House of Lords

Monday 29th June 2026 Lords Chamber

Monday 29 June 2026

14:30

Prayers—read by the Lord Bishop of Manchester.

Palantir: Public Service Contracts

Monday 29th June 2026 Lords Chamber

Question

14:36

Asked by

[Baroness Chakrabarti]

To ask His Majesty’s Government what assessment they have made of the human rights and reputational risks presented by their public service contracts with Palantir.

[The Minister of State, Ministry of Defence (Lord Coaker) (Lab)]

My Lords, government departments operate within a robust procurement and assurance framework, ensuring that contracts are awarded only where requirements are met and no exclusion grounds apply. Palantir’s software is used globally across public and private sectors. Within the UK Government, its use is governed through established legal and assurance frameworks. In defence, Palantir supports data integration and AI-enabled analysis, providing timely insights that improve operational planning, decision-making and effectiveness.

[Baroness Chakrabarti (Lab)]

My Lords, I am perennially grateful to my noble friend. If we are to avoid a future Fujitsu-style scandal of even greater proportions, how can our public money, personal data, national security and reputation be safe in the hands of a company credibly implicated in gross human rights violations, both in Gaza and ICE operations in the United States?

[Lord Coaker (Lab)]

My noble friend is quite right to challenge the Government on these incredibly important issues around human rights and how the Government establish their contracts. To be clear about the UK Government, we are talking about a relationship and contracts that are negotiated with Palantir UK. The contracts that we operate with Palantir UK have strict protocols in place. We retain full ownership and sovereign authority over all defence data, including how it is stored, how it is accessed and how it is used. Contracts with suppliers include legally enforceable provisions to ensure that data sovereignty is maintained. I understand the points that my noble friend raises, but with respect to our contracts with Palantir UK, we ensure that the correct provisions are in place.

[Lord Austin of Dudley (Non-Afl)]

My Lords, given the Government’s decision to partner with Palantir as part of their defence modernisation programme and the role that advanced data and AI capabilities will play in future warfare, does the Minister agree that such technologies are critical to delivering the strategic defence review, strengthening the UK’s ability to respond to hostile state threats and supporting the Government’s wider objectives for growth, innovation and defence-industrial capacity?

[Lord Coaker (Lab)]

My noble friend makes a really important point. Many people across this Chamber will know that the responsibility of government requires difficult decisions to be made. As my noble friend Lady Chakrabarti has rightly raised, there are sometimes difficult decisions and difficult dilemmas to be resolved. Alongside that—my noble friend asked about defence—we have a responsibility to ensure that with the AI capability and the data management capability, we can take forward our strategic defence review and can give our Armed Forces and those who work with them the best possible tools to ensure that we deliver the objectives of His Majesty’s Government. That is what we seek to do, while recognising the moral responsibilities we also have.

[Lord Gove (Con)]

My Lords, I am grateful, as ever, to the Minister for his lucid and authoritative response. When I was a Minister, I saw how Palantir’s technology helped to save lives in the NHS. I saw how Palantir helped to ensure that those fleeing persecution from the Ukraine war could have a safe home in this country. I also appreciate that Palantir is playing a role in defending democracy, not just in the Middle East but in Ukraine. Is it therefore not a matter of regret to the Minister, as it is to me, that the Mayor of London has specifically ruled out Palantir helping to fight crime on the streets of London when the commissioner of the Metropolitan Police has made clear that, as a result of the Mayor of London’s decision, our citizens will be less safe?

[Lord Coaker (Lab)]

My understanding is that the mayor and the commissioner have now reached an arrangement with respect to the activity of Palantir within the Metropolitan Police, where there will be a 12-month period to establish a proof of concept as to whether Palantir can move forward. The mayor and the Metropolitan Police commissioner have agreed that because, as the noble Lord says, the commissioner believes it will help fight crime. It is a matter for them to resolve that, but it seems they have found a way in which both are happy to try to take it forward.

I do not want to underestimate the moral questions that Governments sometimes have to answer. The noble Lord knows the issue of education particularly well, but let us look at the issue with respect to health: 41 ICBs and 171 trusts have signed up to use the NHS federated data platform; more than 100,000 extra patients have been seen; hundreds of thousands of patients have been safely removed from the waiting list; and nearly 94,000 patients have been supported on their cancer journey. That is the sort of dilemma that Governments need to resolve to try to find the best way forward.

[Baroness Smith of Newnham (LD)]

My Lords, on these Benches we understand the importance of the Armed Forces modernising, including with AI. My understanding is that Palantir received a £240 million contract without the MoD going out to tender. While there are clearly national security exemptions for genuinely exceptional cases, is the Minister concerned that this could just move towards being a way of avoiding competition rather than helping national security? Will the next contract go out to procurement?

[Lord Coaker (Lab)]

The noble Baroness is quite wise to raise that point; it is a question I asked too. Officials told me that it was the only company—the only available platform—that could provide what the MoD needed and give us the operational capability that was required. Under the single tender regime—I cannot remember the exact title—where there is no other option available, it is okay and legal for the Government to operate in that way. That is why the Government did that. Of course we are looking at whether other people can provide the sort of expertise that the noble Baroness refers to, but there was no point going out to procurement when the only provider was Palantir.

[Baroness Goldie (Con)]

My Lords, by common assent, Palantir’s technology has rapidly and dramatically improved the Ministry of Defence’s logistics and operational planning systems without either human rights or reputational risks. Given that the current challenge confronting the MoD is recognised in the SDR, which recommended achieving a 10% efficiency saving by greater use of AI systems, what progress has been made on that objective to date?

[Lord Coaker (Lab)]

The noble Baroness will see in due course some of the ways in which we are taking forward AI, but she is quite right to ask about this. AI is crucial to the future provision for our Armed Forces and to enabling them to have the capability and capacity they need for the conflicts of the future. Palantir is one example of the way in which we seek to take that forward. Other options will be brought forward as part of the defence investment plan. Clearly, AI is the future of much of the technological co-operation that will be needed both within government and with our allies.

[Lord Spellar (Lab)]

My Lords, the Minister is quite right to resist attempts, which happen quite regularly, to demonise individual companies rather than looking at the underlying reality. He is also right to look at results. In this very fast-changing world of information technology, the company leading this year may well not be leading next year or even in six months. I recognise that Palantir has a major presence in the UK, which is welcome, but other companies are available. I caution against the department and the Government becoming overdependent on individual companies that almost become too big to fail, as we have seen in other sectors.

[Lord Coaker (Lab)]

My noble friend makes a really important point. Palantir provides us with the capability that we require at the moment, but he will be reassured by the fact that, alongside granting this contract to Palantir for the next three years from this April, we are seeking to look at options with small and medium-sized and other companies that could provide the same capability, so that we have a competitive process in future. That also answers the noble Baroness’s point. I suggest that will keep Palantir on its toes in the marketplace as well.

[Baroness Bennett of Manor Castle (GP)]

My Lords, have His Majesty’s Government considered applying a fit and proper person test to owners and managers for public sector IT contracts, particularly those involving Britons’ private data, with particular attention to their respect for human rights and the rule of law? If they do not have that, the contracts will not be worth the paper they are written on.

[Lord Coaker (Lab)]

I understand the point that the noble Baroness is making, but the point I made at the beginning is that these contracts are with Palantir UK. Anyone who has been a Minister knows that contracts signed on behalf of the Government have to have a fit and proper process. We will not take on people to run things for us who have criminal records of a particular sort, do not pass the monetary test or have other considerations around them that mean we see them as a security threat—of course we would not. The people who have gone through this process and been given the contracts have passed the tests set for them as part of the risk assurance process.

The noble Baroness is perfectly entitled to her opinion, but taking the decision not to grant Palantir the contract would have consequences as well—many patients now being seen would not be seen, many crimes being solved would not be solved and the operational abilities and capabilities of our Armed Forces would be undermined because no one else can provide that capability. That is the side that I am on. The noble Baroness can take the side that she is on.

Covid Fraud

Monday 29th June 2026 Lords Chamber

Question

14:48

Asked by

[Lord Foulkes of Cumnock]

To ask His Majesty’s Government what action they have taken regarding the recommendations in Pursuing Recoveries and Preventing Reoccurrence: Final Report of the Covid Counter Fraud Commissioner, published on 9 December 2025.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, on 23 June, I laid the Government’s response to the Covid Counter-Fraud Commissioner’s report before this House setting out our plan to pursue those who defrauded the state during a national emergency, to put money stolen by fraudsters back into the public services and to tighten our counter-fraud controls to make sure that this scale of fraud can never happen again.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, I am grateful to my noble friend for that reply, but does he not think it strange that Peter Murrell is in jail for embezzlement of £400,000 whereas not one person responsible for £10 billion of fraud has been charged, let alone convicted? Will the Government speed up their action to use legal methods against these people and recover the money, which, I am sure my noble friend will agree, will help balance his books?

[Lord Livermore (Lab)]

I am very grateful to my noble friend for his question and his continued determination to see justice in this matter, which I share. Covid fraud and corruption is an appalling financial scandal that has cost UK taxpayers dearly. I thank the commissioner, Tom Hayhoe, for his tireless efforts to chase down fraud so that public money can be used as intended on public services such as hospitals and schools, as my noble friend said. The Government will continue relentlessly to pursue Covid fraud to retrieve taxpayers’ money, to hold those responsible to account and to ensure that such failures can never be repeated. In his report, the commissioner made 22 separate recommendations. The Government have fully accepted 18 and partially accepted the remaining four. The Treasury will now establish a Minister-chaired scrutiny panel to review the implementation of the recommendations every six months for at least the next two years.

[Baroness Kramer (LD)]

My Lords, fraud during Covid—heinous though it was—was carried out mainly by individuals and individual firms. Do the Government accept that, with AI, the character of fraud has now evolved into highly co-ordinated operating systems falsifying identity, behaviour and documentation, and it escapes detection by using digital money—primarily stablecoin and primarily among that tether? Work by Juniper Research shows that in 2025, tech platforms earned £430 million from scam ads in the UK alone. Will the Government require the tech platforms to close down these crimes?

[Lord Livermore (Lab)]

While I absolutely accept what the noble Baroness says about the evolving nature of fraud, I am not sure that I fully accept it is becoming as overwhelming as she says. I understand that the FCA is engaged in cracking down on exactly the type of practice she outlines, and we fully support its actions to do so.

[Lord Pitkeathley of Camden Town (Lab)]

My Lords, I declare my interest as a previous small business owner. While greater transparency for regulators is clearly desirable, can the Minister confirm that the Government have listened to concerns from small businesses about making commercially sensitive profit and loss accounts publicly available? Can he also explain how the balance has been struck between improving fraud detection and protecting legitimate commercial confidentiality?

[Lord Livermore (Lab)]

I thank my noble friend for his question, and I agree with the underlying point he makes. In his report, the commissioner recommends that small companies and micro-entities be required to file profit and loss accounts with Companies House under the Economic Crime and Corporate Transparency Act 2023. I said before that the Government have only partially accepted four of his recommendations, and this is one of them. While small businesses and micro-entities will be required to file profit and loss statements, as announced in June 2026, this requirement will come into effect in April 2028—one year later than initially anticipated—to give companies and businesses time to prepare. Small companies and micro-entities will have the option to opt out of publishing their profit and loss information on the public companies register. These changes reflect the Government’s consideration of concerns raised by stakeholders following the June announcement. The opt-out option addresses legitimate concerns about the commercial sensitivity of profit and loss information for smaller companies. Publishing this data on a public register carries privacy and competitive risks that are disproportionate for businesses of this size.

