicitly to flag the importance of general aviation, not just to the very significant number of people who use general aviation services, both purchasing services and flying themselves—it is also a very important sector in generating pilots and those who are skilled in aviation services, which then goes into the wider sector. An explicit recognition of the importance of general aviation, reminding people of its importance, is very welcome, and his amendment has served us all by putting that on the record.
Viscount Goschen (Con)
My Lords, I start with a couple of declarations of interest. I am a current pilot of light aircraft. I also own and operate an aircraft and am a member of the Light Aircraft Association, and I have worked and continue to work extensively in the civil aerospace, defence and related fields, supporting those industries. Many decades ago, I was a Minister for Aviation. There are no new issues, perhaps, apart from the effects of withdrawal from the European Union 10 years ago. I sympathise and empathise with the Minister, and I shall of course be very supportive.
At this point, I would just like to make two points, or perhaps three. First, I apologise to the Committee for my absence at Second Reading. However, as I was not a Member of the House of Lords at the time, perhaps the Committee will excuse me and allow me to speak.
I make what is perhaps a rather generic point at the outset. We are considering important affairs with this Bill. The UK has a strong reputation for regulation in the aviation sector, with the reputation of the Civil Aviation Authority being very high in the UK and internationally. Of course, aviation is an international activity and I think that we need to tread extremely carefully when it comes to regulation in this field. Yes, when I was in government there was a transfer of competence, in the technical sense of that term, to the Commission and of course, since that position has been reversed, there has been a transfer of competence, again in the technical sense of the term, back. But we have tremendous skill in aviation regulation in this country and we need to be extraordinarily cautious when looking at such issues as design of aerospace and others. The law of unintended consequences is at play.
On a specific point, relating to my noble friend Lord Davies of Gower’s amendment, there is a curious grouping of general aviation with the overall purpose of the Bill. Notwithstanding that, we have a strong GA sector in this country, despite the costs of operating in the UK and despite the weather that we deal with here. General aviation is important; it is not always the highest-profile issue to government and regulators, but it is important. It is important on its own merits and important as a feeder of pilots, skills and engineers into the broader sector. If we lose or damage that, it will be very difficult indeed to recover.
The noble Lord, Lord Davies, has done the Committee a service by emphasising the importance of general aviation. It is very wide: from training, police helicopter operations, offshore operations and the plight of small airfields, it is a broad subject. But it is important and we must not just view aviation in this country as airline-related, which is incredibly important. It is much broader than that, and I look forward to the deliberations of the Committee as we progress through the Bill.
Lord Kirkhope of Harrogate (Con)
My Lords, this is Committee and I do not wish to talk about amendments that will come later, but I want to support my noble friend Lord Davies as another pilot and the honorary vice-president of BALPA.
I raised general aviation with him at Second Reading and I am waiting for answers from the Minister. There will be a specific amendment a little later in today’s proceedings, and I hope my colleagues who have spoken so far on general aviation will be here later to join me when we get to it. In the meantime, I fully support Amendment 113 and look forward to the Minister’s response to my noble friend.
Lord Grayling (Con)
My Lords, I support the amendments from my noble friends Lord Moylan and Lord Davies of Gower. This is not a failing market. This is a highly competitive environment, where both domestic and international competition are working aggressively to make it a challenge to run an airline or a freight airline in today’s world.
The need for extensive government regulation, therefore, is limited and questionable. We are not trying to solve a massive problem. There are, of course, specific issues. We will hear more, for example, about disability rights, where, yes, of course we should make sure that airport operators in particular deliver the right environment for disabled people. But first and foremost, we must ensure that the Government do not interfere in this marketplace in a way that damages the competitiveness of one of the UK’s most important economic sectors. That is why my noble friend Lord Moylan is absolutely right. As we go through this debate—not simply on these amendments but on the Bill as a whole—the Minister needs constantly to have in mind the need not to cramp the style of our sector by overregulation, and, where he is regulating, to explain why, otherwise he will not have the support of this Committee.
Finally, on general aviation, the comments made so far are absolutely right. There is a genuine issue around the future of general aviation—the loss of smaller airports, for example, to planning pressures and planning opportunities, and those who own them trying to make money out of them. General aviation needs to be looked after in this country because at a time when, as we hear, there is a growing shortage of young up- and-coming pilots, general aviation is an essential way of developing the skills that we need for the future. It is not simply a way for a few rich people to have a good time.
Baroness Grender (LD)
My Lords, Amendment 1 and Amendments 23, 24 and 25 are in the name of the noble Lord, Lord Moylan. As we noted previously, the Bill sets out the framework but leaves a great deal of detail to be determined later, so we welcome these amendments. We have consistently argued that such an approach risks leaving both passengers and Parliament with too little certainty about how the regime will operate in practice. We see these amendments as useful in probing how that framework might be strengthened.
Amendment 1 raises an important issue around transparency and consumer protection: the case for clearer comparable information at the point of sale. In our view, it should be pursued and I look forward to discussing my noble friend Lord Russell’s amendment, which aims to strengthen the Bill in this area, in the next group.
Equally, how compensation is delivered remains a live and important concern. The current system too often places the burden on passengers to navigate complex processes to secure redress. I say to the noble Lord, Lord Harper—I am sure we will keep coming back to this issue of a low-margin industry—that a different way of viewing this is that if £1 million is not returned to a whole group of consumers by a low-budget airline over a long period, it is, in effect, using families who cannot afford it, or can ill afford it, almost as an overdraft facility with no interest. Getting the balance right on that will be important as we investigate some of the amendments and get into the detail.
On Amendments 23, 24 and 25, we find ourselves in close alignment with the noble Lord, Lord Moylan. As the Bill proposes to confer significant new functions on the Civil Aviation Authority, it is right to consider how those powers are to be exercised and scrutinised. A more centralised regulatory role must not come at the expense of transparency, or indeed parliamentary oversight. The noble Lord and I have discussed this issue, which is that unless there is a threat, with teeth, to move a fatal Motion on a piece of secondary legislation, there is a tendency for Governments to plough on regardless—also regardless of previous colours, I would just say. If we are concerned about secondary legislation—and we are concerned about this—there needs to be clarity about what we would do with it. I hope we can get into some of the detail on that.
On Amendment 24, later we propose two amendments that explore a high common denominator between UK 261 and EU 261, and we look at shadowing EU 261. I entirely hear what the noble Lord, Lord Moylan, says about there being no ownership of who has the best, so we want to pursue, on behalf of industry and customers in the UK, what is the best. That may be EU 261, as revised when it cuts, or it may not.
Overall, these amendments highlight two issues. We consider fundamental the need to embed meaningful consumer protections and the need to ensure proper accountability in the exercise of new regulatory powers as the Government move to address the post-EU powers gap. It is essential that this Committee is not asked to accept a blank cheque approach. I therefore look forward to hearing the Minister’s response as we all warm to this theme throughout the rest of today.
Baroness Foster of Oxton (Con)
My Lords, I will stay on group 1, on growth and competitiveness. I will just add a brief word endorsing the comments of my colleagues on this side of the Room: whatever decisions we come to on detailed changes to legislation in this Committee, we need to remember that we are part of international law. We comply with the Montreal and Chicago conventions, and we comply with all the rules covered by IATA and ICAO, so whatever we do cannot be done in isolation—whichever area we debate and come to conclusions on over the next couple of days. I just say to my noble friends and the Minister that this has to be at the back of our minds when we determine anything that we do. What we should not do is come to conclusions whereby we end up putting through regulations that are wholly anti-competitive for the UK airline industry and not compatible either to third-country carriers who come to the UK, as we do not have, in most cases, any extra territoriality rights to impose certain rules or regulations. I just say that as a thought, and I am sure we will have very interesting debates on the amendments laid down.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, I am grateful to have the opportunity to discuss growth in the aviation sector and I thank the noble Lords, Lord Moylan and Lord Davies of Gower, for their amendments.
This Government’s primary mission is to deliver the highest sustained growth in the G7. Aviation has a vital role to play in achieving that ambition as a key enabler of international trade, investment and job creation across the United Kingdom. As the noble Lord, Lord Harper, said, that includes freight traffic as well as passenger traffic. Aviation is a dynamic, primarily private sector industry. Our regulatory framework must strike the right balance, supporting the sector to grow and innovate, while ensuring strong protections for consumers.
In addition to this Bill, we are taking forward a wide range of work to deliver this. We are modernising our airspace to improve efficiency and to ensure that it can meet the demands of the future. We are embedding a pro-growth approach across our regulatory system. Through the future of flight programme, we are creating the right conditions for innovation, unlocking the economic benefits of new technologies such as drones. Alongside that, airport expansion is an enabler of growth, subject of course to the relevant planning processes. As I set out at Second Reading, this Bill is separate from those processes. This approach will support a thriving aviation sector, strengthen our economy and deliver for passengers.
I turn now to the specifics of the amendments in this group, beginning with the amendment seeking a purpose clause. While I support the intention to drive growth, I do not consider this amendment necessary. Economic growth, investment and competitiveness, which we confirm will be delivered in relation to both passengers and freight traffic, are core to how we approach reforms in this sector. The Secretary of State already takes these matters into account as part of wider government policy and decision-making. She communicates such priorities, including the vital importance of economic growth, to the CAA annually. In practice, this amendment would place a statutory duty on the Secretary of State to have regard to these specified objectives when exercising the powers in the Act. While that might appear helpful, it risks narrowing the focus to a defined list of considerations.
These objectives, though important, cannot be exhaustive. Notably, they do not include safety, which is a fundamental objective of both the aviation sector and this Bill. Setting out only a limited set of considerations would prevent flexibility to balance a broader range of factors as circumstances require. I also note that the noble Lord’s explanatory statement suggests that this duty would extend to the Civil Aviation Authority. That authority is already subject to the statutory growth duty, which requires it to have regard to economic growth in a proportionate way. Ultimately, we believe that it is right that decisions taken under the Bill remain flexible, proportionate and responsive to the evidence, rather than being constrained by specific duties set out in primary legislation. I hope that the noble Lord will withdraw his amendment.
I turn next to the amendment on the promotion of economic growth under Clause 1. Any regulations laid under this power would be subject to growth assessments. These are a central part of policy development and ensure that full consideration is given to growth throughout policy development. Officials will also undertake an options and impact assessment, which requires careful consideration of the impact on business, as well as the impact on trade and investment, the ease of doing business in the UK and further economic growth. As this amendment would duplicate existing government obligations and processes, I cannot support putting it in primary legislation.
I turn to the amendment on alignment with international legislation and air passenger rights. The policy process for developing secondary legislation already includes a full assessment of the potential impacts on business, passengers and government, as well as justification for why government intervention is required. Supporting documentation for secondary legislation would set out the reasons for regulations being made. We will come to other amendments on this subject later, as the noble Baroness, Lady Grender, referred to. This amendment would duplicate existing processes and thus I hope that the noble Lord will not press it.
Finally, I turn to the amendment on regulatory burdens on business. I emphasise that the Government are already committed, across the whole of government, to reducing the cost of regulation to business. That is being taken forward in a co-ordinated and systematic way, including through regular reporting on changes to the administrative burden of regulation, which is collated and published across government. Indeed, as the published impact assessment makes clear, the overall effect of the Bill’s measures on an industry with the margins noted by the noble Lords, Lord Moylan and Lord Harper, is expected to reduce costs to business over time, particularly through improvements to the safety rule-making framework, which will provide greater clarity, consistency and efficiency.
Lord Harper (Con)
I want to press the Minister on my noble friend Lord Moylan’s Amendment 25. I completely understand why the Minister has taken the view that he has about not wanting it in the Bill. I do not expect him to be able to set this out today, but would he be able, perhaps when we come back for the second day of debate on Thursday, to set out for the Committee how the department is doing on its bit of hitting the Government’s target of reducing the administrative burdens on business by 25%? It would be helpful to know how the department is doing. I am sure that it is being tracked, because to hit that target there would have to be some metrics, and it would be helpful if the Minister could provide those to the Committee on Thursday.
Lord Hendy of Richmond Hill (Lab)
I will certainly see what information I have, and whatever I have I will tell him about on Thursday.
Lord Moylan (Con)
My Lords, I note that the Minister quotes the Delegated Powers Committee favourably. I hope, therefore, that he will be willing to accept, when we come to it, my later amendment, which gives effect to the recommendation of the Delegated Powers Committee that certain powers in the Bill be constrained. We will debate that, as I say, at a later stage.
I am grateful to noble Lords who have spoken on these amendments. I say a particular word of thanks to my noble friends Lord Davies of Gower and Lord Goschen for their contributions on the general aviation sector, which, as they say, is not always remembered with the prominence due to it. I thank the noble Baroness, Lady Grender, for the support that she found able to give to my amendments in general and to raising a case that we will pursue. I thought that the Minister might have been able to agree with my amendments in the same way, but he was not. He found somewhat footling reasons for saying that they were unnecessary. That only makes it more likely, I am afraid, that we will return to them on Report.
I am persuaded that when the Minister says that he is committed to a competitive and successful aviation sector, he is right. But he is not the only voice in Whitehall. That is why these amendments are so important. I do not imagine that the Minister was consulted when the Chancellor of the Exchequer decided to impose bone-crunching increases in business rates on the aviation sector that he wants to see remaining internationally competitive. I do not know the extent to which the Minister is consulted when DEZNZ—I hate that expression —is pushing for ever-increasing drop-off charges at airports. This is something that we will discuss again in considering further amendments, which clearly imposes a cost on flying for ordinary families, and is intended to do so, and which can only damage the aviation sector and make it less competitive. I was disappointed by what the Minister had to say. None the less, at this stage I beg leave to withdraw my amendment, although I expect to return to the matters on Report.
Baroness Grey-Thompson
Baroness Grey-Thompson (CB)
My Lords, I declare my interest as I was chair of the Aviation Accessibility Task and Finish Group, which published a report last year. I thank the officials at the Department for Transport for their support. The vast majority of the recommendations from that report are now amendments to the Bill. As of today, I have been appointed a board member of Active Travel England, and I also chair the Accessible Transport Policy Commission. We had a useful meeting this morning which looked in a UK context at disabled people’s experience of travelling. I understand that aviation is more complicated than that. The sheer difficulty that disabled people have in using any form of transport came out clearly in the meeting. I make reference to the Transport Select Committee’s report, Access Denied: Rights Versus Reality.
We have probably a once-in-a-generation chance to make a difference to how disabled people are able to access this industry. Since Second Reading, I have had a much-increased number of emails from disabled people who have had truly dreadful experiences of flying, and some of those will be picked up in the next group.
I have two amendments in this group, Amendments 2 and 16, which are in my name and that of the noble Baroness, Lady Brinton. They simply ask that we change “may make provision” to “must make provision”. “May” is too vague in this context, so we have a chance to make a change. The Minister will know from other debates that we have had around disability access, such as the debates around taxis, that it is hard enough when we are trying to enact accessibility legislation that was passed 30 years ago, let alone what we are trying to do now. There have been a lot of promises about what disabled people might have the opportunity to rely on. Unless we have a much bigger commitment to “must make provision”, it feels like we will be kicking the can down the road, as we have done with the rail industry and all the derogations around it.
I am more than happy to discuss a tighter range of regulations that the Secretary of State may make or to work across your Lordships’ Chamber. I am simply looking for assurance that there will be a genuine shift in how disabled people will experience air travel. Both this group and the next have a number of important amendments that both seek to strengthen the Bill and to provide more clarity for disabled people. For them, currently and so far, the experience is far too ad hoc. I beg to move.
Lord Young of Cookham (Con)
My Lords, Amendment 109 in my name aims to remedy a manifest injustice whereby the airlines have to pay for customer compensation when the fault lies not with them but with NATS. I am grateful to my noble friend Lord Kirkhope, who trailed this amendment in his Second Reading speech, but, in the time available, the Minister was not able to address it.
The problem manifested itself on 28 August 2023, when the air traffic system, managed by NATS, failed. An independent review was set up and its report gives the scale of the debacle:
“From CAA estimates, over 700,000 passengers were affected by cancellations and delays ascribed to the incident, including approximately 300,000 impacted by flight cancellations, approximately 95,000 by long delays (over three hours) and at least a further 300,000 by shorter delays”.
It went on to say that
“the incident on 28 August had substantial negative impacts on a large number of passengers, not only on the day of the outage but for several days afterwards, as it took until the following weekend for all the re-routed journeys to be completed”.
The review estimated the costs involved:
“Based on the information provided by the airlines most affected by the incident, the Panel has estimated that the costs to airlines were approximately £65m. In addition, substantial costs were incurred by passengers, airports, tour operators, insurers, and others. The Panel was unable to accurately quantify these costs. It is likely that the total cost was in the region of £75m to £100m”.
Finally, it said about passengers:
“Many passengers incurred costs which they could not recover, for example, the loss of pre-paid holidays, lost income from work to which passengers were not able to return, and other consequential losses. The total costs of this large group would be very difficult to calculate but is likely to have been many millions of pounds”.
However, when one reads the NATS annual report for that year, it puts a slightly different spin on the incident:
“A technical flight handling system issue in August necessitated a considerable reduction in flight capacity for a short period in order to ensure the skies remained safe”.
Noble Lords would expect that the guilty party, NATS, rather than the innocent parties, principally the airlines, would have to bear the costs—not a bit of it. The only cost to NATS was £1.8 million. In the words of the review, that was a
“relatively modest penalty associated with not meeting some of its performance … targets”.
Lord Grayling (Con)
Will my noble friend allow me to help him a little? He may have heard of a company called Network Rail, which, if my memory serves me correctly, must pay compensation to train operators if it goes through the kinds of failing that he has identified. Were he to know anybody who used to chair Network Rail, he might have an interesting point to make.
Lord Young of Cookham (Con)
My noble friend is a mind-reader; I was going to refer to Network Rail in about 40 seconds. As I said, as far as NERL’s ownership is concerned, it is different, but that should not preclude it having to pay up for claims.
The review then produced another pretext, which, again, does not stand up to scrutiny. This is what it said:
“Such a liability would probably lead to a substantial increase in the annual costs of the ATC”—
air traffic control—
“service, which could in turn lead to increased costs to airlines and passengers”.
What happens at the moment? The compensation liability rests with the airlines and, as such, it has already caused increased costs to passengers. If the airlines did not have the liability their costs would go down, but if NATS then passed back all the increased costs we would be back where we started. Crucially, that assumes that the regulator, the CAA, would allow the costs to be passed on by NATS to customers, instead of taking it out of profits. If, as happens with the water companies, costs were not passed on to consumers but funded out of profits then costs to the airlines and passengers would actually go down, not up—the opposite of what the review suggested.
I come to my noble friend’s intervention. The Minister will understand and, I hope, sympathise with the case I am making because of his previous responsibility for Network Rail. If, as my noble friend said, a passenger is delayed, the train operator pays the compensation. If Network Rail was responsible for the delay, it then reimburses the train operator. That is as it should be, and it is exactly what should happen in air transport. A failure in traffic control is paid for by the traffic controller. My amendment is supported by IATA, which actually wants to go further. It would like the amendment to be extended to airports and other parties that provide air services that can cause disruption yet are not liable for passenger compensation. Airlines currently pay all passenger compensation regardless of who is at fault—for example, the power failure at Heathrow last year.
To sum up and use management jargon, we need shared accountability across the value chain. I hope the Minister can respond positively to the case I have made and put right this manifest injustice.
Earl Russell (LD)
My Lords, I will speak to my Amendment 9, which seeks to strengthen the consumer protection provisions at the heart of the Bill. This amendment would insert two paragraphs into Clause 1. We believe that both are desirable and necessary if this legislation is to deliver meaningful change for the travelling public. The first would add the requirement for
“standardised, comparable information at the point of sale”.
Anyone who has purchased an airline ticket recently will be familiar with the booking experience. I will not go through all the painful detail but suffice to say that, by the time you come to the payment page, the fee you are charged bears little resemblance to the one that first encouraged you to make the booking.
That is not an accident; it is intentional. It is a business model that has moved, frankly, from the sublime to the ridiculous. For example, at the moment, the CMA is investigating Ryanair’s mandatory charge of £8 each way for the privilege of sitting with your own children. It is a business model that harms consumers, distorts competition and corrodes trust in the aviation sector. Airlines that compete fairly on total price are undercut by those which strip out every possible cost, just to put them back in. We do not tolerate these practices in other markets—imagine for one moment that the same situation was in place when you were doing your online grocery shopping. It means that consumers cannot make rational or informed choices. Again, that is the intention. Families on modest budgets find themselves paying significantly more than they had intended to.
My amendment would address this directly by requiring airlines and all ticket sellers—I emphasise all ticket sellers, whether the airlines themselves, online travel agents or price comparison websites—to display the total price up front, including all fees, taxes and unavoidable charges. We believe this is not a radical proposition. It is not difficult for the airlines, if they are selling direct to consumers, or their agents to comply with. Most consumers reasonably believe that this is the case already, so this amendment aims to make it so.
The second element of the amendment concerns passenger rights. When a flight is delayed or cancelled, or a passenger is denied boarding, they are entitled to certain protections, and rightly so. But the evidence consistently shows that a significant portion of affected passengers do not know what those rights are and that airlines do not always volunteer that information. My amendment would require this information about passenger rights in disruption scenarios to be provided clearly at the point of sale, not buried deep in terms and conditions in the small print, and accessible only to those who know how to look for it.
Thirdly, the information element concerns environmental impact. Consumers are increasingly seeking to make informed choices consistent with their values. Aviation, as we know, is a significant contributor to greenhouse gas emissions. While the sector as a whole must decarbonise, individuals, too, wish to understand the environmental impact of their individual journeys. Standardised carbon footprint information at the point of sale would enable informed choices. It would also in time, we hope, drive competition on environmental performance, an outcome that we argue would drive consumer-led carbon-reduction measures.
The second part of the amendment includes mandatory minimum compensation standards and, critically, automated payment mechanisms for flight delays, cancellations and denied boarding. The right to compensation for significant disruption already exists in law. Yet, year after year, consumer bodies and passengers find that it is not happening. They are waiting long times and often having to go to court and take legal action. That is an unacceptable situation.
The solution that I have proposed is an automation system to make sure that, where delays happen, there is an automatic payment so that you do not have to go through a complicated process to do it. The airlines have all this information. They know who is on their planes, they know who is not, they know when they are delayed and they know when compensation needs to be paid. We do not believe that this requirement would be too onerous on the airlines. It would simply make it a more efficient, fair and effective system.
We welcome this Bill. We recognise the consumer protections, but we feel that they need to have real bite. That is what my amendments seek to do. Our worry is that, if we do not put stronger protections in the Bill, we will simply have gestures towards consumer rights without actually putting them in statute. With the inclusion of these amendments, we would take concrete steps to make sure that we are acting in the passengers’ best interests in making these systems fairer and more efficient.
Lord Empey (UUP)
My Lords, I will speak to Amendment 41. The question of responsibility for drop-off charges was mentioned in closing by the noble Lord, Lord Moylan. This has become a new and evolving tax in the last few years and it is quite substantial. Edinburgh Airport is now charging £8.50 for somebody to be dropped off. Our major airports, Heathrow and Gatwick, are around the £7 to £8 mark, and other airports around the country have various levels. What effectively is happening is that the sharp increase in business rates applied to the airports has been passed on to a passenger being dropped off at the front door.
This has a huge impact on the potential for growth. It has an impact on the cost of doing business in this country and on the cost of travel. While it might be nice to say that we would like as many people as possible to go to airports by public transport, the realistic situation is that there are many airports around the country where the practicalities of doing that are very limited, particularly if you live outside an urban area. We have to take these charges into account. It seems to me that more and more airports are making more money out of drop-off charges and car parking than they are out of running the airports. While I do not want to see the model of airports made less competitive, the fact of the matter is that this is a tax on travel and a tax on business. There are many parts of this country where, if you are going to do business, there is little alternative to using aviation. I think that is a very important point and I would like the Minister to address that.
The other issue I want to raise relates to Amendment 40 and air quality on aircraft. Obviously, we all fly, some of us more than others, but thousands of people work in the airline industry and are in aircraft all their working days. There have been cases, because the air supply in most aircraft—although changes and improvements are being made—comes from the turbines, of seals failing from time to time in those turbines and oil being vapourised and fed into the cabin, where it is visible. What worries me is that there will be many times when it is not visible. What is the Minister’s response to that? Who is monitoring this and at what levels? Are the levels reviewed and are any checks being carried out on those who work in the airline industry as to whether their health is affected by long exposure?
Baroness Finlay of Llandaff (CB)
I declare that I am president of the CO Research Trust and a member of the Delegated Powers and Regulatory Reform Committee. The Minister has already referred to our report. I am also one of those people who responds when there is a call for a doctor on a flight, and some of my experiences lead to my support for Amendment 36 —in particular, two aspects of it.
I shall deal with my Amendment 14 first. It aims to address potentially toxic dangers sneaking into the air that we breathe, as has already been mentioned. We must have an unconditional duty to protect human life. The silent threat has mostly been ignored; that is the risk of a plane’s cabin air containing contamination by carbon monoxide and hydrocarbons. Carbon monoxide is colourless and has no smell, yet it is highly and rapidly toxic.
In much of the commercial fleet, pressurised air for the cabin and other parts of the plane must be kept frost-free, and that air comes directly from the engine compressors. It is called bleed air. When engine seals are broken or even have a micro-crack, synthetic oils and hydraulic fluid leak into this air flow. When subject to extreme temperatures, the fluids become neurotoxins, which are then inhaled, and that constitutes a cabin fume event. The neurological and respiratory symptoms are often short-lived and fade, but they can be far-reaching. They include things such as dizziness, headache, muzzy thinking and even shortness of breath and nausea—but, very occasionally, it may lead on to much more serious issues. Carbon monoxide binds to haemoglobin, which it does much more quickly than oxygen, so in effect it suffocates our vital organs.
Even at low levels of exposure, passengers can feel unwell, but for the pilots in charge of the plane, hypoxia is potentially a threat to aviation safety, nationally and internationally. Filters exist, such as the HEPA filters, which can block around 99.97% particles, including viruses, but they are useless against gases, which just flow through them.
In 2007, the Committee on Toxicity examined several reports on cabin air sampling on a selection of normal flights, showing very low levels of contaminants. It concluded that cabin air quality globally conforms with standards. However, it stated that
“uncertainties remain, and a toxic mechanism for symptoms cannot confidently be ruled out”.
A 2017 study by the European Union Aviation Safety Agency pointed out that
“there is no contaminant-free indoor environment. The aircraft cabin is no exception. However, due to the exceptional high air exchange rates in aircraft, the cabin air has been proven to be less polluted compared to normal indoor environments”.
So far, so good. The 2018 guidance on cabin fumes from the International Federation of Air Line Pilots’ Associations states:
“When a fume event occurs, cabin air contamination can cause short-term physical effects which may compromise flight safety. Sufficient scientific concern exists requiring more studies in order to determine any short and long-term effects of fume exposures”.
It is worth noting that the Civil Aviation Authority does not officially recognise aerotoxic syndrome, but Unite the Union and other unions are pursuing legal action over airlines’ duty of care and campaigners have called for an independent inquiry. Fume events are indeed rare, affecting only about one in 10,000 flights. Newer aircraft designs, such as the Boeing 787, utilise bleed-free technology, which draws air directly from outside rather than through the engine turbines. However, these planes represent only around 1,175 planes of the approximate 30,000 commercial aircraft in service. Most aircraft pre-date or did not incorporate that design.
The reality of our skies is interesting. Heathrow registers about 1,300 flights a day and Gatwick over 700—let us round that to around 2,000 flights a day. Mathematically, if one fume event occurs every 10,000 flights, the risk is about one a week over London, ranging from very minor to potentially serious. Currently, we rely on the human sense of smell to detect a fume event, and crew report the typical smell of dirty socks or burnt oil. However, the human nose cannot detect carbon monoxide, which is what caused the tragic crash of the Piper Malibu that killed Emiliano Sala.
In 2025, the CAA mandated that certain small piston engine light aircraft carrying passengers must monitor carbon monoxide. This leads to my amendment. If monitoring is vital for the protection of the users of small light tourism aircraft, on what grounds do we fail to offer the same protection, and de facto guarantee of safety, to hundreds of passengers confined in a commercial airliner? The technology already exists. Airbus is collaborating with the Fraunhofer Society to develop mass spectrometry systems capable of pinpointing the source of these pollutants with extreme precision. Our legislation should mandate every air transport service provider to install, maintain and operate continuous active monitoring systems for carbon monoxide, in particular, and hydrocarbons in the cockpit and passenger cabins.
Notably—I believe this is directly relevant—the Delegated Powers and Regulatory Reform Committee, of which I am a member, gave the view that
“the power in section 61A(7) of the Civil Aviation Act 1982, read with section 61A(1), is inappropriate because its effect is to give the Government unconstrained power to decide which operational and safety aviation rules will be delegated to the CAA and consequently made without Parliamentary process; and to ensure Parliament is properly able to scrutinise the scope of delegation of rulemaking to the CAA: the power … should be amended to make clear the principles underlying the exceptions to delegated rulemaking; and that power should be subject to affirmative procedure”.
I hope that the Government will amend the Bill accordingly. Otherwise, we will have to bring this back on Report.
Very briefly on Amendment 36, there is a risk of deep vein thrombosis in passengers. It can result in a fatal pulmonary embolism. It may well often be linked not only to the passenger’s own propensity to have a blood clot but to whether they are in an inappropriate seat to meet their medical needs and the seat pitch is inappropriate, particularly on very long-haul flights. I have had to look after people on the floor of an aircraft, sometimes for many hours. It is extremely difficult to hear what is going on through a stethoscope, because the engine noise is so great that you cannot hear properly, and trying to take somebody’s blood pressure on the floor of a crowded aircraft is not easy.
The thing that concerns me even more than that is the provision of lavatories. I have had an incident on a long-haul flight of two young people with really catastrophic and probably infectious gastroenteritis, which meant creating a public health measure to seal off one toilet for only them to use and making up rehydration fluids to keep giving them all the way back to Heathrow. It meant that there were not many toilets for other passengers, but I certainly did not want other passengers to use the toilets that these two were using. One problem is that the lavatories in many planes are so small that if anyone needs assistance with toileting, particularly if they have a bowel problem of any sort, including a stoma, it is extremely difficult to be in that toilet cabinet to assist them. Amendment 36 is particularly important.
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to take part in Committee on the Bill. As it is my first intervention in Committee, I declare my technology interests as set out in the register, variously as adviser to the Crown Estate, Endava plc, and Simmons & Simmons LLP, and as non-executive director of Avalanche (BVI) Inc and the Avalanche Foundation. It is also a pleasure to follow my friend the noble Baroness, Lady Finlay. The whole Committee and everybody should thank her for everything that she has done on flights in extraordinarily difficult circumstances. I support everything that she had to say on shortcomings and areas that need to be addressed which, as she clearly pointed out, could be addressed right now.
I also support the amendment from my friend, the noble Baroness, Lady Grey-Thompson; it must be agreed. I see precious little point in wasting any of the draftsperson’s ink on a “may” provision. “May” is “whenever”. We have seen from other legislation pertaining to disabled people that “may” is a hope that never comes to fruition, so “may” must be converted to “must”.
Similarly, I support the comments of my noble friend Lord Young of Cookham—he sounds even better when he is quoting himself from a previous Hansard. It seems extraordinary that the circumstances he sets out have not been addressed. They do not, in any sense, reflect what happens in the rail industry. As a corollary, I ask the Minister: as it works so well in the rail industry, would some systems such as Delay Repay not be a positive addition to the airline sector? Those payments can be rightly collected behind the scenes from the source of the problem, be it NATS or another service provider. Smart contracts could be deployed so that those payments are automatically made when such events occur.
However, there is a situation that we are seeing a creeping illustration of across a number of sectors, including in aviation, as my noble friend Lord Young set out. I will highlight what is happening in the financial services sector around fraud. Banks are on the hook for repayment and reimbursement for certain fraud events, such as push payments, whereas telcos or platforms, where the frauds may originate from, are currently not. I would be interested in the Minister’s comment on the sense that there is an increasing tendency for this, where, in reality, the costs and compensation should fall where the breach occurs. It is a very simple and well-established legal principle. I look forward to the Minister’s response to my noble friend’s excellent intervention.
Baroness Brinton (LD)
My Lords, I signed the two amendments from the noble Baroness, Lady Grey-Thompson, in this group. As she said, they are pertinent to the next group, when we get into the detail. I just wanted to say, as the noble Lord, Lord Holmes, said, that going from “may” to “must” is extremely important. We all know that when Ministers have the option of doing “may”, it never, ever gets to the top of the urgent “must” list.
Baroness Foster of Oxton (Con)
My Lords, I will briefly comment on some of the issues raised. We have to separate out the former regulation 261 on passenger rights for delays and cancellations from the very important report on the former regulation 1107, which the noble Baroness, Lady Grey-Thompson, has spent a great deal of time working on with passengers with reduced mobility. I certainly echo the points that she has raised.
Without going into detail on the late regulations 261 or 1107, one of the biggest problems is not that we need more regulations on passenger rights but that we need to enforce the regulations that are already in place. These are robust. I was involved in their conception in the European Parliament and they have been revised over the years. We need to be very careful that however they are amended in this Committee does not then cause some sort of conflict. We must have treatment of passengers abroad that would echo the treatment they would have in the UK. We cannot impose differences in regulation on third countries, so we have to persuade, through the international bodies, that we need a certain level of treatment for all passengers. As I said, on the old regulation 261, from a competition point of view, we need to ensure that a balance is struck, notwithstanding what the airlines are culpable for in terms of paying, so that the business runs accordingly and passengers are compensated appropriately.
I will comment briefly on my noble friend Lord Young’s comment on the delays caused through NATS and other providers. We looked at this some years ago when I was in the European Parliament. With the exception of force majeure—people recognise force majeure, where something happens and the airline or air traffic services have no control whatever, and they are pretty magnanimous about it—I wholly agree with my noble friend. It was something we tried to push. What we found, unfortunately, was that air traffic services and providers not just in the UK but across the EU were very reluctant to look at the third party where there was a responsibility for compensation to be paid back to the airlines where it had not been their fault. It is worth pursuing. It is a tough way forward; nevertheless, it is worth looking at.
Finally, the noble Baroness, Lady Finlay, is a great expert in these fields, with her medical background. If I recall, the initial problem with passenger air quality arose some years ago with the BAe 146 aircraft. The effects on the pilots went on for years. For reassurance—I declare an interest, having spent four years as the head of European affairs for the Aerospace, Security and Defence Industries Association of Europe—looking all these years on, the safety of and the quality of air in the aircraft that we produce today is really quite different from some of the older aircraft. Fortunately, as former crew on a lot of the older aircraft, I survived 25 years of air quality that was perhaps not great. It needs to be kept in perspective. It should be monitored, of course, but we should reassure the public that, when they fly on these aircraft these days, they are safe and extremely well maintained.
My final point concerns onboard facilities if people fall ill. Believe me, people like me have called for a doctor onboard in the past. It was not much fun when someone was lying on the floor and I, a mere first-aider, was trying to deal with them and keep them alive. It was not ideal. It is very difficult to see how you could rearrange the entire aircraft. Fortunately, a critical situation does not happen very often, but it is up to the airlines to ensure that the crew and everyone onboard are trained sufficiently, that they have the facilities, in terms of medical kits and everything else, and that, if something is extremely serious, the pilot and the captain have the ability to divert to another airfield to ensure that the passenger is looked after as quickly as possible. Those are my points.
Baroness Grender (LD)
My Lords, we support these amendments because they test whether the Bill does more than just create broad enabling powers. If we are giving the Secretary of State and the CAA new regulatory and enforcement functions, Parliament should also be clear about the statutory floor, the scope and the standards against which those powers are to be exercised.
We believe that Amendment 9, tabled by my noble friend Lord Russell, should be agreed to because it would insert a specific passenger safeguarding obligation to prohibit carriers separating children from accompanying adults. In doing so, it would remove a gap in the consumer protection framework and prevent airlines monetising what is, in practical terms, a safeguarding issue. It would also give statutory weight to the principle that family seating should not be treated as an optional extra, which is consistent with the Bill’s wider consumer protection purpose. Although we are aware of the CMA’s present investigation into Ryanair, we think that this an excellent opportunity to embed something in this legislation. We think that that is the right approach.
My Amendment 13 is technically important because it would refine Clause 1 by requiring air passenger rights regulations to standardise hand baggage dimensions by reference to recognised industry standards. This matters because the present position is too often defined by variable carrier policies rather than a clear statutory baseline, which makes the operation of Clause 1(2)(d), on price transparency, much harder in practice. A uniform volumetric standard would enable genuine, like-for-like comparisons at the point of sale. We all know people who have to hold three different sizes of hand luggage if they are using three different airlines. It just does not make any sense.
This amendment would still preserve commercial freedom because it would standardise the box but not the fee. It would also give the CAA an objective benchmark for compliance and enforcement, which is preferable—we can all agree on this, I think—to relying on what is, after all, very patchy guidance or post hoc disputes at the gate. We have all seen those, I am sure.
My Amendment 20 would provide a non-regression safeguard as domestic aviation consumer law replaces assimilated EU-derived protections. The amendment would require the Secretary of State to ensure that new regulations are at least equal to, and ideally better than, the protections that are already in place. I mentioned this in our debate on the previous group. It would provide an important constraint on delegated power because it would prevent the framework being used to dilute rights over time. It would also convert what is currently a permissive approach into a continuing duty of review, which is a sensible way to ensure that consumer rights do not fall behind evolving standards.
Amendment 36 would give the Bill a more coherent accountability structure through providing a passenger charter—I thank the noble Baroness, Lady Finlay, not only for her support but for bringing to life the realities of being on a plane in some difficult circumstances. At the moment, the risk with the Bill as it stands is that powers exist in principle but passengers have no clarity or codified statement of what service standards they can expect or how failures will be remedied. Embedding a charter with objective performance measures and a defined redress framework would make the regulatory architecture more intelligible and more enforceable. That said, I recognise that the Minister has set out the challenge to us about being more specific about this passenger charter and we will continue to attempt to do that, including in the run-up to Report. I thank him for the ongoing discussions about that.
Amendment 2, tabled by the noble Baroness, Lady Grey-Thompson, and my noble friend Lady Brinton, is also an important technical correction, because it would turn accessibility from a general policy objective into a legal duty. Disabled passengers should not be left dependent on guidance, voluntary compliance or uneven airline practice. A statutory obligation, accompanied by annual reporting, would create clearer lines of accountability for both operators and the regulator. That is especially significant where the Bill is otherwise expanding the CAA’s enforcement role. I thank the Minister again for his willingness to engage and discuss this issue with us behind the scenes. I feel that there is a door that is reasonably open to achieving some kind of understanding, particularly in this area and particularly in the light of the absolutely hair-raising stories that we all heard in the Second Reading debate.
I added Amendment 59B a bit late. It is—with apologies to the noble Lord, Lord Moylan—about echoing and shadowing EU 261. This is a probing and exploratory amendment, which goes to the coherence of the UK passenger rights regime at the moment, when the European framework is evolving and the Government are asking Parliament to confer broad powers on the Secretary of State. If the Bill is to modernise aviation consumer protection, it should not allow UK 261 to drift away from EU 261 without some kind of explicit policy choice or decision and clear scrutiny here in Parliament with a proper explanation.
The practical concern is straightforward. We know that EU 261 is making progress on embedding greater rights—for instance, about travelling with your child or about compensation after three hours’ delay. It would be useful to make sure that we mirror that, unless we can do better. That is in my other amendment, which is saying, “Let’s not do a race to the bottom; let’s do a race to the top of the highest possible standards”. That is why Amendment 59B should be seen as a non-regression and alignment safeguard, not a mere technical tidying-up provision. That said, I very much look forward to hearing what the Minister says in response.
Lord Moylan (Con)
My Lords, I will introduce my amendments in this group and will then make a few comments about remarks made by other noble Lords in the course of debate—not, I assure your Lordships, responding to every noble Lord who spoke, although it was a very valuable and interesting debate. I will speak first to Amendments 4, 5 and 30. I also have Amendments 38 and 39 in this group, but Amendments 4, 5 and 30 stand as a set that work together, so I will speak to them first.
Amendment 4 would require a review of hidden or undisclosed charges imposed on passengers by airlines or airport operators. I am singing from a similar hymn book to that used by the noble Baroness, Lady Grender, the noble Earl, Lord Russell, and others in trying to get to the heart of understanding how, cumulatively, passengers are being charged for various things. I have cast my amendment in the form of asking the Government to have a review. We all have anecdotal experience of this sort of thing. I booked some air tickets the other day. Of course, a very attractive price is offered, but by the time I have chosen the option that includes the suitcase and I have booked my seats, it is a bit more expensive than it started out.
Lord Harper (Con)
My Lords, I wanted to let all the Members who had amendments speak first, notwithstanding the Front Benches. I just wanted to touch on one amendment where I think I can add some level of knowledge. I agree completely with my noble friend Lord Moylan about the way in which my noble friend Lord Young of Cookham set out his case with some charm and tenaciousness. However, I am afraid to say that I do not agree with the ineluctable logic. Let me just share with the Committee why.
I was in post when NATS had its failure and I will always remember getting that phone call telling me that something terrible had happened, with potentially millions of people whose holidays were going to get messed up. You pay a great deal of attention in that situation. I spent quite a lot of my time over that short period engaging with the aviation sector and ensuring that NATS, the airlines, the airports and everybody else worked incredibly closely together at pace to make sure that passengers had the least terrible experience possible in the circumstances.
Once the initial events had taken place and we had got everybody back to where they should have been, we considered—or I considered, as the then Secretary of State—exactly the point that my noble friend set out, about whether we ought to change the legislative regime around compensation. Superficially, there is a case for doing so, but let me deal with the reason why we decided not to.
The first point is that, if you look at the ownership structure of NATS, which I do not think that my noble friend touched on, almost half the business—49%—is owned by the Government or, in other words, the taxpayer. Some 42% is owned by a group of major airlines, 5% is owned by the staff through a trust and 4% by the company that owns Heathrow Airport. The conclusion that I came to was that, if you were to change the position so that NATS was responsible for paying compensation, almost half the bill would land on the taxpayer, just over 40% of it would effectively end up on a different group of airlines—not necessarily all the ones hit by it—and a little bit would effectively land on the staff. The conclusion that I reached was that that did not really get you to a significantly better place than the current position, accepting that the current position is suboptimal.
What made me think was that my noble friend set out the position with Network Rail, which is and has for a long time been completely owned by the taxpayer. There is a question about whether there is a purpose in doing that. The conclusion that we reached, and the present Government’s conclusion, is that we are not sure that the regime whereby Network Rail has to pay money to train operating companies is an effective lever in driving up standards. The conclusion that we reached, which the current Government are following through on and which we will be debating in due course through the Railways Bill, is that the way you get more effective working between the train operating companies and Network Rail is by bringing them together in what will be GBR. I am not sure, therefore, that getting the taxpayer to pay a chunk of money to airlines is the right way in which to deliver what we actually want, which is to stop these sorts of outages and disruptions happening in the first place.
NATS is a regulated business, so it has quite considerable constraints on how it acts, and the Government have a considerable say in how it operates because of that 49% stake and the Government’s role in nominating a number of members of the NATS board. Certainly, when the outage happened, I had a considerable say in putting pressure on the management of the company and appointing the person who conducted the review, effectively ensuring that the company took steps to make sure that that particular circumstance could not happen again.
I understand the case that my noble friend has made. I considered it at the time, but we did not think that moving from the status quo to that position was particularly compelling. I do not think that I have changed my mind on that, but of course I will happily take a question on it.
Lord Young of Cookham (Con)
I thank my noble friend, who may have saved the Minister a bit of trouble. I will make just two points. First, as my noble friend said, the airlines are one of the major shareholders. The airlines support this amendment. I have a letter from IATA and I have seen correspondence from British Airways; they believe that this change should be made. The second point my noble friend made, which I have real difficulty with, is that the taxpayer picks up the tab when an organisation owned by the taxpayer makes a mistake. Look at the National Health Service, for example. What is happening here is that, where the taxpayer is on the hook, the Government have decided to penalise an innocent party, namely the shareholders of the airlines. As a Conservative, I cannot see how my noble friend began to defend that when he was Secretary of State. Had the incident happened 20 years earlier, when I was Secretary of State, I would have come to a different decision.
Lord Holmes of Richmond (Con)
My Lords, before my noble friend responds, far be it from me to get between two former Secretaries of State for Transport before a Transport Minister comes to respond to either of them, but I want to check something with my noble friend Lord Harper. Is he suggesting, as a point of principle, that for any wholly or partly owned entity where the state has even a minor share, there should never be a question of compensation or liability for redress to be made by dint of whole, partial or even minority public share ownership of that entity?
Lord Harper (Con)
No, I do not. The question I had to answer was that if you have a status quo and if you are going to make a change, you have to ask yourself, does the change drive an improvement in behaviour or outcomes? I simply was not persuaded that it would.
Picking up my noble friend’s point about perhaps having saved the Minister a bit of bother, I thought, when I was listening to him make his case, that there is, of course, the opportunity, when one is now both in opposition and on the Back Benches, to let the Minister do all the work. But since the event happened on my watch, as it were, and we put quite a lot of thought into whether we should make the change that my noble friend set out, and since the answers that he received from our noble friend Lady Vere of Norbiton when she was Aviation Minister were effectively on my behalf, I thought it would be a bit slopy-shouldered of me to sit here quietly, not say anything and not give the Committee the benefit of the thought process at least. Being slopy-shouldered has never really been my style, so I thought it was at least worth giving the Committee the benefit of the effort that went in on behalf of aviation consumers who were disadvantaged by this, the work that went on by the industry and the work that the Government did to try to put things right.
My final point is just to say that the industry—NATS, the airlines and the airports—demonstrated a remarkable ability to work together to serve the interests of consumers. The industry has a lot to be proud of in the way that it comes together when there are these difficult circumstances to serve the people who pay their wages.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
Respectfully, before my noble friend responds for the Government, I point out to the Committee that it is a convention—I will put it no more strongly than that—that we let Back-Benchers come in before Front-Benchers. It rather dulls the flow of the argument if we go back from Front-Benchers to Back-Benchers. I urge all colleagues who want to make a contribution to do so before we get to Front-Benchers, because that generally aids the flow of debate.
Lord Hendy of Richmond Hill (Lab)
My Lords, these amendments raise important questions about how we strengthen air passenger rights. As I said at Second Reading, the strong intention of the Bill is to increase protections. The Government’s approach is to build on a strong existing framework while preserving the flexibility to act where it is most needed and avoiding unintended or overly prescriptive requirements. Taking each amendment in turn, I thank the noble Baroness, Lady Grey-Thompson, for her excellent work on the Aviation Accessibility Task and Finish Group report and for her amendments seeking to ensure that regulations are made in relation to the areas listed in Clause 1. I am very pleased to see the noble Baroness, Lady Brinton, in her place supporting that.
I confirm that the Government intend to make a serious change in the experience of disabled people when flying. The intention of this clause is to provide a non-exhaustive list of areas that can be addressed through regulations. While regulations exist in many of these areas, requiring regulations in all these areas may have unintended consequences. The list of areas currently included could be considered an exhaustive list and therefore prevent amendments on other areas of air passenger rights. Equally, it could require amendments where they may not be required.
This amendment would also require that any regulation made under this clause to address all the areas listed, which would not be necessary for every regulation made under the clause. I reassure the noble Baroness that many of the areas listed are already covered by existing regulations. The Bill allows us to strengthen and update those protections over time, while retaining the flexibility to act where it is most needed. I will discuss with her and others what the next steps will be, to give confidence that action will be taken in secondary legislation, because that is firmly the Government’s intent. That is a commitment to the noble Baroness and others, including the noble Baroness, Lady Grender, and the noble Earl, Lord Russell. I hope that the noble Baroness, Lady Grey-Thompson, feels able to withdraw her amendment.
I thank the noble Lord, Lord Moylan, for his amendment on price transparency. I reassure him that there is already legislation in place to ensure this. All mandatory fees, taxes, charges and surcharges must be included and broken down in the final price paid by the passenger. In addition, any non-mandatory costs, such as baggage or seat selection fees, should be clearly displayed during booking and should be on an opt-in basis, meaning that passengers select which options they want for their trip. The Civil Aviation Authority is already responsible for ensuring that airlines meet those requirements. In response to the noble Lord’s question, I note that the CAA publishes comparison tables for passengers on the charges and fees of different airlines and airports. Clause 2 will strengthen the CAA’s enforcement toolkit, enabling it to deal more efficiently with non-compliance.
I note the point from the noble Earl, Lord Russell, on the current issues with Ryanair charging parents to sit with their children. He will appreciate that I cannot comment since it is currently under investigation by the Competition and Markets Authority. For the reasons I have set out, I hope that the noble Lord, Lord Moylan, will not press his amendment.
I turn to the amendments from the noble Lord, Lord Moylan, on travel intermediaries. Consumers should be able to rely on fair and transparent information and functionality wherever they book air travel. I reassure the noble Lord that existing regulations already set out a code of conduct on computerised reservation systems. This seeks to ensure transparent, fair and non-discriminatory approaches for airlines and intermediaries. Should future reforms be necessary on this issue, they would be possible under Clause 1.
The noble Lord’s proposal for the CAA to produce a code on access to airline fares and booking systems for travel intermediaries concerns commercial arrangements between airlines and intermediaries, rather than air passenger rights. These are business-to-business matters for industry, with competition concerns best addressed through the existing body of competition law. It is also not clear that there is sufficient evidence of consumer harm to justify this level of government intervention. Although intermediaries play a role in providing choice to customers, it is not established that this is currently being undermined by a lack of transparency from airlines. Established transparency requirements are already in place, as I have mentioned. If evidence showed that further intervention was needed, Clause 1 powers could be used to consider that properly. For those reasons, I ask the noble Lord not to press his amendment.
I thank the noble Earl, Lord Russell, for his amendment seeking to expand Clause 1 to require upfront information at the time of ticket sales, as well as minimum standards and automated payments for compensation. In addition to requirements for transparency around pricing, there are also clear rules about the rights of passengers during disruption, including when compensation is payable. Clause 1, as drafted, can be used to strengthen these rights further, and we can discuss the Government’s intentions around this.
The noble Lord, Lord Holmes, asked about Delay Repay, which the previous Government considered under a past consultation. It was clear that there were both benefits and risks inherent in this approach, and several respondents noted that aviation is not comparable to rail due to the operational complexities in aviation. However, this could be considered through Clause 1 powers if necessary.
Work is already happening—I will not use the word “ongoing”—to increase transparency around the environmental impact of journeys. The CAA published a framework on implementing consumer environmental information for UK flights earlier this year. Airlines and other relevant organisations are expected to take adequate steps towards implementing this by April 2027. As a result, I hope that the noble Earl feels able not to press his amendment.
I thank the noble Baroness, Lady Grender, for her amendment, which would make regulations on consistent hand baggage sizing. Although I appreciate that this would give consumers consistency, it could have unforeseen consequences for passengers. I cannot, therefore, support this amendment. Aircraft have different overhead and under-seat storage capacities. Setting a standard size would necessitate using the smallest aircraft capacity, resulting in many passengers needing to use a smaller case or bag. Many passengers appreciate the flexibility of choosing add-ons, such as baggage, in order to be able to make decisions about how they travel in a way that works for them. This amendment could force more passengers to use checked baggage, which often comes with an additional fee and time inconvenience due to the need to drop off and collect bags. Moreover, there could be unintended consequences for passengers. I hope that this enables the noble Baroness not to press her amendment.
I now move on to the amendments relating to cabin air quality in the names of the noble Baroness, Lady Finlay of Llandaff, and the noble Lord, Lord Empey. All of us will of course be grateful to the noble Baroness and others for responding to medical incidents aboard aircraft; I am especially grateful to the noble Baroness for her knowledge of this subject, which is far more detailed than my own.
The safety of passengers and crew is vital. The department recognises and takes seriously the concerns raised around cabin air quality. The Government have commissioned independent studies and evidence reviews relating to cabin air. The most recent evidence review by the Committee on Toxicity concluded that
“the concentrations of the chemical contaminants … reported in aircraft cabin air are unlikely to cause adverse health effects in aircrew following acute or long-term exposures”.
Commercial aircraft are already required to meet and maintain a number of design requirements for certification, which include ventilation and cabin air flow. The Government are committed to keeping this area—in particular, the technological innovations described by the noble Baroness, Lady Finlay—under review. Operators are also required to report and investigate any incidents involving toxic cabin air. The CAA’s expert medical team regularly reviews every suspected cabin air incident and takes action if it identifies a concerning trend. I hope that this provides reassurance that there is a continuous mechanism to identify and investigate any cabin air issues; and that noble Lords will therefore feel able not to press their amendments.
I thank the noble Baroness, Lady Grey-Thompson, for her amendment relating to the enforcement of regulations. The Government will ensure that any regulations made under Clause 1 can be properly enforced. This will be enhanced by the CAA’s direct enforcement powers, which are being introduced via Clause 2. The purpose of Clause 1(3) is to outline the types of enforcement provision that can be made in regulations under Clause 1. Amending the wording from “may” to “must” would mean that any regulations made under this clause would have to contain all the enforcement provisions listed. This would not be necessary for all regulations made under this clause. Consideration of any enforcement provisions will be given during the policy development and secondary legislation process. This will be subject to appropriate and full assessment of the available evidence. For these reasons, I hope that the noble Baroness will not press her amendment.
On alignment with the EU, I agree with the noble Baroness, Lady Grender, that we must maintain a high level of consumer protections in aviation. Since leaving the European Union, the UK has had the flexibility to set its own approach. The power in Clause 1 enables the UK to keep pace with the EU and, where we choose to do so, to go further. As I have said, the intention of Clause 1 is to strengthen and enhance air passenger rights through secondary legislation. This is in line with the shared UK-EU objective, under the trade and co-operation agreement, to achieve a high level of consumer protections; it also gives us flexibility to improve on these standards over time. However, requiring all future reforms to be “equal or superior” to the current standards is subjective and could have unintended consequences.
Similarly, on the noble Baroness’s further amendment on automatic alignment with Regulation 261/2004, requiring the UK to mirror both the current EU framework and any future changes to that regulation, including those currently in course in the EU, would place a statutory obligation to follow EU reforms without discretion. Although we continue to monitor developments closely, it is important that the UK retains the flexibility to design a complex compensation regime based on the evidence, consultation and what works best for UK passengers and the aviation sector. Therefore, although I agree with the intent that the Bill is used to strengthen rather than reduce protections—and I believe that Clause 1 would allow for this—I would welcome further discussion on this. Meanwhile, I ask the noble Baroness not to press her amendment.
Lord Moylan (Con)
My Lords, there is the case of airports such as Heathrow—admittedly few in number—that are economically regulated on the basis of a regulated asset base. Assuming that it was approved by the CAA acting as economic regulator, a Heathrow investment in infrastructure would be added to the regulated asset base, and it would earn its return that way. It does not defray those returns on the grounds that it has income from shops, drop-off charges and so on; they are pure bonus to the shareholders.
Lord Hendy of Richmond Hill (Lab)
I note the noble Lord’s point on Heathrow and other airports that have a regulated asset base. Airports must retain the ability to manage their own infrastructure. The Government’s role is to ensure that competition and consumer laws are protected and upheld. Ultimately, each airport operator must justify the charges they levy and show that they are fair, transparent and carried out with proper accountability. For those reasons, I hope noble Lords will feel able not to press their amendments.
I thank the noble Lord, Lord Young of Cookham, for his amendment relating to reimbursement for airlines if delays are caused by air traffic management, and I note the support from the noble Baroness, Lady Foster of Oxton, and others. Long delays and cancellations that are caused by air traffic management decisions are considered extraordinary circumstances under the current law, and therefore compensation is not due to passengers in those cases. None the less, the airlines are responsible for providing refunds, or care to passengers, such as meals and refreshments, when there are such delays and cancellations, provided certain qualifying conditions are met.
I note that National Air Traffic Services is subject to a robust regulatory regime overseen by the Civil Aviation Authority, and it includes performance targets linked to delays and a financial penalty mechanism when these targets are not met, meaning that NATS must reduce what it charges airlines in the following period. This is at least currently the effective penalty on NATS for poor performance.
I recognise that the noble Lord has diligently pursued this issue across the previous Government and this one. With relative joy, I have discovered how many previous Secretaries of State there are not only on the opposition Benches but in this Room. I am very grateful to the noble Lord, Lord Harper, for his explanation of what happened in the case that the noble Lord, Lord Young of Cookham, referred to. He supposes that I have some sympathy with the proposition that, somehow, the charges levied on Network Rail did not act as the incentive that they were supposed to. He is right, which is why the Railways Bill does not go in that direction. I am grateful to him—seriously—for explaining what decision he came to in that particular case, because he is right that the shareholding of NATS is very far from a conventional commercial company with a range of shareholders.
I hope I have never been grudging. I may—as the noble Lord, Lord Moylan, probably thinks frequently—be unpersuasive, but I think I owe the noble Lord, Lord Young, at least the courtesy of a meeting on this subject to understand better what he has said and to see whether the current Government’s position ought to be the same as what the noble Lord, Lord Harper, described in his Government’s case, or whether there is a persuasive case for change.
Lord Empey (UUP)
I thank the Minister for his response on Amendment 41 regarding drop-off charges. I understand the argument that an airport operator can manage its own property, but we have to distinguish between parking and dropping off. The dropping-off charge is almost a penalty for not parking. We also have to take into account the fact that these airports, by and large, are monopolies because of where they are: people perhaps do not have an option of going to another airport.
It is becoming a growing revenue stream and it can affect regional connectivity but also the economic model. It can put another charge on business, if that is what it is, or on tourism. I will look at Hansard and see exactly what the Minister said, but it is not a simple matter and I do not think it is an issue that will go away, because it is growing and growing. It started off at £1 and, as I said, in Edinburgh it is now £8.50. But what is the alternative for somebody going to drop someone off at Edinburgh Airport? Do they go to Glasgow Airport? It is a monopoly.
Lord Hendy of Richmond Hill (Lab)
I should just say that of course I respect the views of the noble Lord, Lord Empey, and if he looks at Hansard and considers what I said, I will similarly consider further what he said.
Baroness Grey-Thompson (CB)
My Lords, I thank everyone who has taken part in the debate this afternoon. I would just like to pick up on a couple of points relating to my amendments, and I will try not to run into the next group.
The noble Lord, Lord Empey, makes some valuable points about the drop-off charges. Although I have not had emails on that specifically to do with airports, disabled people have issues in terms of access and technology and might find physically paying some of these charges quite hard to do. Although we should be trying to get disabled people and everybody to travel to airports by public transport, that highlights a bigger set of problems that we have with wheelchair-accessible transport in this country.
An amendment was not passed on wheelchair-accessible taxis outside London. It might be quite hard, if you have a specially designed WAV with hand controls, to take it to off-site parking. So, if you then use transport around the airport, there is a whole issue with not being tied down in the buses to get from the parking to the airport. My husband is not a permanent wheelchair user, but if we are going on holiday, he will quite often take his wheelchair with him because he struggles to walk long distances. We would not be able to travel on the same bus together because of the current rules.
The noble Baroness, Lady Grender, raised hand luggage and made me think of a different aspect not raised today: travelling with medical aids. I have had some emails about that. Some airlines are great, do not charge and are very accommodating, and some are not. It might be a piece of equipment such as a hoist that needs to go into the hold, or something like a CPAP machine, which absolutely needs to be on board with an individual and which is safe to fly with. I think some of that might come into the training in the next group.
I bow to my noble friend Lady Finlay’s greater knowledge on air quality, but the Task and Finish Group looked extensively at toilets. That is outside our jurisdiction in terms of the design, but we could do so much better at the design of toilets. There are some really good examples. The airline crew should help disabled people to the toilet, but not in the toilet—absolutely not. However, because of the poor design of toilets on planes, most people, including myself, absolutely dehydrate ourselves before we fly to make sure that we do not have to use them, even on long haul flights, which creates a whole different set of problems for safety on board a plane. Any influence we could have on smart design—probably outside the Bill—would be very helpful.
I thank the noble Lord for his response; I understand what he is saying. I will be bringing possibly a different version of this amendment back. I do not think it is impossible to look at a form of words that is a tighter list. Maybe a new clause needs to be inserted to give disabled travellers more reassurance on what the Government are trying to do. But at this stage I beg leave to withdraw my amendment.
Baroness Grey-Thompson
“(ca) about the liabilities of air transport services providers and operators in relation to the damage or loss of mobility aid devices, medical and life-sustaining equipment, ensuring compensation of a such loss or damage is commensurate with the full replacement or repair value of the equipment;”Member’s explanatory statement
This amendment seeks to ensure that air transport service providers and airport operators are strictly liable for the full financial value of repairing or replacing any damaged or lost mobility and medical equipment.
Baroness Grey-Thompson (CB)
My Lords, this is a really important group of amendments, like the last one, and it needs some consideration. I support Amendment 7 in the name of the noble Baroness, Lady Kennedy of Cradley, in terms of her work on allergies. The Task and Finish Group again looked at this and recognised that there were some challenges in what we can do about the complicated nature of international jurisdictions. I also strongly support the amendments from the noble Baroness, Lady Brinton.
In this group, we have to ask ourselves what we are trying to do in considering consumer protection. Looking at transport rights for disabled people, we should be guaranteeing freedom of movement, independence and, above all, dignity. When there is failure, one of the words that is frequently used by disabled people is dignity, which they feel has been taken away from them. So it is vital to reform a system that currently hinders disabled people from travelling.
Baroness Brinton (LD)
My Lords, I apologise for not apologising, when I intervened on the last group, for missing Second Reading. I am very grateful for the Minister’s comments on my return after some ill health.
There are 36 amendments in this group. The vast majority relate to disability and accessibility, but there are some other key ones as well. It would be important not to lose sight of those, and I know that other speakers will cover them. I have supported Amendments 3, 6, 10, 15 and 19 from the noble Baroness, Lady Grey-Thompson, by signing them. They tackle the issues that the UK Government and the Civil Aviation Authority can make happen. I also commend her and her aviation accessibility group on their report last year and eminently sensible recommendations.
The noble Baroness, Lady Grey-Thompson, and I have both been in your Lordships’ House for over 15 years and we have repeatedly raised the issues faced by wheelchair passengers specifically, but passengers with other disabilities as well. I started using a chair when I arrived in your Lordships’ House, and I went to see the noble Baroness, Lady Campbell of Surbiton, and asked whether she could give me some advice on what to do, because I had some international conferences to go to. Unlike her and the noble Baroness, Lady Grey-Thompson, I did not have experience of this. She said, “Expect either damage or nonsense on every flight. Plan for it. Learn about what duties the airlines have, and have your evidence with you”. She was right. The expectation of the vast majority of people who are disabled is that air travel going to be difficult—and it usually is, even for those of us that now do it a lot. On every flight, I now have to carry photographs of my battery. I print out the International Air Transport Association—IATA—regulations relating to my wheelchair and battery, as well as the IATA regulations for cargo, which many airlines muddle at the airport, quoting the wrong ones back at you. I will say more on IATA later.
My Amendment 21 proposes regulations to provide an appropriate enhanced level of compensation for a disabled passenger when they have been left stranded without assistance or refused boarding because of an accessibility issue and how that claim can be made. I also read Samanta Bullock’s piece on LinkedIn and, although it is shocking, it is particularly shocking in that most people do not understand that the captain of the plane is the person who makes these decisions—including on batteries, by the way. The captain is able to decide, with no evidence whatever and no form of appeal, whether the passenger can continue. That is outrageous.
I remember flying to Stockholm for a conference about four years ago. I had a lithium chair that I was going to use for travel then, although I cannot use it now—taking lithium on aeroplanes is such a flipping nightmare. I used the same carrier coming back, and the pilot said that he was not prepared to accept lithium batteries on his plane—full stop. I got away with it only because I could show him my boarding card from the previous flight three days before and could say, “Your company has flown me here. Please fly me back”.
The consequences for disabled passengers—in Samanta’s case, she was bumped off a flight—are always much greater. It is not just being refused the flight; in a wheelchair, at short notice, you might need to find an accessible hotel room or accessible taxis, which the noble Baroness, Lady Grey-Thompson, referred to. All of those not only cost much more than the standard but are as rare as hens’ teeth.
My Amendment 29 proposes that the Government and the Civil Aviation Authority have a duty to ensure accessible air travel services and airport infrastructure systems, and ensure that disabled passengers and people with reduced mobility get support. It is not dissimilar to that of the noble Baroness, Lady Grey-Thompson; it is just slightly more detailed. Following the famous disability mantra of the noble Baroness, Lady Campbell of Surbiton—which she was speaking about decades before she joined your Lordships’ House—there should be nothing about us without us. So my amendment states that both the Secretary of State and the CAA must consult with disabled people and organisations, enforce minimum accessibility standards and—to complete the communications loop—publish annual reports.
My Amendment 37 proposes wheelchair passports for air travel. Over the past few years, the Department for Transport has discussed creating wheelchair passports, which would smooth the journey, with one brief check at check-in to ensure that both the wheelchair and, if relevant, the battery and the passport match. Once you have that passport, the details can be in the airport system and airline system for ever. However, the amendment also makes clear that the Secretary of State has to work with IATA—and, I hope, other nations supporting IATA—to make this happen, because it will never happen if only the UK does it.
I support Amendment 7 of the noble Baroness, Lady Kennedy of Cradley; the amendment on air quality of the noble Baroness, Lady Finlay; and many of the amendments of the noble Lord, Lord Holmes. I think we are all trying to do the same job—I will come to that. There is overlap between my amendments and those of the noble Baroness, Lady Grey-Thompson. The Government have to work to get to the heart of much of the problem. However, my amendments go further. Neither the UK Government nor the CAA have the power to change these problems across the world because the regulatory body for aviation travel is IATA. It uses the Montreal Convention of 1999, and yet it is also a trade body. Therefore, it is very difficult to make any change or progress when its stakeholders are the airlines that are not providing the service to disabled people.
However, since I laid my amendments, I was asked if I meant to put down the International Civil Aviation Organization rather than IATA. I did not, but it was a very helpful suggestion, because the International Civil Aviation Organization’s description of itself says that it is
“a United Nations agency which helps 193 countries to cooperate together and share their skies to their mutual benefit. Since it was established in 1944, ICAO’s support and coordination has helped countries to diplomatically and technically realize a uniquely rapid and dependable network of global air mobility”.
Therein lies the problem. There are no teeth anywhere. It cannot create regulations. It cannot instruct or penalise aviation companies. It can only diplomatically support its 193 member countries in co-operating with each other. Further, those 193 countries cannot regulate matters that happen in the air or in another country. The noble Baroness, Lady Grey-Thompson, referred to the problem: if they do so, it is valid in the UK only. I must say, I have hit a problem. On one flight I took, I was told, “Well, it didn’t happen with us. It was taken out of the aircraft and went elsewhere. It’s nothing to do with us”. In consumer terms, that makes it very difficult ever to get any satisfaction. We need these countries to start to come together, perhaps through the ICAO, to influence IATA to be much more active on its own regulations.
Baroness Kennedy of Cradley (Lab)
My Lords, I will speak to Amendment 7 in my name. I declare my interest as chief operating officer of Natasha’s Foundation, the UK’s food allergy charity, which was previously known as the Natasha Allergy Research Foundation.
At Second Reading, my noble friend Lord Hendy of Richmond Hill emphasised that the purpose of the Bill is to strengthen consumer protections and improve the passenger experience. He recognised the importance of accessibility and ensuring that aviation works effectively for all passengers. We have heard passionate speeches from the noble Baronesses, Lady Brinton and Lady Grey-Thompson. My amendment would not only address their issues around reduced mobility but would include non-visible disabilities and medical conditions, such as allergies, so that all passengers—including those with visible disabilities, non-visible disabilities and medical conditions, especially food allergies—can travel safely and with confidence.
I will focus on food allergy today. It is a serious medical condition, where a trace amount of an allergen can trigger a rapid and potentially fatal reaction. If someone is in the air and ingests the food to which they are allergic, they can be unconscious within 30 minutes. Whether they are on a short-haul or long-haul flight, they therefore experience serious difficulties. More than 3 million people in the UK—and around 220 million people globally—are living with a food allergy. This is not a medical condition the aviation industry can afford to continue to overlook.
UK tribunals have recognised that a food allergy can constitute a disability under the Equality Act 2010, where it has a substantial and long-term impact on daily life. Moreover, legal advice commissioned by Natasha’s Foundation concluded that Natasha’s law applies to pre-packaged meals served by UK airlines, and that airlines have a legal responsibility to provide allergen information under UK food safety law. However, in practice, that does not happen: Natasha’s law is hardly ever applied to pre-packaged airline food. Can my noble friend the Minister clarify the Government’s position on Natasha’s law and pre-packaged airline food? Does it apply, and if so—to illustrate the point raised by the noble Baroness, Lady Brinton—who is responsible for ensuring that airlines comply with Natasha’s law and current UK food safety laws? That question covers both UK-based airlines and those that operate within our UK airspace.
As is it clear to many food-allergic passengers, despite the seriousness of their condition and the laws designed to protect them, allergen management is too often treated as an afterthought by the aviation industry. Passenger support is frequently inconsistent. Passengers encounter a reluctance to make reasonable adjustments or to provide any support to help them travel safely and with confidence. Passengers frequently report difficulties sourcing an airline’s policy on allergy. There is hardly ever a list of the support available to them, and it is not clear whether a plane carries spare adrenaline auto-injectors. Food-allergic passengers need to know that information, especially when research suggests that around one in 10 food-allergic passengers reports experiencing an allergic reaction when flying.
Passengers regularly ask the cabin crew for food ingredient lists on a plane. IATA states that the lists should be available to passengers, but they hardly ever are. Even when passengers do everything asked of them and pre-order a special meal, many find that it has not been loaded on to the aircraft, it has been mistakenly given to another passenger or, worse, it contains the food stuff to which they are allergic because there are weak controls over meal supply chains. Unless a provision such as Amendment 7 is added to the Bill, the lack of priority and attention given to allergen management on flights will continue.
The support for food-allergic passengers that we are asking for is not hard to provide, and it is not hard for the aviation industry to make a big difference. My amendment does not impose disproportionate burdens on the industry. It is largely about ensuring better training, information and communication, as well as compliance with the laws that already exist. In brief, Natasha’s Foundation has identified four areas where improvement is needed: leadership, training, policies and food. Airlines need to be asked to publish clear policies, setting out the support passengers can expect. They should be easily available on their websites, communicated before booking and throughout travel, and applied throughout the passenger journey. Simple adjustments, such as announcements on flights or time to pre-board to wipe down food trays, are easy to accommodate in the airline industry, but they are frequently inconsistent. A food-allergic passenger may request them, but that does not mean that the request carries through to the cabin crew on that plane, as they often do not receive the communication that someone is a food-allergic passenger.
All airline staff, as the noble Baronesses, Lady Brinton and Lady Grey-Thompson, said, should receive training. We would obviously say that that needs to be food allergy and anaphylaxis training, how to recognise an allergic reaction and how to use an adrenaline auto-injector. Spare AAIs should be carried on all flights and be available in many different sites across airports. Accurate allergen information must be available for all the food served on board. Natasha’s law should be applied and enforced, and cabin crews should have access to information about the food they serve.
All these recommendations are very much in line with the conclusions of the Aviation Accessibility Task and Finish Group, chaired by my noble friend Lady Grey-Thompson. Natasha’s Foundation thank her for her support, as we were very grateful to have the opportunity to provide evidence, and we were pleased that allergy was recognised in the group’s final report. The group’s recommendations on staff training, passenger information, communication and support for people with disabilities and non-visible disabilities, including allergies, is exactly as the noble Baroness, Lady Brinton, said—we are all trying to do the same thing, because all these conditions need the same thing: information and training.
I therefore hope that the Government will look favourably on the amendment. I also ask my noble friend the Minister to take time to read, before Report, the report from Natasha’s Foundation, Flying with a Food Allergy, and agree to meet the foundation and others to discuss this amendment and the practical solutions that it contains to improve safety, build trust and enhance passenger experience, which is what the Bill should be about.
Lord Holmes of Richmond (Con)
I thank noble Lords who have taken part in this debate so far, not least my friends the noble Baronesses, Lady Grey-Thompson and Lady Brinton, who have done so much for disabled people for such a long period of time, despite suffering indignity and discrimination on their own account, often when using various transport modes. It is impressive, and continues to be messaging that Ministers in any and every department should take more than a passing note of.
To take one tiny step back—here I am in danger of giving a bit of a Second Reading speech, but I promise noble Lords that it is purely Committee-stage chat—I want to talk about what is possible. So much of what has been discussed with regard to disabled people goes into the “too difficult” file, or somehow health and safety trumps the rights of disabled people.
At London 2012 we faced the world’s finest elite disabled athletes coming to London—and, whatever we did at the park, the venues, the stadium or the aquatic centre, imagine if we had not looked at the aviation experience, not least at the port of arrival for air, London’s Heathrow Airport. Noble Lords can imagine that whatever we did in terms of athlete experience in the venue and the village would have been as nothing; if we had not intervened, we would have had the world’s finest Paralympians coming to London, and their first experience of London 2012 would have been being pushed through the airport in an airport wheelchair, because it was said at the time that it was too difficult and operationally impossible to repatriate a person’s wheelchair to the door of the aircraft. We were fortunate that we had the power, the brand and the most immovable of deadlines of London 2012 to make that difference.
But the reality is that, no matter how good we planned that golden summer of sport to be, it is as nothing to ensuring, enabling and empowering all disabled people to assert their rights to travel with independence, dignity and respect, or, to put it another way, to have an airline experience equivalent to what a non-disabled person—lucky for them—can just experience and take for granted. I say “experience” because that, I believe, is the most helpful lens to get us to the right position on this. We should think about this experientially before we even make one operational decision in the Bill.
Baroness Finlay of Llandaff (CB)
My Lords, I am absolutely delighted to follow the noble Lord, Lord Holmes, who has really put his finger on summarising all these amendments incredibly well. As you go through, you can look at each one as an individual case. Amendment 12 is about vulnerable people and where they are seated. Amendments 3, 6 and 15 are about being separated from medical equipment. Amendment 37 is about having a wheelchair passport. Amendment 45 is about unaccompanied minors and Amendment 48 is about offboarding times being reasonable. I will go back for a second to toilets on that one. It is appalling to leave people unable to get to the toilet after a flight and leave them on the plane for a long time. If they have an accident, what happens? All their clothes are somewhere else and they are left sitting on a wet wheelchair. It is absolutely appalling. I note that, on Amendment 58 and assistance dogs, it is important to remember that they also need to do a wee; it is not just the passengers.
I ask the Minister whether he sees it as possible with this Bill to set a standard that must be complied with if an airline has landing rights at a UK airport? If there is a standard that must be met, it could become very attractive to be using UK airports. It would seem to make commercial sense, and it could then apply everywhere. We have focused on Heathrow, but I live in Cardiff. It is a tiny airport, and we have a small number of flights, but everybody should still be treated with respect. One of those standards would simply be for people to deplane first, rather than last. That would make a big difference to people with a disability. The other passengers could jolly well wait five or ten minutes, having travelled for hours. I worry about the selfishness that sometimes we see displayed.
Also, when it comes to wheelchairs and wheelchair damage, we would not accept a passenger having their leg broken by travelling on a plane. As my noble friend Lady Grey-Thompson said, for her and other wheelchair users, their wheels are their legs. Similarly, for people using CPAP, their lungs cannot function without it. We are saying that it is okay to let somebody half-suffocate if they need CPAP, but you would not let somebody else half-suffocate. We have really mixed messages. Could the Minister possibly create a UK-wide standard that everyone with landing rights at UK airports would be required to meet, and, if they are repeatedly in breach of it, they might lose their landing rights? I am interested to know.
Lord Blencathra (Con)
My Lords, I apologise to the Committee—I was in Yerevan in Armenia monitoring the election for the Council of Europe at Second Reading. This is the only intervention I shall make in Committee. I have done an observation role for the Council of Europe for the last 10 years, and among the airports and countries I have visited are Basel, Malta, Crete, Rome, Athens, Riga, Tbilisi, Frankfurt, Budapest, Monaco, Venice, Ankara, Amsterdam, Istanbul, Gdańsk last year, where I met Lech Wałęsa—he is still going strong—New York, Oslo, Helsinki, Charles de Gaulle, Seville, Sofia, Bosnia and Herzegovina, Montenegro, Saint Petersburg—I am banned from Russia now—Monaco, Bulgaria, Vilnius, Minsk and Kiev, before the war. I do not have the authority of noble Lords who have moved their amendments but, by God, I have the experience of 100 check-ins and 50 hours of non-stop hassle.
I support the content of nearly all the amendments in this large grouping, but particularly Amendments 1, 6, 21 and 48. The Minister will say that we do not need any of them, since he has a general power in the Bill to make regulations in Clause 1(2)(e). That is okay as far as it goes, but we need to spell out the areas and aspects of disability on which we need regulations made. We should not leave it to officials in the department at some time in the future to come up with some regulations which may not be a priority for disabled passengers.
Let us take the problems wheelchair users suffer in chronological order. At least 48 hours before we travel, we fill in the airline forms about the chair—its weight, dimensions and battery type. Airline forms are all different and some misdescribe the type of battery, and ask if there is an open cell one, which was abolished about 20 years ago. We tell them whether we can walk a little bit and whether we need a chair down the aisle or can manage a few steps. British Airways are quite good with its forms. That is all good stuff, but I can tell this Committee with absolute honesty that at every single check-in I have done, not one word of what we fed into that computer is on the check-in computer. All the information they have is that the passenger will have a wheelchair, and the only training they seem to have is to ask about lithium batteries. Airlines are right to be paranoid about lithium batteries, which must never be put in the hold. Every time I check in, the check-in person says to me, with a look of panic, “Are they lithium batteries?” I say, “No, they’re sealed, non-spillable, dry cell”, which is an official category on the form. The next question is, “Can they be taken out”? I say, “No, they are bolted in. Only lithium batteries are removable”. That is usually challenged with the question: “Why not take them out”? I explain that they are bolted in and not removable, and they weigh 8 kilograms each.
Baroness Grender (LD)
Wow—how much blood has to boil before this is dealt with? It was striking at Second Reading to hear these stories, and striking that a lot of them came from behind the Minister on the Government Benches. In a sense, that gives me a little hope that there is enough political will and heft here that something can be done. From meetings that we have had with the Minister, I think there is political will here.
We cannot ever hear these stories again without having taken this opportunity and this moment to do something. It is beyond shocking that this happens. It should never happen, but, in a modern age, today, that this is happening on a regular basis is beyond the pale and needs to stop. Whatever support the Minister requires to get this over the line, I know that my noble friend Lady Brinton, the noble Baroness, Lady Grey-Thompson, and the noble Lords, Lord Holmes and Lord Blencathra, are powerful advocates who can help deliver on that.
We support the amendment by the noble Baroness, Lady Kennedy. I have two amendments in my name, one of which is about an accompanying adult with a child. This is an incredibly important issue. We recognise that there is one bad actor at the moment on this and that the CMA is looking into it. That said, embedding this in the Bill would give the reassurance that families need and deserve. When I was talking about this amendment with my noble friend Lady Brinton, she pointed out that it is not simply families who get separated from their children; people get separated from their carers—when you go searching, you find that there are plenty of examples of that. Again, surely this is a small change that can and should be implemented.
I am incredibly hopeful that there is an opportunity between this Committee and Report to do some serious and significant work, to make use of this Bill to ensure that we never have to hear of this appalling treatment ever again.
Lord Moylan (Con)
My Lords, it has been an important, valuable and moving debate. I do not have anything to add that would be helpful to the Committee, except to say that we must all take account of the important stories of people’s real experience, which are illustrative of what so many others have to face.
I said at Second Reading that I hoped that there would be sufficient unanimity on these issues and that the Government themselves would bring forward amendments around which we could rally. The advantage of that would have been that any government amendments would be workable and acceptable, so we would have been able to rally around something that worked rather than struggling as Back-Benchers, with the modest support we have, to devise something and impose it on the Government, which is always unsatisfactory in a certain sense. Unfortunately, the Government have not come forward with amendments, but there is still an opportunity for them to do so on Report. If they do not, I am sure that there will be a wide range of amendments that will almost certainly go to a Division. I do not see that they are going to be defeated, given the attitudes that have been expressed by noble Lords across the Grand Committee.
I urge the Government that it is in their interests to seize this issue and run with it. If they did so, I think that the whole Committee, across parties, would rally round them.
Lord Hendy of Richmond Hill (Lab)
My Lords, I am grateful to noble Lords for their thoughtful and powerful contributions on accessibility and consumer protection. The noble Baroness, Lady Grender, is right that we should not have to hear these stories. Some of them are simply dreadful, and the worst thing is that they are only examples.
The Government share the objective behind the amendments that disabled passengers and others who need assistance should be able to travel by air with confidence, dignity and appropriate redress when things go wrong. It is for those reasons that the Government established the Aviation Accessibility Task and Finish Group. I have already welcomed the report of July last year from the noble Baroness, Lady Grey-Thompson.
Before turning to individual amendments, I should make one point that applies to very many of them. Clauses 1 and 2 are designed to provide powers to strengthen passenger rights and enforcement. The Government’s view is that detailed requirements relating to passenger rights are best developed through secondary legislation, following consultation, evidence gathering and impact assessment, rather than fixed in primary legislation now, when the time to do those things is insufficient. I ask noble Lords to keep these common factors in mind as I progress but, to be clear, I will gladly meet interested Members of your Lordships’ House to discuss each individual amendment and describe further the Government’s intentions. To gently contradict the noble Lord, Lord Blencathra, Ministers will have influence on what is brought forward in the regulations; it will not just be civil servants who propose. However, I will be asking noble Lords not to press their amendments, for the reasons I will set out.
Baroness Grey-Thompson (CB)
My Lords, this has been a large group of amendments, and I think the answer is probably somewhere in the middle. I remain unconvinced that the Bill, as it stands, goes far enough. I like the suggestion from the noble Lord, Lord Moylan, of government amendments. That might save quite a lot of time, as this would be something that I would want to push to a Division on Report.
The debate highlights some of the problems we have with international jurisdictions. We have not addressed people who want to fly in electric wheelchairs. That is above anything that we can do here.