[Lord Watts (Lab)]

My Lords, the company owned by the noble Baroness, Lady Mone, owes the taxpayer £120 million. People who defraud the benefit system by £100 or £200 end up in jail; why is she not in jail? Why do the Opposition not say anything about this type of fraud, which brings disgrace on this House?

[Lord Livermore (Lab)]

The Government have been clear that we expect robust action to be taken to protect the taxpayer, and we have fully supported the appropriate legal and insolvency processes being followed. As I understand it, PPE Medpro Ltd is now in liquidation, and matters related to the recovery of funds are therefore for the liquidators to pursue in line with their statutory duties. Any recoveries that can be made will be determined through those independent processes. It would not be appropriate for me to comment on those proceedings.

[Lord Sikka (Lab)]

My Lords, one of the problems with the commissioner’s report on Covid fraud is that it pays little attention to the role of consultants in devising various schemes. For example, the furlough support scheme did not ask companies to provide the national insurance numbers of employees; it was, therefore, open to fraud. Companies seeking loans were not required to say when they were formed and what their HMRC reference number was; again, it was open to fraud. Are the Government still using the same consultants? Have they taken any action to ensure that those consultants pay the price for the poor design of various schemes?

[Lord Livermore (Lab)]

I am afraid I do not know whether we are still using the same consultants; I am more than happy to check for the noble Lord.

[Baroness Neville-Rolfe (Con)]

My Lords, I think we need to stand back and take a broad view of the problems. We all know that Covid was a challenge right across government and that fraud was an issue. However, the important thing is to do better next time, which is why we set up the Public Sector Fraud Authority in 2022 and introduced the use of AI into fraud detection, which helped with some of the sort of problems that have been raised. Given the doubt expressed in parts of the report, is the Minister confident that the Government of the day will, in practice, do significantly better next time? I am looking for a commitment here.

[Lord Livermore (Lab)]

I can fully understand the noble Baroness’s desire to stand back from this. On entering government, this Government found that £674 million of contracts were in dispute. However, we also inherited a recommendation from the previous Government that any attempt to reclaim that money should be abandoned. The commissioner’s report set out that £10.9 billion was lost to fraud and error from Covid spending. Failed pandemic-era PPE contracts cost the British taxpayer £1.4 billion and over £1.9 billion of bounce-back loans have been flagged as suspected fraud to the British Business Bank. The commissioner also found that the previous Government’s over-ordering of PPE and delays in quality-checking meant that £762 million is unlikely to ever be recovered, with substandard PPE gowns, masks and visors remaining uninspected for up to two years, preventing recovery of public money. Covid fraud and corruption is an appalling financial scandal which has cost UK taxpayers dearly. The noble Baroness asks for a commitment that we will do better next time; I think we could hardly do any worse.

[Lord Pannick (CB)]

My Lords, can the Minister say how much of the billions of pounds of public money which was wasted due to fraud and corruption in relation to Covid has now been recovered?

[Lord Livermore (Lab)]

As I said in my previous answer, the estimated level of fraud and error stands at £10.9 billion. Some £1.6 billion has so far been recovered and a further £1.5 billion is in the act of being repaid. The Public Authorities (Fraud, Error and Recovery) Act has extended the limitation period for Covid cases by a further six years, giving us longer to recover the outstanding amounts.

[Lord Anderson of Swansea (Lab)]

Does my noble friend not find it somewhat surprising that no Back-Bench Member of the Opposition thought it worth while intervening on a matter which affects one of their own?

[Lord Livermore (Lab)]

Obviously, whether they choose to intervene or not is a matter for them.

[Lord Spellar (Lab)]

My Lords, does my noble friend the Minister find slightly odd the intervention from the Opposition Front Bench? Surely if we are to send a message for future contracts, dealing with fraud in previous contracts is essential, otherwise people will think they can get away with it. Why does he think that the Opposition spokesperson was so keen to brush this under the carpet?

[Lord Livermore (Lab)]

I completely agree with my noble friend. It is vital that we deal with past instances of fraud. As he said, that must act as a deterrent to future acts of fraud. We will continue to pursue these fraudsters and ensure that we get as much money back as we possibly can.

Food Security

Monday 29th June 2026 Lords Chamber

Question

14:58

Asked by

[Baroness Carberry of Muswell Hill]

To ask His Majesty’s Government what assessment they have made of the current condition of UK food security.

[Lord in Waiting/Government Whip (Lord Katz) (Lab)]

My Lords, the UK has a secure and resilient food system, built on strong domestic production and diverse trade relationships that provide a stable supply and safe food despite recent global crises. Defra lays the UK Food Security Report in Parliament every three years, providing a comprehensive assessment of all aspects of food security. The next report will be released in 2027. In the intervening years, a shorter UK Food Security Digest is published.

[Baroness Carberry of Muswell Hill (Lab)]

I thank my noble friend for that reply, and I congratulate the Government on today’s publication of the farming road map, with its recognition that the UK’s food system is vulnerable. Food manufacturing is a vital contributor, among several others, to the UK’s food resilience. It is the biggest manufacturing sector by turnover and supports almost half a million jobs in our economy. Will the Government therefore consider treating food manufacturing as a strategically important sector, with the associated support that that would bring?

[Lord Katz (Lab)]

My noble friend is of course entirely correct to underline the importance of the food manufacturing sector and the fact that the Government’s new farming road map recognises it as an important part of the food supply chain. We are supporting food manufacturers with export support, innovation funding and growth programmes; we are working with industry to address barriers such as regulation and labour shortages; and we are strengthening supply chain resilience by monitoring risks and improving preparedness for shocks, and considering targeted interventions where appropriate.

We are driving growth and innovation by funding research and development, including £25 million from Defra and nearly £50 million from UK Research and Innovation. Alongside this, we are working across government to improve market access for UK food and drink exports, to support healthier and more sustainable products and to provide the long-term stability that businesses need to invest. Taken together, these actions are helping to build a more productive, resilient and competitive UK food sector, supporting jobs, growth and food security.

[Lord Gardiner of Kimble (Con)]

My Lords, it was your Lordships’ House that agreed that, instead of five years, as was in the Agriculture Bill, we should consider these matters every three years. It is very important for His Majesty’s Government to keep this under review, because we are in an even more volatile situation: I ask the Minister to comment on that. It is also fair to say that I know no farmer who feels in a confident position. We should be ensuring that British food production is put at a much higher priority as a matter of national resilience, as we have seen increasing volatility across the world.

[Lord Katz (Lab)]

The noble Lord of course has a great deal of experience in this. On his first question around the frequency of the report, he will know that it is a huge undertaking. It takes over a year to produce and usually weighs in at well over 300 pages, covering five themes, from global availability to household access to food security. The annual digest is shorter and more focused, which, as he commented, focuses on more material factors and recent changes in food supply.

When it comes to wider government support for farmers and the agricultural sector, the Government have allocated a record £11.8 billion to sustainable farming and food production over the Parliament, and the food sector is one of the UK’s 13 critical national infrastructure sectors. That tells the whole House how seriously we take it.

[Baroness Grender (LD)]

My Lords, does the Minister agree that the real test of this policy and the new farming road map is whether it leaves the poorest households better protected against disruption to food supply and prices? Given that the poorest fifth of households would need to spend 70% of their disposable income for the Government’s version of a healthy diet, what assessment have the Government made of the urgent need right now for the affordability of healthy food?

[Lord Katz (Lab)]

The noble Baroness will be aware that UK annual food price inflation in the current month, June 2026, was 2.2%, which is lower than overall inflation for the first time since January last year. Historically, of course, our food has been more affordable than the EU average. But she is right to stress the importance of affordability; that is why the Government are providing targeted support to help households manage food costs in a number of different ways. First, we have extended free school meals to 500,000 extra pupils, which will save up to £500 per child per year. The Chancellor of the Exchequer also recently announced targeted tariff cuts on over 100 everyday food items as part of the Great British Summer Savings scheme, which, it is estimated, will save more than £150 million per year.

[Baroness Batters (CB)]

I start by thanking the Minister for publishing the farming road map and for responding to my review on farm profitability. It was a stark fact, leading the review, that over 50% of all farms in England remain unprofitable and below the level of median household earnings. Given that, in the last Parliament, there were legislated targets put in place for the environment, is it not time that we had annual reporting on our food security and targets set to make sure we are not lowering our self-sufficiency?

[Lord Katz (Lab)]

I begin by thanking the noble Baroness, Lady Batters, for all her hard work on the profitability review. The Government have responded to a number of her recommendations, including ensuring that the new round of funding for the SFI opens up with a focus on active farmers, rather than just landowners. As she will know, through the Farming and Food Partnership Board, we are focusing on sector growth plans, with an initial focus on the sectors that need boosts, help and support the most, including horticulture and poultry, as well as focusing on a workforce strategy. However, I heard what she said about the targets. There is a lot of detail in the new farming road map. The Government are of course always open to listening to these ideas.

[Baroness McIntosh of Pickering (Con)]

My Lords, I congratulate the noble Baroness, Lady Batters, on her report, which has been a fantastic contribution to this area. I say to the Minister that the Government should revisit the clean energy proposals to take 10% of the most productive farmland out of food production and make sure that it remains in food production for food security purposes—which is, after all, national security.

[Lord Katz (Lab)]

I point out to the noble Baroness that, even in the most ambitious scenarios under the Government’s solar road map, only 0.4% of total UK land and up to 0.6% of total agricultural land is expected to be occupied by solar farms. Indeed, the changes that we made to the National Planning Policy Framework strengthened the ability of food businesses to grow and improve the productive use of their land. I gently say that there is a way that we can balance both clean energy generation and a growing and profitable farming sector.

[Baroness Foster of Aghadrumsee (Non-Afl)]

My Lords, as a former Economy Minister in Northern Ireland, I know too well the importance of the agri-food sector to Northern Ireland. It is a key economic driver. We have a population of just 1.9 million, but we provide almost £10 billion-worth of food across the UK. Given that, do His Majesty’s Government accept that Northern Ireland is a very strategic part of the food supply for the United Kingdom?

[Lord Katz (Lab)]

Absolutely. We celebrate and enjoy the contribution that Northern Ireland makes to the agri-food sector. It is an important part of our UK economy.

[Lord Winston (Lab)]

My Lords, as my noble friend the Minister knows, there were some concerns from many scientists about the precision breeding Bill. I wonder whether he might be able to give us an update on what is currently happening with regard to the modification of crops and animals in our food security.

[Lord Katz (Lab)]

I do not have an update to hand on the follow-up from the precision breeding Bill, so it will probably be best, in the interest of time, if I undertake to write to my noble friend with some more detail.

[Lord Roborough (Con)]

My Lords, I refer the House to my registered interests as a farmer and landowner. Farming in England is struggling, with globally high employment and environmental costs, while selling at prices set in international commodity markets by lower-cost regions of the world. Despite the dedication of our farmers, that threatens our food security. How will the Minister ensure that farmers are adequately rewarded for the ecosystem services they supply alongside food, beyond the low-margin ELMS payments?