Lord Moylan
Member's explanatory statement
This amendment probes why both the CAA and the CMA require powers to compel information from air transport service providers and airport operators, and whether this function should rest with the CAA alone as the aviation regulator.
Lord Moylan (Con)
My Lords, we come now to a debate about the mechanics of the Bill, and it involves a considerable amount of detail. We are focused on the purposes of Clause 1 and 2. The purpose of Clause 1 is to give the Secretary of State the power to make regulations about the consumer protection of air passengers. As we know, those regulations have until recently been made by the European Union. It is right that the Secretary of State should be given those powers. The Secretary of State is accountable to Parliament and to the public, which is all to the good.
We object to the fact that so many of those regulations are to be made by the negative procedure. I know that at Second Reading, the noble Lord, Lord Tunnicliffe, said that it did not matter either way, but it does matter to us as Members of your Lordships’ House that statutory instruments of importance, especially those making regulations to do with consumer protection, should come forward as instruments under the affirmative procedure. We have amendments to that effect in this group. As things stand, the only instruments that would come under the affirmative procedure, as the Bill is written, would be those creating criminal offences. The Government, at least, accept that. But the others, which are matters to do with consumer protection, would be under the negative procedure. That is not good enough.
The second question relates to who is to do the enforcement and how. This is more to the thrust of Clause 2. Clause 2 itself is very short, but it enacts Schedule 1, which in terms of paper takes up about half the Bill. It is a very lengthy schedule, which is why this group might not be as short as one might hope.
Clause 2, with its schedule, splices—I think that is the right word—the Civil Aviation Authority into the Digital Markets, Competition and Consumers Act, which gives the Competition and Markets Authority its power to engage as a regulator with British businesses, looking at matters to do with competition, monopolies, abusive behaviour and so forth. It is interesting that reference was made earlier in the debate to the case being pursued at the moment by the Competition and Markets Authority against a British airline for charging families a fee in order to sit together, particularly a fee that affects younger members of the family under the age of 16. The noble Lord said he was not going to comment on the merits of that case, and understandably; nor am I, but it is interesting that that case, which is clearly a consumer protection case, is being pursued by the CMA.
We are going to have the CAA spliced into the Bill as a parallel regulator. We will have two regulators, with broadly similar powers, regulating the aviation sector. Anyone with even the remotest experience of low-level local government, such as myself, knows that one of the principles of enforcement in British law is that, for one crime, there is one prosecutor, so you cannot be prosecuted twice or pursued twice by different prosecutors for the same offence. That applies to traffic offences. They are enforced by the local authority, as parking generally is, or, if they are moving traffic offences, then, depending on the area—I am speaking of London now, where this is true, but it is not true of the rest of the country—they are enforced by either the local authority or the Metropolitan Police but not both, for the very good reason I have explained. It is simple. Why is the CAA being spliced into this structure—the architecture of the Bill—as a parallel regulator, and how will the two work together?
Well, the Bill has an answer to that: they will work together because the Secretary of State is given powers to sit on top of this Tweedledum, Tweedledee structure and decide—there is no guidance given and nothing explained as to how he will decide—how to co-ordinate the two. One could hardly imagine a more bizarre structure, a sort of pushmi-pullyu horse with two people inside it, and how they will work together. I do not have a solution. My amendment simply removes one of them from the structure and leaves it to the other; I suspect that that is not a wholly satisfactory solution, but my amendment is for the purpose of provoking this debate. But it is wholly unsatisfactory that the Government are proposing this architecture. I think it is for the Government to come forward with something workable that satisfies the Committee that they are actually able to deliver this in a way that will work. At the moment, it will not.
There are amendments from my noble friend Lord Grayling, which I have signed and which I am sure he will speak to himself shortly, but I have further amendments in this group that relate to the enforcement powers. According to the Bill, the way the Civil Aviation Authority will work if it has to take an enforcement action is that it will issue a notice to the miscreant airline or whatever operator it is that comes within the scope of the Bill. That is perfectly all right, but there is no appeal built in against the notice. The only way in which somebody who disputed the notice could appeal against it, as far as I can see, is by way of judicial review, which the Civil Aviation Authority’s decisions are subject to. You would have to proceed to judicial review, which is an astonishingly heavy and wasteful, time-consuming and expensive process, when the Bill is clearly calling out for some sort of intermediary step, tribunal, mediator or body that can sort out disputes where the two are not in agreement and where it is believed that the Civil Aviation Authority has not conducted itself properly or in a way that is reasonable.
Lord Grayling (Con)
My Lords, I will speak to Amendments 17 and 22 in this group. Following on from what my noble friend Lord Moylan has said, my concern is that the nature of the Civil Aviation Authority is being changed by the content of this Bill. It seems to be going further than simply continuing the protections for consumers that existed under European law—which rightly should remain in UK law. The level of enforcement powers in the Bill cause me a great deal of concern and are not what the Civil Aviation Authority is there to do. It is primarily a safety body. Its big focus, as we left the European Union, was taking over the responsibilities for aviation safety in the UK from EASA. Since then, we have seen dramatic changes in technology, the emergence to a much greater degree of drone technology and different kinds of aviation beginning to appear on the horizon. We are looking at the realistic possibility of air taxis in the very near future. There is a very clear and necessary remit for the Civil Aviation Authority to maintain as the guardian of aviation safety in the United Kingdom.
Of course, there will be occasions when it needs enforcement powers, but as my noble friend rightly says, it is taking over enforcement powers that very much mirror those that already exist for consumers in this sector from the CMA. In doing so, it is creating a whole raft of additional responsibilities for a body that I want to remain a very focused organisation that has safety as its number one priority.
I simply cannot understand why it is necessary to give the CAA what are, in essence, enforcement powers that the police have—for example, the power to kick in a door or to interrogate someone in their place of work or their own home. This is not a simple civil enforcement provision. This is taking the role of the Civil Aviation Authority to another level. The first of the amendments that I have tabled is intended to challenge the need for those powers to exist. I am utterly unpersuaded that they need to exist. Unless the Minister can do a pretty good job of explaining why they are necessary, we will return to it on Report.
We will also need to limit somewhat the CAA’s ability to get into the weeds with these enforcement powers. In effect, we need to concentrate its ability to take such action in a situation where there is clearly a systemic failure. We should not be giving the Civil Aviation Authority draconian powers to deal with relatively minor matters. That simply should not be the case in law. The CMA already deals with minor and significant consumer matters. Amendment 22 simply says that the powers in the Bill should focus on substantial systemic failure only.
I await with interest the Minister’s defence of this element of the Bill. I have addressed two specific areas but, as my noble friend Lord Moylan just set out, there are more. I hope the Minister can persuade us because, unless he does, I am sure we will want to return to this on Report.
Baroness Foster of Oxton (Con)
My Lords, I support the thinking behind the comments made by my noble friends.
For clarification, if we are looking at consumer rights, it is the Civil Aviation Authority that has dealt with the public over a number of years when the public have not been satisfied with the compensation for delays or cancellations that they have received from an airline. The CAA is already doing that and playing that role. Do the Government see the CAA continuing with that particular role in such cases? That is one question.
Secondly, when we start to look at the Competition and Markets Authority, I do not see how you can have two authorities basically dealing with the same things. We know that the Civil Aviation Authority has the expertise in these fields, which is quite right, whatever we might object to in terms of powers. I am not sure who came up with the idea of the competition authority coming into decisions that should be made by the CAA as a regulator. I would be very interested to know from the Minister how this thought—that there could be two regulatory authorities dealing with civil aviation, its merits and everything that goes on around it—came about.
Lord Hendy of Richmond Hill (Lab)
My Lords, this group concerns the consumer rights powers in the Bill and the scrutiny of those powers. I am grateful to noble Lords for their amendments. The Government’s objective is a coherent, effective and proportionate consumer protection regime for aviation passengers.
Before I turn to the individual amendments, I will make three points that apply across this group. First, Clause 1 does not in itself create new powers of entry or financial penalties; it simply enables regulations to be made, with their scope, safeguards and detail being considered when they are brought forward. Secondly, the Government believe that detailed requirements should be developed through secondary legislation, with consultation, options appraisal and an impact assessment where appropriate. Thirdly, the Bill preserves flexibility so that the CAA, the CMA and the Government can respond effectively to consumer harms that may cut across aviation and wider markets. Where I refer to duplication, proportionality or flexibility, these are the common justifications that I have in mind.
Let me begin with Amendments 8 and 18 in the name of the noble Lord, Lord Moylan, which are supported by the noble Baroness, Lady Foster, and concern the role of the Competition and Markets Authority. Although most aviation-specific enforcement relating to information gathering and powers of entry will sit with the CAA in practice, the CMA has a broader, market-wide role—including in sectors that overlap with aviation, such as travel and holidays. The CAA and the CMA already have concurrent powers in relation to general consumer law. Removing the CMA from this framework could limit flexibility and make it harder to address problems that span aviation and wider consumer markets. Therefore, in the Government’s view, it is right to retain the ability to include the CMA where necessary. The precise role of each regulator will be considered when secondary legislation is drafted. I therefore ask the noble Lord not to press his amendments.
I turn next to the amendment from the noble Lord, Lord Grayling, which seeks to remove the power of entry provision in Clause 1. I am afraid that I cannot support it. The Bill is designed to improve the CAA’s enforcement ability and to reduce reliance on slow, resource-intensive court processes. Clause 2 strengthens the CAA’s direct information-gathering powers. Clause 1 enables those powers to be strengthened further, if needed, including by enabling powers to enter premises or to require documents and information during the course of an investigation. Any such power would be considered carefully, consulted on and include appropriate safeguards when regulations are brought forward.
I also assure the noble Lord that these wide enforcement powers, including powers of entry, fell within Section 2 of the European Communities Act 1972. Much passenger rights law originated in EU law and has now been assimilated into UK law. Since our exit from the EU, primary legislation has generally been needed to amend it. Clause 1 restores the necessary degree of flexibility while preserving parliamentary scrutiny and future consultation. I ask the noble Lord not to press his amendment.
Lord Grayling (Con)
I have a simple question. What the Minister has not done is explain why it is necessary. What are the problems that this is designed to solve?
Lord Hendy of Richmond Hill (Lab)
I understand the noble Lord’s question. I will come back to him on that.
Amendment 22, also from the noble Lord, Lord Grayling, concerns financial penalties and the circumstances in which the CAA may act. The CAA’s role is to enforce consumer rights where breaches cause collective consumer harm, rather than to resolve individual disputes. Clause 1 does not in itself create financial penalties; it enables regulations to grant such powers in future where that is justified and appropriately framed. Any regulations creating penalties would be subject to the affirmative procedure. Thus the amendment would be unduly restrictive, so I ask the noble Lord not to press it. Having listened to noble Lords on the need for better enforcement, I would not wish to constrain the CAA’s powers in this respect.
I will address Amendments 26 and 27 from the noble Lord, Lord Moylan, together. I agree that future regulations must receive appropriate parliamentary scrutiny. Clause 1 already provides a balanced approach: the affirmative procedure applies to the most significant matters, including criminal offences and financial penalties. Some amendments could be more minor or technical changes, such as updating an organisation’s name. Requiring the affirmative procedure in all cases would not be proportionate and would place unnecessary demands on parliamentary time. I ask the noble Lord not to press his amendments.
On Amendment 28, also from the noble Lord, Lord Moylan, I absolutely agree on the importance of reviewing the impact of regulations. However, post-implementation review requirements are already considered when developing secondary legislation and included where appropriate. Not every regulation will warrant a review, particularly where changes are minor or technical. For the common reason of proportionality, I ask the noble Lord not to press this amendment.
Amendment 33, also from the noble Lord, Lord Moylan, concerns the procedure for regulations on co-operation between enforcement authorities. I do not consider the affirmative procedure necessary. These regulations are administrative in nature. They may cover information sharing, notification arrangements and how direct enforcers determine which authority should act in a particular case. There are precedents for such regulations using the negative procedure, which provides proportionate scrutiny. I ask the noble Lord not to press this amendment.
Amendment 34 in the name of the noble Lord, Lord Moylan, concerns the jurisdiction of the CAA and the CMA in aviation consumer protection. Paragraph 6 of Schedule 1 already enables regulations to set out how the two authorities co-ordinate, decide which is best placed to act and avoid duplication, including through joint working. The CAA will also have regard to the CMA’s rules, supporting consistent enforcement. A fixed approach in primary legislation would reduce flexibility and risk constraining effective enforcement. I therefore ask the noble Lord not to press Amendment 34.
Lord Moylan (Con)
My Lords, the structure that the Bill introduces is not going to work. Having two regulators that are, frankly, fighting over turf in carrying out enforcement actions will not work. It will fail. I am giving the Government an opportunity now to recognise that and do something about it.
On whether it should be the CAA or the CMA, my amendment would remove the CMA from the process —my noble friend Lady Foster supported this—so that it stays with the CAA, but I am open to an argument either way as to which of the two enforcement authorities it ought to be. That is not my main point, which is that there needs to be just one. The Minister says that this is all going to be sorted out by a statutory instrument. Indeed it will—that is mentioned in Schedule 1 on page 19—but it is going to be a negative statutory instrument, so we will know almost nothing about it.
In relation to powers, I fully appreciate that the Bill does not in itself create new consumer rights nor particular enforcement powers. I was careful to say that Clause 1 gives the Secretary of State the power to give powers to the Civil Aviation Authority; I was clear about that, I think. None the less, all of those powers, which the Minister says are going to be transparent and consulted on, will be carried out under the negative procedure. Except for the powers creating criminal offences, they should not be; they should be carried out under the affirmative process.
This matter is so important to the Bill, as a piece of administrative legislation, that it is very likely, I am afraid, that I will come back to some of these issues on Report. For the moment, though, I beg leave to withdraw my amendment.
Lord Holmes of Richmond
“Use of artificial intelligence in CAA enforcement decisions(1) Where the CAA uses an artificial intelligence system to inform or support the exercise of its direct enforcement functions under Schedule 1, the CAA must—(a) ensure that every enforcement decision informed by an artificial intelligence system is reviewed and authorised by a qualified human decision-maker before it takes effect;(b) conduct bias audits of the system at intervals of not more than 12 months and publish the results;(c) provide a written explanation of any enforcement decision informed by an artificial intelligence system to the person affected on request;(d) operate an accessible appeals mechanism through which persons affected by such a decision may challenge the use of the system.(2) For the purposes of this section “artificial intelligence system” has the meaning given in the AI Act (Regulation (EU) 2024/1689), or such other meaning as the Secretary of State may specify by regulations.(3) The CAA must publish an annual report on its use of artificial intelligence systems in the exercise of its direct enforcement functions.(4) Any regulations under this section are to be made by statutory instrument.(5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”Member's explanatory statement
This amendment seeks to require human oversight at every decision point where AI is used in the CAA's direct enforcement functions, mandates annual bias audits with published results, requires written explanations of AI-informed enforcement decisions on request, and establishes an accessible appeals mechanism.
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to move Amendment 31 in my name and to speak to Amendment 32 and the other two amendments in my name in this group. It is worth reflecting that we have now been in Committee since 3.45 pm. We could have flown to Athens in that time, but who would want that when you can have the warmth of the Grand Committee together?
To take a step back, it is interesting that the aviation sector has often been at the forefront of technological advancement. Just two examples are Sir Frank Whittle’s jet and the elegance of Concorde, which also speaks beyond technology to what we can achieve when we work internationally and collaboratively—something unrivalled in commercial aviation since and that is still a marvel. Bearing that in mind, it is extraordinary that this Bill is silent on the possibilities of technology, not least emerging technologies and the powers they could bring to support the intentions of the Bill. That is the purpose of these amendments.
Amendment 31 looks to how AI could be used to assist the CAA in its endeavours. Amendment 32 looks at all the questions around cyber, particularly given the legacy systems at UK airports. The Bill’s provisions will bring a lot of new data into play. It is imperative that this data is subject to stringent levels of cyber security and protection. It would be positive for all concerned if this were set out in the Bill. Harking back to those days of innovation and endeavour—the white heat of technology from the Labour Government under which Concorde came into being—it would be extraordinarily positive to have a technology horizon-scanning requirement for the CAA. That would make a difference not just for airline businesses, as it sits squarely with them, but to how emerging technologies could assist and transform the operations of the CAA for the benefit of airlines, passengers and everybody involved in aviation.
Finally, to turn to the governance that should sit around these technologies, there is clearly an assistive, enabling and supportive role that the CAA could play in terms of guidance and support. The Government have clearly stated their approach to artificial intelligence: to not bring forward cross-sector and cross-economy AI legislation. There is nothing party political in that approach; it is the identical approach to that which was taken by the previous Government. It is a sub-optimal approach, because it fails to give the UK the best opportunity really to realise and optimise the potential from this constellation of technologies that we call AI and go to the heart of the attendant risks, which will otherwise go unaddressed, and oftentimes it will be those at the sharp end who suffer the most.
The Government have stated that they do not want to do cross-sector AI regulation and that they will take a domain-specific approach. Here we have a specific domain—aviation—yet the Bill is silent with regard to AI. Is it the position that the Government are simultaneously not bringing forward cross-sector AI legislation while also not doing anything domain by domain, sector by sector on AI legislation and regulation? That is the position with regard to this domain, as set out in the Bill. This is about the transformational power, and the potential for the CAA to transform how it goes about its operations to enable better services to airlines, and its role in transforming the passenger experience and optimising it, with a far more efficient use of all the resources that are currently in play. That is the current situation, and it seems at least curious if not somewhat unfortunate. I look forward to the Minister’s response and I beg to move.
Lord Barber of Ainsdale (Lab)
My Lords, I shall speak to Amendment 101A. I declare an interest as I am currently president of the British Airline Pilots Association.
It is clear that we have ambitious targets for growth in this sector. It is a sector with tremendous growth potential. That will need an appropriate number of pilots to be available in the coming years, but it is clear that there is a rising number of licensed pilots who will leave the workforce in the next few years. There is a compulsory retirement age for commercial pilots of 65. In a recent answer to a Parliamentary Question, the Minister reported that, of the CAA-registered pilots reaching that age, more than 1,300 will leave the sector within the next five years. That is at a time when we have ambitious plans for airport expansion, to promote growth in the sector.
This amendment would require the CAA—and it would engage the sector—not to sleepwalk into difficulties with shortages of pilots by publishing an annual report, with three key issues to address. First, there is the availability of pilots in the coming period. Secondly, there is the capacity of training provision in this area. Thirdly, there are the factors affecting access to the profession of pilot, including the cost of the necessary training.
On that final point, there are currently real financial barriers to pilot training. The cost is something of the order of £100,000 or more, and there are only two airline-funded schemes to train new pilots—British Airways and Jet2. For every successful applicant to the BA scheme, there are around 100 unsuccessful applicants who would like to make a career in the industry and who potentially have the skills and adaptability to undergo the training successfully. In terms of availability of finance, unless you have the bank of mum and dad, there is no real alternative provision available. There is no student loan scheme for people wishing to access the profession, and there is no readily available commercial loan offer from the banks either.
Lord Davies of Gower (Con)
My Lords, I will speak to my Amendment 65A, through which I am pleased to have the opportunity to address the issue of instrument training. I confess that it is a dry subject, but it is essential and falls within the scope of group 5.
The CAA published its refreshed general aviation strategy in October 2025, setting out its vision for
“A safe, innovative, and sustainable general aviation sector”
operating within
“a proportionate and supportive regulatory environment”.
In the report, the CAA acknowledged that, while progress has been made,
“The GA sector faces … challenges including declining flying hours, a stagnating number of recreational pilot licence holders, as well as an ageing fleet of aircraft”.
One very challenging aspect facing general aviation at present, which has not been adequately addressed, is support for self-improver pilots in instrument training: the pilots who pay their own way from initial training for a private pilot’s licence through to commercial pilot qualification and who have, incidentally, traditionally made up the vast majority of commercial pilots. This access to instrument training challenge also applies to students on approved airline pilot training courses, and this reinforces the points made by the noble Lord, Lord Barber of Ainsdale: no training, no pilots. One of the essential ingredients to becoming a commercial pilot, or indeed an additional qualification for any private pilot, is instrument rating. I assure noble Lords that it is an exacting test of 55 hours of blind flying, mathematics and flying skill that allows pilots eventually to fly in and make approaches to airports in marginal weather conditions.
The challenge pilots undertaking training now face, however, is access to airports with the facilities to enable training for the instrument rating qualification. Currently in the UK, there is a complete lack of instrument approach training slots. The whole of the UK professional flight training industry cannot deliver for UK-based students the full range of navigational performance training which is reliant upon satellite-based signals. As I pointed out at Second Reading, worse still, all these GPS-supported approaches are only two-dimensional, lateral and non-positional. Three-dimensional precision requires the European geostationary navigation overlay service—EGNOS—safety-of-life service to enable the airport to provide this. I will not dwell on EGNOS, as there will be more of that later.
Across the channel, in places such as Jersey and in other European countries, and indeed in the USA, a full suite of approaches to training aircraft is available, as they still benefit—certainly in Europe at least—from the EGNOS signal in space. This is a loss of revenue and skills base to the UK. Similarly, air traffic control officers cannot do more than train in simulation for 3D approaches, which can get as low as 250 feet above the runway.
Many UK instrument rating instructors and CAA examiners have highlighted the issues relating to the instrument rating training. The situation has been ongoing for the past 15 years and has been noticeably worse in the last 10 years. The situation has been highlighted to the Civil Aviation Authority, but as yet nothing has been addressed.
My amendment seeks to find a remedy to account for the lack of opportunity for instrument training through the limited availability of suitably equipped airfields. There are many reasons for it: the closure of UK airfields; the removal of instrument landing systems, partly due to the expense of maintaining them to the approved standard; the availability of navigational aids at the airfields that remain open and which accept training flights; the cost of transit flights for the students to access airfields with required navigation aids; and the general shortage of air traffic controllers, both civil and military. Quite a number of airports in the UK do have facilities, although they are not made easily accessible for one reason or another, yet at varying times of the day they have a certain amount of redundancy. Furthermore, a large number of military airfields with the necessary facilities also have a great deal of redundancy.
In conclusion, the purpose of my amendment is to open the debate to see whether there is a way to encourage availability where there is this redundancy. I fully recognise the challenge this creates across government departments, but the situation has become quite dire and the solution requires some thought. I hope that the Minister appreciates my concern and is willing to give some thought to the solution, together with the CAA, which, of course, is responsible for licensing the instrument approaches.
Baroness Foster of Oxton (Con)
My Lords, I thank the noble Lord, Lord Holmes, for his very interesting take and amendments in this area.
I want to come to pilot training. I support the noble Lord, Lord Barber, who, as a former trade union negotiator for British Airways cabin crew, worked very closely with our BALPA colleagues for many years—and that continues. I agree with what he said.
My ex-husband trained at Hamble—as I think the noble Lord, Lord Tunnicliffe, will remember—and when I joined the airline industry, our pilots had come from the RAF or the schemes run by BEA, BOAC and then British Airways. Other pilots went to Oxford Flying School, Prestwick or various other places. It was always a costly venture for any pilot not part of the state-owned airline industry as such. But we have moved on, and the noble Lord is right to say that it is fine to complain but we need some action.
As the noble Lord said, it costs in the region of £100,000 to train somebody up to be a commercial pilot. That is an extremely good investment for an airline but, as has been mentioned, British Airways and Jet2 appear to be the only airlines prepared to put their money where their mouth is.
These loans, if they come as loans, guarantee that those pilots will pay them back over the years. Unlike certain students, perhaps, I do not think they are going to disappear into the long grass. So it behoves government to start to look at a student loan-type scheme. Industry and the airlines need to step up, and those complaining of a shortage of pilots coming forward need to look at the schemes run by BA and Jet2 and start to provide some incentive and some action to deal with a possible shortage over the next few years.
This is a fantastic profession and those young men and women who go into it will have a rewarding career until their mid-60s. I think it behoves all of us to do everything we can. While we encourage youngsters to go to university, this is a profession that really needs to be supported. We now need to get outside the box and start to look at ways to get in those young, enthusiastic people who will be our brilliant pilots of the future.
Lord Tunnicliffe (Lab)
I will go next because of the generality of the subject. I find myself in the peculiar position of agreeing with people for once. I, broadly speaking, share the general direction of the noble Lord, Lord Barber, the specific objection of the noble Lord, Lord Davies—I remember well the joys of the instrument rating—and the general direction of the noble Baroness, Lady Foster.
I have a particular interest in this because I was in the airline industry for 22 years. For about eight of those I was a pilot and during that time, thanks to Norman Tebbit, of all people, I was a pilot shop steward. So I am used to this debate but, peculiarly, my future career in the airline industry was as an airline manager, and I was involved with pilot recruitment. Pilot recruitment and numbers since the Second World War have been chaotic. There was not really any serious civil aviation before the Second World War. The expansion of aviation during that period created a situation where there were pilots and aircraft available after the end of the war. Along came, thanks to the Soviet Union, the Berlin airlift, which was a great provoker of civil aviation in the UK, as small firms all over the place set up and participated in that operation between June 1948 and May 1949.
That was the beginning of a period where the Great British public discovered that the sun in Benidorm was actually rather better than the sun in Skegness. There was, generally speaking, a boom from the early 1950s onwards. The nationalised airlines, BEA and BOAC, woke up to the fact that this pool of free pilots was going to run dry and they created the training facility at Hamble. It trained 2,000 pilots over the 24 years it was in operation, including me.
More recently, we have a shortage, and we have worries about how we are going to solve that shortage. It has been funded in the sense of creating pilots by self-funding pilots. People talk of £100,000. Frankly, I do not think you get a lot of change out of £130,000. That has meant it has been an occupation for people who have access to £130,000 pounds. I hate to tell the Committee this, but a lot of people do not have that access to funds. BA has come forward with a scheme over the past couple of years, and we are right back to where I came from—that is, the airlines paying for pilots. I am slightly narked, because its programme is entirely free, whereas I had to pay back £1,000 after being employed ,and that is about £24,000 in today’s money, but good luck to them.
We just cannot have the chaos of the marketplace, including how rich your parents are, determining the supply of pilots. We need a holistic analysis of where we are, what the demand is and what the training capability is. We need to worry about the components of it, the specialist training that the noble Lord, Lord Davies, talked about, and the fundamental training, of which general aviation is such an important part. We need to at least have a situation where somebody sees the total picture, and that should be the CAA.
The amendments in this group basically say that the CAA should pick up that responsibility and create a report every year, or whatever. When see the whole picture, the industry can more sensibly react to it—the CAA can push these things, to an extent, and British Airways can help with this—which could lead to a smooth situation that we have not had since 1945. That is why I support the two amendments that have been spoken to, as well as my own amendment, which says that we should charge the CAA with creating the data picture that will become the basis for future pilot supply.
Lord Berkeley (Lab)
My Lords, very briefly, I support the amendments in the name of the noble Lord, Lord Davies of Gower. I think he will agree that much of what he said—and it was reflected as well in the comments of many of my noble friends—came from the reaction that we both had from the All-Party Group on Aviation. It is a bit of a disaster situation. That group criticised the CAA strongly, not only on training—and everything else that noble Lords have talked about—but on the exam syllabus. The incident training syllabus has apparently not been upgraded for 20 years. This is in spite of examiners and other people asking the CAA to incorporate the charges, to no avail. My plea to my noble friend the Minister tonight is for him to put a bomb under the CAA and convert it into a new, customer-friendly regulator.
Baroness Grender (LD)
My Lords, the amendments in my name insist on statutory duties that would secure workforce resilience and international regulatory alignment, rather than leaving these matters to open-ended secondary legislation.
Amendment 103 would require the CAA to prepare an annual report on commercial pilot licence holders, including anonymised demographic data, and an assessment of workforce sustainability as a regulatory monitoring tool. The licensing authority needs to understand whether the pool of qualified pilots has been maintained at a level that supports safe and continuous operations. I thank BALPA for supporting this amendment and helping to draft it. An important point that has not so far been drawn out is the need to identify the proportion of pilots licensed to fly commercial airliners who are women—the kind of important data that ensures that there is a workforce that reflects the future.
The amendment would also require the CAA to consider the future availability of a pilot workforce. As we have heard, commercial airline pilots must retire at 65. An authoritative annual assessment by the CAA would flag issues about the future supply of trained pilots.
I feel that we are all currently dancing on the head of a very particular but extremely useful and important pin. Between now and Report, I hope that we can put some of this together—unless the Minister says in the next few minutes that he is accepting all our amendments. We live in hope.
Amendment 104 would place a statutory duty on the Secretary of State to pursue UK-EU mutual recognition in relation to pilot and engineer licensing and aircraft parts certification. This came through from one of the APPGs, which had particular concerns about this issue. The absence of recognition mechanisms can create duplicated compliance burdens. We are all familiar with this kind of thing: regulatory friction and delays in maintenance and staffing, all of which matter operationally and economically.
I will not take up any more of noble Lords’ time, except to say that I commend the noble Lord, Lord Holmes. We first served together in 2018 on the first Select Committee on artificial intelligence, so never let it be said that Peers are not sometimes ahead of the curve. Its report was entitled AI in the UK: Ready, Willing and Able? and he continues to pursue this issue with his usual energy. I always support and listen to him on these issues, and I look forward to hearing the Minister’s response.
Lord Moylan (Con)
My Lords, in the last group, I came up with a modest amendment that would have involved increasing the threshold at which strike ballots had to be passed before a strike could be undertaken—a clear consumer protection measure well in line with the purpose of the Bill. In this group, we seem to have wandered off into discussing pilot training, which I do not see as being intimately connected with consumer protection. Everyone is agreed that something should be done to interfere in the market, and that the Government or one of their agencies should take some sort of responsibility for this. It is entirely opposite to the thrust of the response I had on holding strikes. I find it remarkable.
I understand the problems identified by the noble Lords, Lord Barber and Lord Tunnicliffe, and my noble friend Lord Davies of Gower. I understand that these are indeed serious problems. I am willing to go so far as to accept that the Civil Aviation Authority might want to take cognisance of them and have a sense of how extensive the problems are. But it is surely very clearly for the industry itself to solve these problems, and that is what we must insist on. I imagine that the Minister will be as firm in rejecting these interferences with the market as he was in rejecting my modest amendment in the last group.
My noble friend Lord Holmes made points of great wisdom and vision, and the noble Baroness, Lady Grender, rightly pointed out the assiduity with which my noble friend has brought attention to bear on these important technological issues over a number of years. I do not feel competent myself to make direct comments on them, but I applaud the notion that we should be looking very carefully at the developments that technology will bring. That will include, of course, the abilities and skills required of pilots. I do not want to push it too far, but we have planes that now practically fly themselves—I do not mean that they can do without pilots, but they can practically fly themselves. Of course, in freight, we have drones appearing everywhere and great technological advances being made. That must have an impact on a training curriculum for pilots.
I was astonished to hear the noble Lord, Lord Berkeley, say that the training curriculum for pilots was several decades old. I am not sure if I heard him correctly, but if that is so, then perhaps it needs to catch up with modern technology. There are many things that an aeroplane does nowadays that it could not do 30 years ago and that the pilot ought to know about.
I want to make this point again about UK-EU alignment—
Lord Berkeley (Lab)
What I actually said was that the syllabus was 30 years old. I hope the noble Lord understood that correctly.
Lord Moylan (Con)
I am very grateful, but does the syllabus not determine the content of the training? It is a matter we can take up outside—it is not something we need to detain the Committee on at the moment—but I am very grateful to the noble Lord for making it clear what he said and putting me right to that extent. I had no wish to put words into his mouth, but I was just struck by what he said.
I wanted to come back briefly to the question of UK-EU alignment on this. It would, of course, be very good if there were mutual recognition between the UK and the EU, but it would also be very good if there were mutual recognition between the UK and the US. I am not entirely sure why there is this relentless focus on the EU. In the days when we had freedom of movement—mercifully, we do not anymore, because we voted against it—mutual recognition would mean that a pilot could move from one country to another and live there and pursue his calling in those countries. That is no longer the case, any more than it is with the United States, so the argument for a specific arrangement with the European Union seems to me to fall largely by the wayside. Apart from that, I thank my noble friend Lord Davies of Gower for his contribution, and I look forward to hearing what the Minister has to say in the four minutes remaining.
Lord Hendy of Richmond Hill (Lab)
My Lords, I will do my best to speak as fast as I can, subject only to clarity. I turn to the next group, which covers workforce, skills and innovation. I am grateful to noble Lords for their amendments. Across this group, the Government share the underlying aim of ensuring that aviation remains safe, secure, innovative and supported by the skilled workforce it needs.
Before addressing each amendment, I will make a point that applies to several of them. In areas such as artificial intelligence, cyber security, emerging technology and skills, the Government’s view is that regulation must remain flexible, proportionate and capable of keeping pace with fast-moving developments. Where existing legislation, CAA functions, cross-government work or established programmes already address the issue, placing detailed duties in the Bill risks duplication, inconsistency and unnecessary administrative burden. I will refer back to that common justification where relevant.
I begin with Amendment 31, tabled by the noble Lord, Lord Holmes of Richmond, on artificial intelligence safeguards. As he does, I recognise the importance of ensuring that AI is used fairly, transparently and responsibly. At present, the CAA does not use AI to make regulatory decisions, and any future consideration will require board approval. However, there are protections already in place should it do so. The CAA is subject to data protection legislation and Equality Act duties, which require fairness, transparency, accountability and appropriate human oversight in decision-making. Amendment 31 would duplicate those obligations and introduce a prescriptive statutory framework in an area where guidance, assurance processes and evolving standards are more suitable. AI policy is also being developed on a cross-government basis, led by DSIT, and legislation here in isolation risks cutting across that wider work. For those reasons, and applying the common point about flexibility and avoiding duplication, I ask the noble Lord to withdraw Amendment 31.
Amendment 32, also from the noble Lord, Lord Holmes, is on cyber security and legacy systems. Robust cyber security across aviation is essential. The CAA already has deep cyber experience and robust protocols and is subject to expectations in the Government’s cyber action plan. The Network and Information Systems Regulations require regulated entities to manage risks and prevent and minimise the impact of incidents. That already includes considering risks from legacy systems, with compliance assessed and enforced by the CAA.
There is also a wider legislative context. The cyber security and resilience Bill is designed to strengthen the UK’s cyber regulatory framework on a system-wide basis and allows further security and resilience requirements to be introduced through secondary legislation, following consultation. Stand-alone requirements in this Bill would risk fragmenting that coherent approach. I therefore ask the noble Lord not to press his amendment.
I thank the noble Lord, Lord Davies of Gower, for Amendment 65A, and the noble Lord, Lord Berkeley, for his observations on this matter. Instrument approaches to airfields are subject to specific CAA approvals that ensure that pilots can safely land using their instruments when a visual approach is not possible, usually due to poor weather. These focus on ensuring that instrument landings and approaches can be undertaken safely, rather than adding an additional requirement for the airfield also to train pilots for instrument approaches.
There are also detailed requirements for training in international and UK safety regulations. Requiring training would not be appropriate for all airfields. Smaller airfields may not be able to accommodate this, and it may also be unsuitable for larger, busier airports where the operational environment and potential disruption to commercial flights make such requirements impractical. This amendment could, therefore, decrease the number of airfields that allow instrument approaches, making it more difficult for pilots to find places to land in poor weather. We will ask the CAA to give further consideration to this issue, but we are not convinced that it is a matter for primary legislation. I therefore ask the noble Lord not to press this amendment.
Lord Holmes of Richmond (Con)
My Lords, I thank all noble Lords who contributed to this interesting debate. I also thank the Minister for his speedy response, which was Concorde-like in its pace of delivery and has landed us at the end of today’s proceedings in Committee. For now, I beg leave to withdraw my amendment.
House of Lords
Oaths and Affirmations
Environment Act 2021 Targets
(1 day, 4 hours ago)
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The Lord Bishop of Norwich
To ask His Majesty’s Government how they intend to meet the targets in the Environment Act 2021, including halting the decline of species abundance by 2030 and increasing overall species abundance by at least 10 per cent by 2042 compared to 2030 levels.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, Defra published the revised environmental improvement plan in December 2025. This sets out the Government’s long-term plan for improving the natural environment and our enjoyment of it. It includes prioritised actions to deliver our goals and ambitious Environment Act targets, and clearly describes the actions that are required and, importantly, who is responsible for delivering them. The delivery plans published alongside the environmental improvement plan set out how we will deliver against our interim and long-term targets.
The Lord Bishop of Norwich
My Lords, I am grateful to the Minister for her reply. Notwithstanding the work that the Government have done on this and the plans that they have put in place, the Office for Environmental Protection has concerns. It reported back in January:
“Government needs to speed up and scale up its efforts … and actions”
because they remain
“largely off track to meet EA21 targets”.
The window of opportunity is closing fast. We need to drive nature recovery at scale. With 70% of the UK being farmland, farmers play a vital role in nature recovery as well as in ensuring food supply. Might the Government consider providing greater support to farmers for these two twin aims, including within the environmental land management schemes?
Baroness Hayman of Ullock (Lab)
The OEP’s assessment that the right reverend Prelate refers to was made before our revised environmental improvement plan. Following the assessment, we have reset the interim targets so that they are live and under active review. Regarding farm wildlife, to achieve the legally binding biodiversity targets referred to we need as many farmers as possible to be working in a way which benefits biodiversity. Crucially, this will mean land sharing, to support farm wildlife alongside productive farming, as well as land sparing—habitat creation and restoration through bigger projects such as our landscape recovery project. That is a new interim target for the EIP to deliver environmental change through incentivising farmers.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
We will hear from the Cross Benches, then the Opposition Benches.
Baroness Willis of Summertown (CB)
My Lords, I appreciate the response from the Minister. We are very good at saying what is not working but not so good at measuring what is working. Anecdotally we know that some improvements, such as rewilding and regenerative agriculture, are working for nature, but we still lack the metrics and data to record that. Can the Minister assure us that she will look at broadening out what is assessed so that we can learn which legislation is bringing about improvements in nature?
Baroness Hayman of Ullock (Lab)
The noble Baroness is absolutely right. Unless you have accurate data, you do not know whether you have set the right targets. It is absolutely critical. One of the things that we are looking at in Defra, right across the board, is how to improve our datasets. In this particular area, it is critical. We know that if you target nature properly, it recovers very quickly, but we need to understand that better.
Lord Gardiner of Kimble (Con)
Does the Minister agree that invasive non-native species have a very profound effect on not only the economy but our native ecosystem? Does she agree also that we should do more by way of research in dealing with this, and with the mobilisation of volunteers? I am thinking particularly of the efforts with, for example, Asian hornets, grey squirrels, Himalayan balsam and Japanese knotweed. There is so much we could do by mobilising so many people to help with this.
Baroness Hayman of Ullock (Lab)
I could not agree more with the noble Lord; he has got it exactly right. I am very pleased that I am going to be supporting Invasive Species Week this week by going to Derwentwater, near where I live, to look at the work being done by the Rivers Trust on Himalayan balsam, for example. I am sure the noble Lord will also be pleased to know that I spent all last weekend, and the weekend before, Himalayan balsam bashing. We have a local group in our parish on Himalayan balsam bashing, which my husband runs. We also do a lot of work with the red squirrel group locally. It is something that I am absolutely passionate about.
Lord Walker of Broxton (Lab)
My Lords, I declare my interests as an ambassador for the Wildlife Trusts. Its analysis shows that ending bottom trawling in offshore marine protected areas would not only conserve and restore natural habitats but deliver up to £3.5 billion in net economic benefits. Can my noble friend the Minister confirm when the Government will implement the long-awaited ban so that these gains can be realised?
Baroness Hayman of Ullock (Lab)
We are all aware of the damage that bottom trawling can do, which is why we are looking to improve the situation in our marine protected areas. We had a Question on this quite recently, when I mentioned that we are working with the MMO on this. We need to get a solution. It is a complex area. We need to balance fishing with protecting our environment. We are working actively with the MMO and hope to have some outcomes from that very shortly.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, given that only 14% of rivers in England are in a good ecological status, while agricultural pollution affects 40% of water bodies and wastewater pollution affects 36%, and given the importance of healthy freshwater ecosystems to species recovery, what assessment have the Government made of the impact of river pollution on their biodiversity targets, and what specific improvements are expected in river health by 2030?
Baroness Hayman of Ullock (Lab)
River health is incredibly important for all sorts of reasons. Coming back to invasive species, we have issues with invasive species, such as mink, in rivers, so we need to look at it in the round. We have agriculture pollution, and there is run-off from other areas as well. We also have the issues around invasive species; Himalayan balsam, which I mentioned earlier, destroys riverbanks. There is lots of work that needs to be done. We need to get the data and information correct so that we can target resources to make the biggest difference. But if we do not get our freshwater rivers sorted out, we are not going to resolve the biosecurity issues, and we are not going to meet our targets. It is something that we are absolutely focused on delivering on.
Lord Krebs (CB)
My Lords, I am grateful to the Minister for arranging a meeting with her officials earlier this year to discuss Defra’s Habitats Regulations General Implementation Report for the Reporting Period 2019 to 2024. The report makes discouraging reading: of the 71 habitat types covered by these regulations, only 3% are in favourable condition. These include some of the most valuable habitats in the country, such as Dartmoor, the Ouse Washes, and so on. What steps is Defra now taking to improve the conservation status of these protected habitats, bearing in mind that one of the major causes of them being in poor condition is nitrogen pollution from agriculture and other sources?
Baroness Hayman of Ullock (Lab)
With the interim and statutory targets that we have on habitat, a mix of groups—farmers, environmental NGOs, businesses and the public—are going to have to come together to meet them. To meet the habitat targets, we have lots of inter- dependencies, which makes it more difficult. The noble Lord is right to point to nitrogen, which is a particular problem. This comes back to the noble Baroness’s question about rivers; this is an important part of our delivery around habitats. I know that the noble Lord has been meeting officials, and we very much value his expertise in this matter. I suggest that we continue to work together, because these targets are challenging.
Lord Roborough (Con)
My Lords, I refer the House to my registered interests as a farmer and landowner. When in government, we passed the Environment Act, but Governments alone cannot fund all nature restoration. What steps are being taken within Natural England, the Environment Agency and the Minister’s department to encourage private investment in nature restoration, both in its own right and as a co-benefit from nature-based solutions to flooding and drought?
Baroness Hayman of Ullock (Lab)
As the noble Lord rightly says, government cannot pay for everything. As noble Lords have previously said, these are difficult and challenging targets; there is a lot of work to do, and engaging the private sector is critical. I know that the noble Lord has a particular interest in this, and I am very happy to continue to work with him on how we can encourage private investment in nature restoration.
Online Hate Speech
(1 day, 4 hours ago)
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Baroness Berger
To ask His Majesty’s Government what assessment they have made of the impact of online hate speech.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)
Hateful online content impacts people and communities. Illegal hateful content can be used to incite violence and stoke public disorder. We have seen this across the UK. Even where legal, hate online can be used to divide communities. It can erode trust in public institutions and the media. The Government are clear that hatred or division, online or offline, will not be tolerated. We have both criminal offences and regulatory measures to prevent and punish this type of behaviour. We saw law enforcement use its powers to prosecute people for illegal online activity during the Southport riots, for example.
Baroness Berger (Lab)
My Lords, last month, X gave assurances to Ofcom, which were accepted, that it was taking steps to address illegal hate and harm on its platform. In light of the recent violence that we have seen in Belfast, and the role of X and its owner in inciting it, will the Government encourage Ofcom to revisit this judgment? Will the Minister also investigate the failure of X to remove five accounts which are breaking its terms of service by repeatedly posting anti-Jewish and Holocaust denial content?
Baroness Lloyd of Effra (Lab)
My noble friend is right to emphasise that there can be no justification for violence and disorder; there is no place for anti- semitism, either online or offline. As she also rightly noted, Ofcom launched a compliance programme to assess whether the biggest platforms have robust systems and processes to deal with illegal hate and terrorist material under the OSA. As she also pointed out, Ofcom also announced it had secured commitments from X on how quickly it will remove content.
Following the disorder in Belfast, Ofcom wrote to services to remind them of the duties, and the Secretary of State asked it to engage with those companies to understand what action they are taking. We will also take further action; shortly, we will be laying updates in Parliament to bring into effect Ofcom’s strengthened code of practice for crises. We will continue to monitor this, and have said to Ofcom many times that it has our backing to use its powers to enforce the duties that it is responsible for.
Baroness Teather (LD)
My Lords, does the Minister accept that AI-driven recommender algorithms are not neutral channels but active amplifiers of hateful content? What assessment has been made of the systemic risk duties in the Online Safety Act to address algorithmic amplification specifically, rather than individual pieces of content?
Baroness Lloyd of Effra (Lab)
The noble Baroness raises important questions about how platforms operate in practice and the interaction between the online and offline worlds. The Government’s document Protecting What Matters looks across many different government departments and sets out what we can do to support cohesive communities. We have said that we need to explore further how to tackle the spread of hateful content online and that we will look at the way in which algorithms can increase the spread of harmful content. We will set out what we will do as a result of those considerations.
Lord Pickles (Con)
My Lords, the Minister said that there was no place for antisemitism online. However, I am afraid that antisemitism is alive and kicking online with, as the noble Baroness, Lady Berger, said, conspiracy theories, Holocaust denial and extreme Jew hatred. This is having a rotting effect on British society and is a serious threat to public safety, social cohesion and democratic trust. We have heard the Minister give an excellent critique of what is happening, but we are looking for solutions that treat the underlying problem, not the symptoms of this dreadful disease.
Baroness Lloyd of Effra (Lab)
We share a commitment to tackling and stamping out antisemitism. It manifests in all parts of society and we need to act in all parts of society. In respect of the online world and the department, last month the Minister for Online Safety met with Jewish community leaders, Ofcom and major platforms to discuss how best to tackle antisemitism online. He made clear that he expects platforms to act swiftly on that content and we are exploring how we might take this joint work further on a longer-term basis.
Baroness Kidron (CB)
My Lords, social media is where many people and most young people get their news, but it is owned or controlled by a handful of tech billionaires whose views are shared disproportionately and who represent an existential risk to democracy—as we saw when Elon Musk, the owner of X, tweeted in support of the riots. Does the Minister agree with me that our public square has now been privatised and that, for the future of democracy and news, we need to consider an alternative way of sharing news with young people?
Baroness Lloyd of Effra (Lab)
The importance of accurate, trusted news is essential. The noble Baroness touched on many different matters in her question. In respect of young people and their access to social media, as I will be talking about shortly, we have put down proposals that will restrict social media platforms in providing content to under-16s. Providing accurate news is hugely important more generally and, as I mentioned on the previous question, we are looking at the role that algorithms play in social cohesion and the spread of online hate. The noble Baroness raises the very important point of media literacy, and we are working with young people and more generally through our media literacy plan to improve the ability of all people, whether young or old, to discern misinformation and disinformation in this important area.
Viscount Camrose (Con)
My Lords, online hate speech is not solely created by individual users. It is also generated and amplified by malicious state actors using algorithmic methods to inflame tensions and to undermine our social cohesion. So as the Government prepare to strengthen the Online Safety Act to require platforms to act more quickly during a crisis, can the Minister give us some idea of what might constitute such a crisis? In particular, do the criteria include evidence of co-ordinated algorithmic attacks, increasingly referred to as “cognitive warfare”?
Baroness Lloyd of Effra (Lab)
The noble Lord raises the importance of being attentive and aware of the potential for foreign states to spread disinformation online, and through the Online Safety Act we have made the foreign interference offence from the National Security Act a priority offence that places clear legal duties on services to proactively assess risks, prevent users encountering foreign interference content and remove it swiftly where it appears. Ofcom set out in its publication last week some of the answers to the specific questions about definitions that the noble Viscount raises, but I am happy to write to him afterwards if that does not fully complete the answer to his question.
Baroness Whitaker (Lab)
Is my noble friend aware that online hate speech websites record just as virulent remarks about Gypsies and Travellers as about other protected minority ethnic groups? I have seen remarks such as, “Hitler had the right idea”, and “Bring back the gas ovens”. The children of the people who these things are said about go to school and experience extreme bullying. Can she try to ensure that it is explicitly recognised that Gypsies and Travellers are also a protected minority ethnic group, and also that the situation is exacerbated when the Leader of the Opposition in the other place stereotypes Gypsies and Travellers as getting away with crimes?
Baroness Lloyd of Effra (Lab)
My noble friend is right to emphasise the importance of protecting all those with protected characteristics and stamping down on all sources that stir up hatred and division, whether that is online or offline. The Online Safety Act requires platforms to remove illegal content, including threats that stir up hatred based on race, religion or sexual orientation. My noble friend is right to highlight the importance of that to many different groups.
Official Development Assistance: Bilateral Allocations
(1 day, 4 hours ago)
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Baroness Sugg
To ask His Majesty’s Government when they intend to publish a full list of bilateral allocations for Official Development Assistance spending for 2026–27 to 2028–29.
The Minister of State, Foreign, Commonwealth and Development Office (Baroness Chapman of Darlington) (Lab)
The Government are committed to publishing FCDO country ODA allocations in or before the FCDO annual report and accounts 2025-26. The annual report is due to be published in July. Publishing the annual report is in line with previous FCDO practice.
Baroness Sugg (Con)
I am grateful to the Minister for that Answer, and I look forward to the publication. The cuts to the UK’s official development assistance—some of the most severe across G20 countries—mean that the remaining bilateral spend will need to be targeted to remain as effective as possible. How will the Government monitor, track and publish progress against the FCDO’s six refreshed priorities? For example, on women and girls, which I am pleased to see is one of the six priorities, what discretion will heads of missions have, and how will the Government ensure effectiveness in these areas of bilateral spend?
Baroness Chapman of Darlington (Lab)
What we are doing to make this better—I appreciate that there is less money—is to give three years’ worth of certainty to our posts. We are also requiring them, rather than submitting for approval programme by programme, to do that as a portfolio, so that we can see how everything fits together. Posts are experts, they are there in country, and we pay them to know what they are doing. They can do an analysis of what they think the best approaches are for that particular place, and we are enabling them to do that with the three years’ worth of certainty that they now have.
Lord Fowler (CB)
My Lords, HIV/AIDS may have gone off the front pages here in Britain, rightly or wrongly, but what is beyond doubt is that it remains a serious scourge in many countries overseas. How do our overseas assistance programmes, current and future, measure up to that specific and very serious challenge?
Baroness Chapman of Darlington (Lab)
It is absolutely a serious challenge. While we see medical advances that enable us to make progress, we see problems emerge in other areas. We see prevalence among young girls, in particular, increasing to a worrying extent. This is one of the reasons that we decided to maintain a very strong commitment to the Global Fund, which as noble Lords will know, fights three diseases, one of which is HIV. We work closely with the Global Fund and our country partners in order to keep going on this battle, which we are making progress with, but there is still an awful lot more to do.
Lord Ahmad of Wimbledon (Con)
My Lords, I appreciate the challenge the Minister is facing with the cuts, and I agree with my noble friend about the protection of certain ring-fenced things, including the priority on the WPS agenda. Will the Minister leverage that more extensively, working together with colleagues in the Ministry of Defence? I seek her reassurance that 12 years of quality education for every girl in the world and of course—this is personal for me—preventing sexual violence in conflict remain key priorities for the Government.
Baroness Chapman of Darlington (Lab)
I think that is right. I think we need to work more closely with our colleagues in the MoD because there is clearly a high degree of complementarity between our development investments and the work that we need to do to keep our country safe in the field of defence. On quality education, it is one of the next challenges that the world needs to lean into. We have made improvements in getting children into school, and there is a protective quality to that, but what they are coming out with, the skills and the education that they are attaining during that period in school, is not good enough. We need to address that globally so that it is good quality as well as getting attendance up.
Lord Bruce of Bennachie (LD)
My Lords, I declare an interest as an adviser to the aid and development contractor DAI. I am hosting an event in Parliament this evening looking at new and innovative ways to support humanitarian action as traditional funding streams shrink. I am delighted that the Minister has agreed to attend. In that spirit, will she say what progress has been made to use UK trade, investment, philanthropy, the private sector and other routes to deliver real poverty reduction benefits in developing countries, especially in sub-Saharan Africa, either alongside remaining aid programmes or as an alternative?
Baroness Chapman of Darlington (Lab)
I very much welcome the question from the noble Lord. He will be aware that we had a Global Partnerships Conference just a few weeks ago addressing specifically that problem. I think it is understood now, if it was not before, that with all the aid spending that there has ever been, we would still be falling far short of our ambitions and the ambitions of our partner countries to achieve the sustainable development goals. We do have to work better together, and we do have to leverage, as the noble Lord said, and we do have to grow economies and enable partners to lead their own development, because that is not just the right thing to do in terms of making the money go further, but it is the right way to be a good partner for the long term too.
Baroness Ritchie of Downpatrick (Lab)
My Lords, I thank the Minister for her answers so far and confirm that I am pleased that the Government will introduce individual country allocations for ODA assistance. One of the main challenges for that assistance will be Ebola, particularly in the Democratic Republic of the Congo and Uganda. Will the Minister ensure that local actors, especially churches, faith leaders and faith actors who are best placed to respond, are adequately empowered through funding and decision-making as part of that response to help those who are deeply afflicted at the moment?
Baroness Chapman of Darlington (Lab)
I think that is a shrewd observation. I recently returned from DRC, and I understand completely the point my noble friend makes. There is very little trust among the community in that part of the world. Particularly, they do not trust military actors, and some of the usual mechanisms you might use to intervene in that kind of context are not advisable in this one. Faith leaders and other community leaders are central to being able to make any progress against this dreadful disease.
Lord Callanan (Con)
My Lords, more than 100 UNRWA staff are now suspected of having links with Hamas, with many being suspected of being actively involved in the appalling 7 October attacks; 70 employees have been dismissed following these accusations. The UK pays tens of millions of pounds to UNRWA through ODA. Can the noble Baroness say whether Ministers have considered suspending that funding, as we did in government, given the recent revelations about UNRWA staff?
Baroness Chapman of Darlington (Lab)
Given that UNRWA is the only agency that can really deliver what is needed at scale in what has become an incredibly challenging and militarised context, it is important that we maintain our funding of UNRWA, and we reinstated it when we came into power. I think that was the right decision and I stand by it. When there are issues and problems of the nature that the noble Lord outlines, the right thing for us to do is to make sure that they are dealt with. UNRWA has done so on occasions in the past. There have been reports and they have been acted on. It is our job to maintain that higher standard and those requirements of UNRWA.
Baroness D'Souza (CB)
My Lords, I understand that the FCDO sent a delegation to Afghanistan in recent weeks, and I wonder whether the Minister might be able to say something about the outcome of that visit, with particular reference to continuing assistance for women and girls.
Baroness Chapman of Darlington (Lab)
Noble Lords do not need me to tell them just what a difficult context this is. Since the return of the Taliban, the prospects for women and girls have diminished greatly. We work closely with our partners, we still fund programmes in Afghanistan and we will continue to do so.
Baroness Hodgson of Abinger (Con)
My Lords, while I am delighted that the Government are still prioritising women and girls, how are they going to ensure that this priority remains through the multilateral grants?
Baroness Chapman of Darlington (Lab)
I think it is impossible to do development without prioritising women and girls, and almost everything we do benefits disproportionately—and quite rightly—women and girls. It is one of the reasons why we prioritise health, because most of that does go to support women in particular. We use our voice very strongly and increasingly strongly on the boards of multilateral institutions. I speak regularly with the presidents of the World Bank and the African Development Bank, and our engagement with the UN never fails to articulate strong support for women and girls, particularly at this time when, globally, it is becoming more and more contested.
Baroness Deech (CB)
My Lords, the Government are generously funding the Palestinian Authority. Despite assurances, it is very reliably reported that they are still shipping the money to terrorists who are in prison under their “pay for slay” policy. I suggest that the Government are being deceived over this.
Baroness Chapman of Darlington (Lab)
I hear the noble Baroness’s suggestion and I disagree with it.
Lord Grayling (Con)
My Lords, on biodiversity aid—and I declare an interest as a trustee of the African Wildlife Foundation—both the United States and France are establishing new-type foundations, which are partnerships between public money and private donations, to increase the amounts of money going into biodiversity-support projects because of the pressures on aid generally. Will the United Kingdom Government consider engaging with those who are doing this in the US and France with a view to doing the same thing here?
Baroness Chapman of Darlington (Lab)
We have been doing this for quite a long time. I do not know specifically the programmes that the noble Lord is talking about, or the funds that he is talking about, but his suggestion is very much in line with the approach that we are taking, whether that is on water and sanitation, humanitarian interventions, infrastructure support or governance improvements. This is the right approach. It is about leveraging support and enabling new participants who really want to work to have a social impact, and to be able to do so alongside Governments so that we really work together and get the absolute maximum benefit out of every penny that is invested for our partner countries.
Children: Physical Punishment
(1 day, 4 hours ago)
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Baroness Walmsley
To ask His Majesty’s Government what assessment they have made of the University College London report Physical punishment and child outcomes in the UK, published on 10 June, particularly its findings about the effect that hitting children has on their behaviour and wellbeing.
The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)
My Lords, we welcome the evidence in this report, in particular the inclusion of the voices of children and young people. The Children’s Wellbeing and Schools Act is a key step towards delivering the Government’s mission to break the link between young people’s background and their future success, and will deliver new measures to support children’s behaviour, well-being and protection. This sits alongside earlier support for children and families through our £2.4 billion families first partnership programme and our Best Start Family Hubs.
Baroness Walmsley (LD)
My Lords, we already know that regular physical punishment encourages children to bully other children and damages their relationship with their parents. The UCL research has now shown us that it also damages their educational attainment and future prospects. When will the Government take not just a small step but follow the example of Wales and Scotland and dozens of other countries and give children equal protection under the law of assault as the adults around them have? The Government plan to protect children from online harms. How about protecting them in their own homes?
Baroness Smith of Malvern (Lab)
The UCL research is interesting. I note that UCL itself says that the analysis does not necessarily prove causality, although it does demonstrate correlation. The action that this Government are taking is not a small step, including as it does the reform of the children’s social care system and considerable investment in the Best Start Family Hubs programme to support children and parents with some of the difficult decisions and issues that any of us who have parented know that we will face. That strikes me as being a quite important development, very well invested in, in this country.
Baroness Chakrabarti (Lab)
My Lords, I congratulate my noble friend the Minister on her lifelong professional commitment to children and young people. Might doubters in England be persuaded if we explored replacing the common-law defence of reasonable chastisement with a statutory defence of reasonable restraint of a child?
Baroness Smith of Malvern (Lab)
The point I am trying to make is that, even if you look at the evidence in Scotland and Wales, I am not sure that changes to the specifics of the law around reasonable punishment are the most important and effective way to protect children and to support parents in not resorting to physical punishment of their children. The steps that this Government are taking are more profound and more effective than a change in the law would be.
Baroness Finlay of Llandaff (CB)
My Lords, do the Government recognise that this report shows quite clearly the link between a failure to protect children from abuse and poor outcomes for those children? If parents who are not coping with parenting are to access family hubs and all the other support services, the law has to give a clear message that children should not be assaulted. You cannot assault an adult repeatedly; therefore, you should not be damaging a child’s life chances by repeatedly assaulting the child.
Baroness Smith of Malvern (Lab)
The law in this country gives the strong message that it is wrong to assault a child. The clear advice from government is that it is wrong to use physical punishment against a child. What is more, we are providing the support necessary to help parents to address that. We are investing in the capacity of social care to be able to identify where neglect and abuse has happened in families. We are investing in earlier intervention through the families first partnership programme. The question is whether the appropriate thing to do at this moment is to focus on changing the law. That is not our priority.
Lord Mohammed of Tinsley (LD)
My Lords, I turn to the point mentioned by my noble friend Lady Walmsley about the experiences of Scotland and Wales. Have the Government looked at the assessments that have been made by those Governments on safeguarding and the number of incidents reported to them of harm to young children?
Baroness Smith of Malvern (Lab)
We have looked, for example, at the Welsh report on the implementation of the abolition of the defence of reasonable punishment in Wales. As I said, the report is on the implementation of the law rather than the outcomes achieved by it. It highlights the importance of professional confidence, inter-agency collaboration and widely available parenting support. As I have already identified, those are all things in which we are investing considerable amounts of money in England and where we have taken action through legislation to transform the social care system so as to prioritise them.
Baroness Cash (Con)
My Lords, it would be wrong to speak today of physical punishment without raising the evil murder of the baby Preston Davey. As the Minister knows, we on the Conservative Benches welcome her structural reforms to social care, but there is still a gap. As the Munro inquiry and repeated case reviews have found, the assumptions, biases and culture of individual agency workers are still a major problem. These need to be addressed so that individuals will act to protect children without fear or favour. How does the Minister propose to address these issues?
Baroness Smith of Malvern (Lab)
The noble Baroness is right to draw attention to that terrible case, and to the requirement, whenever we are faced with tragedies such as that, to learn the right lessons about how we need to reform the system. On her particular point about workers, one of the ways that we improve the way in which social workers and others, whether agency or otherwise, work is to increase their capacity, to focus them, as we are doing, on neglect and abuse, and to improve their training. We will continue to do that while, of course, learning the lessons from tragedies such as the one that she has identified today.
Lord Watts (Lab)
My Lords, it is already the case that the serious assault of a child is illegal. What we are talking about is smacking children. Is there any evidence that, since that has been introduced into countries, parents are being prosecuted—that is what it means; prosecuting parents—and that that has helped the situation?
Baroness Smith of Malvern (Lab)
My noble friend is right that it is, as I have emphasised, already illegal to assault a child. He is also right to identify what we can most effectively do to prevent parents feeling that they need to resort to smacking in order to discipline or control their children. The £900 million that we are investing in the Best Start in Life centres, for example, is being used to develop parenting education on behaviour management. How do you set appropriate boundaries? What type of methods should you and could you use to discipline your children? That feels like a more constructive and wide-ranging response than a change in the law at this point.
Baroness McIntosh of Pickering (Con)
My Lords, did not the Preston Davey case prove that the current situation is simply not working? That poor boy was sexually assaulted and abused for months. The question has to be asked: why did no one from any agency pick this up?
Baroness Smith of Malvern (Lab)
One of the important points about the legislation that we have just taken through this House is a stronger duty to report abuse and to share information. We must continue to support and train all professional staff who work with children to understand their responsibilities to both recognise and report abuse when they see it.
Lord Wigley (PC)
My Lords, does the Minister agree that there has been overwhelming acceptance in Wales of the policy that was introduced by the former Labour Government? In the recent election, there was hardly an issue on this matter arising. Will she take the opportunity to discuss with her two colleagues who are former First Ministers of Wales how this policy has been implemented?
Baroness Smith of Malvern (Lab)
As I have already said, we have looked carefully at the first report into the implementation of the changes in Wales. I think I said that we looked at the conclusions, particularly around the need for professional confidence, inter-agency collaboration and a wider availability of parenting support. Those are exactly the provisions that we are putting in place, through investment and through the legislation that has just gone through this House.
Artificial Intelligence: National Security Implications
(1 day, 4 hours ago)
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Baroness Kidron
To ask His Majesty’s Government, in light of the decision of the government of the United States to restrict foreign national access to Anthropic’s Claude AI models, Mythos 5 and Fable 5, what assessment they have made of the implications for the United Kingdom’s security; and what alternative sovereign UK systems or partnerships they are pursuing, if any.
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, no Government take AI sovereignty and security more seriously than this one. The UK is not a bystander when it comes to the security of AI. Our world-leading AI Security Institute was one of only a handful of organisations with access to both Mythos and Fable before they were released; they were used to identify risks in advance. We are investing £1.6 billion in the UK’s sovereign AI capabilities, made up of £500 million directly in UK AI firms via our sovereign AI fund and £1.1 billion via our AI hardware plan.
Baroness Kidron (CB)
I thank the Minister for that response. President Trump gave less than 90 minutes for Anthropic to make Mythos and Fable unavailable to any non-US citizens. In doing so, the White House went from a position of no AI regulation at all to 100% control. These systems are extremely powerful and anticipated to be able to break any other AI system, putting all critical industries and systems into meltdown, and we know other systems of the same ilk will shortly follow. In light of these developments, will the Government ask the AI Security Institute to develop red lines for AI systems deployed in the UK, including those used by government, and bring them forward in the promised AI Bill? Does the Minister not agree that the Government’s increasing dependency on US companies in health, education and security is creating a critical vulnerability for national security?
Baroness Lloyd of Effra (Lab)
We continue to support the AI Security Institute. It is very well respected by developers. That is why it has early access and is able to test the risks. Those risks are obviously going to develop as the models themselves evolve. It is also looking closely at the question of alignment, and that is something we are supporting in particular. In respect of sovereign AI, our approach is about building strength over key parts of the value chain to bring to the table technologies that no one else can do without.
For the UK, one of the most promising sectors is in AI hardware. We have brilliant start-ups in that area. That is why we announced the £1.1 billion AI hardware plan, which includes up to £400 million to purchase these new types of chips. In respect of regulation, as the noble Baroness knows, we are working with our regulators to support them to take account of the risks posed by AI and the opportunities brought by AI for increased productivity and effective regulation.
Lord Vaizey of Didcot (Con)
My Lords, my understanding is that the US Government took urgent action because of security flaws found in the AI model in question. They used the legislation that was available to them. There was no sinister or hidden agenda in their decision to cut it off, and it has been cut off from use by all American companies as well. It is also my understanding, as the Minister echoed, that the AI Security Institute, originally set up by Rishi Sunak and supported by this Government, is one of the leading bodies in the world in this work. Can the Minister assure us that the AI Security Institute is able to work closely with its US counterparts as we navigate this extremely complex field?
Baroness Lloyd of Effra (Lab)
The noble Lord raises very important points, including the fact that Mythos and Fable are unavailable worldwide, including in the US. He rightly stresses the importance of the AI Security Institute—its establishment, its ongoing support and funding by this Government, and the fact that it was able to test both Mythos 5 and Fable 5. We are in touch with the US Government and are monitoring the situation closely.
Lord Clement-Jones (LD)
My Lords, the Minister has mentioned the AI Security Institute. It identified ways to circumvent the safety guardrails of Fable 5 and Mythos before their public launch, including vulnerabilities that could allow the extraction of instructions for producing dangerous substances, yet the model was released by Anthropic regardless. Will the Minister now accept that voluntary co-operation with safety institutes is wholly insufficient at this level of capability and bring forward legislation giving the AI Security Institute the statutory power, where necessary, to delay or prevent the launch of dangerous frontier AI models in the UK?
Baroness Lloyd of Effra (Lab)
The AI Security Institute did test Mythos and Fable before they were launched. In light of the risks that they potentially posed—Mythos in particular—we also gave advice to our companies. We worked carefully with the National Cyber Security Centre to provide advice to companies and regulators on what needed to be done because, generally speaking, what we find with these potential new capabilities is that many of the basic mitigants that you need to take will inhibit the effectiveness of these new models. In respect of regulation, as I mentioned a moment ago, we continue to support the effectiveness of sector-based regulators regulating AI risks as they approach their sectors. They are best placed to know what those risks are and what the mitigants will be.
Viscount Stansgate (Lab)
My Lords, I commend the Government on having introduced the Cyber Security and Resilience (Network and Information Systems) Bill, whose remaining stages are, as it happens, going through another place this very day. The House knows—or, if it does not, it is rapidly coming to understand—that AI is being used to manufacture and promote all kinds of cyber threats and scams. Looking beyond the legislation, what more can the Government do to ensure, whether through the AI Security Institute or by other means, that the risks of AI can be mitigated not just for individuals but for businesses and indeed for the Government themselves?
Baroness Lloyd of Effra (Lab)
My noble friend highlights the importance of us being incredibly vigilant on cyber security. He highlights the important role that the cyber security Bill will play in bringing data centres, large load controllers and managed service providers into the regulatory ambit, as it were, but he is also right that we need to do more. The National Cyber Security Centre supports organisations through Cyber Essentials. It published new joint guidance with the AISI on preparing cyber defences for frontier AI. My noble friend also mentioned the importance of the Government taking cyber security seriously, which is what they have set out to do through the Government’s cyber action plan.
Lord Tarassenko (CB)
My Lords, I declare a conflict of interest as a senior adviser to the Alan Turing Institute, the national AI institute. We have known for a while that access to US big tech models might be restricted, and it will happen again. We should not rely on Chinese open source models either, for obvious reasons. There is an alternative: a UK sovereign AI model. The Alan Turing Institute has argued for several months that the UK has the technological capability in the institute, in academia and in its nascent AI industry. The UK also has sovereign data assets, such as data from the BBC and the Met Office. The Alan Turing Institute, as a national AI institute, could lead a team to train a sovereign model for millions of pounds, not billions of dollars, following UK values, including transparency and respect for copyright. The Council for Science and Technology’s AI subgroup and many others are convinced. What more evidence does DSIT need to fund the training of a UK sovereign AI model?
Baroness Lloyd of Effra (Lab)
We are very attentive to the importance of building out sovereign AI capabilities that complement the strength of the UK’s AI sector. At the model level, the sovereign AI fund has invested in Ineffable Intelligence and Cosine, and we are targeting companies innovating in hardware, providing an investment into Callison. In terms of the importance of investing in this area, that is an approach that we are able to take through the sovereign AI fund. In respect of the specific proposal that the noble Lord recommends, I am happy to pick that up with the department and come back to him specifically on that model.
Viscount Camrose (Con)
My Lords, I very much welcome the proposal of the noble Lord, Lord Tarassenko, for sovereign AI capability here. But I would welcome a great deal more clarity from the Government on what exactly they mean by sovereign AI. Does it mean a complete sovereign stack of hardware, software and data? Does it mean AI capability being sovereign, as the Tony Blair Institute suggested, or some variation of that? Until there is a clear definition, it will be very difficult to understand the way forward.
Baroness Lloyd of Effra (Lab)
Sovereignty is not just about controlling AI models. It is about building leverage over key parts of the value chain and bringing to the table technologies that no one else can live without. It is about looking at where the UK has competitive strengths and where we can support our most promising sectors and start-ups, whether through financial investment, support for R&D or support with visas and so on. We have identified five priority areas: compute efficiency and sovereign architecture; next generation AI labs and model development; AI for health and life sciences; AI for scientific discovery; and AI trust, integrity and assurance. Those are the areas in which we think the UK has a competitive advantage.
Baroness Stowell of Beeston (Con)
My Lords, bearing in mind that Fable is Mythos with guardrails, have the Government asked Anthropic whether it is addressing the jailbreak that threatens cyber security to a Mythos-style extent? If they are not addressing it, why not? There appeared to be some reluctance from Anthropic when the flag was first raised, which is surprising, bearing in mind how much emphasis that company places on security and safety. Have the Government sought confirmation from the US Administration that if Anthropic addresses that jailbreak, the US Government will lift the export control alongside all the other controls they have placed on this model?
Baroness Lloyd of Effra (Lab)
The focus of the AI Security Institute is on its great relationships with frontier developers in order to be able to test these and provide feedback to them. Indeed, it publishes its findings so that others can see them as well, allowing people to address those risks. As I mentioned before, we are in touch with the US Government, but it is not for me to talk about what the US Government do in terms of their export control decisions.
Lord Dixon of Jericho (LD)
My noble friend Lord Clement-Jones is right that this is about investment, but it is also about people. The Minister touched on visas briefly. Given that many of the leading researchers in the US are deeply concerned about the way the US Administration are taking action in this area, what practical steps are the Government taking to ensure that the UK is attractive to the very best AI researchers in the world?
Baroness Lloyd of Effra (Lab)
The noble Lord is spot on to highlight this point. On the approach that the sovereign AI fund is taking, it is investing. We are also providing access to compute, and we are able to support visas. The Global Talent Taskforce is looking to support researchers and expert scientists from around the world to bring them to the UK.
Lord Brooke of Alverthorpe (Lab)
Is my noble friend the Minister aware of the growing desire for the UK to have an independent sovereign entity in this field? That is going to cost a great deal of money, of course. First, can she copy the letter that she is sending to the noble Lord on the Cross Benches to the whole House? Secondly, can she please update us on the questions we keep asking about the possibility of developing a new public/private partnership to fund such a venture?
Baroness Lloyd of Effra (Lab)
I am very happy to make the letter regarding the suggestion from the Turing Institute and the noble Lord, Lord Tarassenko, available to all in the House. Our view is that the best way for the UK to build up strength, and hence sovereign strength, is not just about controlling AI models. It is about having leverage over key parts of the value chain by bringing those technologies here, supporting UK expertise and supporting people to come to the UK to build companies here, to stay and to scale. That is the approach we will take.
Local Elections (Proportional Representation) Bill [HL]
Strategic Litigation Against Public Participation Bill [HL]
(1 day, 4 hours ago)
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Baroness Stowell of Beeston (Con)
My Lords, I declare that I have received support in preparing this Bill from the UK Anti-SLAPP Coalition, the Media Lawyers Association and the News Media Association.
Compassionate Use Medicine Schemes: VAT
(1 day, 4 hours ago)
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Lord Kamall (Con)
My Lords, I thank the Minister for accepting this Urgent Question repeat. Life science companies have warned that the decision to charge VAT on early access and the innovative medicines that they provide free of charge could lead to them ending providing these free treatments to patients before routine NHS funding is available. The second fact is that recently released government papers reveal that the Cabinet is being asked to look at who they can tax to pay more in benefits. I have three quick questions. First, can the Minister unequivocally state that these two issues are not linked? Secondly, what discussions have the Government had with life science companies, especially those that have raised concerns over charging VAT on free medicines? Thirdly, have the Government looked at whether they could spend that revenue from VAT on improving access to innovative medicines?
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
It is important to say, first, that this is not a new policy. There is recognition that while early access and compassionate use programmes are crucial, they are voluntary for pharma companies, which are aware, as I say, that VAT is applicable in these instances; it has been in place for decades. To be brief in answering the questions, first, I am not aware of the second issue that the noble Lord raised with regard to discussions—this is a totally different matter, in any case. Secondly, we are working closely with pharma companies, patients and anybody else who needs to be involved to find a sensible solution on this long-standing policy, which I understand was particularly discovered in 2023 by HMRC—so we are dealing with it from then. I have forgotten the third question, but I would be happy to write—oh, I know it. Yes, we always look at where revenue can be used, in a generic sense, but what matters here is that is not new. It was discovered in 2023, and it is entirely up to pharma companies—to which we are most grateful for the compassionate use of medicines, I should add—whether they wish to do it.
Baroness Pidgeon (LD)
My Lords, compassionate use and early access schemes are often the only way for patients with rare cancers to access life-extending medicines. What assurance can the Minister give that HMRC’s approach to VAT will not result in patients losing access to these vital treatments? What discussions about the impact has the department had with cancer charities?
Baroness Merron (Lab)
Cancer charities are important in this area, and we are certainly engaging with them; they are very invested partners. I understand why people are concerned. This is not instead of the NHS. NHS medicines are provided on the advice and guidance of NICE, and that absolutely continues. As I say, what we need to do, and what we will do, is work with everyone concerned to find a solution quickly, because we want to support the pharma companies that continue to donate what are very important medicines.
Baroness Finlay of Llandaff (CB)
My Lords, do the Government recognise that it has been estimated that, for each pound invested in research, there is an approximate 25p return on that in perpetuity. Therefore, we should avoid anything which disincentivises research investment in this country, which would include the inability to recruit patients if they have to be told that, even if the treatment is successful, they will not be able to access it on the NHS afterwards because the NICE approval processes are too slow for many of these substances. Will the Government therefore undertake to speed up the NICE assessment processes to make sure that patients are not disadvantaged and research is not disincentivised?
Baroness Merron (Lab)
Indeed, we will. I can tell the noble Baroness how important speeding up access to medicines is. That is why, in April, we introduced the joint MHRA-NICE pathway for medicines, which will speed up access to new medicines by some three to six very valuable months. We have also brought in the early access to medicines scheme, the Innovative Licensing and Access Pathway, and the innovative medicines fund. All these mean that, across the regulatory and access system, innovative treatments will be available to patients who need them earlier, as the noble Baroness rightly called for.
Lord Patel (CB)
My Lords, going back to the question about access to compassionate medicine, as I understand, the Minister just stated that medicines that are not yet authorised or licensed can be issued if companies agree to provide them for free, and that HMRC charges VAT on them. If the medicines are free, how do you calculate VAT? If a shop gives away free chocolates, does it have to pay VAT?
Baroness Merron (Lab)
I am sure that the noble Lord would not want me to be quoted as suggesting that VAT should be charged on chocolates given free in shops, so I will not. The way in which VAT is calculated is a long-standing arrangement that companies are aware of. The medicines are treated as taxable deemed supplies, which means that VAT is applied even when no payment is made. VAT is worked out by calculating the value of those products, but if there is nothing similar, then an assumption is made. This is a usual way of dealing with that. I should also emphasise that VAT is a matter for His Majesty’s Treasury and has been for all these decades.
Lord Deben (Con)
Can I bring the noble Baroness back to the last part of my noble friend’s question? It looks as though the VAT department in HMRC is behaving most peculiarly. First, it lost the case about VAT on entry to the Great Yorkshire Show, yet it is fighting every single show rather than giving way to what the law says. Secondly, it lost the case about VAT on charging your EV, but it has been putting off taking that in and will now appeal, against all the interests of the Government. Now we have this case. It is perfectly right for the noble Baroness to say that this is a long-standing thing, but can she join with fellow Ministers and say that it is about time that HMRC recognised that it is a public service, that it ought to look at what it is doing and that it ought not to hold up changes which the law has insisted it makes?
Baroness Merron (Lab)
Again, I appreciate the invitation to enter into conversations about VAT more widely, which I will resist. Certainly, HMRC is aware of its role. We are trying to find the right way forward with HMRC while the issues are resolved, because patients are at the heart of this. HMRC is already using its discretion to extend deadlines where appropriate and suspend collection of tax if a taxpayer has requested a statutory review. It does not mean that HMRC has changed its mind on past liabilities, but it does mean that, if taxpayers and companies have concerns, they have a direct line to it. We are working carefully and closely with industry, patients, charities and others to find the right way forward as soon as possible.
Baroness Altmann (Non-Afl)
What data is there on patients who have been or will be denied treatments that they would otherwise have had? Does the Minister have any estimate of the amount of revenue expected to be raised from this? Are there plans for proper exemptions for patients who are in desperate need of this type of medicine and who may well then not be able to access it?
Baroness Merron (Lab)
I do not have the specific figures, but if I can access them, I would be happy to have noble Baroness receive them. It is important to step back here. As mentioned by the noble Baroness, Lady Pidgeon, patients are at the core of this and, as I said to the noble Baroness, Lady Finlay, I do not want to alarm people. We are taking other actions; this is not an “instead of” but an “as well as”. For example, our raising the threshold for NICE in April meant that it could recommend three new medicines, which are helping those with muscular dystrophy, those as young as 12 with brain tumours and those who would benefit from a particular medicine for an aggressive form of stomach cancer. All these are not to do with compassionate use, but they are to do with NHS medicines and NICE approval. That will always remain at the core of our support for patients.
Defence Investment Plan
(1 day, 4 hours ago)
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Baroness Goldie (Con)
My Lords, the Chief of the Defence Staff has today given the International Relations and Defence Committee of this House stark evidence of what funding is needed and why we need it to maintain our defence capability. Does the Minister agree that, whatever ends up being in the defence investment plan, there must be an emphasis on funding ongoing operational activity such as boarding sanctioned tankers, paying for drones, equipping our serving Armed Forces personnel with everything they need to maintain operational readiness, and ensuring that our reserves are trained and equipped to optimise military and national resilience support? Does he accept that these are priorities?
The Minister of State, Ministry of Defence (Lord Coaker) (Lab)
The priorities, and the moneys for the future, will be laid out in the defence investment plan. The noble Baroness is right to point out some of the important capabilities we have to protect our country and to work with our allies. She was right, for example, to point to the importance of the reserves—it is good to see the noble Lord, Lord Lancaster, here—and to the ability to maintain our operational requirements. This goes back to a question asked by the noble and gallant Lord, Lord Stirrup, who is not in his place. As the DIP goes on, an important thing that will have to be wrestled with is the relationship between RDEL and CDEL, which is crucial to the way we will operate in the future.
Lord Bruce of Bennachie (LD)
My Lords, the Government have committed to increase defence spending to 3% by 2030 and to 3.5% by 2035. But what is required, and is chaotically missing, is a clear timeline that would enable the MoD and the defence industry to budget, plan and procure. Even if the DIP is published, as promised, before the NATO summit, it will not end the uncertainty. Holding out unspecified prospects for future spending does not really cut it. So when will the Government make a clear medium-term to long-term decision and remove damaging uncertainty for our defence industry and for other departments, which fear cuts, in order to fund what they do not know is happening?
Lord Coaker (Lab)
Money for defence is already increasing, notwithstanding what happens in the DIP, which will further increase defence spending. In answer to various questions yesterday about defence spending going forward, I simply referred to what the Prime Minister told the BBC on Friday afternoon. The Prime Minister laid out that defence will be the number one priority in every spending review, including the next one, which, I remind the noble Lord and the House, will be in 2027. There is the additional commitment, which I made at NATO last year, to get to 3.5% by 2035. The commitment laid out by the Prime Minister to the BBC and Chris Mason was important.
Lord Shamash (Lab)
My Lords, I have £50 billion in my back pocket. In 11 years’ time, my noble friend the Minister and every Member of this House will be able to get to Birmingham 20 minutes faster. Some £102 billion is due to be spent on HS2 going forward. If we cancel this project now, it will cost us £33 billion. The net saving will be somewhere between £50 billion and £70 billion. I ask my noble friend the Minister to take this away and see whether he can persuade his colleagues in the Cabinet to chop HS2, which is utterly useless, is going nowhere and was a bonkers vanity project right from the beginning. I invite him to do so.
Lord Coaker (Lab)
That is the most difficult question I have had. The serious point, notwithstanding the debate around HS2, is the question of priorities within government. One of the issues that has caused some debate and discussion—I was asked a question about it—was that when the Government made the initial defence spending increase, it was funded by a reduction in the overseas development budget. Now, the debate and discussion are about how we can reprioritise within the existing government spending envelope and use money from other departments, particularly from capital, to spend in the defence investment plan. There is always debate and discussion about priorities within government, and, no doubt, that will continue.