[Lord Katz (Lab)]

The ELM scheme, which is backed by nearly £12 billion, is already delivering sustainable and profitable farming approaches. We need to work on this and develop this more. We have strong food security. We do not take anything for granted and we will continue to work across the supply chain and with partners to maintain and enhance it.

Construction Sector: Skills Shortage

Monday 29th June 2026 Lords Chamber

Question

15:08

Asked by

[Lord Allen of Kensington]

To ask His Majesty’s Government what steps they are taking to address the skills shortage in the construction sector and to ensure a steady future supply of skilled workers.

[The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)]

My Lords, in 2025, the Government announced a £625 million investment to train up to 60,000 more skilled workers in construction. This includes £100 million for skills bootcamps, £98 million for industry placements, £100 million to establish 10 construction technical excellence colleges, a £90 million uplift for 16-19 courses and £75 million for adult retraining. Construction will also benefit from new foundation apprenticeships, with employers receiving up to £2,000 for each apprentice they take on and retain in the industry.

[Lord Allen of Kensington (Lab)]

My Lords, I declare an interest as chairman of Balfour Beatty Plc. I welcome the steps that my noble friend the Minister outlined. Attitudes to the sector are outdated and sometimes ill informed. Attitudes toward careers in construction and infrastructure are contributing to the reduced pipeline of people coming into the sector. Almost half—47%—of young people report that construction and infrastructure careers are not even mentioned in their school’s career advice. I started life in the steel industry in Scotland as an apprentice, and I am proud to say that. What steps are being taken to ensure that career guidance in schools accurately and positively represents the significant opportunities in this important sector for Britain?

[Baroness Smith of Malvern (Lab)]

My noble friend is absolutely right. There are well-paid, secure jobs in the construction industry. One of the benefits of my role is that I quite often get the chance to meet young people who have made that decision. We need to make sure that that message gets through in the improved careers education that we are providing in schools. Also, as part of the construction support package, we are delivering targeted communications to raise awareness of those construction careers and promote the sector as a pathway to good jobs and progression. That will increasingly focus on young people, alongside tailored promotion for women and for those returning to work, in order to spread more widely the message that my noble friend has ably communicated.

[Lord Mohammed of Tinsley (LD)]

My Lords, I welcome the Government’s announcements about apprenticeships, particularly in the construction industry. Given that small and medium-sized businesses deliver the bulk of the construction infrastructure, particularly housebuilding, in the country, what support are the Government going to give to those smaller-sized construction firms that we dearly need across the country? These small business are often the ones that find government red tape the most difficult when it comes to apprenticeships.

[Baroness Smith of Malvern (Lab)]

The noble Lord is right. What is more, of course, small businesses are often the businesses that offer apprenticeships to young people and to people from disadvantaged backgrounds. That is why Skills England is focused on engaging with small businesses to help them understand the range of opportunities there. It is why we are introducing a new apprenticeship hiring payment of £2,000 for small businesses that take on 16 to 24 year-old apprentices. It is why, from August this year, we will also fully fund apprenticeship training for small businesses for eligible people aged 16 to 24. It is why no employer is required to pay employer national insurance contributions for employees under 21 or apprentices under 25, and it is why the Construction Industry Training Board’s new entrant support team is working to provide practical support to employers, particularly SMEs, who are recruiting apprentices.

[Lord McLoughlin (Con)]

My Lords, what role will the Government take in directing the infrastructure projects that they are responsible for to ensure that the companies participating in those projects take enough apprenticeships and give the proper training via the longer opportunities which those companies can naturally provide?

[Baroness Smith of Malvern (Lab)]

The noble Lord makes a really important point about the power of government procurement. Many of those contracts already require support for training, and particularly apprenticeships. For example, in the estates strategy in the Department for Education, we expect, if I remember rightly, 8,000 additional training places to be provided as a result of the investment that we are putting into maintaining and rebuilding schools.

[Baroness Winterton of Doncaster (Lab)]

My Lords, does my noble friend the Minister agree that, as well as looking at national infrastructure, it is important to get companies involved locally through organisations such as UTCs, as in Doncaster, where they have been very effective by not only having career guidance but putting on courses that are relevant to the local area? Combined with that, could more be done through local procurement, with local authorities, for example, requiring more apprentices to be employed?

[Baroness Smith of Malvern (Lab)]

My noble friend makes a really important point. It is why local skills improvement plans, of which the second round are due to be published quite soon, identify where there are local skills needs that need to be met locally, and why UTCs, as she identified, and the strong partnerships that construction and technical excellence colleges are developing between colleges and employers locally are really important ways of reflecting the local need for construction skills into the provision of training opportunities for young people.

[Lord Londesborough (CB)]

My Lords, the construction sector is suffering from an acutely ageing workforce, with 35% over the age of 50. This means that 750,000 workers will retire over the next 10 years. At the other end of the spectrum, numbers of apprenticeships are falling, with more than half of those taking them dropping out before they complete their training. What can be done to attract more young people and, in particular, improve apprenticeship outcomes?

[Baroness Smith of Malvern (Lab)]

We have a target to increase by 50,000 the number of young people starting apprenticeships, after 10 years in which that number fell by 40%. That is the reason behind some of the support that I have identified, including full funding for small businesses, the hiring incentive for businesses taking young people into apprenticeships, the support being provided through colleges and the increased recruitment of people who have had experience within the industry into our colleges, to ensure that young people get the best and most up-to-date information about those training opportunities. All those things are part of the construction skills package that we have focused considerable investment on, as I have demonstrated.

[The Senior Deputy Speaker (Lord Ponsonby of Shulbrede)]

My Lords, the noble Lord, Lord Campbell-Savours, is taking part remotely. I invite the noble Lord to speak.

[Lord Campbell-Savours (Lab) [V]]

My Lords, with the increased use of solar technology in construction and with the drop-out among construction and engineering students due to the emphasis on academic skills, could we promote two separate initiatives? The first, as a priority, is viring students into solar-related trades. The second is promoting the use of specialised solar engineers from abroad to train others and clear any backlog that develops in solar fitting programmes. We need to unleash the non-academic but inventive skill set that often lies behind Britain’s successes.

[Baroness Smith of Malvern (Lab)]

My noble friend is right about some of the new areas within construction where we need to support training. I am sure he will be pleased to know that one of the new apprenticeship units that we launched in April, where employers can use their growth and skills levy to fund something other than a full apprenticeship, includes one in solar PV installation. That is an example of how the Government are recognising the changing challenges in construction and supporting it through the growth and skills levy.

[Baroness Stedman-Scott (Con)]

My Lords, given the Government’s ambition to build 1.5 million homes and our reliance on a strong construction sector for economic growth, what specific steps are being taken to ensure that a larger proportion of pupils take design and technology GCSE and similar qualifications with strong, relevant, practical content to help increase their interest in following construction pathways in post-16 education?

[Baroness Smith of Malvern (Lab)]

The noble Baroness makes an important point about how the curriculum overly narrowed during recent years. That was the reason for the Government’s Curriculum and Assessment Review and the widening accountability measures of those qualifications that will be recognised. This will lead to more young people being able to take those types of qualifications, as will the investment that is going into colleges—particularly in high-cost courses such as construction—and the efforts that we are making and funding to get more teachers into colleges to provide the highest quality construction qualifications.

Immigration and Asylum: Appeals

Monday 29th June 2026 Lords Chamber

Private Notice Question

15:19

Asked by

[Lord Davies of Gower]

To ask His Majesty’s Government what assessment they have made of the impact of replacing immigration judges with adjudicators on the consistency of asylum appeal decisions; what qualifications, if any, adjudicators will be required to have; and what safeguards and accountability mechanisms will be put in place to ensure public confidence in the new Independent Immigration Appeals Authority.

[The Minister of State, Home Office (Lord Hanson of Flint) (Lab)]

I am grateful to the noble Lord for his Question. In the Government’s Restoring Order and Control Command Paper, which was published on 17 November 2025, we announced systemic reforms to the appeals system. The Government have provided additional funding to the First-tier Tribunal Immigration and Asylum Chamber to increase capacity, and we remain grateful for the ongoing efforts by the tribunal to clear its backlog. However, its current backlog stands at 151,767, with appeals taking, on average, 61 weeks to resolve across all case types, as of March 2026. The Government will shortly bring forward legislation that will underpin the new independent immigration appeals authority. The new authority will be able to determine appeals in a way that provides justice to appellants, with suitably qualified adjudicators independent of the Executive. Further details of the independent immigration appeals authority will be set out in the near future, including the measures that will be put in place to ensure public confidence in the new authority, as the noble Lord requests.

[Lord Davies of Gower (Con)]

I am grateful to the Minister for his Answer. What steps will the Government take, through the recruitment and vetting process, to ensure that adjudicators are genuinely independent and impartial, and to guard against the new authority becoming dominated by individuals who have publicly campaigned in favour of open borders or who have otherwise taken partisan positions on immigration policy?

[Lord Hanson of Flint (Lab)]

I remind the House that the backlog stands at over 151,000, but that that has not happened in just the last two years. It is the result of 14 years of individuals not being processed, dealt with or sorted by the noble Lord and his party. To answer his question, as of now, we will ensure that individuals are vetted, that there are strong safeguards in place to ensure high standards, and that those making decisions in the independent appeals authority will be entirely independent of the Executive. He will not have to wait too long because, tomorrow, on 30 June, we will publish a Bill setting out the matters that were trailed in the immigration White Paper in November. The noble Lord’s party will have the opportunity to test that Bill through both Houses of Parliament, and I assure him that that independence is critical and will be maintained.

[Baroness Deech (CB)]

My Lords, there is currently an issue with immigration tribunal judges that will be exacerbated, especially when it comes to public confidence, in that the tribunal judges, and no doubt the adjudicators, are not declaring their interests. We, as parliamentarians, have to declare our financial interests and memberships. It is high time that tribunal judges and adjudicators are made to list their financial interests and any controversial, or even uncontroversial, organisations that they have joined; this would fit within the judicial conduct guidance. At the moment, we do not know whether those judges should be recusing themselves and what interests they have, because they are not declared and they should be on a register, in the same way that ours are.

[Lord Hanson of Flint (Lab)]

I am grateful to the noble Baroness for raising that point. If she will allow me, can I reflect on it? The issue is self-evidently important, but I cannot answer her question right now. I will make sure that the appropriate policy Ministers in the Home Office and the Ministry of Justice examine those issues in detail.

However, I can tell the noble Baroness that we are doing this because the demand for adjudications is far outstripping what we can currently offer. We have around 26,000 additional funded places for sittings this year, so the backlog of over 151,000, which I mentioned earlier, is simply unsustainable. We have to take action on that. The backlog has not just appeared from nowhere; it has appeared through the inaction of the previous Government. We are committed to restoring it and that is what the Bill to be produced tomorrow will begin the process of doing.

[Lord German (LD)]

My Lords, following the last question, I declare my interest: I am supported by the RAMP Project. Can the Minister tell us whether the adjudicators will need to possess specific legal qualifications or accreditation in asylum and human rights law? On the process of getting the adjudicators in place, how long will the training programme take?