Lord Howell of Guildford (Con)
My Lords, might not the Government find it a bit easier to deal with their problems explaining defence spending if they distinguished much more clearly between the overall defence of the nation—where the budget spreads across many departments and takes a variety of new forms that change all the time—and the MoD budget, which, just like general spending, is always in trouble? I see in today’s newspapers that more trouble is coming along.
Lord Coaker (Lab)
It is an interesting idea. Indeed, the strategic defence review of the noble Lord, Lord Robertson, pointed out the contribution that many departments, not just the MoD, will make to homeland defence and the protection of critical defence infrastructure. In terms of what happens to the budgets, there will clearly have to be more co-ordination and work between government departments if we are to ensure that homeland defence and the security of our nation is what we want it to be.
The Lord Bishop of Norwich
My Lords, I thank the Minister for the answers he has given so far. I want to ask a question about service personnel retention; I declare an interest as the father of a soldier. The defence investment plan primarily addresses equipment, procurement and investment in research. However, one of the greatest challenges we face with the Armed Forces is retention and the general health and well-being of service people. Currently, the outflow before the end of their agreed engagement or commission stands at around 6%. What more can the Minister and His Majesty’s Government do to retain and support our service community?
Lord Coaker (Lab)
We are taking a lot of action on recruitment and retention. To give a couple of examples in the short time I have, the announcement last week about the further increase to Armed Forces personnel pay was important, showing that the Government support and respect the work they do. There is also the work we are doing on military housing; that is an important statement as well. We are taking a variety of measures in a variety of ways to ensure the value that we all place upon our Armed Forces personnel.
Lord Fox (LD)
One way of achieving the objectives that my noble friend spoke about, to give some certainty, could be for the UK to join the defence, security and resilience bank. In answer to a Question I asked on 19 May, the noble Lord, Lord Livermore, said that the Government had “no current plans” to join that bank. However, the Canadian High Commissioner said late last week that Gordon Brown had talked to Mark Carney about the UK joining the bank and that talks were ongoing between it, the Treasury and the Ministry of Defence. Can the Minister clear up for your Lordships’ House whether we are or are not seeking to join that bank?
Lord Coaker (Lab)
I cannot say that we are seeking to join that bank, but within the MoD and across government there are considerations of what other mechanisms we might use to fund defence.
Lord Dannatt (CB)
What is the defence intelligence assessment of the Treasury’s inexplicable decision not to fully fund the strategic defence review of the noble Lord, Lord Robertson? If it is purely to force change on the Ministry of Defence and move from legacy systems to innovation, surely, that is a rather blunt instrument—or have I missed the point somewhere along the line?
Lord Coaker (Lab)
I thank the noble Lord for his question. The original assumption was that we would look towards 2035 as when we need to be ready. However, with the intelligence and the work being done, we are looking more towards 2030, and that is in addition to what we do now. Those are the parameters within which government is operating, and that is the work the DIP seeks to address.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, does my noble friend agree that it is not just about how much we spend but ensuring that it is spent effectively? What is being done within the MoD to ensure that procurement is improved? Perhaps he might consult our noble friend Lord Drayson, who was a very good Procurement Minister. Will he also explain why we have more civil servants in the MoD than we have soldiers, and more admirals than we have ships?
Lord Coaker (Lab)
We are trying to increase the number of ships, so hopefully in the end we will catch up. The personnel we have, we seek to employ gainfully. We have reformed and changed how procurement operates within the MoD. We have a new national armaments director running a National Armaments Directorate, which is seeking to reform and change how we procure so that we ensure that whatever money is spent is spent as effectively and efficiently as it can be.
Russian Shadow Fleet
(1 day, 4 hours ago)
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Baroness Goldie (Con)
My Lords, I begin by expressing my huge admiration for all those personnel involved in the seizure of the “Smyrtos” at the weekend, from the Royal Marine commandos and officers of the National Crime Agency to the sailors of HMS “Sutherland” and HMS “Ledbury” and the airmen aboard the Poseidon P-8 and the Merlin and Wildcat helicopters. They executed their duties with characteristic—indeed, exemplary—professionalism, and I thank all involved.
It is welcome that the Government have finally begun interdicting sanctions-busting Russian ships, and that is the right move to disrupt Putin’s war machine, to degrade Russia’s efforts to undermine Britain’s security, and to help our allies in Ukraine. It is the duty of all political parties to stand by the Government in their efforts to help Ukraine defeat Putin’s vicious invasion. But many unanswered questions remain. The Government announced back in March that they would start boarding and seizing vessels of the Russian shadow fleet, and yet the first instance of such action occurring was this past weekend, so why the delay? The new Secretary of State for Defence failed to answer this question from my honourable friend James Cartlidge in the other place, so I hope the Minister will do better.
Why did it take so long to start boarding these sanctioned law-breaking vessels? Surely it does not take three months to plan for one operation. According to the BBC, there have been at least 94 instances since March of shadow fleet vessels crossing into British territorial waters without being interdicted, and that is in addition to almost 200 that have entered our exclusive economic zone. That is 94 vessels carrying sanctioned Russian oil that have been allowed to pass unimpeded through our waters, with the cash flowing directly back to Putin. That is not acceptable.
Shortly after the Government announced that British forces would be boarding these vessels, we heard reports that the Attorney-General, the noble and learned Lord, Lord Hermer, was bizarrely concerned about breaching international law. The Government were very coy about responding to that allegation and refused to respond to my honourable friend David Reed when he asked that question on 13 April. Can the Minister confirm whether concerns about international law were holding the Government back and causing this delay, and if so, how has this situation changed? Can the Minister tell the House whether this is a one-off, or will the Government start hitting every ship of the Russian shadow fleet that enters British waters?
There have been further reports that after the operation at the weekend, six shadow fleet vessels that were heading for the channel have now turned round. There seems to be a likelihood that they may head up through the North Sea and around Scotland. This, of course, elongates their journey, but if they are permitted to continue, they will still reach their destination, offload their illegal oil and send that money back to Russia. So will the Government intercept vessels making that journey north?
Finally, this all leads back to resource. The Minister and I have had many exchanges on this topic recently, so he is fully aware of my position, but I have to repeat it. If we are to continue seizing Russian vessels; if we are to play a leading role in keeping the Strait of Hormuz open, as the Prime Minister announced today at the G7; if we are to maintain a military presence abroad, particularly in our overseas territories; and if we are to continue to deter our adversaries, our Armed Forces must have the funding they truly require. The funding they truly require far exceeds that which the Government have committed to date. We know that the Chief of the Defence Staff has asked for £28 billion as a minimum. Why will the Government not commit to that level of funding for the defence investment plan?
Lord Bruce of Bennachie (LD)
My Lords, the boarding of the “Smyrtos” was conducted speedily, efficiently and without any casualties. It is a real credit to our Armed Forces. We all agree that it was a very impressive effort, and we should be grateful to them, but it is the first that has happened, as the noble Baroness has pointed out. My understanding is that the “Smyrtos” was operating under a Cameroonian flag, but Cameroon abruptly purged 36 shadow fleet vessels from its shipping registry last week. Can I ask where the other 35 are, and indeed who is pursuing them, and who is going to take any action to block them, deter them or prevent them from completing their journey towards Russia? What are we doing, either by ourselves or in co-ordination with others, to ensure that collectively we stop this shadow fleet? If you are talking about that number of ships, there is a huge amount of oil that is still being got through to Russia and that Russia is using to finance the Ukraine war.
On the oil that has been seized—which I think is 100,000 tonnes—what will happen to that? I assume that it will be sold on the market, but will those funds go to Ukraine to compensate it for the war? I hope the Government will consider that. Does this not also raise the case to lift the waiver on Russian fossil fuels now, rather than at the end of the year? Is it not quite ironic that we are launching military escapades to capture shadow ships while at the same time allowing oil to go to Russia legally? That is a huge contradiction, and a total lack of common sense. So I ask the Government: what are we doing to try to eliminate this shadow fleet—not by ourselves, but collectively with our allies? What are we doing to end the Russians’ waiver and apply the sanctions? Can we ensure that any oil seized is used for the benefit of the Ukraine war effort?
The Minister of State, Ministry of Defence (Lord Coaker) (Lab)
My Lords, I thank the noble Lord and the noble Baroness for the comments that they have made. I particularly thank the noble Baroness for her thanks—and I know it is a sentiment shared by us all—to our Armed Forces for the work that they did. It is important that we recognise that, as well as the military, specialist officers from the National Crime Agency were involved. I know that noble Lords will join me in thanking them for the work that they did as well.
I will share a factual update which may be of use to the House, before I come to the questions that have been posed by the noble Lord and the noble Baroness. One Indian national who was the captain of the ship has been arrested and is currently at Bournemouth police station. There were a further 24 Georgian and Indian crew on the vessel. The ship has been seized and is currently off Weymouth, and all those 24 members of the crew remain on the ship. The ship, having been seized, is now under the control of the Department for Transport. Many noble Lords will be aware of some of those facts, but they are worth repeating for the awareness of noble Lords, and there may be questions that will come from them.
I am not sure that I am going to do a lot better than my right honourable friend in the other place—I am not sure that the noble Baroness expects me to—but the situation is that the Prime Minister made the statement about acting when all the circumstances aligned, and when preparations were made. It was based on the briefing from the military and others that this was the right time to act, and it was a time when we could act. In the way that it was conducted, no shots were fired, and nobody was injured or hurt, but it was the right time to act, and that is why we did. That is the answer to the noble Baroness’s question; I am not sure that she will be totally satisfied, but that is the answer.
As far as I am aware, there has been no problem with respect to the law or being held back because of the law. The Government have always said we will act in accordance with the law, and there has been no barrier to action with respect to that. This operation was conducted totally in accordance with the law.
In answer to the noble Baroness’s question about whether this was a one-off, no, it was not a one-off. This was a purely UK personnel operation, and we will take action at any point, should it be appropriate. If the advice that we receive from our military and others is that it is appropriate, of course we will act.
The noble Baroness is right to say that the action was a deterrent. Some ships were immediately rerouted, with some veering off around the English Channel past Cornwall. It is my understanding, as she is right to point out, that other ships moved around the top of Scotland. We keep under consideration any other activity that we may wish to undertake.
I stress the importance of the noble Baroness’s point that we must show that we will act. It is important for others to hear that from this Chamber. We will act when all the circumstances are right, when all the legalities are in place, when the military capability is there and when the military advice that we receive says that it is appropriate to do so. None the less, the noble Baroness’s point about deterrence is really important, so I say again that this should not be seen as a one-off. The Government will act, with the support of everyone, where that action is appropriate.
More generally, on the noble Lord’s point, we have sanctioned 570 ships and we assess that some 200 of them have been restrained to port—in other words, they have become non-operational. I am aware of the actions to which the noble Lord referred, but sanctioning ships is also important.
In answer to the noble Lord’s question, of course we always work with others. We liaised with others on this operation, but it was led by the UK. He will know of other operations off our own coast, where we supported the Americans, and recently in the Mediterranean, where we supported the French. There is a lot of work going on, in which we act in the way that the noble Lord suggests.
We work hard to ensure that we do all we can to impact Russia economically. In this respect, it is oil, but there are other ways to ensure that we undermine Russia economically to have an impact on the war in Ukraine and to ensure the defence of our own country. What happens to the oil will be considered by the Department for Transport, which will no doubt have heard the noble Lord’s point on that.
The noble Baroness made a point at the end of her question about resources. I cannot add a lot to what I have already said on that, other than to repeat a point that I often make: the defence budget has gone up. From memory, it was approximately £60 billion in 2024-25, and it will be £73 billion in 2028-29. That is before we get the uplift from whatever happens with the DIP and, following the Prime Minister’s comments to the BBC, the spending review in 2027, when defence will be the number one priority.
We should be under no illusion about the actions that we have seen recently and the many others that we have seen in the Middle East and the north Atlantic, and the various other operations that take place. Notwithstanding the debate about resources and their adequacy or not, it is important to recognise, as I know your Lordships do, the significant amount of activity that our Armed Forces conduct on our behalf, in Europe and around the world. It is important to recognise that, notwithstanding the present challenges.
Lord Cromwell (CB)
While the Minister may have handed this off to the Department for Transport, can he comment on the likely fate of the crews of the ships that are being detained and on the future expectation of what will happen to the oil and to the ships themselves, many of which may be poorly maintained? I have a vision of our anchorages becoming full of these oil-filled rust buckets, which pose a real risk to our maritime environment. Anyone who remembers what happened with the Armada will know what happened to the ships that tried to go around the north of Scotland and down the coast. That poses a substantial environmental risk to us, should one of them come to grief. Could the Minister comment on that?
Lord Coaker (Lab)
I can comment on the environmental risk. Obviously that is important, and we will do all we can to ensure that we do not see any adverse impact or consequence of what we have done in that respect. As I have said, apart from the captain, who is in custody with the police in Bournemouth, the 24 others remain on board. The only legal way that they could come on to the UK mainland would be if they were to be repatriated—in other words, if they were coming here to be sent back to their country of origin. That answers that specific point. As for the ship, then noble Lord will remember the “Bella 1”, which was interdicted a few months ago. It was just off the coast of Scotland for a time, but, as I understand it, it is now in the Caribbean, far away from our shores. That is, I hope, an example of how, while we deal with the specific consequence of the interdiction, we are mindful of the potential environmental consequence. We are also mindful of what we do with the crew, but we do not want any environmental damage from the ships. However, that should not alter the fact that we will take action where we need to do so.
Lord Redwood (Con)
To deter these ships, surely it is important that the Government tell them what would happen to their cargo and what would happen to their vessel if they persist.
Lord Coaker (Lab)
The noble Lord is right to raise that. Let us be clear that the Department for Transport will ensure that the way in which the oil is dealt with in no way benefits the Russian war effort. That is a matter for the Department for Transport. One of the important things is to make sure that we as a country stand up for the law. The noble Lord will appreciate that the really important point is for Russia to understand that we will not stand idly by, whether that means sanctioning ships or taking action where we need to.
Lord Hamilton of Epsom (Con)
The Minister has stated that the reason why this ship was stopped and many others were let through was that the circumstances aligned. Does he mean to say that, when all the other ships went through our territorial waters, for none of them did the circumstances align?
Lord Coaker (Lab)
Without going into the criteria, which would benefit only those who seek to circumvent the work we are trying to do, all I can say to the noble Lord—he will know this from his own experience—is that I receive advice from people who are much more qualified than I am to say what is and is not an appropriate way to act in the circumstances. We had advice from a wide range of people that this was an appropriate sanctioned vessel for which we could take action, at minimum risk to our own personnel, ensuring that we could be effective in what we did.
Lord Robertson of Port Ellen (Lab)
I join my noble friend in commending those who were responsible for this remarkable operation and the success that it represents. I also commend the Prime Minister, who today announced further sanctions on Russia, tightening further the screws on Vladimir Putin and his regime. Can we be assured that the Government will continue now to look at any of the loopholes that may be being used by people to provide money that allows Vladimir Putin to continue this dreadful war against Ukraine and the Ukrainian people?
Lord Coaker (Lab)
I thank my noble friend for his question. He is right to point out that this is an important action by the Government, but it has to be seen alongside all the various other actions that were taken, which I know are supported by all noble Lords in this House. I agree with him about looking at any loopholes that might exist, as well as at what further sanctions we might take. The Government and the Prime Minister are keen to do that. It is important to say that, notwithstanding what is happening in the Middle East and in other parts of the world, our determination to continue to stand with Ukraine in defence of its territory against the illegal invasion by Putin—I know this is a sentiment shared by all—remains absolute. That is a really important point.
Let me also just say this, because I think it is sometimes not forgotten but overlooked. Putin did not expect to be fighting a war in Ukraine in 2026 after his illegal invasion. His policy objective, and what he believed would happen, was that within three or four days he would have taken Kyiv and established a puppet regime there to act as a barrier between NATO and Russia. He has failed in that objective, and we will continue to do all we can to support the Ukrainians in their fight, which is a fight for our democracy and our freedom, as well as a fight within Ukraine for their democracy and their freedom.
Lord Clarke of Nottingham (Con)
The Minister has several times failed to give any clear answer to the question of what is going to be done with the oil and the ship. He dodges that and, for some peculiar reason, the Department for Transport is now considering these important matters. Do I take it that this very skilful military operation was carried out with nobody having any idea of what they were going to do with the ship and the oil once they seized it? If they do not know what to do with it, will they consider the very sensible suggestion that, as this whole military operation is for the benefit of Ukraine, they should be sold and the proceeds given to the Ukrainians?
Lord Coaker (Lab)
I am sorry to have been such a disappointment to the noble Lord, Lord Clarke. I cannot really do any better. It is the law and the way the country has operated for many decades, including when the noble Lord was a senior Minister. The Department for Transport retains responsibility for these actions, and it remains responsible for what happens to the oil and the ship.
I say to the noble Lord that the most important consideration, in deterring Russia and in taking action against Russia, is for them to understand that they cannot sail around the world with impunity and that we will take action against them where it is appropriate, where we can, to interdict these ships. Alongside that, we have sanctioned 550 vessels—that is alongside what other countries have done—and stopped Russia having more than 200 vessels available because they have been kept in port. I take the point the noble Lord is making, and no doubt the Department for Transport will hear that, but the action we have taken will have a deterrent effect on Russia, and that is what is important.
Baroness Butler-Sloss (CB)
When the Department for Transport decides what to do, will we be told?
Lord Coaker (Lab)
I shall make a solemn commitment to the noble and learned Baroness, who is one of the most esteemed Members of this House. It will no doubt be noted by many of those who support me in my ministerial role that I am making a solemn parliamentary commitment that I will ensure that the House is informed of what happens to the oil, the ship and the crew. There we go. I cannot do much better than that.
Lord Howell of Guildford (Con)
One of the problems is that we do not know where these hundreds of ghost ships are at any one time or where they are going. There is a need to identify that. We should have a better system of international port links, possibly working with the Commonwealth, to achieve that.
While I am on my feet, I add that, having heard the mention of Lord Howard of Effingham keeping the Armada to the windward side of Britain, with the result that the ships all got smashed up and their goats and ships are on the islands of Scotland to this day, we have in this House his descendant, my noble friend Lord Effingham. We should be very proud that our contribution shows that the descendants of these brave people who saved England again and again is memorised and enshrined in that fact.
Lord Coaker (Lab)
I have not got that in my briefing, but it is important to recognise the contribution that many have made through the ages, which is reflected in their families and their descendants today, and I take the noble Lord’s point. Alongside that, it is important that we look at how we more effectively work together across the international community to ensure that the sanctions regime is implemented much more effectively. As many people know, through history, economic sanctions and the denial of economic benefit to a country undermine its war effort, so we have taken action to do that. Can we do more working with our international allies? Of course we can.
Lord Harris of Haringey (Lab)
My Lords, it is reported on Sky News that the “Admiral Grigorovich”, a Russian warship, has fired a warning shot at a yacht in the English Channel. Should we regard this as being a sign of an escalation in the tensions between us and Russia?
Lord Coaker (Lab)
The noble Lord will not expect me to say too much on, as I understand it, an ongoing incident that clearly is potentially very serious, as I do not know the full facts of what has happened. I know it has been reported; I have just found out about it through a text on my phone, so I say to the noble Lord that he will realise why I do not really want to say much about it, given that I may, unfortunately, just add to the problem. It is certainly a developing story, as they say, and will need to be reflected on. As soon as I go back to the MoD, I will ask for a full briefing on what is actually going on.
Lord Garnier (Con)
My Lords, does the Minister know whether the Russian shadow fleet, in so far as it is coming in and out of northern Europe, is going into the Russian Baltic or to the Russian Arctic? If the Russian Baltic, the strait between Sweden and Denmark is a lot narrower than the Strait of Hormuz, so what are we doing to interdict the ingress and egress of Russian shadow oil tankers through that strait? That seems to be a much more practical way of dealing with things with our allies in NATO in Scandinavia and Germany. Equally, what are we doing to patrol the north Atlantic in the Arctic region to prevent ships coming in and out of, for example, Archangel?
Lord Coaker (Lab)
Clearly, we work with our international allies and colleagues, whether it be in Scandinavia or anywhere else in Europe, essentially to deal with the sort of issue that the noble and learned Lord has raised. However, he will know that the UK is sending its aircraft carrier, HMS “Prince of Wales”, up into the north Atlantic with allies and friends in order to assert the rule of law in and around the seas. I think that is an important statement of where the UK Government, with our friends and allies, are with respect to all of this as well. Clearly, we work with others to ensure that, wherever the shadow fleet operates, we do all we can to ensure that we take the necessary action to prevent it happening.
Lord Walney (CB)
My Lords, this high-level procedure obviously took place in UK national waters. Do the Government believe that there would be legal justification for taking similar action against a sanctioned vessel in international waters? If the Minister is not clear, might he write to me?
Lord Coaker (Lab)
My understanding from the briefing that I had is that the action took place in international waters, and then it was brought back into UK territorial waters. An important point to make, just as a statement, is that the English Channel, although called the English Channel, is an international waterway; it is perfectly legal for legal ships to operate and to travel—even for warships, frankly—to go through the English Channel, providing their intent is not malign. That is an important comment for us to make. Then, of course, we have the territorial waters of our own country and the territorial waters of others in Europe. But as a specific answer to my noble friend’s question, my understanding is that the interdiction took place outside our territorial waters and the ship was then brought back into our territorial waters.
Baroness McIntosh of Pickering (Con)
My Lords, I declare my interest as being half Danish. The Danes have been especially concerned about this, and not just because of the damage it is doing to the war effort against Ukraine. Obviously, they live a lot closer to Russia, as do other Scandinavian countries, and we have had the build-up of troops on the Russian side of the Finnish border. Is it not the case that it might be easier for a big country such as Britain to board these vessels than a small country such as Denmark? To what extent can we co-operate through JEF and other international efforts in this regard? It would cause a catastrophic environmental incident if one of these vessels were to beach on one of the Scandinavian coasts.
Lord Coaker (Lab)
The noble Baroness makes a very important point. On what we may or may not do, we work very closely with all our allies, of course, including Denmark, but the noble Baroness makes a broader point about the importance of JEF and its work. In JEF, both in the maritime sphere and on land, we work with others to co-operate. She will know that we have troops in Estonia. I have also mentioned in the House that, only a couple of months ago, I was in Finland as part of a NATO operation. We were talking about the border between Finland and Russia. When you get within 30 or 40 miles of the Russian border and talk to people who live there, as I am sure many noble Lords have done, you understand the very real threat that they face; you understand the prospect, and their fear, that what is happening with respect to Russia in other parts of Europe might happen to them.
Lord Craig of Radley (CB)
My Lords, I join others in commending the crew that carried out this operation. It appears, technically, to have been piracy on the high seas, but the Minister has made very clear to the House that it was legal. I wonder, therefore, whether the Minister could explain in a short way the difference between what appears to be piracy on the high seas and a legal operation.
Lord Coaker (Lab)
The legal basis is that the ship was falsely flagged. As such, it loses some of the protections that it would have were it to be properly and legally flagged according to the rules that operate in the maritime environment. Also, the Attorney-General made clear that it was legal under the United Nations Convention on the Law of the Sea. From both points of view—the United Nations law of the sea, under which the Attorney-General was satisfied, and the fact that the ship was falsely flagged—it loses some of the protections that it would otherwise have. That means it is not piracy. The ship does not avail itself of the protections it would have were it properly flagged.
Lord Vaux of Harrowden (CB)
My Lords, what assessment have the Government made of the role of Greece with the Russian shadow fleet? Many of these ships appear to have been previously Greek-owned, and we have the ship-to-ship transfers of oil that are taking place in the Aegean Sea. What discussions have we had with our European partners in that respect?
Lord Coaker (Lab)
We talk to all our European partners, including Greece, about how we ensure that the sanctions with respect to Russia are as effective as possible. We highlight all the time the importance of ensuring that the efforts of Ukraine to repel the illegal invasion are successful. That obviously requires the support that we give militarily but, as I have said in answer to many of the questions that noble Lords have posed, the ability to undermine the strength of the economy of Russia should not be underestimated. The shadow fleet is playing a role in trying to support the economy of Russia; the more we can do to undermine that, the better.
Lord Tyrie (Non-Afl)
The Minister has said on several occasions that we will continue these operations of interdiction where circumstances align and where it is appropriate. I struggle to think where it would be inappropriate but, as for where circumstances might align, is that a reference to available resources? If there were an increase in the defence budget, would these interdictions become easier to conduct?
Lord Coaker (Lab)
It is not a question of resources. Where a sanctioned vessel is identified as having a false flag—to answer the point made by the noble and gallant Lord, Lord Craig—it is about understanding what its registration is or is not. When that is done, we get the military advice that it is possible to do X, Y or Z. Other criteria are also taken into account, some of which I do not want to go into. All I will say to the noble Lord is that, where we can and should, and where all the various criteria come together, we will take the action necessary to deter that shadow fleet from operating. In answer again to the question put by the noble Baroness at the start—Is this a one-off?—no, it is not a one-off. We will take action where we can, as often as we can.
Social Media Ban for Under-16s
(1 day, 4 hours ago)
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Viscount Camrose (Con)
My Lords, I thank the Minister for the Statement and indeed for alerting me in advance of the announcement, which was much appreciated. This announcement—although coming, I am afraid, rather later than many noble Lords would have hoped—is extremely welcome on these Benches. I thank in particular my noble friends Lord Nash and Lady Barran for their tireless campaigning on this issue. Had they and others not developed their arguments so well and expressed them so compellingly, I do not believe we would have reached this important moment. Needless to say, most of all I thank and offer my respect to the parents of the children who have lost their lives at the hands of social media. They have bravely and wisely directed their unthinkable pain into a legacy that will protect countless children for the future, and their efforts will not be forgotten.
A social media ban for this age group has been something that Conservative parliamentarians, both here and in the other place, have long advocated. We have been joined in support by Labour Back-Benchers, Liberal Democrats, campaigners, parents, schoolteachers and charities in calling for action to be taken to protect children. Yet just months ago, the Prime Minister directed his Members to vote against the same policy he is now so urgently championing. During the passage of the Children’s Wellbeing and Schools Bill, noble Lords were instructed by the Government Whip to vote against the amendments tabled by my noble friend Lord Nash. Save for a small handful of admirably brave, principled Labour Peers, more than 150 voted against the ban not once but three times.
The Government explained that they did so in order to conduct a consultation, but the evidence and support in favour of a social media ban were already overwhelming. In fact, it had already been adopted by other countries. It is not clear at this point what value this consultation has added. I think it is worth highlighting two opportunity costs of inaction. First, as the bereaved parents have stated, the longer you leave change, the worse it can be for children. Secondly, had the Government acted decisively at the time, the consultation could have been used as a means of refining the detail of the ban. With that in mind, I have several questions for the Minister.
First, are the Government yet ready to set out a detailed timetable of what legislation is coming, and roughly when, to bring this about? Given the extra work that will fall on Ofcom, what additional resources will it be provided with? Will tech companies be obliged to contribute towards the budget, or will the funding come from the taxpayer? When will which platforms fall into scope be published? I thank the Government for listing some platforms that will be banned, but we need a clearer, principles-based explanation as to what platforms and what functionality will be banned or limited for which age group. Can the Minister confirm today that digital ID will not be a mandatory requirement for those wishing to access social media, both children and adults alike? Can the Minister comment on reports today that age verification will be conducted at operating system level rather than by the platforms themselves? Lastly, do the Government feel that new frictions for all users, including adults, of age-gated platforms are unavoidable?
The social media ban is welcome. I was surprised to learn, however, that the Government are also considering overnight curfews and infinite scrolling interventions for those under 18. There may well be a case for this, but I do not see how it is possible to believe simultaneously that 16 year-olds have the wisdom and judgment to vote to elect a Government but not the wisdom and judgment that 18 year-olds might bring to bear on what social media functionality to use. It strikes me as psychologically wildly incoherent.
But, to conclude positively, although we are disappointed by the time it took the Government to arrive at this position, we should not lose sight of the significance of the step being taken today. The protection of children online should never be, and I think is not, an area of disagreement between us. These Benches will of course continue to scrutinise the detail of the proposals and hold the Government to account for their delivery. However, where measures genuinely strengthen protections for children and support families, the Government will find in us a constructive and willing partner. I look forward to working collaboratively with Ministers to ensure that these reforms are implemented effectively and provide the lasting protections that children deserve.
Lord Clement-Jones (LD)
My Lords, I, too, thank the Minister for taking the Statement today and for her alert. On these Benches we welcome the fact that the Government have finally responded to the overwhelming public demand to protect our children online, especially from the bereaved parents: like the noble Viscount, Lord Camrose, I pay tribute to them and to their campaign. We share the Government’s diagnosis. There is a genuine children’s mental health crisis and the platforms have for far too long been allowed to profit from it.
However, we fundamentally disagree with the Government’s prescription. After months of insisting that a drawn-out consultation was absolutely necessary before any action could be taken, what has been announced appears to be a panicked policy cobbled together ahead of a by-election and a Back-Bench rebellion. It appears that DSIT’s own expert panel flagged a “substantial” lack of evidence to justify key aspects of the plans. Can the Minister tell the House what steps the Government are taking to address those evidence gaps before the regulations are laid?
The Australian model the Government are adopting is based on definitions and lists. It bans specific platforms while trying to carve out exemptions for messaging or education. As my honourable friend Caroline Voaden pointed out in the Commons, the internet moves far too fast for lists. The moment one platform is banned, another unnamed platform launches. This is, at its heart, a “dangerous dogs” approach to regulation, focusing on arbitrary categories rather than the actual risk of harm.
The Secretary of State made a startling admission at the Dispatch Box. She openly acknowledged that children will find workarounds, using VPNs or fake IDs, stating that
“kids will get around this … That is what kids do”.—[Official Report, Commons, 15/6/26; col. 606.]
If the Government themselves acknowledge that children will bypass this ban, how exactly does a policy built purely on exclusion protect them? Does it not simply give parents a false sense of security and, worst of all, let the tech giants completely off the hook?
As the noble Baroness, Lady Kidron, has tirelessly argued in this House, with our support, we must regulate the product, not just the child. This is about safety by design. Instead of an outright ban, the Liberal Democrats have consistently called for a targeted and coherent harms-based framework: films-style age ratings for platforms. Under our approach, platforms that deploy addictive algorithmic feeds or host inappropriate content would be legally restricted to users over 16 and the most extreme sites rated 18-plus. Will the Minister explain why the Government have rejected this approach and why the burden of proof is not being shifted to the tech companies themselves, forcing them to remove toxic, addictive features such as infinite scrolling, autoplay and manipulative algorithms.
As the Molly Rose Foundation has rightly warned, relying on blanket bans risks migrating bad actors, groomers and violent groups from banned platforms to permitted ones or into the dark web. We will end up playing a desperate, endless game of whack-a-mole with children’s safety. What assessment have the Government made of that migration risk?
There is also a dangerous cliff edge in what is proposed. DSIT’s own expert panel warned in writing that a sudden transition at 16 could lead to intensive uptake and increased risks. We risk keeping children in a sterile digital environment until their 16th birthday, only to suddenly expose them to harmful, unfiltered content the moment they come of age, without having helped them to safely develop the digital and emotional resilience they will need throughout their lives. What specific measures does the Minister propose to address that cliff edge?
The Statement is also glaringly silent on the commercial exploitation at the heart of this crisis. Will the Minister confirm when the Government intend to raise the digital age of consent from 13 to 16?
Finally, any ban or restriction is entirely meaningless if the regulator lacks statutory teeth. We have a fundamental enforcement deficit. The Australian experiment already demonstrates the immense difficulties with enforcement and circumvention: six in 10 children there are still on social media six months after the ban came into force. Will the Minister commit today to a formal review of Ofcom’s enforcement powers within six months to ensure that the regulator has the necessary tools—business disruption measures, injunctive relief— to compel tech giants to change their business models?
We will rigorously scrutinise the forthcoming regulations and continue to press the Government to move away from blunt exclusion towards a robust harms-based framework that holds these tech giants properly to account. This must be indeed big tech’s seat-belt moment, but a seat belt protects a passenger within a vehicle; it does not simply ban them from the road. We need a smart approach that allows young people to benefit from the best of the digital world—and indeed, as the noble Viscount, Lord Camrose, says, prepare to vote at 16—and to learn, connect and grow while properly dismantling the addictive profit-driven architecture that is doing them such harm.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)
I thank the noble Lord, Lord Clement-Jones, and the noble Viscount, Lord Camrose, for their contributions. They have been at the forefront of calls to engage on how to make our online world safe for children growing up for many years, and I join them in paying tribute to the bereaved families who have also been tirelessly campaigning on this issue.
The Government set out earlier this year our intention to consult parents, children and young people on what more needs to be done. We also committed to act swiftly following that consultation. We repeatedly said, “The question is how we act, not if we act”. The two noble Lords have expressed concern about the Government’s consultative approach. Perhaps they have questioned whether it was needed. We feel that the approach has been both swift and responsible. A short, focused consultation was necessary so that we could hear that input. We received over 116,000 responses from parents, civil society, industry and, crucially, children and young people themselves. The magnitude of that engagement demonstrates the range of strong views. We felt that it was critical to listen to those children and families and to have a national conversation.
This week we have set out plans to ban social media platforms from allowing those under 16 to access them. On the point made by the noble Lord, Lord Clement-Jones, we have also announced our intention to restrict under-16s from accessing some harmful functionality, such as livestreaming and features that enable the discoverability of children and facilitate unrestricted communications with strangers. It is by doing those two things together that we build a safer future. Those features will also be off by default for 16 and 17 year- olds, and we have made it clear that we will age-gate features on AI chatbots that enable sexually explicit interactions to over-18s. We believe that will deliver graduated, age-appropriate experiences and address concerns about the issue of cliff edges, as highlighted by the noble Lord, Lord Clement-Jones.
On the question of speed and when we are going to act, we have committed to moving as quickly as possible to lay these regulations on social media by the end of the year, to vote as quickly as we can on those, and to implement them by spring 2027. By taking the powers in the Children’s Wellbeing and Schools Act, we can move at this speed.
Noble Lords also asked about the digital age of consent. We have said we will come back to some other questions that were raised in the consultation—for example, the digital age of consent and the risk of circumvention through virtual private networks—in July, when we will come back on further details.
On the question of different ages, it is indeed the case that there are many different ages in our legislation for access to alcohol and access to gambling. That is a feature of our legislation. We feel these are the right ages to restrict social media companies from providing services to under 16 year-olds—and, as I mentioned, setting the default features for 16 and 17 year-olds.
In terms of the scope, this is indeed based on the Australian criteria. We will set out, with the regulations later this year, exactly the criteria that we choose in our regulations. In respect of age verification, currently the Ofcom guidance recommends the following age-assurance methods for over-18s: passports, driving licences, credit cards, facial scanning, mobile network operator checks, open banking checks, or email-based age estimation. Some of these will not work for the 16-plus category. That is why the Secretary of State has asked Ofcom to look at options for highly effective age assurance for 16 year-olds. We have asked that it publishes its findings in October, so that Members of this House can consider them before voting on the regulations. So, to answer the question of the noble Viscount, Lord Camrose, on age verification, there are a variety of models.
On the question of evidence gaps, we are aware, obviously, that social media moves quickly and that new services may be provided. We think that this can provide some opportunities. The current legislation is set in a certain way. Once the legislation and the regulations are changed, this will provide the opportunity for providers to provide services that they do not today—for example, to access the news or other services. This may provide our children and young people with better opportunities than they have today.
We also recognise that some children may attempt to circumvent age restrictions. What we are setting out in this set of proposals is a new societal norm. We are resetting what is expected. This will benefit children today and, importantly, it will benefit children growing up today who have not yet reached the age of 13, 16 or 18—the generation of tomorrow.
On the question of enforcement powers, obviously this is an incredibly important point. We need the new regime to be effectively enforced. That is why the Secretary of State wrote to the chair and CEO of Ofcom to reinforce this and to ask that they ensure that there is robust and effective enforcement of the ban, and to submit to Parliament and make publicly available an update on their wider enforcement strategy, noting the legitimate interest of Members in the other place and of noble Peers here. We will ensure that Ofcom has the resources to properly enforce these new measures and to take strong enforcement action and protect all users more widely.
We recognise the importance of parliamentary scrutiny in this process, and I welcome the offers to collaborate and engage on the proposals we bring forward with the appropriate scrutiny—and, it seems, some extra scrutiny and critique from the noble Lord, Lord Clement-Jones. We all want to protect children online and ensure that their online life is as fulfilling as their offline life. It is a responsibility we take very seriously. We do not want children to have to navigate unsafe digital spaces. We believe that our statement of intent here will do that and will deliver to make sure that we give children the childhood they deserve.
Lord Nash (Con)
My Lords, I express my gratitude to the Government, including our Minister, the Secretary of State for DSIT and Minister Narayan, for coming to the conclusions that they have as a result of the consultation. They have listened and are clearly determined to act effectively. I add my gratitude to the bereaved parents who have endured unimaginable pain to get to this point. I was grateful to the Minister for her time earlier today, when she met a number of noble Lords and said that she will share the draft regulations with interested noble Lords, in advance of them being published. I agree that a spirit of co-operation on this issue, which clearly has cross-party support, would be helpful. I would be grateful if she could confirm that at the Dispatch Box today.
In my conversations with the social media companies, they have all said that if there is a level playing field, they will accept the situation. The proof of that pudding will, of course, be in the eating, but I would be grateful if the Minister could confirm, either today or, more likely, in due course, that all apps which are user-to-user and have the ability to post content, and where algorithms are involved, will not only be in scope but will not be able to provide those services to under-16s—and, if not, that the criteria on which they will be exempted will be very clear and consistent, to minimise the risk of legal challenge.
On enforcement, I would hope that because the criteria the Government are talking about are very black and white, there should be minimum scope for delay in effecting enforcement. I would also be grateful if the Minister could confirm, I hope today, that geotagging and location sharing are within the concept of “communication with strangers”. But, given that apart from—
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
These should be short interjections with questions, not statements, if the noble Lord does not mind.
Lord Nash (Con)
But, given that apart from in relation to VPNs the Government have gone further than I was asking for, I commend their approach and particularly like its dynamic nature, which enables them, under the powers taken in the Children’s Wellbeing and Schools Act, to come forward with not just part 2 in July but parts 3 and 4, and so on, as technology moves on apace, so that we can play catch-up fast.
Baroness Lloyd of Effra (Lab)
I thank the noble Lord, Lord Nash, for his comments and, moreover, for his engagement over the last months—in fact, it was longer—with me on this topic. We will be able to continue that engagement—obviously, there will be scrutiny in the House—but also outside the Chamber. We committed to sharing the regulations with opposition spokespeople and the chairs of the Select Committees for scrutiny, and we will follow through on that.
On the definition and the scope, we plan to use the same model as Australia; that would capture user-to-user platforms whose purpose is to enable social interaction and which allow users to post material, alongside algorithms. The details of how those criteria will apply in the UK will be set out later this year. We have also said that purely educational services obviously will not be in scope.
On the question of enforcement, as I mentioned earlier, this is an incredibly important part of our thinking and approach. The Secretary of State and the department have interacted frequently with Ofcom. Noble Lords have made clear the importance of effective enforcement by Ofcom, and we have written to Ofcom to ask it to ensure that we can have robust and effective enforcement of this ban. The CEO of Ofcom has written back, confirming that that is what it will take forward.
Finally, on geotagging and location services, I will write to the noble Lord on that specific question.
Viscount Colville of Culross (CB)
I thank the Minister for the comments she has just made. She has just said that Ofcom will have a consultation on which age verification method will be used for identifying under-16s. However, I understand that the preferred form of age verification in this new social media regime will be ID documents, because the Government do not trust the age-verification technology for identifying under-16s. Will the Government continue to incentivise tech companies to come up with reliable technological solutions in this area? Surely, it is the responsibility of the tech companies to come up with this technology.
Baroness Lloyd of Effra (Lab)
The onus will be on the social media companies to age verify. The specific point I referred to is that the Secretary of State has written to Ofcom to look at options for highly effective age assurance for 16 and 17 year-olds, as the current regime applies to those over 18 years old, for which there is already guidance. That is the specific question. We expect there to be further developments in this area to provide effective age assurance.
Baroness Keeley (Lab)
My Lords, I join my noble friend the Minister in praising the bereaved families, who have campaigned so powerfully on online safety. I welcome the harms-reduction approach that the Government have taken. As my noble friend has outlined, we know that there is much more to do. It is right that the Government act, because the tech companies have shown that they cannot be trusted to regulate themselves. The ban is a welcome start, but not sufficient in itself. Can my noble friend the Minister assure me that, once the regulations have passed—the Communications and Digital Committee looks forward to seeing the regulations —the regulator, Ofcom, will take the strongest possible line in enforcing them, including substantial fines for any firm that does not comply in reducing harms?
Baroness Lloyd of Effra (Lab)
I thank my noble friend for the work of her committee, and for the scrutiny, ideas and suggestions that it has provided over the years. I stress again the importance of ensuring that these regulations are implemented. I will just say one other thing: one of the other benefits of the consultation is that there has been a national conversation and there is a very clear public expectation of how social media firms should operate. Therefore, in addition to the importance of Ofcom having the capabilities for its role, the Secretary of State has insisted that we look at making sure that Ofcom is properly funded. So the whole of society is moving to institute this new norm.