[Lord Hanson of Flint (Lab)]

We are moving at quite a pace. The Bill that establishes the new authority will be published tomorrow and has to make its way through both Houses of Parliament. The principle behind it is that there will be a body that is fully independent of the Government and staffed by professional trained adjudicators, with safeguards to ensure high standards, so that appellants are able to receive impartial and independent redress, as is required under our obligations. We intend still to meet our international obligations as part of this change, which I hope will give comfort to the noble Lord. He will have an opportunity to see the Bill when it is published tomorrow. At some point, this House will have the opportunity to examine it in detail. For the moment, I suggest that he waits for the Bill to be published.

[Baroness Chakrabarti (Lab)]

My Lords, I remind the House that there are lawyers on all sides of the House who have spoken on all kinds of immigration measures. Nobody impugns their ability to continue to give legal advice or, indeed, sometimes to sit in judicial office. I agree with my noble friend that there is a crucial need to deal with the backlog. Can he say a little more about the legal qualifications for the new independent adjudicators? That is more important than whether they were once a member of Amnesty International—which, by the way, is a good thing to be.

[Lord Hanson of Flint (Lab)]

The Bill will be published tomorrow and will establish the framework for the body and examine in detail the issues my noble friend has raised. My right honourable friend who is dealing with these matters is cognisant of the fact that the independent body will be responsible for monitoring qualifications and standards. I am happy to answer questions on that once the Bill has been published. I am not in the position today to be able to do that.

[Lord Harper (Con)]

My Lords, I accept that the Minister is a little frustrated, but this is what happens when you trail things in the media ahead of a Bill being published. He cannot expect people not to have questions. If he does not want questions in advance, he should not do the trailing. In the trailing in the media, it was said that the body the Government are looking to establish will be like the magistracy. The problem in this case is that people often come to asylum decisions with very clear views, either against people claiming asylum or very pro people claiming asylum. If the adjudicators are members of the public, how will the Government guard against them bringing those preconceived ideas to determining these important legal questions?

[Lord Hanson of Flint (Lab)]

If the noble Lord, as a past Cabinet Minister, has never trailed anything, I trust that he will stand up now and tell me that that is the case. I rest my case. But he raises an important point. The key issue is that all members of the new independent immigration appeals authority will have the required training. Decision-making expertise to make determinations will be part of that process of skills and experience. The body will be established in accordance with the Cabinet Office’s Public Bodies Handbook. We are currently considering accountability and governance structures, including the body’s relationship with Parliament and with the Government. We will safeguard independent decision-making. I return to the trailing: the noble Lord has only 23 hours to wait for the publication of the Bill. I look forward to engaging with him on it in due course.

[The Lord Bishop of Manchester]

My Lords, picking up on the point about training, can the Minister tell us what support will be available and what training will be offered to the adjudicators around religious literacy? Decisions regarding people’s cases often hinge on claims of religious persecution and involve people who have deeply traumatic pasts. They must, therefore, be well-informed and accurate.

[Lord Hanson of Flint (Lab)]

It is an extremely important point. It is self-evident that we want the individuals who undertake this very serious role to have the required training and support to do it in an effective way. All members of the new independent immigration appeals authority will have the required decision-making expertise to make determinations on appeal cases through a comprehensive training programme and will possess a range of skills and experience. The organisation of that will be down to the new body. The Bill that we are producing tomorrow will establish that body, which is independent of government. The key point I bring the House back to is that we have a backlog of around 151,000. We currently have capacity for around 26,000 extra sittings that we have put in place. It is not possible to end the backlog without significant changes and that is the purpose of this policy.

[Lord Pannick (CB)]

My Lords, I quite understand that the Minister cannot give us the details until the Bill is published tomorrow, but he will know that we currently have a body of independent impartial adjudicators who deal with immigration matters. Of course, I understand that we need more of them to deal with the backlog and the delay, but what I do not understand is why, in principle, the Government think that the current arrangements for the appointment of adjudicators are inadequate.

[Lord Hanson of Flint (Lab)]

I pay tribute to those who are doing this difficult and challenging job. We owe them a debt of support, and this is not critical of the way in which they have approached their role. But given the level of training and support required, and that the time that we can give to get additional judges is not sufficient to be able to meet the objective, we are looking at widening the pool and this is the start of that process. The establishment of the new body will put that revised process in place. We ran a targeted call for evidence from March to May this year and sought input from individuals. We have ensured that the judiciary has been kept fully informed of relevant developments and communications. I am hoping that once the Bill is produced and when it reaches this House—because it will be in the House of Commons first—the noble Lord can put some of those issues to the test.

[Lord Murray of Blidworth (Con)]

My Lords—

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords—

[Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)]

It is the turn of the Labour Benches next, then the Conservative Benches.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, as my noble friend knows, in my advancing years I have become more understanding, particularly of those who find themselves, sadly, in opposition. The Front-Bencher opposite clearly got up early this morning to put in this PNQ so that he could have a go and attack the Government. Can my noble friend say what positive proposals the Opposition have put forward for reducing the huge backlog that they created?

[Lord Hanson of Flint (Lab)]

I try to be fair when dealing with the Opposition—if possible. In the years up to the general election in 2024, they suppressed the number of activities taking place in this field, they reduced the number of appeals being brought forward, they took action which did not address the backlog, and every action they took created a further backlog, so the 151,000-plus backlog that we have now is entirely the responsibility of the previous Government, including, potentially, the next speaker, who was a Minister in the Home Office. I presume that when he stands up, his first question will be: how do I apologise for the backlog?

[Lord Murray of Blidworth (Con)]

We have a backlog of 151,000 cases. Will the Minister tell us whether it is the plan to transfer the backlog from the First-tier Tribunal Immigration and Asylum Chamber to the new independent authority that is being set up under the Bill? If it is not the proposal to transfer the backlog to the new authority, on the current rate of case resolution, the First-tier Tribunal will still be hearing cases into the 2040s.

[Lord Hanson of Flint (Lab)]

The noble Lord has detailed knowledge of this matter because he was responsible for the policies that led to the backlog in the first place. The Bill tomorrow will establish a new body. We are looking at how we merge the new body. There will be a parallel operation for some considerable time, but the purpose of the Bill that will be published tomorrow is to establish a new framework to ensure that the backlog built up when he was a Minister is eradicated. That is the policy objective of the Government.

[Baroness Butler-Sloss (CB)]

If I may add to the questions on training, will the new people working have some training on genuine cases of modern slavery and human trafficking?

[Lord Hanson of Flint (Lab)]

Again, self-evidently, it is important that individuals who make determinations about life-changing matters have the support to understand the reasons why those decisions have to be taken, and the mechanisms of training and support that are required to do that. The noble and learned Baroness raises important points about modern slavery and our international obligations. That is for the Government to determine. I am in the difficult position of not having the Bill until tomorrow, but within it the opportunity for the successor body to develop the types of policies that she has mentioned is one that I would wish to see and encourage.

Business of the House

Monday 29th June 2026 Lords Chamber

Announcement

15:35

[Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)]

My Lords, I thought it would be helpful if I updated the House on the plan for the consideration of the National Security (State Threats) Bill tomorrow. I will email all noble Lords with this information shortly to save a rush to write it down, and to help colleagues not currently present in the Chamber.

Committee and all remaining stages will take place tomorrow. A Marshalled List has been issued and the Whips’ Office is preparing groupings today in the usual way. Committee will take place as normal, with debates on groups of amendments. However, given that the Bill has been fast-tracked, the usual channels have agreed that issues should be resolved in Committee and that Report could potentially be taken formally. This means that, if noble Lords feel that they need to press amendments, Divisions should take place in Committee. I know the Minister has been engaging positively across the House to address concerns.

If the Bill is unamended in Committee, we will proceed to a formal Report stage and Third Reading. After that, we will debate the statutory instrument and the associated Motion on the Order Paper before taking a Statement on steel trade measures as the last business.

If the Bill is amended, it will need to be reprinted and prepared for Report. Once the Bill is reprinted and in the Printed Paper Office, there will be a 30-minute window for noble Lords to table amendments for Report, which I expect to be debated in one group. I will make a further announcement tomorrow, and the today’s list document will be reissued and precise deadlines will be advertised on the annunciator. Given the time needed for reprinting the Bill, the tabling windows and the other preparations, the SI and the Statement would need to be taken after Committee and before the remaining stages, but hopefully no amendments will be tabled before Report and it will be taken formally.

My noble friend Lord Hanson of Flint remains happy to discuss the details of the Bill ahead of tomorrow’s debates, and noble Lords should find that useful.

Planning and Infrastructure Act 2025 (Consequential Amendments) Regulations 2026

Monday 29th June 2026 Lords Chamber

Local Government (Structural and Boundary Changes) (Control of Disposals etc.) (Amendment) Order 2026

Motions to Approve

15:37

Moved by

[Baroness Taylor of Stevenage]

That the draft Regulations and Order laid before the House on 27 April and 14 May be approved.

Considered in Grand Committee on 23 June.

Motions agreed.

Nuclear Safeguards (EU Exit and Fees) (Amendment) Regulations 2026

Monday 29th June 2026 Lords Chamber

Motion to Approve

15:38

Moved by

[Baroness Wheeler]

That the draft Regulations laid before the House on 23 April be approved.

Considered in Grand Committee on 23 June.

[Captain of the King’s Bodyguard of the Yeomen of the Guard and Deputy Chief Whip (Baroness Wheeler) (Lab)]

My Lords, on behalf of my noble friend Lord Vallance, I beg to move the Motion standing in his name on the Order Paper.

Motion agreed.

Media Green Paper

Monday 29th June 2026 Lords Chamber

Commons Urgent Question

15:40

The following Answer to an Urgent Question was given in the House of Commons on Wednesday 24 June.

“I thank the honourable Gentleman for bringing this Urgent Question to the House and giving us an opportunity to discuss this important advancement. Yesterday the Government published a Green Paper, Watch this Space, to set a new strategic direction for media policy in the UK. The way we consume broadcast media is changing, and television is undergoing a profound transformation, having moved away from a system of traditional channels to a far more fragmented system in which people access TV on demand and on video-sharing platforms. Young people, in particular, are far more likely to access media on their phones and tablets through streaming services and platforms, and the Government believe that we are not adequately equipping that generation with access to high-quality media.

There are three key areas where we intend to act. The first is digital prominence, where we are exploring legislative options to require social media platforms and connected TV interfaces to make public service media content, particularly trusted news, highly visible and easy to discover. This is not about promoting government narratives or only the BBC; it is about ensuring that brilliant journalism from many of our news publishers—both local and national—and broadcasters can get in front of the public. For that reason, we are also opening a conversation about how we define ‘public service broadcasting’ in the modern age.

Secondly, the transition to internet TV is where we are outlining plans for a managed shift away from terrestrial broadcasting to internet-delivered IPTV. We know this is an essential switchover in terms of both access and cost, but we want to ensure that the transition is managed responsibly and that nobody is left behind. We are therefore consulting on two dates for the switchover: 2034, when current licences expire, or 2044, with any date contingent on a full and watertight transition plan.

Finally, we are protecting major sporting events. We will add on-demand and streaming rights for major sporting events such as the World Cup and the Olympics to the listed events regime, protecting free universal fan access as viewing habits shift online.

Taken together, these proposals set out a vision for a future TV and media policy in which everyone can access world-leading public service broadcasting content, including children’s and news programming, away from the misinformation and disinformation that has defined too many of our online lives. This Government will ensure that no matter where people access their TV, they are given access to high-quality programming that informs, educates and entertains, and this Green Paper is the next stage of our ambition”.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, there is much to be commended in the Green Paper, not least adding on-demand rights to the listed events regime which we have been discussing in the Sporting Events Bill. As the Government recognise, some of the questions in there are thorny ones which will need careful consideration, not least how we ensure greater prominence for trusted news sources in our increasingly crowded media environment.

When this Urgent Question was taken in another place last week, one of the Labour members of the Culture, Media and Sport Committee urged the Secretary of State to consider “reining in GB News”—a question that the Secretary of State rather sidestepped. Can the Minister provide a bit more reassurance that that is not the Government’s direction of travel? Do the Government consider GB News a trusted news source?

[The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)]

The noble Lord makes an interesting point. The whole idea of prominence is to ensure that people know the difference between trusted sources of news and opinion, and that is where the prominence issue comes in by looking at ways we can make sure that such sites come further up in the searches that people make. On the specific question, I would say it would depend whether the item on a particular news programme was opinion purporting to be fact or more factual.

[Baroness Bonham-Carter of Yarnbury (LD)]

My Lords, we welcome the Green Paper, which rightly recognises the severe financial challenges facing our PSBs, vividly exposed by the recent devastating cuts at the BBC. We have long proposed on these Benches that the BBC World Service should be fully funded directly from an FCDO budget, freeing up millions of pounds per year. The World Service is so important both for underpinning soft power and for the security implications of guaranteeing a source of trusted news in a polarised world. Will the Minister take this on board and tell us what conversations her department is having with the Foreign Office on this really important matter?

[Baroness Twycross (Lab)]

One of the real strengths of the BBC is that it is such a trusted source of news, and that is behind a lot of the issues within this. On the ongoing discussions with the FCDO, I am happy to meet the noble Baroness to discuss that. As she is aware, another Minister in the department deals with this. The Secretary of State has referred to the BBC’s overseas coverage as

“a light on the hill”,—[Official Report, Commons, 16/4/26; col. 992.]

and somewhere that people go to, so we do recognise the real importance of the World Service.

[Lord Birt (CB)]

My Lords, I too welcome the Green Paper because, frankly, Rome is burning. Two of the UK’s greatest, most respected and historic achievements are threatened by the globalisation of media—a lively, challenging and diverse press, which we have had for centuries, and an unmatched tradition of public service broadcasting, encompassed by Channel 4 and ITV, as well as the BBC, which we have had for almost a century. For over a century, through those means, we have created a very effective national debating chamber and brilliantly captured our national culture, talent and capability. Does the Minister accept that radical measures will be needed to arrest these trends?

[Baroness Twycross (Lab)]

The Government are fully behind the BBC, both at the present time and as a future source of trusted news and content. Through the charter review process, a lot of these conversations are happening and we are looking in particular at how we can ensure that the funding model is sustainable while being fair and affordable for households. We are clear that,, if we can get sustainable funding and make sure that we get the prominence regime on the internet as well as on television screens, then we should go a long way to ensuring a strong future for our press and media. I would probably draw back a little from saying Rome is burning. There is so much good practice out there that we should celebrate, but I appreciate that we need to see the warning signs of what might come down the road, which is where the paper comes from.

[Baroness Armstrong of Hill Top (Lab)]

My Lords, the Green Paper is really welcome. If this is got right, then digital switchover will mean many more people in this country will get sufficient media and digital understanding to be able to use what they need to improve their lives, so this is much bigger than many people have been thinking. I welcome that and hope that the department will fully involve those who are really concerned about digital inclusion in the consultation so that we get it right for everyone.

[Baroness Twycross (Lab)]

The intention is to make sure we get it right for everyone. If people have not read the Green Paper, it is worth the read; I thought it was a really interesting document. A striking point made in the paper is about information being part of public infrastructure, and recognising that is critical. In terms of the switchover from digital terrestrial television to the internet provision, there is a question about whether that should be in 2034 or in the decade afterwords. It is not just critical for people and their news; it is also about how people get jobs and apply for pretty much anything. The world is now online, and we need to do what we can to make sure we listen to those people as part of this process.

[The Archbishop of York]

My Lords, none of us underestimates how hard it will be to preserve and protect the place of what we must now call public service media in this new world, but I would contend that it is impossible to understand our world at the moment if we do not understand the place of faith in the affairs of the world. It is impossible to understand our own nation’s culture, literature and law without understanding the place of faith; I do not think we can understand ourselves without it. But I notice that, in the Green Paper, there is little or perhaps no mention of the place of faith, which has always been such an important part of the public service broadcasting economy. I wonder whether the Minister would like to mention—I know how difficult it is—what steps are being taken to make sure this is preserved.

[Baroness Twycross (Lab)]

I will feed the right reverend Prelate’s point back. I think it is a really interesting point. I know that having knowledge of the Bible and Bible stories meant that I was much better equipped to understand literature. I think there is that cultural aspect, as well as the faith aspect, to it. The main thrust of the paper was around making sure nobody was left behind in the move towards digital, but I will feed those points back.

[Baroness Stowell of Beeston (Con)]

My Lords, a trusted source of news that everyone can rely on is good for society, but we should not kid ourselves that that is what currently exists. Levels of trust in the BBC and other mainstream broadcasters are not universal across all demographic groups. The cause of that is the failings of the broadcasters and that is what pushes these people in search of other sources of information—not all of which is bad, I must add. Before any decision is made on giving greater prominence to broadcasters, will the Minister require them, especially the BBC, to publish a breakdown of their audience trust scores by demographic group, using a modern model, such as that deployed by More in Common or Yonder, that goes deeper than just age and socioeconomic groups? Will she demand from the BBC especially that, for any prominence to be awarded, it must first improve its performance among those groups?

[Baroness Twycross (Lab)]

The noble Baroness makes a really interesting point. I hope the noble Baroness will take part in the consultation, but I will feed that back. We are clear that a free and fair media is essential to our democracy; part of that is people actually accessing information, and that trust piece has to go beyond just the surface level. I will feed the points back.

[Lord Young of Acton (Con)]

My Lords, the Green Paper does not simply propose that the prominence regime be confined to public service media, including public broadcasters; it suggests that it should also be extended to news publishers. Therefore, if some news publishers are going to be included in the prominence regime and given various privileges, and social media companies will have to promote the content of those news publishers, how are those news publishers going to be selected? Can the Minister assure the House that this is not a Trojan horse for forcing some news publishers to bend the knee to a state-approved press regulator, such as Impress?

[Baroness Twycross (Lab)]

This is entirely why we have a consultation period that runs to 31 August. As part of the consultation, we will work and engage with relevant parties to determine the criteria that we use. We will decide the criteria for a trustworthy news provider in an open and transparent manner. On protecting media freedom, this is not about censorship or people having to take a different view; this is about making sure that the general public—and we as the part of the general public with a particular interest in news—can understand what is more likely to be high-quality content, and ensuring that that comes further up the search mechanisms.

Nottingham Maternity and Neonatal Services

Monday 29th June 2026 Lords Chamber

Statement

15:52

The following Statement was made in the House of Commons on Wednesday 24 June.

“With permission, Madam Deputy Speaker, I will make a Statement on the independent review of maternity services at Nottingham University Hospitals NHS Trust.

Donna Ockenden’s review is the largest into a maternity service in the history of the NHS. The nature and sheer scale of the failings it exposes are horrific. It uncovers dangerously and tragically deficient care at almost every turn. Its findings and conclusions are chilling.

The report covers 13 years, including accounts from 838 members of staff and, crucially, the experiences of 2,536 affected families. I met a small number of those affected families last week, and I felt numb after hearing the depth of their pain. I felt even more numb when I considered how many families not in the room went through such trauma too, and the forgotten children who survived but live every day with the consequences of maternity care failings.

I felt devastated that so many women and babies, as well as their fathers and other family members, had suffered injury, death and lasting trauma while under the care of the NHS. Now having met the families, and having seen the report, I feel appalled by the neglect, incompetence, racism, discrimination, contempt and harassment that so many suffered. I feel heartbroken to know that, so many times, when they tried to raise the alarm about their care, they were ignored, sneered at, disbelieved, blamed and lied to. How on earth could this have happened? There is no single answer, but Donna Ockenden shines a light on what was going on.

First and foremost, women were not listened to. Donna Ockenden says that the staff shortages and lack of training in Nottingham were among the worst she has ever come across. Bullying by doctors and senior midwives was rife, which meant that staff who tried to speak up were intimidated and ridiculed. There was a culture of cover-up at the highest levels of the trust, and there were ineffective and inadequate responses from regulators.

Perhaps most damning of all, for years the trust ignored evidence of clinical and cultural flaws in both internal and external reviews that it had itself ordered. When I met Donna Ockenden last week, she told me that those inquiries were ‘diligent’ and of ‘good quality’ but that they were effectively swept under the carpet by the board. That refusal to act is unforgivable.

Donna Ockenden and her team deserve huge credit for their forensic and compassionate approach, as does my honourable friend the Member for Sherwood Forest (Michelle Welsh), herself a harmed mother, as well as Members for neighbouring constituencies who have walked side by side with their constituents through years of anguish and struggle.

However, the driving force behind the review has been the affected families themselves. They have demonstrated more patience, more courage and more tenacity than one might imagine is possible from those dealing with broken hearts that will never mend. Though each of their experiences is unique, one feature is common: at the very moment when they were at their most vulnerable, they placed themselves and the lives of their unborn babies in the hands of the NHS—and the NHS failed them catastrophically.

To all those who have suffered so appallingly, I say today, on behalf of the NHS: I am sorry. I am sorry not just for the failures, or the heartless and undignified treatment, but because your cries of concern went unheard for too long—and so the Government will act. We will act by taking immediate steps, including to expand Martha’s rule to all maternity and neonatal settings so that parents can demand a second opinion if they feel their concerns are being ignored.

I know that some people may want me to accept all the review’s recommendations today, but in the past too many recommendations have been accepted and then have sat on a shelf gathering dust, and we have seen more deaths and more suffering. I do not want to let down the families I met in Nottingham, or bereaved parents anywhere else in the country. I want to use the National Maternity and Neonatal Taskforce, which I chair, to create a comprehensive action plan to be published by the end of this year that will address all the national-level recommendations from this review and others. I am confident that work will be welcomed by all those midwives, obstetricians, paediatricians and other healthcare workers who strive every day to make sure that babies are born safely and that women receive outstanding levels of care.

It is clear that, in case after case, families felt that regulators, including the General Medical Council, the Nursing and Midwifery Council and the Care Quality Commission, were more concerned with protecting clinicians than with providing accountability. That is damning and that is wrong. As one grieving mother told me:

‘They put the fox in charge of the hen house’.

Clinicians and trust leaders must know that their behaviour will be properly scrutinised and that their actions will have consequences. We must meet the test of the Nottingham victim who told me last week that ‘accountability drives action’.

We are making changes to the CQC, one of which is to extend the cut-off period to initiate proceedings from three to five years so there is more time for families to bring cases. I will also call in the chair and chief executive of the GMC to hear directly their account of the failures at NUH. Let me be clear: if their response falls short, things will change at the GMC.