Baroness Benjamin (LD)
My Lords, it has been a long and winding road, but the Government have finally reached the door of common sense and agreed to a social media ban for under-16s—something that I, as well as parents, teachers and children themselves, have long been calling for. I too thank the bereaved parents for playing their part in bringing this change about.
However, social media platforms and opponents have wrongly argued that the Australian experience shows the policy is not feasible, and they are trying to blame age-assurance technology. Some suspect that they might be under instruction to sabotage age assurance to avoid the policy going beyond Australia. Does the Minister agree with the Australian eSafety Commissioner that many social media platforms are not enforcing the ban, and that these platforms should not try to claim that age-assurance technology is not working until they use it themselves? Enforcement matters. Furthermore, is the Minister aware that technology can now be embedded into mobile phones’ operating systems to prevent children viewing or uploading harmful material and getting around any ban? We should give children back their childhood and I am happy to work with the Government to do just that.
Baroness Lloyd of Effra (Lab)
I thank the noble Baroness for raising two important points. We have been looking at the evidence from Australia and on age assurance. There are differences in the UK approach. Australia takes a reasonable-steps approach to age assurance, which contrasts with the UK approach of highly effective age assurance. We think the UK position has the advantage in having potentially more effective enforcement. We are seeing the development of other age-assurance technologies all the time. We announced very recently that children should not be able to take, share or view nude images: this is device-level technology. I underline, however, that the onus will be on social media companies.
Lord Young of Acton (Con)
My Lords, I declare an interest as the director of the Free Speech Union. I have read through the DSIT document published yesterday, Growing Up in the Online World: Progress Statement, but I could not find a single reference to Sections 15 or 16 of the Online Safety Act: namely, the duty not to remove or restrict content of democratic importance or journalistic content. Those duties, due to be activated I believe in July before the plan is put into effect, apply to all users, not just adults. How is the plan compatible with those duties? I know the plan includes some restrictions for 16 and 17 year-olds. Can the Minister assure the House that content of democratic importance and journalistic content will not be restricted for 16 and 17 year-olds, which is particularly important given that the Government intend to grant them the vote?
Baroness Lloyd of Effra (Lab)
Under-16s will still be able to access the internet and the news in that way. Social media is not the only source of news, nor is it always the most reliable or accurate source. We continue to work with the Department for Culture, Media and Sport to ensure that younger audiences can find and access high-quality, culturally relevant programming and content. We are working to strengthen access to trusted news across the UK as part of the local media action plan, because it is very important that young people can engage with high-quality local and national journalism.
Baroness Alexander of Cleveden (Lab)
My Lords, I also welcome the Government’s Statement, their commitment to cross-party working on this and their recognition of the importance of enforcement. I have a question about enforcement. The Statement indicates that Ofcom’s chair and CEO have been asked to carry out an urgent review of its enforcement capabilities. Given Ofcom’s rather patchy record, will there be any external input into its capabilities review? Will it be published? Thereafter, when Ofcom publishes an enforcement strategy, will the initial strategy be published prior to the regulations coming into force in the spring of 2027?
Baroness Lloyd of Effra (Lab)
The newly appointed chair of Ofcom has highlighted the importance to him of ensuring that Ofcom has the right capabilities in place. In writing to Ofcom to ask about capabilities and ensuring that there will be sufficient funding, we have emphasised how important that is to us. I will come back to my noble friend on the precise timing of some of these products. In general, the letters we exchange with Ofcom are made public but, if she does not mind, I will come back on her specific three questions.
Lord Russell of Liverpool (CB)
My Lords, earlier today, I had the enormous privilege to co-host with the noble Baroness, Lady Berger, who I suspect will try to ask the question after me, a group of the bereaved parents. Four of them spoke very bravely in person. Behind them were arrayed the photographs of even more children who lost their lives. They spoke very movingly. They said that while they absolutely welcomed the Government’s announcement yesterday, for them, that was the end of a long process of trying to get government to listen, but it is, at the same time, a beginning, because there is an awful lot more to do. If the Minister has not had the chance to read it, a very well-known bereaved parent, Ian Russell, wrote a very sensible piece in today’s Guardian about safety by design and how completely and utterly fundamental that is if we are going to get this right.
My question to the Minister goes back to enforcement. I know these large companies; they were clients when I was a headhunter. I know how well funded they are. We put in a lot of their top lawyers. They are very smart and have very deep pockets. The only way that we will be able to enforce is by joining with other jurisdictions, most obviously the European Union, to create a large enough economic bloc of customers and users of these technology companies—despite whatever the slightly incontinent current President or any of his minions may say—and by working together in a united way to make the companies realise that there is no “get out of jail free” clause. They have to be held to account, and they will be, but we can only do that together.
Baroness Lloyd of Effra (Lab)
The noble Lord—who has been a consistent advocate of ensuring that our children are safe online throughout the many months that I have been here, and he has played a very important role in doing so—is right that enforcement is absolutely key. He is also right to highlight that many other jurisdictions are looking at this and moving in this way. That will all be part of setting the new social norm and ensuring that not just this generation but the next generation grows up in a world in which social media operate very differently.
Baroness Barran (Con)
My Lords, I echo other noble Lords in thanking the Government for their announcement and the important progress that has been made, of course acknowledging that my noble friend Lord Nash in particular encouraged some of that movement. I want to press the Minister on the exception for educational services. She will be aware that there are concerns that edtech is often described as the Wild West and that just because a service claims to be educational does not actually make it educational. Can she reassure the House that, in particular, some of the apps that children have for homework on their phones will not automatically be seen as meeting the educational exemption? If she cannot clarify that today, maybe she could be very kind and write to me.
Baroness Lloyd of Effra (Lab)
The noble Baroness is right to highlight the importance of the definitions and ensuring that we target the platforms that we intend to. The definition that we have adopted from that in Australia is
“whose purpose is to enable social interaction and which allow users to post material, alongside algorithms”.
We will look carefully at the criteria and how they apply to particular platforms and expected exemptions to ensure that when the regulation is applied in the real world. it achieves its purpose. We will be developing that during this year, so it may not be quite immediately that we update the noble Baroness.
Baroness Berger (Lab)
My Lords, I warmly welcome yesterday’s announcement of a social media ban. It will make a material difference to the future of many children and young people in our country and is what parents and carers across the country have been crying out for. I echo many of the sentiments expressed. I commend the courage and tenacity of the bereaved parents who every day have campaigned on this issue to ensure that no one else must suffer as they have to every single day. I echo the many points that have been made about enforcement.
On functionalities, many have talked about safety by design. The Prime Minister said that we were going to see stranger pairing stopped. It is right that this happens, but it must be associated with ensuring that no child or young person can be geotagged or located through location services. Stranger pairing is very dangerous—knowing where young people are should be restricted to the parents, carers and, potentially, the siblings of those young people.
Baroness Lloyd of Effra (Lab)
I thank my noble friend for her passionate advocacy of the importance of improving online safety for our young people and for the engagement that she has had over the years with the families and others. She is right to highlight that we are taking action on not just social media companies but the functionalities. I undertook to write to the noble Lord, Lord Nash, on geotagging and geolocation. I will make sure that I write to my noble friend at the same time.
Steel Industry (Nationalisation) Bill
(1 day, 4 hours ago)
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Lord Leong
That the Bill be now read a second time.
Northern Ireland, Scottish and Welsh legislative consent sought.
The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)
My Lords, steel is a historic British industry at the heart of our national story. For generations, steelworkers have forged not only steel but Britain’s prosperity. From Scunthorpe to Sheffield, from Port Talbot to Teesside, steel communities have powered our industrial success, strengthened our economy and contributed immeasurably to our national life. For those communities, steel is far more than an industry; it is a source of pride, identity and opportunity. It is a way of life, built over generations through skill, dedication and enterprise.
However, steel is not only about our past; it is fundamental to our future. Steel underpins our infra- structure, manufacturing base, energy networks and transport system. It is essential to the homes, railways and power stations that we build and the defence capabilities on which our national security depends. Steel is therefore not merely another sector of the economy; it is a strategic national asset. Its future is central to our economic resilience, our industrial strength and our ability to deliver the growth and prosperity that this country needs.
The global steel industry faces profound challenges. The volatile geopolitical climate, intensifying international competition and significant global overcapacity have placed enormous pressure on steel producers worldwide. British producers face those challenges while contending with energy costs that remain higher than those of most of their many international competitors. Recent events have highlighted the fragility of global supply chains. The pandemic exposed vulnerabilities that many had assumed did not exist. Russia’s invasion of Ukraine reminded us that economic and national security are inseparable. Increasing geopolitical uncertainty has underscored the importance of maintaining domestic industrial capability.
The lesson is clear: a modern industrial nation cannot afford to lose the capability to produce the materials on which its economy and security depend. Without intervention, the United Kingdom faces the prospect of being the only G7 nation unable to produce virgin steel from raw materials within its borders. That would be more than an industrial failure; it would represent a strategic vulnerability. That is why in March the Government published The UK Steel Strategy, setting out a commitment to revitalise the steel sector, restore domestic production to sustainable levels and secure the industry’s long-term future.
The strategy recognises that the Government have a vital role to play. It means tackling the drivers of high operating costs, including reducing industrial energy costs. It means maintaining a robust trade defence regime to protect British producers from unfair competition. It means working alongside industry to secure the investment that is needed to modernise and decarbonise steel production. It means ensuring that where strategically important steel-making assets are at risk, government has the tools necessary to act decisively in the national interest.
That brings me to the Bill before the House today. This Bill establishes a framework that enables the Government, where necessary and justified by the public interest, to bring steel undertakings into public ownership. This is an enabling measure. It provides the Government with the ability to intervene where strategic domestic steel-making capability is at risk and where such intervention is necessary to safeguard the national interest. As the Prime Minister has already made clear, the Government are strongly minded to use these powers in relation to British Steel, subject, of course, to the public interest test set out in the legislation.
The circumstances surrounding British Steel and the Scunthorpe steelworks are well-known to the House. Scunthorpe is the last remaining primary steel-making capability in the United Kingdom. It directly employs approximately 2,700 highly skilled workers and supports many thousands of additional jobs throughout the wider supply chain. The Government took decisive action last year under the Steel Industry (Special Measures) Act 2025 to prevent the premature and disorderly closure of the blast furnaces at Scunthorpe. I would like to place on record my gratitude to noble Lords across the House for their constructive and responsible engagement with that legislation. I pay tribute to the parliamentary staff whose efforts enabled Parliament to respond swiftly to an urgent national challenge.
The measures enacted last year served their immediate purpose. They prevented closure and ensured continued production. However, those powers were always intended to be temporary. Although they have enabled continued operation, they do not provide the flexibility required to undertake the longer-term restructuring, investment and modernisation that the business now requires. As matters stand, the Government believe that public ownership offers the most effective way to secure the company’s future and to enable strategic decisions to be taken in the long-term interests of the business, its workforce and the nation.
However, I emphasise that any decision to nationalise remains subject to the public interest test as set out in the Bill. The Government did not reach this position lightly. We engaged constructively and extensively with Jingye to pursue a commercial solution. Our clear preference was to secure the future of steel-making through agreement rather than through intervention. However, despite extensive negotiations, it has proved impossible to reach an agreement that would represent a responsible and proportionate use of taxpayers’ money. In those circumstances, the Government concluded that legislation was necessary.
Some noble Lords may reasonably ask whether nationalisation is the right answer. The Government’s response is straightforward. Nationalisation is not an ideological aim and it is not the first option either. It is a pragmatic tool available for use when the national interest requires it. The costs of losing our steel-making capability would far outweigh the costs of preserving it. Once blast furnaces are extinguished, once supply chains disperse and once specialist skills are lost, rebuilding those capabilities becomes extraordinarily difficult and expensive. Inaction carries consequences and dependency carries risks. The loss of sovereign industrial capability carries costs that cannot be easily measured in purely financial terms. That is why Governments around the world intervene to protect strategically important industries. Britain should be no different.
We believe that British Steel can succeed. With the right leadership, investment and long-term strategy, the company can be transformed. We have already seen the success of public ownership in the case of Sheffield Forgemasters. Recently, British Steel has secured important new contracts, including supplying rail infrastructure and supporting future energy projects. These are encouraging signs of the opportunities ahead.
Turning to the detail of the Bill, I recognise that it contains significant powers and that noble Lords will wish to scrutinise them closely. That scrutiny is both expected and welcome. The Government have consistently sought to ensure that the powers contained in the Bill are proportionate, necessary and appropriately constrained.
Lord Leong (Lab)
I will continue. In developing this legislation, we have drawn heavily on the framework established by the Banking Act 2009, adapting well-established precedents, rather than creating entirely new mechanisms. The principal transfer powers are subject to a sunset clause and will expire two years after Royal Assent. This ensures that they remain in force only for as long as necessary to achieve their intended purpose. The Bill provides for compensation arrangements when powers are exercised. Compensation will be assessed independently, by a valuer appointed through an independent process. This ensures fairness, impartiality and proper protection for affected parties. The Government are committed to treating all investors fairly and consistently.
Many of the technical provisions contained within the Bill are designed to ensure that any transfer of ownership can be carried out smoothly and effectively. In practice, we are seeking through legislation to replicate many of the outcomes that would normally be achieved through a complex commercial transaction. That inevitably requires powers to address legal and operational issues arising from such transfers and to ensure continuity of operations. These powers are not novel; they follow established legislative precedent, and are solely intended to ensure that the legislation’s objectives can be achieved effectively.
The Bill is ultimately about the kind of country that we aspire to be. Do we believe that Britain should continue to produce the steel upon which modern economies depend? Do we believe that strategic industries matter? Do we believe that economic security, industrial resilience and national security are worth safeguarding? Do we believe that steel-making communities deserve a future? The Government’s answer to each of those questions is yes. The Bill demonstrates our resolve to safeguard a strategically important industry. It demonstrates our commitment to safeguarding jobs, supporting communities and securing Britain’s industrial future. It demonstrates that this Government are prepared to act decisively when the national interest demands it.
Today, we have an opportunity to send a clear signal to steelworkers, investors, industry and the country that Parliament is committed to preserving and strengthening Britain’s steel-making capability for generations to come. I look forward to the contributions that noble Lords will make during this debate and to the constructive scrutiny I know this House will bring to the legislation. I beg to move.
Lord Hunt of Wirral (Con)
My Lords, I start by congratulating the Minister on his appointment last Friday as Parliamentary Under-Secretary of State at the Department for Business and Trade. He has a long established and proven track record of success in business. I hope that his voice will be heard loud and clear within government. I wish him well and hope that he will emerge from our debates with his reputation enhanced.
At the outset of this debate, I make it clear that my party accepts that steel is a strategic industry. Steel helped to build our past and I agree with the Minister that it will shape our future. It matters to our national resilience, to our defence capability, to our manufacturing base, to our construction sector and to communities right across the country. Recognising the importance of steel is not, however, the same as accepting that nationalisation is the necessary answer. The central issue facing the sector is competitiveness, and the Government have still to set out a credible plan to address just that.
Last week, Al Carns, who was then Minister for the Armed Forces, resigned from the Government. He has since argued that energy policy has to be treated as a matter of security, but high energy costs are making British steel less competitive globally. The Government’s chosen path towards lower carbon production will dramatically increase the sector’s reliance on electricity and therefore require very substantial capital investment. The industry itself has warned that high electricity prices risk undermining its long-term plans to decarbonise. The Government acknowledge that steel is vital to national security. If that is the case, surely the energy policy upon which steel depends must also be judged through the lens of national security, resilience and industrial capability.
The Government came to office promising a £2.5 billion steel fund—a fund that was supposed to transform the sector, modernise production, support new technology and crowd in private investment. There is now a real risk that that money will be used not to transform British Steel but simply to plug the losses created by the Government’s failure to address the underlying causes of uncompetitiveness.
If hundreds of millions of pounds are being spent merely to keep British Steel operating day to day, and if still more liabilities are now to be brought on to the public balance sheet through nationalisation, how much of that £2.5 billion will be left for genuine transformation? How much will remain available to support new technologies, energy-efficiency improvements and the investment needed to secure the industry’s long-term future?
This leads to a more fundamental question: where does this end? Will British Steel, under public ownership, be expected eventually to stand on its own two feet, or will taxpayers be asked to fund operating losses year after year, while Ministers continue to promise that help is just around the corner? Before Parliament grants these powers, surely it is reasonable to ask what the end state is, what the exit strategy is and how the Government intend to measure success beyond simply writing more and larger cheques.
The Government’s impact assessment makes it clear that the costs of this Bill will be substantial. These costs include the possibility of capital injections, working capital support, operating costs if the company remains loss making, compensation, administrative overheads, and the expenditure inherent in establishing and running a government-owned company. So I ask the Minister what the Government’s estimate of the total cost is. Will Parliament be told that figure before the Bill receives Royal Assent?
We must also question the Government’s approach to ensuring environmentally friendly steel. Ministers have chosen a pathway that the industry warned will be more costly, more electricity-intensive and thus more difficult to finance. In the other place, the Secretary of State Peter Kyle said that
“the long-term future of the UK steel sector relies on public and private investment”.—[Official Report, Commons, 21/5/26; col. 787.]
If the Government’s preferred model drives up costs and makes the United Kingdom less attractive than competitor countries not operating under the same net-zero constraints, where is that private investment supposed to come from? Investors can choose where they deploy capital; if the Government make steel production more expensive, more regulated and more politically uncertain, they will look elsewhere.
The Government’s impact assessment of 13 May is clear and explicit about the risk to investment. I quote its paragraph 75:
“One potential impact is a chilling effect on investment as investors may perceive an increased risk of government intervention. This could increase uncertainty for investors and therefore deter future investment in the UK steel sector. If investors perceive these risks as material, they could further undermine the recovery of the sector, putting jobs and capabilities at risk”.
This is a remarkable admission from any Government.
The Government have also not properly addressed the wider trade risk. If British Steel is to be subject to constant and persistent subsidisation at the expense of the taxpayer, Ministers must explain how they intend to ensure that this remains compliant with the United Kingdom’s international obligations. Prolonged state support, if not carefully structured, could risk challenge under WTO subsidy rules and invite countervailing measures from trading partners. That would not be a theoretical concern; other countries could impose countervailing duties, raise disputes or just take other retaliatory action if they believe that UK steel is being unfairly subsidised.
Such action could not only harm British Steel itself but damage the wider UK steel sector and the downstream industries that rely on steel inputs, including automotive, aerospace, defence, construction and advanced manufacturing. Can the Minister therefore tell the House what assessment the Government have made of the WTO implications of the Bill and of any continuing public subsidy to British Steel? Have Ministers had any discussions with the World Trade Organization or major trading partners about the proposed structure of support? What conversations do they intend to have before any transfer into public ownership takes place?
On the issue of trade, I also raise the significant concerns expressed by stakeholders across industry about the Government’s steel strategy and, in particular, their tariff policy. The Government appear to have conducted a partial U-turn: it seems that we did not need to wait 12 months for a formal review for Ministers to discover that tariffs can be harmful—if only more than a century of economic history had already taught us that.
The first point is one of parliamentary accountability: any change to the Government’s steel tariff regime should be reported to Parliament first, so why are Members of both Houses having to learn through the media about possible changes? That is just not acceptable, and it gives the impression of a Government making up policy in response to headlines rather than setting out a coherent and properly examined trade strategy.
We have already seen the risks of retaliation. We have seen concerns in relation to the United States and questions raised on India, including the possible implications for the trade deal. We now read of concerns about the European Union, with reports that the Secretary of State has been to the EU to plead with it not to reduce tariff-free imports of British steel. What did the Government expect? If the UK chooses to escalate protectionist measures, it should not be surprised when trading partners respond in kind. Retaliation was not unforeseeable; it was predictable. We saw the European Union respond in precisely this way to President Trump’s tariffs. Did the Government really fail to assess that risk before introducing their own regime?
Countermeasures, reduced market access and increased uncertainty could all make it much harder for UK producers to export, and harder for investors to commit capital. At the same time, tariffs risk raising costs for downstream sectors that rely and depend on steel inputs —metal forming, automotive, aerospace, construction, defence and advanced manufacturing among them. These sectors are central to growth, productivity and investment. If tariffs increase their costs, reduce their competitiveness or force them to source elsewhere, the Government will have weakened the very industrial base they claim to be trying to strengthen.
I therefore ask the Minister: what assessment has been made of the impact of the steel tariff regime on downstream manufacturers? What assessment has been made of possible or likely retaliation by trading partners? Why should British businesses have confidence in a strategy that appears to protect one part of the supply chain by imposing costs and risks on so many others? We cannot just ignore the wider business climate the Government have created.
I am not going to go into detail about the Employment Rights Act 2025, but that will not stop me raising it, because it is making the business environment less competitive and less conducive to investment. Combined with those increased national insurance contributions, endless reporting requirements and carbon taxes, the Government are damaging the steel sector, along with every other sector of the UK economy. For a steel sector already operating under intense global pressure, these additional costs affect hiring, investment, margins, productivity and the ability of British steelmakers to compete. In the light of the importance to our national security, the steel sector may be a special case, but that does not mean it is immune to the effects of wider government policy.
Many questions remain to be answered. At this point, His Majesty’s Opposition are far from convinced that nationalisation is the best option, or even the so-called least worst option, but we are eager to hear some, or better still all, of those questions answered as the Bill progresses. Steel has shaped our nation’s history. The challenge now is to secure a future for the industry that is internationally competitive, financially sustainable and attractive to investors.
Lord Bilimoria (CB)
My Lords, I thank the noble Lord, Lord Leong, for introducing this debate, and I too congratulate him on his well-deserved appointment as a Minister. This Steel Industry (Nationalisation) Bill is a government Bill, and it will provide powers to nationalise any company involved in steel manufacturing where that is in the public interest. But we know the focus of the Bill is the potential nationalisation of British Steel Ltd, a company currently owned by the Chinese company, Jingye Group, and subject to ongoing government financial assistance, and it is still operating.
The Government said in May—last month—that they were minded to nationalise the company. This was cautiously welcomed, including by the local community in Scunthorpe, but concerns have been raised about the significant cost and complexity of nationalisation. Of course, the Chinese Government have urged the UK to act prudently and said that they would protect Chinese business. The Conservative Party, as articulated by the noble Lord, Lord Hunt, very clearly just now, has set out its opposition to the Bill, and stated that it does not address the problems affecting the industry, which I will address.
The company, Jingye Group, operates the only remaining blast furnace for steel, in Scunthorpe. This is the country’s only remaining production capacity for making virgin steel. If the blast furnaces are switched off, it can be very difficult and costly to ever return them to operation. The company was preparing to close down the furnaces, and noble Lords will remember that last year Parliament was recalled—something that very rarely happens. We passed emergency legislation, the Steel Industry (Special Measures) Act 2025, which gave the Secretary of State the power to intervene in steel undertakings—and that is exactly what has happened.
The result is that the production plant at British Steel is still producing. The Government have stated that they now want to modernise and co-invest with the private sector. The Minister for Industry, Chris McDonald, set out the details and said that government officials would continue to provide on-site support. To date, the Government have spent almost £0.5 billion on working capital to support British Steel. Can the Minister confirm that? When it comes to modernising and decarbonising, and providing stability for workers, suppliers and customers, the Government recognise that that will require both public and private investment. Can the Minister confirm that?
Then there is the impact assessment that was carried out for this proposal. It said that the 2025 Act provided only short-term emergency powers and did not allow for the longer-term planning or investment required. It also said that the powers could create fear among investors and put off UK investment in the sector—owing to, for example, concerns about government intervention —and that this could undermine jobs and attempts to develop the sector. Will the Minister acknowledge that aspect?
The impact assessment also said that, on the other hand, the powers could have a positive impact on supply chain confidence and reduce uncertainty, boosting investment in jobs in the sector, and that they could have wider impacts on supporting and stabilising the economy and jobs. Overall, the impact assessment said that the socioeconomic benefits were likely to outweigh the associated costs, and that there would be a post-implementation review within five years. There is now the beginning of a clear and credible long-term plan for British Steel, with low-carbon steelmaking as a priority.
An important point from a legal perspective was made by Peter Ware, who is a partner and head of the government sector at the law firm, Browne Jacobson; I have to declare my interest, as I have worked with this firm in my business. He described this as
“one of the most significant acts of state intervention in British industry in decades”,
and said that it would raise
“substantial questions that will need careful navigation”,
including on compensation and the transfer of employees. Will the Minister acknowledge this?
Of course, there are underlying sovereignty concerns that losing the Scunthorpe furnaces would, as the Minister said in his opening speech, leave the UK as the only G7 country unable to make steel from raw materials, and dependent on imports for a material central to defence and infrastructure. I am co-chair of the India All-Party Parliamentary Group, and the UK signed the CETA with India—its FTA—last July at Chequers, with implementation due any time soon. There was a pitch to Indian capital, yet the Bill contains a discretionary power to seize a foreign-owned steelmaker. That is scary to any potential investor and sends the opposite signal to the Vision 2035 partnership at the worst possible moment, when we are about to implement the CETA.
Also to do with India, there is Tata, India’s flagship industrial investor in the UK, with Jaguar Land Rover and of course the £1.25 billion investment in Port Talbot’s electric arc furnace, which the Government have supported with £500 million of grants to save 5,000 jobs. The Bill defines a “steel undertaking” generically. Can the Minister confirm that the Government’s intentions are to do with Scunthorpe and not to do with Tata? Having secured Tata’s £1 billion commitment, the UK is handing itself a power to expropriate that same asset in the public interest, and that is quite scary.
Moreover, when it comes to compensation and the valuing of the business—this needs to be taken into account—nil compensation could be awarded. This is something the Government could do. Tata’s entire transition therefore rests on government co-investment. If the state can seize the asset and value it, but for the support of the UK Government, the inbound investment is worth little or nothing. This is really very scary to a country we have just signed a free trade agreement with—a country with which we are hoping to double our bilateral trade from nearly £50 billion to £100 billion by 2030.
Peter Ware of Browne Jacobson again said:
“The compensation question is particularly complex: with the government having already committed over £400mn in working capital, Jingye’s scope to claim substantial compensation may be limited, but legal challenges under bilateral investment treaties or domestic property rights principles cannot be ruled out”.
Will the Minister acknowledge this?
Shevaun Haviland is the director-general of the British Chambers of Commerce. I chair the International Chamber of Commerce UK; we are the regional co-ordinators for Europe, and she sits on the board of the ICC UK. She warned of
“significant financial and logistical problems”
from planned tariff changes, cautioning that revised quotas and tariffs risked
“economic damage in key supply chains”
for sectors such as car-making, aerospace and medical technology.
Can the Minister please clarify the rumours circulating in the press that India may reduce tariff concessions for the UK due to steel tariffs jeopardising the FTA that we have signed and that this FTA should be separated from any issues to do with steel? That would be really reassuring to hear.
On top of this, we have the backdrop of US tariffs and the UK’s high energy costs. The Government announced their much-delayed steel strategy focused on reworking trade quotas designed to protect steel majors from a glut of Chinese imports. Before that, Tata Steel—I do not want to miss this point—had broken ground with £500 million of government backing, which is going to be a pivotal moment in UK steel-making in future. It is expected to cut the site’s carbon emissions by 90%, thanks to the £500 million help from the Government that will save 5,000 jobs. Tata Steel says it is paramount that how it operates and what it is doing should be a distinguishing fact versus what is happening with UK Steel in Scunthorpe. We need clarification that these powers are not going to be implemented for a company such as Tata.
Domestic demand is a challenging opportunity. The UK steel industry now supplies only 32% of the UK’s overall steel demand. Will the Government commit to a minimum threshold of 30% domestically produced steel? On top of this—this is a point that the noble Lord, Lord Hunt, mentioned—the UK’s energy prices are some of the highest in the world and certainly the highest in Europe. I will give some facts. UK steel producers face an average electricity price of £66 per megawatt hour, compared with Germany at £50 and France at £43. We pay up to 50% more than our main competitors right at our doorstep in Europe.
On top of that, steel is a highly traded commodity. I am chair of the ICC UK and regional co-ordinator for Europe. Our expertise is in trade. Our competitors in Europe have successfully accessed government grant funding of 50% and more for major operational changes. China’s steel subsidies are more than 10 times higher than those of OECD countries and more than five times those of non-OECD economies. Steel subsidies in non-OECD countries are 42% higher in terms of cash grants, and 11 times higher with respect to below-market borrowings than in OECD countries. How do we create a level playing field when we are facing this sort of competition worldwide?
On the other hand, there are great opportunities. Renewable energy infrastructure presents a huge opportunity for the UK steel market. One report shows that just the offshore wind pipeline will require 25 million tonnes of steel by 2050, with a potential value of £21 billion to the UK steel market over the coming decades, which will be great for our British steel industry. This reinforces that we need to have that 30% minimum threshold.
We are paying more than 50% more for our electricity than our counterparts in France and Germany. When it comes to facing excess steel-making capacity, the gap between global capacity and crude steel production in 2023 was estimated at 543 million tonnes. That is 70 times the size of the UK market. Exports from China this year are expected to reach 100 million tonnes, the highest since 2016, when the last steel crisis saw several steel plants close and thousands of jobs lost in steel-making countries around the world, including the UK. On top of that, there is the effect of the US tariffs. Tata Steel, for example, exports about 170,000 tonnes of products to the US. Those products are not made in the US. They can come only from us, so the US needs what we produce.
There is no question: we cannot compete on costs with producers in China and across Asian markets. They have lower environmental regulations and cheaper carbon-intensive energy and labour costs. It is very difficult. On top of that, UK steel producers face higher network charges despite the Government’s recent announcement of a 60% exemption for charges starting in April last year. Germany produced a 90% exemption and France 80%, so we could do more. Can the Government do more to help our industry?
My last two points are about research and development and innovation. Tata Steel spends around £10 million to £15 million in R&D and collaborates with universities such as Warwick, Swansea, Cambridge, Sheffield, Cardiff and Imperial College. We must encourage more of this research and development between our industry and universities. On skills, we need core capabilities in engineering, metallurgy, safety, sustainability, leadership, advanced digital, green skills and AI.
To conclude, I have the privilege of chairing the Manufacturing Commission, which is the research arm of the All-Party Parliamentary Manufacturing Group. Although manufacturing was 30% of GDP in the 1970s and has now gone down to less than 10% of GDP, the UK is still the sixth-largest economy in the world and the 11th-largest manufacturer in the world in absolute terms. It is, most importantly, high-quality manufacturing that we are proud of. Steel is a vital part of our manufacturing industry. We must do all we can to ensure that our steel industry continues to flourish and prosper.
Baroness O’Grady of Upper Holloway (Lab)
My Lords, I too offer my warm congratulations to my noble friend the Minister on his appointment. I strongly welcome this Bill for the simple reason that our country must have a sovereign capability to make steel, and I commend the Government on acting swiftly. Taking powers to nationalise in the public interest is an essential tool of a modern industrial policy. We have done it before. In 2009, with cross-party support, similar powers were taken to stabilise the banking and finance industry. If we can bail out bankers, we can certainly support our steel-workers.
Steel is a vital part of our economy, as we have heard. Critical infrastructure such as roads, bridges, defence capability, hospitals, schools, housing and wind turbines all rely on steel. Some would add to that list Wembley Stadium, which was built with British steel. In today’s world, we cannot afford to leave ourselves at the mercy of China dumping cheap steel on the global market or the United States playing a capricious game on tariffs. Nor can manufacturing depend on supply chains left vulnerable by wars made in Moscow or Washington, so the Bill is essential for our security.
Many other advanced economies recognise the value of a mixed economy and the important role that state intervention and ownership can play. Germany, France, Italy, Belgium, Spain, China and India already provide major state aid to their steel industries. The state can intervene not just to correct market failures but to accelerate industrial success. It can both protect and grow firms of strategic importance and, for good measure, lift skills, living standards and whole communities.
The Opposition once recognised that. In 1971 a Conservative Government led by Ted Heath, admittedly somewhat reluctantly, nationalised a strategically important firm that was on the brink of bankruptcy. It was called Rolls-Royce. Some mounted the same arguments against nationalisation back then that we hear from some quarters today: that it was too expensive or that government should not bail out so-called lame ducks. History records that under state ownership, Rolls-Royce produced a new generation of engines that were a huge commercial success. It was only 16 years later that Rolls-Royce was sold off alongside a good deal of the nation’s family silver, including, of course, the national grid. Over subsequent years, bill payers and taxpayers have paid a high price for that 1980s dogma of privatisation. Now the steel industry is at a crossroads.
According to More in Common polling last year, the public think that the Government should take state control of the wider steel industry. More than half the public support this, with only 13% opposing. Support for public ownership of British Steel is even higher. Roy Rickhuss, chair of the National Trade Union Steel Co-ordinating Committee, and a former steel worker himself—in fact, I think he is also the son of a steel worker—backs this Bill. Gareth Stace, director-general of the trade association UK Steel, strongly backs it too. They agree that, without support, our steel industry risks falling further behind international competitors, but with state backing British Steel can become a global leader once again.
Let us be clear: we owe our steel workforce. Their vital work is hard, and it can be dangerous, so we owe them respect for their skill and resilience, but, most of all, we owe them respect for their sheer determination to see a successful and sustainable future for their industry and for their communities.
In conclusion, I would welcome my noble friend the Minister’s views on the following. First, I agree that we need to deliver competitive energy prices. Can he tell us what additional support there will be for energy-intensive industries, including progress being made to speed up and scale up grid connections? Secondly, we must match the ambition of other countries’ investments in green steel production and ensure a just transition for workers. Can the Minister update us on discussions with the steel industry and trade unions to develop a just transition plan, and does the Minister agree that all technological options need to be on the table? Thirdly, can the Minister comment on the need to introduce robust climate measures to protect us from dirty steel imports, and on progress to mandate the procurement of UK-made steel for defence, energy and major infrastructure projects, including a clear forward pipeline to encourage long term investment?
Finally, in this House I have previously asked about the Government’s assessment of the impact on UK manufacturing of the EU Industrial Accelerator Act. I would add to that question another one on the impact on UK steel of the European Union’s plans to cut tariff-free quotas by 47%, to double tariffs from 25% to 50% and to impose melt-and-pour requirements. I would be very grateful if the Minister could provide an urgent update on the reset negotiations, and other discussions with the EU on these specific matters, either now or by letter.
Lord Redwood (Con)
My Lords, I congratulate the Minister on his appointment. I am also very grateful to the Minister for his honest account of this legislation, where he made it very clear that it is very likely that the strong powers in this legislation will be used sometime soon fully to nationalise the Scunthorpe works. That, I think, makes it even more curious that the Government he represents have given us an impact assessment with no numbers in it at all, no account of what a nationalisation of the Scunthorpe works would look like, what impact it would have on the public budgets, what impact, as my noble friend Lord Hunt said, it would have on the £2.5 billion allocated for steel as a whole, and no account of how it would be a transfer of money we thought had been allocated for capital investment and modernisation in creating something new to the purpose of paying losses on a very old plant whose future is very uncertain. During this debate and over the course of this Bill, I hope we can get some numbers from the Government.
When the emergency legislation went through a year ago, I think both Houses of Parliament understood that the Government were not then in a position to produce numbers, but at that point, in those debates in both Houses, strong voices said, “There must be a business plan; there must be budgets”, and we were told at that stage that these would be forthcoming in relatively short order—but we await them. We still have a menu with no prices. We still have a lack of information about what the business plan of a nationalised Scunthorpe would look like, just as we have travelled for a year with a Scunthorpe that is run by the state and paid for by the state, but not owned by the state, making enormous losses which, according to the press, have been running at £1.3 million a day. We were offered no explanation of how long this might go on, when those green shoots the Minister reports will actually translate into real cash, how much steel this plant needs to sell and at what kind of prices before it can have a positive margin or before it can maybe halve the negative margin which it has been running at for all too long. Indeed, we were told at the point when the state took on these mighty obligations that, under the previous Chinese owners, it had been losing about £700,000 a day, so if the more recent press stories are right, the losses have clearly been considerably worse over the last year.
I understand that the Minister cannot firmly say they are definitely nationalising because they have put in this public interest test and they obviously have not yet applied the test to any project to nationalise which they are currently planning. However, reading how wide the public interest test allows the Government to be in order to satisfy themselves, I do not think it is any actual prevention of the nationalisation of Scunthorpe. I am sure they are quite clever enough to come up with a plan that is well within the details of the public interest test, widely drawn as it is in this piece of legislation, so I do not think that is a reason for not giving us proper figures.
I think it would also be good, over the course of this Bill’s debates, if we could hear a more honest statement to the workforce of Scunthorpe, because the Government say two different things. They tell the press and the rest of us—and we are very relieved to hear it—that they have saved the jobs, but then the Government still seem to be wedded to a net-zero strategy, which says that all blast furnaces of the Scunthorpe type have to close—and they are the only two left—to be replaced by electric arc furnaces. Therefore, if that is still the plan, we need to be told that honestly, and the workforce needs to be told that, because, of course, there will be a very big reduction in the numbers of people working, should they switch from blast furnaces to electric arc furnaces in the case of Scunthorpe, as the Welsh steel industry discovered when the previous Government went on that journey, carried on by this Government, to replace those blast furnaces with electric arc furnaces.
Ministers should have a personal interest in wishing to get beneath the numbers and work out how much it is going to cost, not just because of pressures on public budgets and the need to assess this against alternative ways of spending the money, but also because we read that, when the initial transfer of the liabilities and the running of the plant was made to the state, the senior civil servants apparently said to the Secretary of State and Ministers that they were not able at that point to sign off that this was value for money. They were not able to sign off that it was definitely going to be a policy that was going to work. They were not saying it definitely would not work: I think they were saying they did not have enough time and it would require a lot of very detailed work and consultation.
Ministers used their right to issue a direction to the Civil Service to say, “We think the public interest is such that this is urgent, and so we are going to ignore the absence of sign-off on value for money and on the efficacy of the policy because it is worth a shot and we, Ministers, will take responsibility”. I understand that, but, having taken that responsibility, the Ministers are under more of a personal duty to come to this House and to the other place with proper budgets and proper business plans to show that there will be value for money as they go on this course. Indeed, I think we need a year’s audited statement on what has happened so far with all that money passing to a Chinese-owned business, which the state largely controls but where it does not own the assets.
It would be good as well to be updated on where the Government have got to in negotiating with the Chinese owners. I think it is tragic that we have not had a deal with the Chinese owners. Maybe it is the fault of the Chinese; I understand that there are two sides in any negotiation. However, when I looked from the outside, just using public sources, at what was on offer when the state moved in a year ago, I thought that, as a rough rule of thumb, if the state said to the Chinese owners, “We will take full responsibility for the workforce and their future payments, so we save you all the redundancy payments you would have had to make if you had carried out your closure”, the state would take on the land and buildings in the state that they were in, probably with many environmental obligations and costs of clean-up, and that would have been another relief for the Chinese authorities of the company, because otherwise they could be liable for having to clean up the site after they had closed it.
In return, the Government should have said, “You definitely keep all the debts you have incurred during your unsuccessful period of management, and the value of your share and your land and plant we would put at £1 to complete the transaction”. Some people thought I was being a bit generous there, but I think that was the shape of a deal that one might have been talking about. According to press comment, the Government have been thinking about £100 million of compensation for the liabilities that they are absorbing to also obtain the plant and the land in its current state.
We read in the press that the Chinese say that, no, they want £1 billion for this transfer of the freehold and the shares, which would seem to me to be extremely excessive in the circumstances. I would fully support the Government pushing back very hard on that and, if necessary, defending themselves in court if they cannot get a deal. But it would be in everybody’s interest if a deal could be reached. Getting to that deal would be helped if we had a published statement of the likely business plan for an enterprise now in public control and maybe soon to be in public ownership. That would also help create a mood for the negotiations with the Chinese.
I fear that that business plan, certainly for the last year and probably for the next year or so, would produce an awful lot of red ink. It would be the background to explaining to the Chinese why the idea that they might walk away with £100 million or £1 billion is for the birds. They have presided over a heavily loss-making business and they were unable to find a way to make it work, so they were thinking of incurring massive costs of closure as the alternative to carrying on with a very high rate of losses.
Like all the other speakers in this debate, I think we want a proud steel industry again in Britain, as we were used to having over many decades. I also think there is a case for keeping a virgin steel manufacturing capability, as well as a lot of electric arc recycling steel capability. That would require a study of how much longer one could carry on with these two blast furnaces, which the state will probably own quite soon, and of what would be a sort of deep or long-term maintenance schedule if it is thought that they can carry on, because these are quite ageing plants. That would perhaps be a better option than having to think about how to find an investor who wants to establish new virgin steel-making capability in our country.
What is very clear in the wider debate of the Minister and the Shadow Minister’s opening remarks is that we will not have that opportunity—through inward investment, or domestically financed investment, or City financing through private equity, or new equity issued through the AIM market, or whatever—of steel-making capability in this country as long as our energy prices are sky high.
We heard unfavourable comparisons in a previous good speech with European competitors, but, of course, they are not the main threat. Asia and America have energy prices considerably lower. In the case of the United States of America—a first-world competitor in many fields, with a much stronger economy than the European one—its electricity prices are one-quarter of the prices that industry in Britain has to pay before any subsidy.