From speaking to families in Nottingham, I know that there is real and understandable anger that some leaders and clinicians at the centre of this review were able to avoid giving evidence. Today, I make a commitment that, when passed, we will use the Hillsborough law’s duty of candour to ensure that witnesses in upcoming reviews of maternity service failures, including those in Leeds and Sussex, can be forced to provide evidence. That change will make sure no one is able to refuse to co-operate in the search for accountability and justice ever again.

There is so much in the stories of the families in Nottingham that is shocking and heartbreaking, but the way the bodies of their loved ones were handled by hospital mortuary services revealed a level of disrespect and a lack of humanity that—I will be honest—left me utterly aghast. The details are disturbing, but they need to be heard to understand the gravity of what families were confronted with: deceased babies referred to as a ‘specimen’ or ‘sample’; a baby placed into a mortuary space already occupied by an unknown and unrelated adult; a baby disposed of as clinical waste against the express wishes of their parents; and a baby kept in a domestic fridge in a bereavement room. The emotional and psychological effect of those dehumanising failures was to layer the most profound disrespect on the most unbearable distress. There is also evidence that the trust actively decided not to report failings in mortuary care to families.

As honourable Members will know, there is an active police investigation and arrests have been made, which limits what I can say. As a start, however, I have asked NHS England to write to trusts to make sure these appalling experiences are not happening elsewhere in the NHS. I confirm today that the Human Tissue Authority will require all mortuaries to review internal records going back 10 years to ensure all incidents have been logged and reported. I have instructed them to report the findings directly to me by 16 October.

When I met the Nottingham families last week, they also raised with me the issue around what are known as secondary victims. In maternity settings, fathers, partners and others are actively encouraged to be present to support mothers through labour and delivery. However, the law does not allow them to bring their own claims for the psychiatric illness suffered as a direct result of witnessing their partner or baby suffer injury or die. I have therefore asked David Lock KC to work with my officials to consider that important issue as part of his wider work on clinical negligence.

Donna Ockenden acknowledges that NUH has not waited for her findings to be published to start making improvements. I will speak to the chief executive next week to interrogate the trust’s response and make sure there is a proper plan in place for implementing the recommendations speedily and effectively. But there is a long road ahead before NUH fully addresses all the issues and before it can possibly regain the full trust and confidence of the communities it serves.

I close where I began: with the families. Nothing can make up for what they have gone through, but this report is a tribute to their resilience and tenacity. I say to them directly: you had to drive this for so long, but you are no longer driving this alone. We are with you and we will not stop until you have the accountability and the justice you deserve. I commend this Statement to the House”.

[Lord Kamall (Con)]

My Lords, I thank the Minister for the opportunity to ask questions on this Statement on the report, which raises many troubling issues. I add my thanks to Donna Ockenden and her team for their extraordinary work in conducting what has been the largest review of maternity services in the history of our NHS. Our thoughts are with the thousands of mothers, babies, fathers, partners and families whose experience lies behind this report. It is only because of their courage and determination that these failures have finally been brought to light.

When, in the past, I have spoken to families who feel that they have lost a relative or friend due to medical negligence, they often say to me that they are reluctant to pursue justice, since it adds to their grief. They also point out that they often face hostility for raising concerns, as they are seen to be criticising the NHS. This is a terrible indictment. No organisation, including the NHS—perhaps especially the NHS—should be above criticism. The findings expose years of failures in leadership, governance and culture, not just a few isolated cases of clinical failure. Women were not listened to, families were dismissed, and staff were unable to raise concerns in an environment where bullying and intimidation were embedded. Most disturbing of all, the report noted that evidence of these failings already existed, yet action was repeatedly delayed or avoided.

However, we on these Benches wish to be constructive in our response, since maternity safety has challenged Governments of all political persuasions. Will the Government and the healthcare system introduce measures that genuinely improve safety and strengthen accountability, and will they listen to women and families? If so, they will have our support. But the real test will be whether the report leads to meaningful and lasting change across every maternity service in England, because, regrettably, many of the report’s conclusions are not new. Previous inquiries in Morecambe Bay, Shrewsbury, Telford and East Kent identified many of the same underlying themes: women not being listened to, poor communication, inadequate staffing and weak governance. This report must become the point at which recommendations are accepted and demonstrably delivered.

I have four questions for the Minister. First, can she outline whether the national implementation plan will include clear milestones and regular public reporting, so that Parliament, families and clinicians can judge whether progress is being made? Secondly, how will boards be held accountable for creating an environment and a culture in which openness and patient safety genuinely come first? Thirdly, what steps are the Government taking to ensure that maternity services have the workforce training and leadership they need to provide safe care? I understand that the former Secretary of State felt that there should be more of a focus on technology than recruitment. That is not necessarily a bad thing, but can the Minister explain how this would work in maternity care?

I also welcome the Government’s recognition of the distressing findings on mortuary services. The treatment described in the report represents a lack of dignity and compassion towards bereaved families. The actions announced are important and I look forward to the Minister reassuring the House that the lessons from these failings will be embedded across the NHS and not just confined to Nottingham.

Fourthly, the Minister will be aware that Henrietta Hughes, the Patient Safety Commissioner, is increasingly frustrated that, having proposed a system for redress and compensation for those poor victims of valproate and pelvic mesh, there has still been no movement from the Government. Can the Minister update us on that?

No woman’s experience of pregnancy or childbirth should be determined by their ethnicity, background, language or confidence in navigating the healthcare system. This report highlights clear disparities. The evidence of racism and discrimination identified in the review is deeply concerning and underlines the importance of ensuring that every woman receives safe, personalised and compassionate care. This is not asking for special treatment for anyone; it is about making sure that patients of all backgrounds are treated equally.

Trust in our maternity services will not be rebuilt through apologies alone. It will be rebuilt when women know that they will be listened to, when families see concerns acted upon rather than dismissed, when staff are empowered to speak up without fear, when boards are judged by the safety they deliver and when Parliament sees clear evidence that today’s commitments have become tomorrow’s reality.

The families of Nottingham and other maternity scandals have carried this burden for far too long. They should never have had to fight so hard simply to be heard over many years. They now deserve our determination that this report marks a genuine turning point, and, if the Government achieve that, they will have the support of all Benches. I look forward to the Minister’s response.

[Baroness Pidgeon (LD)]

My Lords, the Statement before us today from the Secretary of State in the other place is distressing reading, as is the report by Donna Ockenden. This review shocks us all to the core and must shake the Government into real action at every level of our health service and its regulation. Staff concerns were dismissed, a board did nothing and regulators failed in their duties. There was a simple refusal to listen to women and their families, causing such loss, trauma, negligence and damage, alongside bullying, organisational failures and the horrendous misplacing of bodies. Words just cannot express this horror. What brave and resilient families to keep fighting for justice; I thank them all.

I heard the deeply moving testimony at the press conference last week about the mental health legacy for bereaved parents. One explained how she had lost all trust in the NHS and had the constant, triggering experience of having to engage in her daily life with the organisation she holds responsible for the loss of her baby. It is hard to imagine.

This review, and the upcoming wider review from the noble Baroness, Lady Amos, must draw the line. This has to stop. Mothers, babies, children and families must have confidence that they will be provided with first-class maternity services, wherever they live in our country. There must be quality services that meet their needs whatever their age or background, with respect and dignity at the heart.

I welcome the taskforce, chaired by the Secretary of State. It will be crucial to ensuring the implementation of recommendations at every trust and to ensure that whistleblowing throughout the NHS works. An independent patient voice must remain part of our health service to help hold NHS trusts to account. We will revisit this point with the NHS Bill later this year.

I understand that, in 2018, over 50 members of staff wrote to the chair of Nottingham’s board, stating plainly that there were significant safety concerns. The letter was not even discussed by the board—it went to a sub-committee and was buried. In 2023, the chief executive found that the trust had never formally investigated staff shortages. I cannot get my head around this, as someone who has sat on many different boards over the years. This is not good practice. I therefore ask the Minister what urgent work the Government are undertaking to assess the competence of NHS trust boards. What changes may take place to strengthen them and to ensure that they carry out their serious role and responsibilities thoroughly and robustly?

The Government must also take action to strengthen whistleblowing powers in the NHS. My Liberal Democrat colleagues in the other place have tabled amendments to the Health Bill which would provide new powers for coroners and medical examiners to report suspected health failings. Will the Government look to support those amendments to strengthen whistleblowing in the NHS?

Finally, families need to have confidence in their local maternity services, and those services need to all be at the highest standard. Will the Government commit to a maternity rescue package to deliver this, including one-to-one midwifery care for every woman in labour and consultant obstetricians present 24/7 on every labour ward?

A big step change is needed to transform maternity services across the country that every family and every individual can have confidence in. I look forward to the Minister's response.

[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)]

My Lords, we find ourselves deeply affected, as we have heard from both Front Benches. I am grateful for the tone and for the acknowledgement of the experiences of bereaved and harmed families who are at the absolute centre of this. The noble Baroness, Lady Pidgeon, said that she could not get her head around many of these things; I am sure we are all in agreement on that. I share the views of both Front Benches. I am grateful for the support for action. I absolutely agree with the noble Lord, Lord Kamall, that there is only one test: action. As the noble Baroness, Lady Pidgeon, said, it is also about confidence and step change. We all want to get this right. It is not recent; it is not isolated—as both Front Benches identified. It should not be the case that those who are bereaved and harmed have had to show such courage and determination. This is an impossible circumstance that people are in. The noble Lord, Lord Kamall, said that people understandably often do not wish to add to their distress. The fact is that women, babies and families have all been terribly let down, not as a one-off but by a system—a system that failed to listen, failed to be transparent and, to make it even worse, failed to provide the truth when things went wrong. We are looking at 13 years, since 2012. This is a sustained approach that was totally unacceptable.

On behalf of the Government, I want to say how deeply sorry I am, and the Government are, for what every family has suffered and for those who have been affected. I also want to thank parents and families for their courage and determination for sharing their experiences. Without that, Donna Ockenden and her team—to whom I express great gratitude—could not have done the work that they did. They have been diligent; they have shown compassion and great detail, and it will make a difference.

To the noble Lord, Lord Kamall, I can say that, certainly, the Government are going to deliver a clear and deliverable plan by the end of the year. As the noble Lord and the noble Baroness have asked for, these will indeed be system-wide improvements, so that everyone can have full confidence across maternity and neonatal services—and, yes, it will have milestones and transparency. How will this be done? The noble Baroness, Lady Pidgeon, has spoken about the taskforce. That is important. It is personally chaired by the Secretary of State. There is a very good reason for that—to give the absolute authority of his office. I am the deputy chair of that taskforce. It brings together many groups, including through the expert reference groups, but, crucially, it includes affected families and Michelle Welsh, MP for Sherwood Forrest, who would describe herself as someone who has been harmed in this terrible catalogue of heartbreaking experiences. She is our first appointed maternity adviser to the Secretary of State.

How will we deliver through the taskforce a clear action plan that will make a difference? We will bring together the national recommendations from this review and the independent review from my noble friend Lady Amos, rightly established by the former Secretary of State, which will report this Wednesday. The work will also look at previous reviews. It is right to say that there have been many previous reviews and lessons clearly have not been learned, which is totally unacceptable. It will be our duty to deliver that lasting change through the National Maternity and Neonatal Taskforce.

I have some immediate responses to the points raised by noble Lords on the Front Benches. The Secretary of State announced last week that we are extending Martha’s rule straightaway to all maternity and neonatal services. That means that every parent or caring person supporting a birth can request a rapid review from an independent medical team if the condition of a baby or mother is deteriorating and they are concerned that it is not being responded to. This is a very important step on the point of real listening.

I was also absolutely shocked to read the findings on mortuaries. They are chilling and deeply distressing. It is hard to believe that these things could ever be allowed to happen. There is a live police investigation, and two people have recently been arrested—noble Lords will appreciate that I cannot say more. Two immediate actions are also being taken: the Human Tissue Authority is conducting an urgent national review of mortuary incident reporting and NHS England, on instruction from the Secretary of State, is writing to all trusts to ensure that they consider the findings on mortuary care in this report.

I will pick up some of the questions asked by the Front Benches. On the point about boards being accountable for an open culture and patient safety coming first, that is their job. Noble Lords will not be surprised to hear that there has been a change of leadership. This week, the Secretary of State is meeting the chief executive and interim chair to discuss this point. Boards are held accountable to ensure that there is a patient safety culture through strict duties, independent oversight and targeted regulatory assessments. Clearly, this was not the case here and in other areas, but I welcome the change in leadership and their commitment to delivering a change of culture. I am grateful to Donna Ockenden for recognising that there have been improvements, though she is right that more needs to happen. As I said earlier, this is not just one random situation in one area—it goes so much deeper than that.

The noble Lord, Lord Kamall, asked about workforce. One of the recommended actions from the Nottingham report is that a perinatal workforce tool be developed. This will be considered by the taskforce along with all the other recommendations, as we have discussed.

The noble Baroness, Lady Pidgeon, asked about the urgent work to assess the competence of NHS trust boards. For example, the Nottingham trust has a learning and improvement board to oversee the required improvements, chaired by Michelle Welsh MP. It is supported by a family board and a staff board, which is the model we need to see.

On strengthening whistleblowing as part of the taskforce’s work, we will be looking at all parts of the health system when things go wrong, including how accountability is established and, if necessary, strengthened. On a maternity rescue package, continuity of care, referred to by the noble Baroness, Lady Pidgeon, is an action in the report from Nottingham and will be considered closely by the taskforce.

The noble Lord, Lord Kamall, asked about sodium valproate compensation. The Patient Safety Commissioner rightly continues to press on that. I do not have a specific update for the noble Lord; as soon as I do, I will be very glad to write to him.

It is impossible not to be affected by this report, but I consider it a luxury that I am affected in how I feel rather than in what has happened to me. Again, I apologise for myself and on behalf of the Government for the harm, losses and trauma that continue to this day. I commit us to doing all we can to make sure this is not repeated, and I am grateful to have the support of the Front Benches in doing this.

16:12

[Baroness Chisholm of Owlpen (Non-Afl)]

This is the most appalling thing that has happened. I have great respect for the Minister, and I thank her for letting us know about some of the action plans going ahead. What has gone wrong with a profession where the professionals have seemingly no empathy for those they are caring for? Is this about society? Have we given up putting others first? Have we become a society where we do not listen and do not treat each person as an individual with needs individual to them? That is what I was taught when I was given my nursing training. Is that being taught now? Have we forgotten how we behave towards individuals when they are asking for help? Do we not listen and do everything in our power to make them feel better? Government cannot do everything; it has to be society that can, in some way, teach people in these very important roles how they treat the human beings in front of them.

[Baroness Merron (Lab)]

I certainly agree. Every woman, in the case of maternity services, deserves safe and compassionate maternity care. That is why we are so determined to drive urgent improvements in maternity services. It is worth noting that this review—the largest ever of its kind, as the noble Lord, Lord Kamall, said—considered the experience of more than 2,500 families and 830 staff. I think it is important that your Lordships’ House also remembers how many staff have found themselves in situations they would never have wanted to be in. I am sure that the noble Baroness, like me, pays great tribute to the many NHS staff who are in the majority in doing their work in a compassionate way—as the noble Baroness has experienced.

I cannot comment on whether it is specific to society but, from Donna Ockenden’s conclusions, there was something deeply wrong here. Whether it was not listening, culture or racism and discrimination towards women, families and staff, and between staff, we cannot have it.

[Lord Hunt of Kings Heath (Lab)]

My Lords, to continue this theme, the report describes a bullying and toxic culture, with junior midwives not being sufficiently supported when dealing with complex cases. It was a culture that did not allow them to refer such cases up the chain. There was a constant turnover in senior midwifery leadership and those they appointed were not given proper induction, mentoring or even guidance about their roles. In the work that the Minister is taking forward with the Secretary of State, will there be a concerted national programme of training and development for senior midwives so that there is a real opportunity to try to grip these issues?

[Baroness Merron (Lab)]

My noble friend’s analysis is quite right. One of the reasons we are developing an anti-discrimination programme is that cultural change across maternity and neonatal services is much needed. I use that as one example; all NHS trusts are to have completed that programme by 2027, and that is already under way.

I found it absolutely shocking that so many senior people at Nottingham did not give evidence to Donna Ockenden’s investigation. That is why, once the Hillsborough law Bill receives Royal Assent, we will extend the duty of candour to the Leeds and Sussex reviews so that the chair, Donna Ockenden, will have the powers to find the truth from organisations and staff. On the earlier point, it is quite shocking and totally unacceptable that they refused to participate.

[Baroness Wheatcroft (CB)]

The Ockenden report does a great job in looking at the problems in one specific trust. However, the problems go much deeper, as the Minister has said. It is cultural, and one of the cultural problems appears to be that there is a complete split between a contingent of midwives and the rest of the medical profession about medical intervention. Until that is tackled, I cannot believe that we are going to get to the root of the problem. Will the Minister commit that the taskforce will delve into that difficult issue? It is cultural, but it is a very deep difference of opinion that goes back to the noble Baroness’s question about what has changed. That is part of what has changed.

[Baroness Merron (Lab)]

The key is to bring together the recommendations from Donna Ockenden’s report with the independent report that we established, chaired by my noble friend Lady Amos, which will report on Wednesday, as well as the reviews from before. I do not think we necessarily need a description of the problem but, to the noble Baroness’s point, we do need action to challenge and monitor this. Transparency and accountability will also be our friends, which in Nottingham they were not.

[Baroness Hodgson of Abinger (Con)]

My Lords, as we know, this horrific failure is not confined to Nottingham University Hospitals NHS Trust. A number of other NHS trusts are being investigated, and I suspect it goes much further. Neither is this a problem of just the last 13 years; it goes back decades.

Forty years ago, one of my twin sons died at birth, a combination of bad decisions, inadequate systems and negligence. It was similarly impossible to get answers, with the name of the midwife withheld and the notes disappearing, including the only photo, and no one held accountable. The damage to families from this type of behaviour is unquantifiable. How is the Minister going to change this endemic culture of cover-up in the NHS and ensure that systems are put in place so that when even one baby is put at risk, is damaged or dies, the situation is properly examined so that it cannot happen again?

[Baroness Merron (Lab)]

I am so very sorry to hear of the noble Baroness’s experience; I am grateful to her for sharing it with your Lordships’ House. I am sure we all offer our condolences and understanding as far as we can to support her and her family, and I say how sorry I am for her loss.

The noble Baroness is right to talk about cover-up. That did happen in this case and has also been identified through other reviews. Certainly, as Donna Ockenden conducts reviews into Leeds and Sussex, we will be able to find out what happened there. But we are not waiting, and I assure the noble Baroness of that.

It is worth speaking about the role of the regulators, because it has come up not by using the word itself but by how account is kept. The Secretary of State is meeting with the GMC—which we currently have a three-month consultation on reforming—because he wants to hear its personal account for failings in care. The Nursing and Midwifery Council has been undergoing a widespread programme of reorganisation and change under new leadership, which, again, is much needed. I assure the noble Baroness that, as part of the taskforce, we are looking at all parts of the health system where things go wrong, including how accountability is established, because we should be avoiding that harm where it is avoidable.

[Baroness Nargund (Lab)]

My Lords, I welcome the report and thank my noble friend the Minister for all the work she is doing with the Secretary of State to support and to implement recommendations. Our thoughts are with the families affected. The report has yet again shown the racial bias in care, which is harming mothers and babies. I request that my noble friend the Minister ensures that cultural competency training is integrated in medical school and in midwives’ training, so that they are qualified after receiving that training and it is not left for later.

[Baroness Merron (Lab)]

It is absolutely crucial, as my noble friend says, that the training should reflect the needs of the care that will be given. That is something that I know the taskforce will look at very closely. Donna Ockenden’s report offers insight and recommendations on workforce and training. The noble Baroness, Lady Amos, may also do so. I mentioned the anti-discrimination programme, but I should also say, on inequalities, that we have launched a maternal care bundle on what the best practice is for clinical conditions that are the leading causes of death for women from Black and Asian backgrounds. As I say, the numbers reflect a great inequality which cannot be allowed to continue.

[Baroness Berridge (Con)]

My Lords, building on the Minister’s comments on the maternal care bundle, which was introduced because Black women are 2.3 times more likely to die in childbirth, this report also confirms that, in Nottingham and Nottinghamshire, infant mortality rates were significantly higher for Black and Asian women. In the report, a full dataset is not given of women of ethnicity. Can she also reflect on the recommendations from the Preterm Birth Select Committee report that we need more nuanced recommendations in this regard, and more work on causality? It is not clear, from what I have read in the report, why there is a 2.3 times greater likelihood that these women die; we need more work on that as well.

[Baroness Merron (Lab)]

The noble Baroness is right to refer to the report undertaken by the Lords committee, which I was pleased to be invited to appear before. It is true that there is a complexity. Outcomes also vary between trusts. There are a lot of potential reasons, but “potential” is not good enough. In 2023, the number of stillbirths in the most deprived areas remained much higher than in the least deprived.

In all the ways that noble Lords, including the noble Baroness, have mentioned, there are deep inequalities. NHS England has published an inequalities dashboard. That is important because it supports the identification of areas where populations face the greatest disparity, so that interventions can be appropriate for them and there can be more equitable support. We will certainly look very carefully at the differences and the inequalities, because that will be a real driver for change.

[Lord Roe of West Wickham (Lab)]

My Lords, I thank my noble friend the Minister and the Secretary of State for their hard work, shining a light on the inadequacies in maternity services in this country. My question is more general. The Minister referred to the coming Hillsborough law—one would hope in the next Session—which will be vital to accountability and driving candour across reviews into areas of both public and private failure. I respectfully ask, if the Minister cannot update me on progress being made on an oversight mechanism, whether the relevant Cabinet Office Minister might write to me to provide an update on progress. I am afraid that without the addition of an oversight mechanism, whether through a powerful public committee set up within Parliament or an independent body, we will once again return to terrible stories, whether in maternity, construction or other aspects of care.

[Baroness Merron (Lab)]

I will be pleased to raise that with my ministerial colleague in the Cabinet Office. I agree that an oversight mechanism is very important. On the Bill—which will, of course, become an Act—it is key to note that it will establish a new duty of candour and assistance at inquiries, inquests and other investigations. To the point that we are discussing here, the Bill will also allow for that duty of candour to be applied to health investigations by regulation. That is crucial, and it is by using that power that we will ensure that the Leeds and Sussex reviews, which are live, are included through secondary legislation.