The Government are following a bizarre policy towards energy. They put on massive carbon and emissions taxes, and all sorts of other taxes if we dare to produce any of the energy ourselves, or else we have to pay other people’s heavy oil and gas taxes as we import so much. Then they realise that this produces energy prices that mean the loss of jobs and the mass closure of industry. We have seen refineries and bits of the oil industry go, we have seen petrochemicals go, and we have seen a lot of our steel industry and a lot of our ceramics industry go.
So then they say, “Why don’t we offer a little bit back by way of subsidy to discount the very expensive energy prices we’ve got with these very high taxes imposed on the energy?” This is a very bad way of doing it: you get the worst of all possible worlds. You deter investment because the energy prices are too high. You do not give enough back in subsidy to make the businesses competitive, so they still close. You are left with a situation where you are deindustrialising, so your import bill for goods goes through the roof. Your import bill for energy also goes through the roof because of the bad mistakes made in the energy policy. That is why the UK is struggling so much.
So I plead with Ministers, for their own sakes, to do some sums: find some numbers, work out what the business case will look like, interrogate your managers, find out what you need to do to help them to sell more steel. Unless you can sell more Scunthorpe steel, there is no point pumping money in; you will not end up saving the jobs. And please tell your workforce whether you are serious about saving these jobs and really want to carry on with blast furnaces, or whether your net-zero preoccupations mean that their jobs are doomed anyway.
Baroness Donaghy (Lab)
My Lords, I congratulate my noble friend Lord Leong, both on his ministerial appointment and on his opening speech. I also give full support to the Government for doing their best to protect and modernise a strategic industry that has suffered from past failures to adapt and from short-termism and lack of courage by successive Governments.
It was not the workers who let the side down or the communities who depended on them. These are tough jobs and tough people. My brother-in-law, Don, worked in the steel industry in Scunthorpe for most of his working life. I was there to celebrate his 90th birthday two years ago and he is still soldiering on. As I said, these are tough people.
We could spend a lot of time analysing how we got to this position, how much steel is stuck in the Strait of Hormuz, tariff imposition by the USA, and whether Europe is doing any better. We could pore over the comments by the Chinese Commerce Ministry when it called on our Government to
“respect the wishes of firms and market principles and avoid the abuse of administrative coercive measures”.
We could compare that with Chinese state aid and anti-competitiveness practices. We could score points on all of these things, together with overcapacity, cost and the complexity of the issues, but none of it would preserve a strategic industry or save a single job.
Clearly, issues such as parliamentary scrutiny, sunset clauses and regular reports to Parliament are important and can be discussed more thoroughly in Committee. This Bill is a signal that the Government are ready to act if it is in the public interest to do so. At present, we are not in control of our steel industry. We do not have sovereignty.
Why is the public interest not more closely defined in the Bill? I accept the explanation that we cannot forecast the circumstances. Will it be defence, national security or the construction, maintenance and operation of critical infrastructure in the United Kingdom? Which companies might be the first to impact on us? The noble Lord, Lord Bilimoria, asked this—quite understandably, given his connections with the Indian industries. Included in this must be where a steel company attempts to take a decision that might have a detrimental national implication, whatever the name of the company. I do not believe that any Minister would choose to be in this position today. There are no guarantees of success and no political kudos. It is about taking tough decisions to keep a national lifeline to try to protect our future security.
The Government recognise that blast furnace production will need to continue in the immediate future—I am sure they welcome the remarks by the previous speaker, the noble Lord, Lord Redwood, on that—and that a managed transition is vital to monitoring supply. They accept the need for public and private investment to modernise. That was repeated several times in the debate in the other place.
Opponents of the Bill have cited the cost of employees and energy. Workers in the UK earn an average of £40,000 a year and represent only 13% to 22% of total costs, depending on operating a primary basic oxygen furnace or a recycled electric arc furnace, so I argue that this is far from a labour-intensive industry. However, as has been said by previous speakers, energy costs are a different matter altogether and represent the highest in Europe.
I understand that the British industrial competitiveness scheme is being developed as part of the UK’s industrial strategy and could save a substantial amount in energy costs, but it is not due to be launched until April next year. Is there any chance that this could be brought forward? Does the Minister have any more information on the development of that policy? Germany, Spain and France have already intervened on energy costs in their steel industries. As we are now, we cannot provide long-term control or stability. We must safeguard supply chain resilience for defence, critical national infrastructure and major programmes, as stated in the impact assessment. The Government need to have the ability to respond quickly and effectively. I commend the Bill to the House.
Lord Frost (Non-Afl)
My Lords, I congratulate the Minister on his promotion and thank him for his very clear opening statement. The problem we have today is that we are looking at a Bill that is important in its own right but is only one part of a much bigger problem: can we sustain a steel industry at all in this country and, if so, how? I am not quite such a fan of the Government’s March steel strategy as the Minister is. The problem is that what one thinks of this Bill really depends on what one thinks of this broader strategy and how viable it is.
I sympathise with the Government’s difficulties, even though they are in part self-generated, although not wholly. Even somebody as economically liberal as me recognises that we are hardly operating in a free market environment in this area and that some sort of government steering hand is needed. We all have an interest in maintaining a viable steel industry in Britain, after all. It is the design that is crucial.
I want to set out three contextual problems before talking about how we might find a way forward. The first problem has been alluded to before: the fact that there is no genuine market in steel globally. We know about the huge amount of structural overcapacity worldwide, the Chinese subsidies and the reaction—the wave of tariffs, quotas, anti-dumping measures and so on that has spread across the industrialised world. There is no sign that that is going to change any time soon. In that context I understand the Government resorting to tariffs. I certainly do not like them, but it is unreasonable to exclude them as a weapon. They could be better targeted on particular kinds of steel, stronger rules of origin and perhaps bigger TRQs for reliable suppliers. Maybe the Minister can say whether the Government have considered this or might consider it in the future as a way of reducing the downstream effect on our own producers.
The second problem is the need for resilience and the national security issues that go with that. That means maintaining a necessary sovereign capacity, as other noble Lords have said. The question is, what does that sovereign capacity actually mean? The UK currently consumes about 12 million tonnes of steel a year. It is going up slightly. Domestic production is about 30% of that and the Government say they want it to go up to 50%. It is never going to be 100%. Sovereign capacity does not mean producing everything you consume; it is about defining the capabilities you cannot afford to lose and the supply chains you cannot afford to depend on. Others will have different views, but my assessment is that the main capabilities we should be focusing on are: the defence-grade plate, forgings and specialist alloys that are broadly made in Sheffield, and the Government are committing to that; stockpiling and reliable contracts for the upstream supply chains; and rail and critical infrastructure products currently made at Scunthorpe but unprofitably.
The first of those three categories is largely state guided and in part state owned. As for the second, stockpiling, the Government have said nothing at all about this. On the third, Scunthorpe, the Government have not really been clear about the national security or resilience case for keeping Scunthorpe going. The Minister mentioned that it was about maintaining the ability to produce steel from scratch from raw iron, but an EAF plant with a DRI plant can do that as well, and that may well be the direction of travel. It is not in some particular resilience in the upstream supply chain either. After all, we no longer make coking coal in the UK, so we have to import that anyway to keep Scunthorpe going. As far as I can see, the only real case is transitional: to keep the UK as a main supplier to the rail industry while the new electric arc furnace facilities are built at Scunthorpe. I do not know whether this is the case or what mix of these things is the Government’s thinking on Scunthorpe. Perhaps the Minister can give us a bit more detail on that.
The third problem is this. If we are envisaging a modernised steel industry of some kind in this country and the capacity of specific types for specific purposes, can it be done profitably over the long term? Is it viable? I think our answer to that is yes. We can see it done in the US in the mini-mill industry and elsewhere—Turkey, for example, has a profitable steel industry based on EAF plants. Maybe this points to a UK model that is something like specialist capability for defence in Sheffield, two or three EAF clusters, perhaps including Scunthorpe, and this question of a DRI plant, which is touched on in the Government’s strategy but not brought to a conclusion.
Perhaps we could all agree to this as a viable destination. The problem is, how do we get there? As a destination, it depends on a cost and business environment that currently does not exist. Electricity is super expensive and getting more so. The business environment is poor and getting worse. As a transition, it involves somehow encouraging investment into this poor business environment, or else the Government coming up with the money themselves. This is why we have the problem that this Bill encapsulates. We are heading for a destination, however desirable it may be, that is probably unviable in current conditions without massive government help. This is the problem with rushing to nationalise Scunthorpe without thinking it through properly.
So where does that leave us? In the circumstances, there is clearly a case for the temporary nationalisation of Scunthorpe, on certain conditions. Temporary public ownership may be justified—and we wait to hear from the Minister on this—because closure might remove the UK’s primary iron capability overnight, with no clear succession plan. The problem is, as we know, that nationalisation always sets up terrible perverse incentives and poor management, which is why temporariness is really important. There must be a way out and a viable end point. It is reasonable to ask for something clearer on those conditions if we are going to proceed satisfactorily, and I give notice that I will probably put down some amendments to that effect.
We need three things. First, we need a clear exit strategy for Scunthorpe: the blast furnace run-out date if there is one, an EAF commissioning date if there is one and a target for return to the private sector. Without that, Scunthorpe risks becoming British Leyland—a permanent loss-making ward of the state where all the incentives are just to put in more money and hope that things turn out better, impossible to close but impossible to fix either.
The second condition—unfortunately, this is far from being fulfilled—is electricity and energy prices and a business environment that support a viable industry. We know the problem with electricity prices. It has been said that the British industrial competitiveness scheme exists and will hold down those prices, but that itself is only cross-subsidy. We are supposed to believe, and the Secretary of State for Energy has said, that our great net-zero project is going to bring prices down in the future, so why do we need the cross-subsidy if that is really the case? There is a real problem here with the strategy.
It is not just me saying that; plenty of people are. Dieter Helm, who is a pretty neutral commentator on this subject and has certainly supported net zero in the past, wrote on 3 June that the industrial consequences of the Government’s energy policy
“have been dire. High electricity prices have contributed to the closure of Grangemouth … 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. There is devastation amongst the SMEs … unfunded welfare spending has increased the cost of capital … Energy policy has reduced economic growth, not increased it”.
That is the problem. We are building a steel industry—we hope—in that environment but it is not clear to me how it is going to survive in those circumstances.
The third thing we need is a proper strategy for the industry as a whole, not just for Scunthorpe but something broader. What is the end point? Is there going to be a DRI plant or not? Do the Government recognise the need for the stockpiling of hard-to-source EAF kit and scrap? Do they recognise the need for strategic stockpiles of defence plate billets, HBI and so on?
The problem we have, to return to where we started, is that the March strategy covers only about half the ground. It commits on Port Talbot funding, on expanding Forgemasters and on one or two other things, but it is unclear on Scunthorpe—the subject before us today—non-committal on DRIs and silent on stockpiling. It says little or nothing about whether the future industry can be expanded further if we need to upgrade our defence effort. Above all, it does not tell us what the hierarchy of objectives is. What is the Government’s choice framework? When national security clashes with profitability, what is most important? When employment clashes with modernisation, do we protect jobs or do we fund the transition? When net zero clashes with the industrial base, do we change the plans or continue the charge of the Light Brigade to industrial suicide? That needs to be clear if it is a strategy. I would like to think the March strategy was interim but I do not know. Perhaps the Minister could say whether any thinking has been done on this broader approach and whether a broader strategy is needed.
Britain is not going to get back to a world of free trade in steel—that is not going to appear any time soon—but it can have a steel industry that is smaller, smarter, sovereign in the things that matter and capable of paying its own way. The problem is that putting so much of this in the hands of a Government relies on a Government who are capable of strategising for industries and running them, but history suggests that Governments are not good at those things. We are right to be sceptical about the approach and to ask for more information. Perhaps in winding up the Minister could start to give us some of that.
Baroness Noakes (Con)
My Lords, when the Government took powers to take control of British Steel’s operations last year, they were clear that they had no intention of nationalising it. Now nationalisation is the name of the game. This pivot has nothing to do with the Government’s failure to reach an agreement with the owners of British Steel; the weakness of the Prime Minister has driven it. In his desperate attempt at another reset after last month’s local government elections, the Prime Minister reached for the socialist playbook of nationalisation. This was aimed at placating the trade unions and the left wing of his party, and they duly reacted with joy. There is no plan for British Steel other than to take it into national ownership. The Government have not said how much this socialist adventure will cost British taxpayers. The impact assessment is very long on words but has no financial analysis, as my noble friend Lord Redwood has said. Parliament is being asked to buy a pig in a poke.
Nationalisation is not the answer to the root causes of unprofitability in the steel industry, as many have said today. As for all British businesses, high unemployment costs and taxes are an issue, but it is the ruinous level of the cost of electricity that is killing our energy-intensive industries. Now, I am not proud of the former Government’s net-zero policies, which made so much of British industry uncompetitive, but the current Government’s policies are much worse. Industrial electricity prices are among the highest in the western world, as we have heard, and the reliefs already announced but not yet enacted barely scratch the surface of the problem. That is where the Government’s attention should be, not this Bill.
As a matter of principle, I oppose state ownership of businesses. I spent much of my professional working life working first on nationalised industries while in state ownership and later on privatising them, and I am clear that the state was a terrible owner of commercial businesses. There were many downsides of state ownership. Instead of the informed judgments of capital markets, nationalised industries were overseen by civil servants who had little or no experience of business. Key decisions, such as those on investment, were made by Ministers for reasons that were political rather than economic, while trade unions typically called many of the shots and prioritised job protection over commercial success. The result was massive inefficiency that only privatisation could unlock.
One of the biggest problems that faced nationalised industries in the past, and will surely face British Steel if it is nationalised, was financial pressure from the Treasury. Nationalised industries are rightly classified to the public sector, so their borrowing scores as public sector debt. It does not matter whether the debt is provided via the Treasury or borrowed from the market; it is all public sector debt, so there is no escaping the Treasury’s interest in keeping public borrowing in check. We know that the UK’s public debt is not far short of 100% of GDP, a long way from its pre-financial crisis norm of no more than 40%, and the risks are all on the downside. If the powers under this Bill are exercised, we can expect public sector debt to rise as British Steel sucks in more and more cash. The Treasury is unlikely simply to nod in approval.
While I do not favour nationalisation, one of my main problems with this Bill is that it is not a nationalisation Bill. I remember what nationalisation legislation looks like and it is not like this Bill. When businesses were nationalised in the past, there was a clear legislative formula. The Government controlled all key appointments, such as the governing board and the chief executive. The Government had wide powers of direction, which were generally not used but acted as a reminder to the nationalised industry that the Government called the shots. The Government had powers over borrowing, for the reasons I have just mentioned. There were also arrangements for parliamentary accountability, such as the laying of annual reports and accounts.
There is none of that in this Bill. Instead, the Government make great play of basing this Bill on legislation designed to deal with the fallout from the financial services sector after the global financial crisis. That legislation was never conceived in terms of creating nationalised banks and building societies. It was used as a mechanism to sell any saleable bits of the failed financial institutions and to wind down the rest. Its use as a precedent for the nationalisation of British Steel is a category error.
The Banking (Special Provisions) Act 2008 lasted for only one year and it allowed the Government to deal with a very small number of failures such as Northern Rock, which could not find a private sector buyer. The Banking Act 2009, which set up a permanent resolution regime for failing banks and building societies, has been used only once, and that was for a very small building society. I cannot think of a less suitable legislative foundation for a nationalised industry.
While the Government seem to have no idea about the future of British Steel and what role, if any, the private sector might have, they have been clear that the purpose of this Bill is nationalisation. If that is the case, a completely different Bill is needed to give the Government the correct powers and levers. If the Government intend state ownership to be temporary—which I would applaud, though it would doubtless upset their left wing—they need to make this clear on the face of the Bill. For example, there should be regular reports to Parliament on the progress made in returning British Steel to the private sector. There should be a duty on the Secretary of State to seek all reasonable ways of encouraging private sector ownership, as well as an explicit duty to ensure that the cost to the public purse is minimised.
I was pretty shocked by the lack of financial analysis accompanying the Bill, so I have just two questions that I ask the Minister to answer when he winds up. First, do the Government accept that the debt of British Steel will be classified as public sector debt from the day that the Government exercise the power to acquire it under this Bill? Secondly, will the Government commit to giving Parliament a full analysis of the impact on the public finances when they choose to exercise this power and seek parliamentary approval?
Lord Murphy of Torfaen (Lab)
I begin by congratulating my noble friend Lord Leong on his debut in this debate. It was a very good one as well, and we look forward to similar contributions in the future. I welcome the Bill. I welcome it because, first, there has been almost unanimity in this debate from your Lordships regarding the significance of steel and the importance of having steel as a critical and vital part of our economy. That is a very important starter. How we do it, I suspect, will be the cause of lots of debates in Committee and on Report. But it is vital to our construction, to our defence and to our engineering. It is vital because of the uncertain world that we now live in: a world of tariffs and wars and presidents who are unpredictable and dictators all around the world. As we debate this, the G7 is meeting meet in Evian, and each of the countries around the table has its own steel industry.
It is also vital—this has not been touched on too much in this debate—for the communities around the steel industry. You would expect a Welshman to refer to the Welsh steel industry as part of our life in Wales. It is in our blood. I come from a family of miners and steelworkers. I represented a constituency in the other place that was a steel-making constituency. In Blaenavon, the Gilchrist-Thomas process was invented, which transformed steel-making in the 19th century. I had in the constituency a stainless steel works, which for generations was hugely important to our communities. As an aside, before I entered politics, I taught in a college in Ebbw Vale at the time when the steelworks was almost completely closed. The impact of that closure on a one-industry town was devastating. That is why, in terms of British Steel and Scunthorpe, it is about the significance not simply of keeping our steel industry but of ensuring that our communities are healthy and intact.
I point out to the House that we are only talking about approximately half of steel-making coming from British Steel. The other half comes from Wales, from an industry which is not nationalised. The great Port Talbot steelworks, which is now changing over from blast furnaces to electric arc furnaces, is where the whole of the steel-making capacity of Tata in Wales is produced. It is interesting that this 50% of steel-making is not nationalised. It is a working partnership between, on the one hand, the Government—by which I mean two Governments, the Government in Cardiff and the Government here in Westminster—and the company itself. The deal, which was struck only days before the general election, meant that approximately £1.3 billion was to be invested in Port Talbot: £500 million of that came from the then Conservative Government. This Government have honoured it and indeed have gone further by giving about £120 million to retraining and by ensuring that procurement rules have changed, so that British companies must use British steel. To that end, 5,000 jobs are to be maintained in Port Talbot. So, as welcome as this Bill is, we must see it in context. It is only part of the picture: only half of it.
The questions I would like to ask the Minister concern Port Talbot, which this month suffered a severe fire on its site and is facing some difficulties with that. Also, there are hugely important problems with the supply of electricity—and I very much take the points that have been made regarding the cost of electricity. We cannot ignore it as a Labour Government. We must look at it very seriously. Secondly, there are planning issues which have been faced by the company in Port Talbot. These I would have thought can be overcome if my noble friend liaised with the Secretary for Wales and with the new Welsh Government.
At the end of the day, all of us understand that we cannot be without a British steel industry. Nothing is going to be easy with regard to this. There is no easy solution to it. But this is at least a start. It is the right thing to do and it is the British thing to do.
Lord Sikka (Lab)
My Lords, this enabling Bill paves the way for a possible nationalisation of steel companies, with a particular emphasis on British Steel, currently owned by the China-based Jingye Group. This nationalisation may or may not happen—we have to wait and see. The Bill allows the Government to transfer the shares or property of a steel company into public ownership, where doing so is in the public interest. The concept of public interest is inevitably highly contested, and competing meanings can be advanced. It would be helpful to have the Minister’s explanation of the detailed conditions that would actually satisfy the public interest test; that might enable us to discuss public ownership of other industries as well.
The Minister’s explanation would help to dissolve uncertainty for workers, suppliers and local communities. Prolonged delay of nationalisation would increase the cost to the public purse as, since April 2025, the Government have already been incurring significant costs to keep the Scunthorpe plant going. I support the public ownership of steel, as it is a crucial input for so many industries. The Scunthorpe plant is the last UK plant producing virgin steel, which is essential for the construction of buildings, railways and critical hardware such as submarine hulls and aircraft landing gear. The loss of the plant would leave the UK as the only G7 country without the capacity to produce virgin steel. A large number of direct and indirect jobs depend on the plant. Nationalisation and expansion of the steel industry would help to expand our industrial base.
The Bill raises lots of questions about the Government’s strategy. It would rescue England-based British Steel but allow the Port Talbot blast furnaces in Wales to be extinguished. People in Scotland have still not forgotten the Government’s failure to rescue the Grangemouth refinery. Can the Minister answer the charge of being England-centric? Can he assure the House that once the Scunthorpe plant is nationalised, it would not be re-privatised by a Labour Government?
The Bill also throws up other inconsistencies in the Government’s policies. Nationalisation of steel and rail passenger services is apparently in the public interest, but the same is rejected for water, even though water companies exploit people, dump raw sewage in rivers and are destroying human lives, marine life and biodiversity. Some 120,000 people a year are dying in fuel poverty, but there is no attempt to nationalise energy. Is it that the Government are prioritising corporate interests over the lives of the people?
Part 2 of the Bill establishes a framework for possible compensation for nationalisation. I assume that this would eventually require another Bill. Can the Minister clarify the position? As British Steel is financially insolvent—it is finding it very difficult to survive and its assets probably have no alternative use value—the chances are that any compensation offered for it would need to be fairly low. Any framework for compensation must recoup the £500 million or so spent by the Government to keep the Scunthorpe plant going. The real value of all subsidies and grants must be recovered.
The Jingye site in Scunthorpe is the second-largest single-site source of carbon emissions in the UK. It accounts for approximately 2.2% of the UK’s total carbon footprint. Surely the Government will insist that Jingye makes good the environmental damage before it exits the steel industry. If not, it would be helpful to know why the Government would not insist on that.
As expected, the Opposition Benches have focused on the possible cost of nationalisation and its impact on the national debt. That is really a one-sided argument because through nationalisation, Governments also acquire the assets of the enterprise in question, enhance economic resilience and improve supply-chain security. The tendency of the ONS is to show the net liabilities of publicly owned entities and ignore the assets. It does that for Network Rail, where its liabilities are shown in the national debt but its assets are completely ignored. That practice needs to change. If changed, the ONS calculation must net off a nationalised British Steel’s liability against its assets, which would result in a very small change to any national debt calculation. Can the Minister clarify the position and indicate whether how we measure the national debt would be changed?
The high cost of energy is a major obstacle, as many noble Lords have already indicated. It puts steel- making and other industries at a competitive disadvantage. The high cost is an issue all across households as well. We know that, in April, the Government extended what they called the British industrial competitiveness scheme, which reduces energy bills by about 25% for 10,000 companies deemed to be heavy users of energy. That scheme kicks off in April 2027, although discounts would be backdated to 2026. The scheme is funded by the public purse and is therefore likely to be temporary. In any case, it does not help small businesses, farmers and others who are totally excluded from it.
A bright future for steel-making and British industry requires a permanent reform of energy costs. That would require decoupling the price of gas-produced electricity from the rest, moving all levies to general taxation, and cuts in the profit margins of energy companies. This in turn would require scrutiny of the way that Ofgem calculates the weighted average cost of capital and all the assumptions that are used to generate those numbers. Noble Lords earlier mentioned many countries which have a competitive advantage in energy production, such as France, Norway, Sweden, Denmark, Germany, India and China. What they did not mention was that in these countries, a significant part of energy production is state-owned so, freed from the need to generate profits, they are able to simply break even, taking one year with another. That therefore offers their industries a competitive advantage and lower rates of inflation.
Public ownership of energy must not be a taboo for the UK. It could give the Government more economic policy options and help to address the competitiveness of our industries. I look forward to hearing the Minister’s reply.
Baroness Redfern (Con)
My Lords, I thank noble Lords for allowing me to speak in the gap. I congratulate the Minister on his appointment and his opening statement.
As negotiations to resolve are still being discussed, the Bill will not immediately nationalise until the public ownership test is met. But years of underinvestment in our steel industry has resulted in it being neglected, and uncertainty lingers for many skilled Scunthorpe steelworkers and those employed in the supply chain.
Only last April, the House was recalled for emergency state intervention. At the same time, we witnessed a cliff-edge shortage when the Chinese owners halted new orders for coking coal and iron pellets, causing a critical threat that the last blast furnaces would go cold. Since then, it has cost the Government over £1.3 million a day to keep the furnaces running.
To sustain steel-making in Scunthorpe in the future, there will be a transition to two new electric arc furnaces, but that will take several years due to limited preparation and the need for a secure grid connection. The question posed is: how will the Government secure stability for the plant in the short to medium term? Our steel having to compete on an unlevel playing field due to our having the highest energy costs in Europe is one of the greatest barriers to competitiveness and viability for future investment. These costs must be reduced. In their ongoing support of the steel business, the Government must ensure that Bess and Anne are part of that transition. They are proud Scunthorpe queens of virgin steel. They are hungry to keep burning and cannot be left to run cold—as they nearly were last April—and they need further investment now.
There are initial concerns surrounding the scale of the UK carbon border adjustment mechanism while we are still importing nearly 70% of our steel requirements. This too must be reduced for procurement, and we must look at how future UK contracts are managed. We must not, and cannot, be the only G7 nation without the ability to make primary virgin steel. We must not forget that, from defence to renewable energy, steel provides vital material for our national infrastructure and for economic growth, and that it supports our highly skilled specialist workers, who work in the production of our own steel-making.
As the Government put forward this proposal to nationalise a steel company in the short term, they can make their own decisions and, in future, may have the opportunity to include new investors or owners. Above all, our steel sector needs certainty for our dedicated workforce and contractors and for future investments in our industry stretching across the country. For our prosperity, the future has to be “UK steel first”.
Lord Wigley (PC)
My Lords, very briefly in the gap, I flag up my support, and that of Plaid Cymru, for the Bill’s general objectives, although we have reservations on some of the detail, which I hope I can pursue at later stages. I also wish the Minister well in his new duties.
Before entering Parliament, I worked for two major steel-using companies: the Ford Motor Company at Dagenham, and Hoover washing machines at Merthyr Tydfil. Steel was a basic ingredient of both products. When I started working, steel employed over 100,000 workers in Wales. The danger then was of such manufacturing processes becoming vulnerable to new techniques or being undercut by overseas manufacturers. Modernisation was essential. The third quarter of the 20th century saw the nationalisation, denationalisation, renationalisation, and then in the 1980s the privatisation, of steel—hardly conducive to attracting the investment needed to modernise that industry.
At that time, as now, steel had strategic importance in defence policy. Surely that is the real backdrop to this Bill. I accept that, for defence purposes, the UK requires a steel industry that is not vulnerable to commercial or strategic decisions taken by overseas industrialists or Governments, or the whims of financial markets. If steel has that level of strategic importance, all the eggs should not be in one basket. We need at least two or three centres where the capacity, technology and skills are available and not vulnerable to being undermined by physical or cyber attacks.
It is in that context that I view the Bill before us. I have in mind the implications for iron and steel manufacture at Port Talbot. The main reservations Plaid Cymru has about the Bill is whether its powers will be used to safeguard the steel industry in Wales. There is widespread belief that the steel industry at Port Talbot has not been treated on an equal basis with that at Scunthorpe. We do not claim that Port Talbot should have preferential treatment, but neither should Scunthorpe. Both are needed, and both should be developed in a manner that avoids strategic, economic or defence needs being limited to one location. That would be nothing less than strategic myopia and a blunder of monumental dimensions. So the assurance I seek is that the Bill is not the prelude to building up Scunthorpe at the expense of Port Talbot. I will seek to clarify whether the public interest test applies equally to Port Talbot and Scunthorpe, and whether equivalent resources will be available to both Port Talbot and Scunthorpe. Both plants need to be as effective, productive and resilient as each other.
While Port Talbot is the major plant in Wales, other steel locations such as Shotton and Llanwern should be developed appropriately. A diversity of capacity, technology and experience is needed to ensure a steel industry that responds to commercial and strategic needs. At later stages, we may also want to probe how “public interest” is defined. Defence and strategic considerations are clearly within such a definition, but the public interest may extend much further, as the noble Lord, Lord Murphy, implied in his comments a few moments ago. There must also be a provision requiring the UK Government to work closely with devolved Governments in implementing the Bill. I shall be grateful for whatever assurances the Minister can give me, and I look forward to his response.
Lord Fox (LD)
My Lords, I join the chorus welcoming the noble Lord, Lord Leong, to his new ministerial role. He has not only got the new role but got it in time to steward this Bill, and the Commercial Payments Bill, through your Lordships’ House. What a time to be alive.
As we have heard, around Easter 2025, the Government pressed the emergency button. They pulled us into Parliament on a Saturday and, as a result, acquired the powers to make decisions regarding the Scunthorpe blast furnaces and prevent its owners running it down. Subsequent events supported the Government’s haste in that movement. To avoid becoming a hybrid Bill, this Bill carefully avoids Scunthorpe. However, I very much doubt that we would have this Bill were Scunthorpe not an issue. It sits there, like Banquo’s ghost, and clearly the Government are having to press buttons in order to take control from the Chinese owners.
So that noble Lords did not have to, I reread my speech from last year. To be honest, I could have copied and pasted large parts of it. In the Saturday debate, I noted that the steel industry’s problems did not start a couple of years ago but were systemic and had been there for a long time. In that regard, I noted the hubris of the Conservative spokespeople—and the noble Lord, Lord Hunt, did not let me down today. There are huge responsibilities for this industry that go back a long way; it is not two years’ work.
I asked how steel fitted into the carbon emissions route to net zero; I questioned the path to electric arc conversion, and, in giving support to that Bill, I said that there needed to be an overarching steel strategy. Well, we have reached the privatisation stage and, to be honest, I am quite surprised it has taken that long. The Scunthorpe plant has been haemorrhaging public money for over a year and the Government have clearly been arm-wrestling with the owners, Jingye.
In 2025, the Government published a steel strategy that had billions of pounds attached to it. In this context, this Bill is part of a very high-stakes exercise that the Government are seeking to run. It is therefore important that there is sufficient scrutiny, both in your Lordships’ House and at the other end, of every move that follows this Bill, should it be passed.
I will use this speech to set the scene. There are four broad issues of concern, and we have heard them raised in different ways: national security, economic resilience, modernisation, and jobs and communities. The justification for protecting the steel industry has always been that it is a strategic asset, not least in that it supports defence, critical infrastructure, wider national resilience and our advanced manufacturing industries. For many years, a contrary commercial argument has preached that most of what we need is available on the open market and is usually cheaper as a result. Clearly, the Bill’s proponents frame it as protecting the country’s ability to make essential materials at home. This turns on the question of sovereignty and readiness. Given the world we live in now, Liberal Democrats side with this sovereignty argument. Going on the world market is no longer a safe option to take us forward.
However, I remind your Lordships that none of what we discuss today can be taken in isolation from the steel tariff regime and the implementation of CBAM, the carbon border adjustment mechanism, nor can success be achieved without the provision of low-cost green energy. I will talk about the first two points and leave energy costs for another day—not because they are unimportant, clearly, but because they do not directly relate to this Bill.
On tariffs, I thank the Minister for his letter clarifying some of the issues, but I question the spirit of his reply, which seems to be that everything is okay in how the tariffs will be pitched. The word from steel users is that it most certainly is not. We are being told that the measures due to come into force in just two weeks, on 1 July, are likely to have a materially damaging impact on downstream manufacturers, with immediate implications for competitiveness, investment and jobs.
Where there are no direct domestic sourcing alternatives, materials for steel users must be imported. However, we are being told that the current commodity code structure is too broad, reflecting some of the issues raised by the noble Lord, Lord Frost. There seems to be a need for a more subtle coding process in the focusing of tariffs. If essential items that cannot be domestically sourced are captured in the tariff regime, this will have a dire effect on industrial users. With tariff-free quotas being reduced by around 60% and a 50% tariff applied beyond those limits, businesses that need those kinds of steel are effectively being taxed on critical inputs, with no ability to substitute domestic products if they are not being made. I think the Department for Business and Trade has received proposals from the industry to remove or move certain commodity codes, make amendments to quota sizes and utilise authorised use schemes. I urge the Minister to respond to this and make sure that the department is fully co-operating with different elements of the supply chain to ensure that what I believe is an unintended consequence does not come back.
Most of the imported steel comes from the EU, and negotiations on this between the UK Government and the European Union are critical. If they reach a successful fulfilment, many elements that are causing problems around tariffs will be eliminated. However, we are homing in on a very tight corner here; as I have pointed out, 1 July is two weeks away and we may have an interim period between an agreement with the EU and the implementation of these tariffs. It would be useful to hear from the Minister how the timing and phasing of this could be achieved and whether putting relief in for a further period until the EU negotiations are concluded would give better certainty to our businesses. We will come back to this in Grand Committee, but that will be another week gone, so it is important to find out where we are going.
Fundamentally, I want to make the obvious point that it is not the manufacture of steel that is strategic, but its use. If ring-fencing steel production using tariffs creates higher costs for our businesses, we are missing the point. It is how we make stuff that is important. We do not just need a secure industry that produces strategic materials; we need it to be cost effective. That is one element of economic resilience.
The Government have said that their actions are meant to avoid a sudden halt in production and provide stability while longer-term options are considered. The nub of that is what the longer-term options are. Although we have a steel strategy, the Government have an awful lot of work to do to flesh out how they see the future of our industry. A key element of that is whether they see Scunthorpe continuing to have blast furnaces or converting to electric arc, as raised by the noble Baroness, Lady Redfern. The Minister and I have discussed substitutability and whether there is a strategic need for blast furnace capacity to keep virgin iron production in the United Kingdom. I would like to hear from the Dispatch Box that, if we are going to all-electric arc provision in the United Kingdom, we will be able to maintain all the strategic needs of steel in this country—as it stands now, not in some future provision where electric arc can be honed and tuned. Can we deliver the steel we want with the knowledge we have now?
The aim is to make the industry investable. Can the Minister explain how this will be achieved? For example, every location will come with a huge environmental legacy. Ultimately, there will need to be remediation, and usually it is the owners of the businesses who have to fund that. Every location has important pensions commitments. The Bill appears to deal with pensions liability only indirectly. I presume that, once it is taken into public ownership, Ministers will have to manage the company’s wider obligations, including pensions, through the rescue or transfer process. Can the Minister expand on that? Both these factors affect investability. Can the Minister explain their attitude to environmental and pensions liabilities in any nationalisation when they are looking for investors? Will subsequent investors in nationalised steel have the opportunity to invest clean of past liabilities, or will they be investing in a business that retains them? Again, I will pursue this topic in Committee.
The Government have said that their aim is not just to preserve the status quo but to create a modern, competitive steel sector. Once again, this legislation is merely a route to explore future options. It is still not the final answer.
The Government have rightly emphasised the importance of steel plants for jobs and communities. Nationalisation could preserve many of those jobs, but does the Minister recognise that, in creating that modern, competitive and investable steel sector, there may well be fewer jobs in future? How will the Government prepare those communities now so that they can be made stronger and absorb any changes to employment patterns in their area?
The other important part of this Bill is the inclusion of the public interest test. The noble Lord, Lord Sikka, did my work for me in laying out some of the puts and takes that go into that. There will be tension between the real value of Scunthorpe, whether that is positive or negative, and our relations with the Chinese Government. In that case, where does the balance of public interest lie? How do the Government view this?
Last year, we were asked to approve an emergency stopgap to save Scunthorpe. This Bill is couched in wider terms, devoid of detail and laden with executive powers that could very well leave taxpayers exposed to huge costs and liabilities. That vagueness means it is unclear how it will protect jobs and what the future of steel will look like. Because of this, my colleagues in the Commons tabled amendments seeking to give Parliament more oversight of the developing stages of this paving legislation. We agree that it is important to get on with this, but only with the necessary parliamentary controls. We will retable those amendments.
As a parting point, to echo the noble Lords, Lord Bilimoria and Lord Wigley, nothing in the Bill should be used to put Tata and Port Talbot at an unfair disadvantage, as their transformation reaches fruition.
In practice, the UK steel strategy’s success will depend on whether the prevailing energy costs, the implementation of the CBAM, huge public sector investment, the imposition of procurement and demand measures, and the introduction of import tariffs and tighter controls are enough to make domestic production commercially viable. That is a huge task, and we will have to work together closely to achieve it. It is a mission that we want to succeed and we support the Bill, with some provisos. I look forward to Grand Committee.
Lord Sharpe of Epsom (Con)
My Lords, I join the general approval of the Minister’s promotion. I wish him well and I am delighted to face-off somebody who has considerable business experience.
I am grateful to all noble Lords who have contributed to this important debate. It is always a pleasure to follow the noble Lord, Lord Fox, who, when talking about hubris, was slightly selective with his times. The steel industry has had systemic issues for a couple of decades—and there was a Liberal Democrat Business Secretary for at least five of those years. Apart from that, I agreed with much of what he said.
There was a great deal of agreement in the House about the general strategic importance of steel, which is welcome. British Steel matters to Scunthorpe, jobs, rail, construction, manufacturing, defence and our national resilience more generally, as many others have noted. We do not deny that the Government may have had to act in April 2025 to prevent an immediate and disorderly closure of the blast furnaces, but the central question remains, and it runs through the debate. It is not whether steel matters; it is whether nationalisation is a serious strategy for making British Steel viable. On that question, the Government have still not provided convincing answers.
As my noble friend Lady Noakes noted, nationalisation, we were told, was not the Government’s original plan. When the emergency Steel Industry (Special Measures) Bill was brought before Parliament last year, the then Secretary of State, Jonathan Reynolds, told the Commons that:
“The Bill does not transfer ownership to the Government”.
He said that the Government’s aspiration remained
“a co-investment agreement with a private sector partner to secure a long-term transformation”.—[Official Report, Commons, 12/4/25; cols. 840, 841.]
I have absolutely no doubt that the Minister will say that private investment remains the goal—indeed, the Minister in the other place, Chris McDonald, said as much in a Written Statement—but where is the plan to achieve it? Where is the timetable? Where is the private partner? Where is the route back to commercial viability?
The noble Baroness, Lady O’Grady, referred to the halcyon days of the 1970s—when state ownership worked so well that I have clear recollections of doing my homework by candlelight. In the 1970s, when the Labour Government last ran British Steel, the taxpayer was forced to carry staggering losses. We worry that the danger now is that we will repeat the same mistake, by not solving the underlying problem but moving it from the company’s balance sheet to the public balance sheet.
The central barrier is not ownership; the central barrier is competitiveness. Every speaker in the debate referred to high energy costs. It is the cost of doing business now more generally in Britain. It is the regulatory and taxation environment that makes heavy industry harder here than it is in competitor countries. Yet the Secretary of State for Energy Security and Net Zero appears more interested in driving forward an ideological net-zero agenda than in bringing industrial energy prices down dramatically. I cannot help thinking that, with his messianic zeal, he is doing more damage to the Government’s growth agenda than anyone else in Britain. Instead of cutting bills and taxes, abolishing the UK carbon border adjustment mechanism and giving energy-intensive industries a fighting chance, the Government seem preoccupied with regulating ever more aspects of economic life, from factories to household heating products.
We recognise that there has been a long-standing and serious problem with Jingye. We also recognise that there may now be legal proceedings. I do not ask the Minister to prejudice the Government’s position in litigation, but there are matters on which the House is entitled to clarity. Can the Minister confirm whether Jingye has asserted that, from 12 April 2025, the date on which the Government assumed control of British Steel, neither Jingye nor any company in the Jingye Group has any continuing obligation to British Steel? Can the Minister confirm whether Jingye intends to disaggregate British Steel from Jingye Steel (UK) Holding Ltd and remove assets, liabilities and other British Steel-related items from its own balance sheet? If that is correct, what is the Government’s assessment of the solvency position of British Steel itself?
If British Steel is continuing to trade only because the Government, directly or indirectly, are underpinning its working capital, does the Minister accept that this raises serious questions about the public accounts treatment of the support advanced since April 2025? Does it still make sense to treat that support as recoverable debt if the company cannot repay it without further taxpayer support? Do the Government now accept that, if British Steel continues to trade, the taxpayer may have to assume responsibility not merely for the working capital but for accumulated non-cash losses, balance sheet liabilities and forward obligations?
Will the Minister address the reported intercompany debt position? Jingye has been reported as quantifying outstanding British Steel debt to different Jingye counter- parties at hundreds of millions of pounds. If the Government acquire all the shares in British Steel and the company is not placed into insolvent liquidation, will the Government become responsible for those liabilities? Will the taxpayer be assuming the full built-up losses since 12 April 2025, losing the prospect of clawing back earlier support, and taking responsibility for future liabilities, including the eventual decommissioning of the blast furnaces?
In opening, the Minister talked about the premature closure of the blast furnaces, which the Steel Industry (Special Measures) Act was supposed to prevent. Have the Government commissioned a study of how much life the blast furnaces have left in them? It is important to ask that question and to know the answer, because it will have a material impact on the decommissioning costs, as and when they arise.
Can the Minister confirm whether our maths is correct on this? The National Audit Office has said that support for British Steel is expected to reach £615 million by June 2026, while Jingye is reportedly seeking compensation of more than £1 billion. Once potential compensation, operating support, working capital, administrative costs and future capital investment are taken together, is the taxpayer exposure now approaching £2 billion or potentially even higher? If that figure is wrong, will the Minister set out the Government’s current estimate of the total cost to the taxpayer, including any liabilities that may come on to the government balance sheet on day one of nationalisation? If the assets—a couple of 70 year-old blast furnaces—offset the liabilities, as the noble Lord, Lord Sikka, thinks likely, I have a couple of hats that I will eat.
As my noble friend Lord Hunt of Wirral set out so clearly, the Government came to office promising a £2.5 billion steel fund—a fund that was supposed to transform the sector, modernise production, support new technology and crowd in private investment. Yet there is now a real risk that this money will be consumed not by transformation but by rescue, as my noble friend Lord Redwood pointed out. Money that should have been used to modernise the sector, lower energy costs, support new technology and bring in private capital may instead be used simply to keep one loss-making business afloat. That leads to the question that has been asked repeatedly in this debate: where does this end? Will British Steel, under public ownership, be expected eventually to stand on its own two feet, or will taxpayers be asked year after year to fund operating losses, while Ministers promise that a solution is just around the corner?
The Bill says that the Secretary of State may exercise transfer powers only where he considers it necessary in the public interest. The noble Lords, Lord Sikka and Lord Fox, asked some good questions on what the public interest is and how it is defined. I look forward to the Minister’s answers to those. The Government say that public interest will include considerations of national security, the economy and critical infrastructure, but could Ministers be any more vague when they refer to the “economic interests” of the United Kingdom? Will taxpayer funding be limited or capped, or are Ministers asking Parliament to approve an open-ended commitment? Will the Government be required to show that they have made every reasonable effort to secure private sector investment before nationalisation proceeds?
It was uncomfortable and somewhat ironic to witness representatives of the Chinese ownership and the Chinese Communist Party lecturing the United Kingdom about abiding by market principles—although I note that the noble Baroness, Lady Donaghy, pointed out the irony of that as well. However, the Government must consider the signal that they are sending to international investors. If Ministers seize control, fail to secure a commercial settlement and then proceed to nationalisation without a clear compensation, exit or investment plan, how does that make Britain look to the next investor who is considering committing capital to a strategic industry here?
We also cannot ignore the wider business climate that the Government have created. As my noble friend Lord Hunt and others have made clear, the elephant in the room is the Employment Rights Act 2025. I know that Ministers are tired of hearing about it, but we are not going to stop raising it because it is helping to make the business environment less competitive and less investible. Combined with the increase in national insurance contributions, endless reporting requirements and carbon taxes, the Government are piling costs upon costs and burden upon burden on the very industries that they claim to want to support. For a steel sector that is already operating under intense global pressure, those additional costs are not abstract. They affect hiring, investment, margins, productivity and the ability of British steel-makers to compete. At precisely the moment when steel needs flexibility, lower costs and greater productivity, the Government are increasing the cost of hiring and handing still more leverage to trade unions.
It is no surprise that the unions have called for steel nationalisation. The concern is that the Government have given in to them. How will Ministers ensure that a national security asset is not left at the mercy of industrial action? The Government have removed important strike safeguards. What protections will exist to ensure continuity of supply for defence, infrastructure and critical manufacturing if British Steel is brought into public ownership? Are we seriously to place a strategic industrial asset under state control and then leave it vulnerable to the same union pressure that the Government have chosen to empower elsewhere?
The Government have had more than enough time to tackle the underlying problems—uncompetitive energy prices, rising employment costs, higher national insurance, excessive regulation, the burdens of the Employment Rights Act and the net-zero policy that too often ignores the realities of energy-intensive industry. The steel sector has been operating on a tight margin for years. Nationalisation does not make any of those problems disappear.
In closing, can I ask the Minister to answer the central questions: what is the total expected cost to the taxpayer? What is the plan for private investment? What is the timetable for restoring commercial viability? What is the exit strategy? What measures will the Government take to reduce the costs that made British Steel uncompetitive in the first place? Without answers to those questions, this Bill is not a serious strategy for steel; it is a costly exercise in papering over the cracks with nationalisation. We urge the Government to come forward with a serious plan—one that lowers costs, attracts investment, protects taxpayers and secures the long-term future of the British steel industry.
Lord Leong (Lab)
My Lords, I thank all noble Lords for their contributions to this excellent, thoughtful and wide-ranging debate and for their very kind messages on my appointment. I was trying to count the number of questions asked, but I gave up at 45. I will try to respond to as many as possible within my allocated time. If I am unable to address every point raised, especially those relating to costs and technical issues, I will ask my officials to review Hansard carefully, write to noble Lords accordingly and place copies of those responses in the Library.
The quality of debate in your Lordships’ House is often remarked upon, and today’s proceedings have once again demonstrated the immense expertise, experience and commitment that Members bring to issues of national importance. There have been contributions from across the House and from all sides of the debate. While there may be differences of opinion about the means, there is a remarkable degree of consensus about the end—namely, that the United Kingdom should continue to have a strong and sustainable steel industry. That consensus matters.
Many noble Lords spoke of the challenges facing the sector, and the Government recognise those challenges. They are real and significant, and they are unlikely to disappear in the foreseeable future. As my right honourable friend the Secretary of State has made clear, we are determined to revitalise the UK steel sector, restore domestic production to sustainable levels and secure the industry’s long-term role in supporting economic growth. That means reducing industrial costs, which I will come back to later. It means supporting investment, modernising production and creating the conditions for a competitive and sustainable industry. It also means ensuring that government has the tools necessary to act when that strategically important steel-making capability is at risk. It is about ensuring that future generations continue to benefit from a British steel industry capable of supporting our economy and security.
The noble Lord, Lord Sharpe, asked about the company Jingye and the ownership of British Steel. While we are strongly minded to use the powers in the Bill to nationalise the company, no decision has been made and any decision will be subject to the public interest test. The Government have been providing ongoing funding to British Steel under the Steel Industry (Special Measures) Act 2025. We are publishing regular updates to Parliament detailing this funding. These funding arrangements will be set out in the department’s upcoming annual reports and accounts. We are committed to transparency on this issue.
On the point raised by the noble Lords, Lord Hunt and Lord Sharpe, for whom I have the greatest respect, blaming workers’ rights for unemployment is a caustic distortion of the real issue. It substitutes ideology for evidence and seeks conveniently to scapegoat, rather than confronting the structural changes that hold back employment. Fair pay and basic protections are not obstacles to growth; they are the foundations of a stable, productive labour market. Businesses that invest in their workforce through training, progression and decent terms tend to achieve stronger retention, higher productivity and better long-term performance. Responsible capitalism reduces the need for state intervention. However, where short-termism prevails and workers are treated as a cost to be squeezed rather than an asset to be developed, government has a legitimate role in setting fair minimum payments.
The noble Lords, Lord Hunt, Lord Bilimoria and Lord Fox, and my noble friend Lord Murphy raised the issue of tariffs. The Government support free and fair trade, but trade must be fair. Free trade does not mean surrendering British jobs to subsidised foreign competitors. It means ensuring that British firms compete on a level playing field, not with one hand tied behind their backs. British steel producers should not be expected to compete with heavily subsidised imports, dumped products or unfair trading practices that distort markets and undermine domestic production. Every major steel-producing nation takes steps to protect its industry from unfair competition. The United Kingdom cannot be the only country to leave its producers exposed while others actively defend their national interests. This is why we will continue to use the full range of trade remedies available to us, including tariffs, where justified, to ensure a level playing field, safeguard jobs and maintain British sovereign capability to produce steel.
The noble Lord, Lord Bilimoria, asked about the UK-India free trade agreement. The noble Lord will know that we are seeking to bring this deal into force as quickly as possible. We are working with India to ensure that all parties have taken all the necessary steps to bring the deal into force.
The noble Lords, Lord Redwood, Lord Bilimoria and Lord Fox, and my noble friend Lady O’Grady, raised points regarding green steel and electric arc furnaces versus blast furnaces. The Government are clear that the future of the steel industry is green steel. Electric arc furnaces in the UK are making the full range of steels, from commodity construction grades to stainless steel and specialised steel for defence and nuclear industries. There are still challenges in certain areas such as packaging steel, but we are confident that the industry will find the right solutions. If it would be helpful, I can arrange for a technical briefing on this point for noble Lords who are interested in this area.
Several noble Lords asked about energy-intensive industry. The British industry supercharger seeks to address this crucial issue, providing targeted relief to qualifying sectors to improve competitiveness, safeguard manufacturing and support decarbonisation objectives in the UK. From April 2026, the level of compensation offered by the network charging compensation scheme was increased from 60% to 90%. Reducing electricity network connection timescales is also a high priority for the Government. We are working very closely with Ofgem, the electricity system operator and network companies to accelerate network connections.
The noble Lord, Lord Bilimoria, asked about the transformation of British Steel and the noble Lords, Lord Hunt and Lord Frost, asked about the future of British Steel under public ownership. The Government’s ambition is straightforward: we want British Steel to become a successful and sustainable British industrial champion that the entire country can be proud of. Should public ownership proceed, it would provide the opportunity to take a longer-term view and put in place the leadership, governance and investment necessary to secure the company’s future and safeguard domestic steel production. We believe there is every reason to be optimistic. British Steel continues to have highly skilled workers, valuable industrial assets and significant commercial opportunities. Recent contract wins, as I mentioned in my opening speech, demonstrate that there remains strong demand for British steel and that the company has an important role in the future of our economy.
Several noble Lords asked questions on jobs. I fully understand those concerns. The Government’s objective is a sustainable steel industry capable of standing on its own two feet. That is the best guarantee for long-term employment and stability for workers and their families alike. The decisive action taken by the Government last year prevented the immediate loss of approximately 2,700 jobs and ensured a continuation of steel production in Scunthorpe. We recognise that the sector is evolving and that future technologies will shape the future of steel-making. That is why any transition must be managed carefully. It must support workers, protect communities and preserve our economic resilience. The Government will continue to work closely with trade unions, employees and local stakeholders through the process.
The noble Lords, Lord Wigley, Lord Bilimoria and Lord Murphy, asked about Port Talbot. The Government have no plans to acquire any other steel undertakings, but the Bill provides flexibility to intervene if a future need arises and the public interest test is met. The Government remain fully committed to securing the long-term future of steel-making in Port Talbot through Tata Steel’s £1.25 billion transition to a state-of-the-art electric arc furnace supported by up to £500 million of government funding.
The noble Baroness, Lady O’Grady, and the noble Lord, Lord Fox, asked questions on the EU. The global context has changed drastically since Brexit. We need a closer economic relationship that protects our collective industrial security. Both the UK and the EU are taking measures to improve the security and resilience of key sectors. We both face the same challenges, such as overcapacity and higher tariffs, which are distorting global markets. The historic UK-EU summit last year was the first of our annual summits that will take place to improve our diplomatic, economic and security co-operation following Brexit. The date of this year’s summit will be announced in due course.
The noble Lord, Lord Fox, asked about the chilling effect on investment. Let me address this head-on: the Bill does not create any chilling effect on investment. I can do no better than to quote my friend the Minister in the other place:
“We have carried out a very careful balance with this Bill to ensure that the steel industry is fully informed, understands our intentions and is supportive—and it is supportive”.—[Official Report, Commons, 21/5/26; col. 812.]
The Bill is explicitly framed as a targeted, last-resort response to a market failure. The Government are signalling that it is not intended for wider or frequent use, which narrows uncertainty to a specific context rather than the sector as a whole.
The noble Lord, Lord Redwood, asked about the environmental liabilities, and rightly so. Many environmental liabilities arise on closure. Government intervention is precisely about avoiding disorderly shutdown and managing safely the remediation, respectively.
Several noble Lords raised the issue of compensation. The Government are committed to respecting business rights and ensuring fair treatment. To be absolutely clear, the Government’s actions to date at British Steel, and any future actions, are solely about commercial reality and delivering our domestic steel strategy. They would not differ under an owner of any nationality. If the transfer powers in the Bill are exercised, a compensation scheme would be established to consider and pay compensation for any losses suffered by those affected. An independent valuer would be appointed to oversee this process and determine what compensation, if any, is payable. There is nothing to prevent an outcome of nil compensation, but this would be a decision for the valuer and would depend on the circumstances.
Let me address the issue of nationalisation, which was mentioned by the noble Baroness, Lady Noakes, and the noble Lord, Lord Sharpe. We propose this nationalisation on principle. Are other Peers prepared to accept the loss of the United Kingdom’s last remaining primary steel-making capability in the name of market purity? We believe in free markets, but no responsible Government can stand aside when a strategically vital industry and national security are at risk. This is not ideology; it is pragmatism. Every major industrial nation supports its steel industry. The question is not whether Governments intervene but whether they are willing to act in the national interest where circumstances require. Faced with the choice between preserving British steel-making and watching it disappear, this Government chose action.
The promise of privatisation was that private ownership would deliver greater investment, stronger productivity and better outcomes for consumers and taxpayers, yet too often we have seen the opposite, with underinvestment, short-term decision-making and strategic national assets left vulnerable when market conditions turned difficult. The reality is that, when privatisation succeeds, profits are privatised; when it fails, losses are socialised. Working people lose their jobs, communities pay the price and taxpayers are asked to step in. That is precisely why this Government are prepared to act when a strategically important industry such as steel is at risk. When the national interest is at stake, standing aside is not a responsible option. I commit to writing to the noble Baroness about the classification of British Steel—my officials will definitely write to her. We will provide annual reporting to Parliament on financial support, as is provided under the Bill’s powers.
I turn to Port Talbot, as mentioned by several noble Lords. The fire at Port Talbot was successfully contained and all personnel are safe. We will continue to monitor the situation closely while investigations are ongoing and the company moves from emergency response to recovery planning. Regarding grid delays, timelines are still evolving and are not yet finalised. We remain fully committed to securing the long-term future of steel-making at Port Talbot and are working closely with all parties involved to identify mitigations and explore options to accelerate delivery.
The noble Lords, Lord Sikka and Lord Fox, asked about the importance of foreign investment and our relationship with China. I wish to be clear that the Government have decided to introduce this Bill regardless of the nationality of the firm that owns British Steel, which is Jingye currently. The Government continue to welcome Chinese investment in the UK and do not consider the situation at British Steel to reflect our wider relationship with investors.
British Steel is a strategic asset, as I said earlier, for the UK’s steel production. It is critical to national infrastructure and to the local economy. Unfortunately, the Government could not find a way to save British Steel’s operation under its current ownership. Although this Government now need to take steps to secure UK steel capability, we are committed to doing so in a way that respects the rights of business.
Throughout this debate, one theme has recurred: the future of steel matters. It matters to our economy; it matters to our industrial base; it matters to our national security; and it matters to the communities whose lives have been built around steel-making for generations. The Bill before your Lordships’ House is not about preserving the past; as I said in opening, it is about securing the future. It is about ensuring that Britain retains the sovereign capability to produce steel. It is about creating the conditions for a modern, competitive and sustainable steel sector. It is about demonstrating that, when strategically important national capabilities are at stake, this Government are prepared to act.
Today, your Lordships have the opportunity to send a clear message to steelworkers, industry investors, and the country that Parliament remains committed to the long-term future of British steelmaking. I am grateful to all noble Lords for their contributions and for the constructive spirit in which this debate has been conducted. I look forward to continuing those discussions as the Bill progresses. I beg to move.
Combined Authorities (Mayoral Elections) (Amendment) Order 2026
(1 day, 4 hours ago)
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Baroness Taylor of Stevenage
That the draft Order laid before the House on 21 May be approved.
Relevant document: 3rd Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, over the last year Parliament has debated, agreed and decided that the voting system for mayors and police and crime commissioners should be changed to the supplementary voting system, or SV, through the English Devolution and Community Empowerment Act 2026, which received Royal Assent in April. I remember fondly the debates noble Lords had on the matter during the passage of that legislation. Therefore, I am sure that some of the points I will go on to set out in relation to SV will be familiar to noble Lords in the Chamber today. The SV system was used when the positions of elected mayors and police and crime commissioners were first established decades ago. The Government believe that it is the most appropriate voting system for single executive offices, where it is essential that the individual has a broad mandate from their electorate.
The English Devolution and Community Empowerment Act contains the main measures required to change the voting system used for these types of elections, and these will be commenced in due course. However, there are also a number of other changes that must be made to the election conduct rules via secondary legislation to fully enable the use of SV: for example, updating the images on ballot papers to allow a voter to select multiple preferences, updating guidance to electors, and updating the procedures used at the count should there be a second round of counting.
As stated during passage of the English Devolution and Community Empowerment Act, the Government’s intention was to implement the change to SV for any mayoral or PCC election taking place after the scheduled May elections this year. This order has been drafted to be concise, so it will make only the necessary additional amendments to enable SV to be used for both combined authority and combined county authority mayors, including those who exercise police and crime commissioner powers. The order will therefore not make amendments with regards to local authority mayors, the Mayor of London, or police and crime commissioner elections. Further legislation will be brought forward for those in due course.
Turning to the timings for implementation, this order will make the change to SV for any combined authority or combined county authority mayoral election for which notice is given on or after the date this order comes into force. As this is a reversion to the original voting system used for mayoral elections, the SV process will be familiar to both administrators and electors. Implementing these changes will therefore be straight- forward, and we are confident that returning officers will be able to make the necessary changes.
I now turn to the content of the instrument. The conduct rules for elections of combined authority and combined county authority mayors are set out in the Combined Authorities (Mayoral Elections) Order 2017. This order will make a number of amendments to the 2017 order. As we have discussed already, the SV system was that used when combined authority mayors were first established, so these changes are largely reverting the 2017 order back to its original drafting. The Electoral Commission has been formally consulted on these changes and has raised no objections. Articles 3, 4 and 5 of this instrument will amend Schedules 1, 2 and 3 to the 2017 order respectively. They set out the conduct rules for these mayoral elections, both when the poll is a standalone poll and when the poll at a mayoral election is combined with the poll at another type of election or referendum.
The amendments will update the guidance given to voters in polling stations to reflect that they now have the option to select a second preference. They will also update the various processes involved in counting the votes, to reflect that a second round of counting may be required. They also make a number of consequential amendments throughout the conduct rules, to ensure that references to votes refer to first and/or second preference votes, as appropriate.
Schedules 1 and 2 to this instrument contain updated statutory electoral forms. Schedule 1 sets out the forms in respect of a stand-alone mayoral election, and Schedule 2 sets out the forms where a mayoral election is combined with another type of election or referendum.
There are two types of forms that require updating to enable SV. The first is the ballot paper; a new ballot paper image is provided in this instrument to allow voters to select both a first and second preference of candidates. The instrument also contains the ballot paper to be used where there are only two candidates running, as in that scenario, voters are not given the choice to select a second preference, and the poll reverts to a simple majority voting system. The second is the postal voting statement; this contains guidance to postal voters, so this instrument provides a new postal voting statement form that will inform the voter that they may select both a first and second preference where there are three or more candidates running.
To conclude, these are straightforward changes necessary to implement a change set out in the English Devolution and Community Empowerment Act. I hope that the House will join me in supporting this instrument, and I look forward to answering any questions that noble Lords might have. I beg to move.
Lord Hayward (Con)
My Lords, I thank the Minister for her introductory comments, and I shall return to one or two of the points that she made in a moment. It is worth being honest in relation to election changes. In every party, when they make election law changes, they may hide it in one form or another, but, over their shoulder, they are looking at how they are going to benefit from any particular change, and that is worth acknowledging. In this case, the speed with which this order has been brought forward is striking. One has to ask the question: why on earth is it being brought forward at this stage, particularly because, as the Minister said, the legislation has just been passed, having received Royal Assent in April? She also went on to say that:
“Further legislation will be brought forward”
for other matters
“in due course”.
Every single debate in which I have participated on election law in the last decade has included a request to simplify the whole process of elections law, and to not make it more complicated. There has been persistent reference to the Law Commission, its original report, and further changes thereafter. What do we have here? It is an admission by the Minister that we are debating one thing this evening, but at some unspecified stage, further legislation will be brought forward. Why? The answer is quite simple: it is because the Labour Party has got itself into an almighty mess in the north-west. There is a by-election in Makerfield on Thursday, and there is the possibility of a by-election for the Greater Manchester mayoralty thereafter, at a cost—although the Government refuse to identify the actual figure—probably of around £5 million, to solve their problems. That is the first issue.
Let us be honest about this order. It is not normal to identify who would be affected by a particular change of law, but this order is an attempt to prevent Reform winning the possible Greater Manchester mayoralty by-election. It would be better titled “Combined Authorities (Mayoral Elections) (Stop Reform Winning the Greater Manchester Mayoralty) Order 2026”, because that is what it comes down to. There is no other justification for the haste with which this order has been introduced, other than that it solves the Labour Party’s problems and prevents Reform winning a mayoralty. It does not do British democracy well when the position is as blatant as that—nothing more, nothing less. Otherwise, the order could have waited until all the different changes necessary could be introduced in one go, at one time, in the near future.
I want to comment on one other element of this order, and that is the impact assessment. All changes in legislation have an impact; some are smaller than others. The Minister is right that we are reverting to a system that operated previously. Therefore, there should be relatively small changes, but they are changes none the less. It has been quite a few years since this system was introduced, and there will be many polling station officers, returning officers and people asked to administer the whole process who are new to this. A necessary set of changes will result in training courses. As the Minister identified, notices will be different and understanding will be different.
I cannot believe that when this is introduced, the Electoral Commission will not expect to provide guidance to the voters of Greater Manchester on how they will now vote, as against how they did last time. Although the costs in the impact assessment are relatively small, it is not correct to say that there will be no or virtually no cost. It is appropriate that we should be told what the cost is and what the total cost of a Greater Manchester by-election would be, as the Labour Party tries to get itself out of a mess of its own making.
Lord Jackson of Peterborough (Con)
My Lords, I concur 100% with the comments from my noble friend Lord Hayward. I am going to take this statutory instrument at face value and discuss the issues that it raises on the alternative vote and first past the post. As noble Lords will know, when proportional representation was tested with the electorate in 2011—in this case, the alternative vote referendum—it was lost by a margin of 68% to 32%.
Noteworthy in the statutory instrument is the paucity of intellectual rationale for why the changes are happening. I agree with my noble friend: it looks like a cynical stitch-up to avoid embarrassment in the combined boroughs of Greater Manchester. But it also potentially looks like a strategy for a progressive alliance being rolled out in the run-up to a general election—for instance, with the Green Party and the Liberal Democrats —with the stated or probably unstated aim of locking out the Conservatives and Reform UK from power.
First past the post is simple and fair, and Conservatives have always supported it. It ensures proper representation and broad campaigning by parties, rather than policies targeted on a subset of voters. It is simple and transparent. Even in a disaggregated, fragmented political landscape, it is still stable and effective at delivering governance. One person secures the plurality of votes and that is transparent. As it happens, almost 100 Labour MPs have been elected in the other place with less than 35% of the votes. So if it is good enough for this Government’s majority in the other place, it is good enough for our elections generally.
In 2016, the Home Affairs Select Committee recommended that first past the post was best to replace the supplementary vote in police and crime commissioner elections. SV causes confusion and leads to a lot of spoiled and rejected ballots. The Electoral Commission, in its September 2021 report on the 2021 elections, noted:
“A quarter of people who had difficulties filling in their ballot paper in areas holding both local government and PCC elections said it was confusing that the elections used different voting systems. A third of people voting in London said that they found the two voting systems confusing”.
In fact, the rejection rate in the London mayoralty election in 2021 was 114,201 ballots, of which 87,000 were because voters cast a vote for more than one candidate in the first-preference column; 265,353 votes were invalidated because the second preference was cast for the same candidate as the first; and 319,978 second preferences were unmarked. These void rates exceeded the votes validly transferred to the two leading candidates: Mr Khan got 192,000 votes, and Mr Shaun Bailey—now the noble Lord, Lord Bailey of Paddington —got 85,000 transfers.
First past the post focuses on clear accountability. Electors know the one individual who is responsible for the failings or the successes of public policy. SV gives a recycled second vote the same democratic credibility as voters’ first choice. Each vote should count equally. One person, one vote. In fact, a supplementary vote is used almost nowhere else across the globe. The late, much-renowned and much-missed elections expert and academic, David Butler, described SV as a silly answer, based on the need to compromise between rival factions.
First past the post is quicker to count and cheaper to administer, as my noble friend Lord Hayward said, and better understood by voters. Some very eminent people in your Lordships’ House agree with this. In fact, one of them said that “SV is one of the worst systems. We had a referendum in 2011 on changing the voting system for elections to the House of Commons. This was wholly rejected, and I have seen nothing following on from that result, or anything that has happened subsequently, which leads me to believe that the country wants to change the voting system for any elections. We have managed to heap on voters a whole plethora of voting systems. That is not a good thing to do. I thought that one of the worst systems was the SV system. I have observed many counts where people have put a cross in the second column, which means that their votes are discounted.” Brilliantly said by the current Labour Government Chief Whip—quite, my Lords. Indeed, in 2021 the UCL Constitution Unit described the supplementary vote as “an anomaly” and out of step with other elections in England.
At least AV, which is an alternative system, allows a more pluralistic preference voting. I ask the Minister directly: will she confirm that these changes will take effect in respect of a putative Greater Manchester mayoral by-election, which may or may not happen later this year? This is about raw politics. It fails to make a coherent fact-based intellectual case for reverting to an SV regime. It is about locking out Reform UK and the Conservatives from power, and therefore it fails on merit and is a retrograde step, which my party and I oppose.
Baroness Pinnock (LD)
My Lords, methinks the previous speakers on the Conservative Benches do protest too much. First, I remind the noble Lord, Lord Jackson, that it was the Conservative Government, I believe, who introduced the supplementary vote in the first place. So that puts that argument to one side. Secondly, his argument was that first past the post gives us good, clear results. Well, it may do, but on very much of a minority of the electorate. We share this wonderful system with just one country in the world: Belarus. Maybe that is not the sort of companion we would really prefer. I certainly would rather have a system that reflects people’s voting preferences than something that is, as the noble Lord said, easy to count.
As the noble Lord, Lord Hayward, pointed out, the timing of this statutory instrument is interesting, and very helpful to the Government. There is a by-election on Thursday, which may result in a vacancy for the Mayor of Greater Manchester. So here we are with an SI. The voting system for the combined authority mayors was, as I said just now, initially by the supplementary vote. That was abandoned by the Conservative Government, in 2022, I think, in favour of the first past the post model.
The noble Lord, Lord Hayward, said that Governments do this cynically: they choose a voting system saying, “This will be better and reflect the needs of the electorate more”, while looking over their shoulders at how the voters are actually going to choose who they vote for. I suggest to him that maybe that is what happened in 2022. The outcome was not what the Conservative Government hoped for, because in the mayoral elections that followed that change last year, the average turnout was 30%. Two of those mayors who were elected got less than 30% of that 30%—in other words, with less than 10% of the electorate supporting them. I do maths; I am right.
That illustrates the degree of voter apathy about whichever system is used. At least with the supplementary vote there is a bit of a better reflection of voter preferences. But the system is by no means perfect in matching what voters want. It is at best a halfway house towards true electoral fairness, because voters are restricted, as we have heard, to two preferences—column A and column B.
I think it was the noble Lord, Lord Jackson, who said that voters get confused by different voting systems. I am going to ask him to go to Scotland to enjoy its voting system. Local government is elected by single transferable vote. Votes for the Scottish Parliament are by two systems, one for regional and one first past the post—the regional is to make it more proportional. The third, of course, is first past the post for the Westminster election. The people of Scotland have no trouble with that, and the people of Northern Ireland and Ireland have no trouble with STV, so I am not sure why the noble Lord, Lord Jackson, thinks people in England will be confused.
The argument against SV is that you limit voters’ preferences to just two. If you do not like what is on offer, and if your second choice is not of one of the top two candidates, you have no say because your vote is just discarded. In that sense, those voters are left out completely.
I have a question for the Minister. I had assumed that the supplementary vote would be counted and if there was no majority on the first count the top two would be taken forward to second preferences and all other candidates would be eliminated. However, I could not find that in the SI. It refers to
“the candidates remaining in the contest”
without identifying that that will be, as I assume, the top two. Perhaps the Minister can help me understand what is meant and why it is worded rather vaguely.
I know the noble Lord, Lord Jackson, does not like the alternative vote. Actually, neither do I, because although it is more proportional than either first past the post or supplementary vote, it is not the best system to reflect what people want, but it would be a bit better than using either first past the post or SV.
We support the order reluctantly because it moves us a bit further forward and gets rid of first past the post for at least one election. I think it was the noble Lord, Lord Hayward, who suggested that we are now in a multi-party situation. In elections, there are going to be candidates from at least five parties. In the recent local elections where I live, in several wards there were seven candidates. In those instances, people could be elected on 20% or less of the vote. That makes it more of a lottery than it ought to be. It does not reflect what voters really want and is not good for democracy—the Government Whip is giving me the eye just because I have gone 13 seconds over the time.
Democracy depends on the electorate trusting and having faith in the system. If we do not have trust and faith in the system, that is when democracy is in peril. A big change to the electoral system would be good, but I will go with this one.
Lord Jamieson (Con)
My Lords, before I speak—although I am not sure it is a conflict in this issue— I need to declare that I am a councillor in Central Bedfordshire. I thank noble Lords for speaking in this debate. I thank the noble Baroness, Lady Pinnock, who I think at the end of her speech said she is in favour of the single transferrable minute from one speaker to the next to allow her to speak longer. I thank my noble friends Lord Hayward, who raised the very important question of why now—I will come to that later—and Lord Jackson, who gave an excellent exposition of the shortcomings of the transferable vote or supplementary vote system
This is, in essence, a reversal. Within a relatively short period of time, we have moved from supplementary vote to first past the post, and now back to supplementary votes for mayoral elections. Whatever view one takes of the respective systems, that degree of oscillation is not a strength of constitutional design. I ask the very simple question: what problem is this change actually seeking to solve? The Government’s answer appears to be the claim that the supplementary vote system produces a mayor with broader support and therefore greater legitimacy. It is also said to allow voters to express preferences more fully and to ensure that votes are not wasted—although, as my noble friend Lord Jackson pointed out, in the previous London mayoral election there seemed to be an awful lot of wasted supplementary votes.
These arguments are familiar; they have been advanced in favour of preferential systems for many years. But repetition is not justification. The reality is that this draft does not demonstrate a failure in the existing arrangements of first past the post; nor does it set out evidence that voter confidence in mayoral elections has been undermined by the current system. Instead, it simply asserts that the alternative system is preferable. That is not sufficient when what is at issue are the rules by which democratic office is secured. First past the post has one defining virtue, and that is clarity. The candidate with the most votes wins. There is no second count, no transfer of preferences, and no recalculation. The result is immediate and intelligible. As my noble friend Lord Jackson of Peterborough pointed out, the public have previously demonstrated that they have a preference for the first past the post system.
That matters more than Members may realise, because the electoral system does not exist just in theory. It exists in the mind of the voter at the ballot box. If the voter does not really understand how their vote translates into outcome, we risk something important being lost. The supplementary vote system is not incomprehensible, but it is more complex. It does introduce a second stage of allocation, where preferences are redistributed. That may be administratively manageable, but it is not straightforward and it is not intuitive. We must remember that confidence in our elections is essential.
The Government also argue that the system produces a more legitimate mandate, because it takes account of second preferences. That is a fundamentally different conception of legitimacy, and it is not a neutral change. Under first past the post, legitimacy comes from a clear view expressed at the ballot box. Under supplementary vote, it comes from aggregated preferences after elimination and redistribution. Those are different constitutional logics. First past the post is well understood: it is tried, tested and clear. The question for this House is which is more appropriate for mayoral elections in England today. We are not persuaded that the Government have made a strong enough case that change is required.
There is also the wider concern of uncertainty caused by frequent changes. That cannot be ignored. Electoral arrangements should not shift back and forth with such frequency. Voters, candidates and administrators require stability. They need to know that the rules they are voting under today will be same at the next election. At present, that confidence is weakened by repeated changes.
I should therefore be grateful if the Minister could address a straightforward point. What is the Government’s principle here? Is it that electoral systems should be treated as settled constitutional arrangements unless there is clear and compelling evidence of failure, or is it that they may be altered whenever the Government take a different view? Those are very different approaches.
There is also the question of practice. The instrument requires changes to ballot papers, guidance to returning officers, counting procedures, voter information, and administrative systems across combined authorities. All of that is manageable, but it is not without its cost, its friction, and its implications for time. As my noble friend Loyd Hayward has raised, I also ask the question: why now? Why the urgency? Putting this in place will take some time for electoral returning officers, yet there is a risk we shall very shortly have a mayoral by-election. Would it not be better to delay to ensure a smoother implementation and also to include those other potential future changes? My noble friend asked: why now? I also ask: why now?
What assessment has been made of the costs to local authorities of implementing this change? What additional burdens will fall on electoral administrators? What steps will be taken to ensure consistency of understanding across different areas in the run-up to elections? More importantly, what assessment has been made of voter understanding? It is often assumed in this debate that voters are closely engaged with the mechanics of electoral systems, but my personal experience is that they are not. In fact, sometimes they are not that closely engaged in the detailed minutiae of politics, so I think that is a stretch assumption. What matters to voters is that the process is clear at the point of voting and that the outcome is trusted. Trust depends on simplicity and familiarity; both are weakened when this system changes repeatedly.
None of this requires us to resolve, once and for all, the philosophical debate between electoral systems. Reasonable people will differ on that question. But what the House is being asked to approve is not an abstract principle; it is a concrete change to the machinery of elections, justified on the basis of asserted improvements in legitimacy. We on this side of the House are not persuaded that the case has been made. We are not convinced that the benefits outweigh the cost to clarity, stability and confidence. We are concerned about the wider pattern of repeated alterations to electoral arrangements. We are also concerned about “why now?”
For those reasons, while I look forward to the Minister’s response, I must indicate that we remain unconvinced by the necessity or wisdom of this statutory instrument.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank all noble Lords for their considered contributions today. I first pick up the point made by the noble Lord, Lord Jamieson, about the principle behind this. I think that is the most important thing; I did set it out in my introductory speech. It is that the Government believe that this is the most appropriate voting system for single executive offices where it is essential that an individual has a broad mandate. Having cleared up that point of principle, I will try to answer all noble Lords’ questions.
The noble Lord, Lord Hayward, asked whether the reason for delivering this change at pace was political advantage. The answer to that is, clearly, no. As I have already said, the Government were very clear during the passage of the English Devolution and Community Empowerment Act that we intended to make this change for mayoral and PCC elections after May 2026. There is now the potential for such an election; I will come on to more about that in a moment. We are therefore acting to deliver on our commitments made to Parliament.
The noble Lord, Lord Jackson, raised these issues as well—I am sorry that the charm offensive that I experienced yesterday has come to a shuddering halt, but never mind. The noble Lord referred to
“locking out the Conservatives … from power”.
They did a very good job of that themselves; I think that is clear.
The noble Lord, Lord Hayward, asked me about the cost of any by-election in Manchester. If he does not mind, I will write to him on that issue. It is paid for by the local authority and not from central taxation. However, in the general course of things, when it is not a by-election, these elections will be held anyway. Ballot papers have to be printed anyway. The count has to be held anyway. Those costs are very similar, whether the election is held under SV or under first past the post.
Lord Hayward (Con)
I thank the Minister for giving way. I am very pleased indeed by her commitment to write to me. My noble friend Lord Jamieson referred to the associated costs of introducing this process. Could we possibly have both at the same time?
Baroness Taylor of Stevenage (Lab)
I will have a look at whether it is possible to get that figure; I thank the noble Lord for that question.
The noble Lords, Lord Hayward and Lord Jamieson, asked me why we are changing the voting system only for two types of mayoral elections. First, to reiterate— as I think was referred to by the noble Baroness, Lady Pinnock—these changes revert to the 2017 voting system, which was brought in by the Conservatives, and it was the Conservatives who changed it back in 2022. We are reverting to the system that the Conservatives had introduced for these single-office posts.
The English Devolution and Community Empowerment Act 2026 received Royal Assent in April this year and the Government’s stated aim has always been that we will work at pace to deliver secondary legislation needed to implement the new law at the earliest appropriate opportunity. Of course, the Government are conscious that there is now a possible scenario in which a mayoral by-election may need to be held in Greater Manchester in the coming months, subject to the outcome of a parliamentary by-election in the Makerfield constituency on Thursday this week.
To fulfil both Parliament’s will and this Government’s stated commitment to reimplement SV, we have drafted this order at pace to ensure that the necessary legislation will be in place for this system to be utilised if that mayoral by-election takes place. To meet this deadline, the order had to be kept concise and could not include measures to amend all other types of mayoral elections. Amending all the relevant mayoral and PCC election conduct rules would also require a range of statutory instruments, as they use different parliamentary procedures. We intend to implement SV for other mayoralties and PCCs in due course through separate instruments.
Baroness Taylor of Stevenage (Lab)
If the noble Lord will bear with me for a moment, I am going to answer some of his other points. If I do not cover it, he is welcome to step in.
The noble Lord, Lord Jackson, raised issues about the voting system. I am sure he will make his comments on voting in London when we make the instrument for London mayoral elections. To be clear, this particular instrument does not cover London mayoral elections. SV was the voting system implemented on the introduction of both mayoral and police and crime commissioner elections. As I said, we think it is much more appropriate for selecting single-person executive positions such as mayors or police and crime commissioners.
However—and the noble Lord Jamieson asked about this—we believe that the first past the post system is a clear way of electing representatives which is well understood by voters and which, although not perfect, provides for a direct relationship between a member of a legislature and the local constituency. The first past the post voting system is therefore a more suitable system where there are a number of seats to be filled, such as for a council or a Parliament, and the likelihood is that people representing a range of views and parties will be elected. Therefore, the Government have no plans to change the electoral system for UK parliamentary or local council elections in England.
Lord Jackson of Peterborough (Con)
I thank the Minister. On a point of fact, as a result of the 2022 legislation which reverted back to first past the post, the Greater London returning officer estimated that, because it was not necessary to use the e-voting infrastructure for counting, there was an indicative saving of £4 million. That is the difference between the SV system and first past the post, so surely the Minister will concede that there is a significant greater cost of this new system that we do not yet know.
Baroness Taylor of Stevenage (Lab)
As I said, this instrument does not cover London, and there is no price to put on democracy. We should always be aiming for democracy first. However, as I said to the noble Lord, Lord Hayward, I will do my best to find out if there is any financial impact of this instrument.
The noble Lord, Lord Hayward, asked me about the sector being able to cope with the late change. SV has been used in the past extensively and recently and will be deeply familiar to returning officers and their teams. My department has been working closely with the sector as it prepares for the changes arising from the English Devolution and Community Empowerment Act 2026, and we will continue to support it in managing any changes once this instrument is made. As I said, we consulted with the Electoral Commission, which did not have any concerns about this, so we are confident that the change is straightforward and the sector will have no issues in implementing it.
The noble Lord, Lord Hayward, and the noble Baroness, Lady Pinnock—for very different reasons, I think—asked how the public will be informed of these changes, and the noble Lord, Lord Jamieson, had some concerns in that area too. Electors will receive information on the voting system used via a number of methods, including guidance on postal voting statements and in polling stations that they will read prior to voting. More importantly, where there are three or more candidates at an election, the ballot paper itself will be clear that electors have the option to select a second preference. I am confident that electors will be informed of the change and understand their options when casting their vote, especially given that this is a voting system that has been used extensively in the past and will be well understood, and indeed familiar, to many voters. Greater Manchester used SV for almost all its elections, with the exception of one in 2024, reflecting its status as an established voting system.
The noble Lord, Lord Jackson, and the noble Baroness, Lady Pinnock—again, I expect, for very different reasons —asked me why we were using SV, not a different system. The Government have no plans at present to introduce the single transferable vote to mayoral and PCC elections. The Government acknowledge that different voting systems can be better suited to different types of polls and elections, and we take the view that SV is the right system to use for selecting single-person executive positions. It requires the winning candidate to receive the majority of votes counted, and that ensures that they have broad support across the area and a broader mandate from the people they are representing. A key advantage of the SV system over other preferential voting systems is that, as I said, it was widely used before for mayors and PCCs, so people are familiar with it.
The other question from the noble Baroness, Lady Pinnock, was about how the supplementary vote is counted. With a supplementary vote, if no candidate gets over 50% of the vote, the top two candidates continue to a run-off and all other candidates are eliminated. When casting their ballot, voters can put a second choice of who they would vote for in a run-off on the original ballot paper. If your favourite candidate gets through then your vote is counted for them in the run-off, but if they did not and your second choice did, then your vote goes to them. The run-off candidate with the most votes is declared the winner.
Baroness Pinnock (LD)
I am sorry to interrupt the Minister, but that is not the question I asked. The order does not say “the top two”; it just says “the candidates remaining” without defining what that should mean. I assumed, as has the Minister, that that means the top two, but I could not find that in the order. Perhaps she could write to me.
Baroness Taylor of Stevenage (Lab)
I am happy to write to the noble Baroness to clarify that point.
In conclusion, the instrument is necessary to allow the SV system to be implemented for combined authority and combined county authority mayoral elections. This was a commitment made in primary legislation, and it will ensure that those elected to these positions have a broad base of support from their electorates, which we believe is of particular importance for these single-person executive offices. I hope the House will welcome these regulations, and I beg to move.