[Baroness Manzoor (Con)]

My Lords, I align myself with the comments that have been made by the noble Lord, Lord Kamall, and the noble Baroness, Lady Pidgeon. This a totally devastating outcome. I pay tribute to the families that have been affected in this way.

I am just absolutely disturbed by the quality of the governance at the trust. I am shocked. I have chaired a number of trusts. To not put patient safety first and to not have the data available to make that judgment is absolutely appalling. Therefore, in terms of accountability, will the Minister assure me that the chief executive, the chair or, indeed, any members of the board who have been given honours as a result of their service to their trust are stripped of them? It is not an honour; it is absolutely devastating, and there has been a lack of duty in what they have achieved.

[Baroness Merron (Lab)]

I completely understand the noble Baroness’s point. I am grateful for her sensitivity on this subject. I do not feel qualified to comment on honours and their removal, but I will raise it with the appropriate ministerial colleague to say that this is a view—exactly as the noble Baroness said. I know that she is not alone in feeling that.

[Lord Beamish (Lab)]

My Lords, this is an appalling case, but some of the themes in it are common to other scandals, including the Post Office scandal: people being ignored, people not knowing how to complain and the system basically coming together to protect itself rather than representing and identifying failings. I accept that the Hillsborough Bill will be a step forward, but we also need a cultural change, and I stress that one of the issues is the GMC. Self-regulation has to go. It is about time that doctors were held to account, because anyone who has tried to complain about a medical situation through the GMC finds that it is labyrinthine and slow, and does not put the patient at the centre.

[Baroness Merron (Lab)]

My noble friend is right to draw comparisons and, as I said earlier, I certainly agree on the point about culture that is made very clearly in the report from Donna Ockenden. I will be looking very closely at that also in the recommendations of my noble friend Lady Amos. As I said earlier, we have sought to make change. I do also think that accountability and transparency are absolutely key. It is one thing to seek to make change, but another for people to feel confident and to know it has happened.

[Baroness Shawcross-Wolfson (Con)]

I am grateful to the noble Baroness for her eloquent and moving statement and her commitment to taking action on this. The noble Baroness said that the workforce planning recommendations from the Ockenden review and potentially also from the Amos review will be picked up in the maternity taskforce action plan, due at the end of the year. Can she tell us how that will fit with the upcoming wider NHS 10-year workforce plan? Will the wider 10-year workforce plan also look at the staffing and training needed for safer maternity services, and can she confirm when it will be published?

[Baroness Merron (Lab)]

We are soon expecting the 10-year workforce plan. In its considerations, it will address patient safety, because that is one of the requirements when thinking about workforce. But the really close look in the way the noble Baroness seeks will be through the plan which the taskforce is overseeing, having received the recommendations. It is the case that maternity services, for a whole range of reasons, including the absolutely shocking experiences that we have all referred to, have suffered in some areas because of a lack of safety, a lack of listening, and the wrong kind of culture and leadership—the list goes on. I know that noble Lords will have looked at the report and I would want to ensure that maternity services have their particular focus, in order that what I believe will be a credible plan by the end of the year will take account of the very points that the noble Baroness rightly makes.

Steel Industry (Nationalisation) Bill

Monday 29th June 2026 Lords Chamber

Committee (1st Day)

Scottish legislative consent granted. Northern Ireland and Welsh legislative consent sought. Relevant documents: 1st Report from the Constitution Committee, 3rd Report from the Delegated Powers Committee.

16:34

Clause 1: Meaning of “steel undertaking”

Amendment 1

Moved by

[Lord Sharpe of Epsom]

1: Clause 1, page 1, line 6, leave out “of or including” and insert “predominantly of”
Member’s explanatory statement
This amendment seeks to narrow the definition of a steel undertaking so that it had to be a business consisting predominantly of the manufacture or processing of steel, or iron for the purposes or in connection with the manufacture of steel.

[Lord Sharpe of Epsom (Con)]

My Lords, Amendment 1, in my name and that of my noble friend Lord Hunt of Wirral, is very simple. It seeks to confine the powers in this Bill to genuine steel businesses. Those are undertakings consisting predominantly of the manufacture or processing of steel—or iron for the purposes of steel manufacture.

As drafted, the definition catches any business which merely includes steel-making as part of its operations. That is a very broad formulation. It could, in principle, sweep up a diversified business in which steel was only a minor part of what it does. Businesses with a limited connection to steel production should not face uncertainty about whether it falls within the reach of these nationalisation powers.

When this point was pressed in the other place, the Secretary of State was asked whether a business with only 1% of its operations in steel would be caught by Clause 1. He did not say that it would not be. However, a statement of intent is not a limit on the face of the Bill, and future Governments are not bound by the assurances of this one. The Government say that these powers are intended for British Steel, and British Steel is obviously and predominantly a steel business. Therefore, this amendment should create no difficulty for that purpose. If the Government’s intention is genuinely not to use these powers against businesses with only a peripheral connection to steel, they should have no difficulty in accepting this amendment. I beg to move.

[Lord Redwood (Con)]

My Lords, I fully support this amendment and hope that it will tease out from the Minister a little more about what the underlying purpose of the general legislation is, as I am not too enamoured of this becoming a fully nationalised industry with the ability to acquire all sorts of other steel interests.

I felt that the Government’s policy arose out of the circumstances of British Steel at Scunthorpe and the question of blast furnace-produced steel, where we are down to our last two blast furnaces. I did not think that the intention was to build an electric arc furnace set of businesses when progress has already been made in establishing these in the private sector and where there are plans in certain cases for government grant aid to achieve an electric arc steel additional business by that combination of subsidy assistance and private capital.

I hope that the Government will accept this quite substantial narrowing of such a broad piece of legislation, because there are many with general interests in steel whom we would not like to get caught up in this. I would also like clarification on whether there is any possibility that the Government might want to build a nationalised electric arc steel set of businesses. This would be an expensive and difficult proposition.

[Lord Fox (LD)]

My Lords, I thank the Minister, his team, the department and the two experts who came all the way from Coventry in 35-degree temperatures to educate the noble Lord, Lord Hampton, and me on the technology of steel. It has been very co-operative and I thank them.

I am slightly confused by how narrowing these words are: “of or including” versus “predominantly”. What is predominantly? Is it 60:40? Is it 55? I do not know. You have to look upon it with the body language of the Government. The Government have shown no tendency to go on a nationalisation rampage through all businesses that have ever touched a piece of steel. It is very clearly focused in one area, as the noble Lord, Lord Redwood, alluded to. Also, I remind noble Lords that there is a sunset clause in here which closes it after two years. So the talk of subsequent Governments does not have particular purchase and I am much more relaxed than the noble Lord, Lord Sharpe, on this.

[The Parliamentary Under-Secretary of State, Department for Business and Trade (Lord Leong) (Lab)]

My Lords, I thank all noble Lords for their constructive engagement in advance of Committee, and for all the amendments and valuable contributions that they will make during it.

Amendment 1 in the names of the noble Lords, Lord Sharpe and Lord Hunt, seeks to introduce a narrow definition of a “steel undertaking”. I fully understand the purpose of the amendment, but the Government have no desire for these powers to extend beyond what is necessary. They are exceptional powers for exceptional circumstances and should be exercised only where Parliament intends.

I respectfully suggest that the amendment would not provide greater certainty; instead, it risks introducing greater ambiguity into the Bill. The proposed test, that a business must be “predominantly” involved in steel, immediately raises difficult questions, as alluded to by the noble Lord, Lord Fox, on how “predominantly” is measured. Is it turnover, assets, employees, production, profit or some combination of these? The amendment provides no answer. That uncertainty would inevitably invite legal challenge, precisely when swift and decisive action may be required. Businesses with significant steel operations could argue that they fall outside the definition, because steel is not their primary activity. Equally, complex corporate structures could be organised to make the test easier to avoid altogether. In seeking to narrow the definition, the amendment risks creating loopholes that undermine the legislation’s very purpose. The Government’s drafting avoids these difficulties; it provides a clear and workable definition that gives legal certainty, while ensuring that powers are used only when genuinely needed to protect the public interest.

For those reasons, while I appreciate the spirit in which the amendment was tabled, I cannot agree that it improves the Bill. I know this is not what the noble Lords intended and I can accept that the current drafting is broad, but this definition follows closely that used in the Steel Industry (Special Measures) Act and it ensures that there can be no disputes about its meaning. In practice, we do not expect many companies to fall within the current definition, so the amendment would have minimal effect.

I will repeat the Government’s position expressed throughout the Bill’s passage so far: we are strongly minded to use the powers to acquire British Steel if it is in the public interest to do so, and we do not have any plans to acquire any other steel undertakings. It is therefore very unlikely that this would be used for any other company, let alone one that is engaged primarily in non-steel activity. I hope this helps clarify the matter and respectfully request that the amendment is withdrawn.

[Lord Sharpe of Epsom (Con)]

I am grateful to all noble Lords who have spoken. It was remiss of me not also to thank the Minister and his team for their extensive engagement on the Bill.

This amendment is simple. I am afraid that I do not agree with the Minister’s comments or those from the noble Lord, Lord Fox. This is very straightforward. In fact, I refer noble Lords to the Merriam-Webster dictionary, which says that the word “predominantly”, in formal or technical usage, can denote a precise majority, such as more than 50%, or an even higher threshold, such as 60% to 80%, depending on jurisdiction. I am not an expert on which jurisdiction we are in, but it clearly means north of 50%. The way the Bill is written, as I pointed out, could allow for as little as 1%.

I have listened to the Minister’s objections to the wording of the amendment and am very happy to work on tightening it up, if he thinks that would help. The amendment is simple: it would confine the powers in the Bill to genuine steel businesses—that is, undertakings

“consisting predominantly of the manufacture or processing of steel, or iron for the purposes or in connection with the manufacture of steel”.

I think that answers most of the Minister’s objections, which, frankly, if they are relevant to my wording, are also relevant to the wording currently in the Bill, so I do not really believe in the ambiguity argument.

Businesses with a limited connection to steel production should not face uncertainty about whether they fall within the reach of these nationalisation powers. The present drafting does not provide that reassurance; it permits powers to apply to an undertaking that merely includes steel-making or related iron production, as I have already pointed out. I will not press the amendment for now, but I would like further discussions with the Minister, if he is amenable, to see whether we can find a way to tighten up the language so that it both suits the Government’s purposes and makes it clearer for all those undertakings that we are discussing. For now, I beg leave to withdraw.

Amendment 1 withdrawn.

Clause 1 agreed.

16:45

Clause 2: Exercise of principal transfer powers in the public interest

Amendment 2

Moved by

[Lord Hunt of Wirral]

2: Clause 2, page 1, line 14, leave out “includes (but is not limited to)” and insert “means”
Member’s explanatory statement
This amendment seeks to limit the public interest test to the areas set out in subsections (a) to (c).

[Lord Hunt of Wirral (Con)]

My Lords, I speak to Amendments 2, 3 and 8.

Amendment 2 limits the public interest test to the specific factors listed in Clause 2. On first reading, the test looks robust: national security, the economy and

“the construction, maintenance and operation of critical infrastructure”.

These are serious criteria that one might think provide a meaningful check on the exercise of what are very significant powers. However, when one reads on, Clause 2(2) says that the test

“includes (but is not limited to)”

those grounds. I contend that, with those five words, the floor falls away. If the test includes but is not limited to the listed grounds, surely, in practice, there is no test at all. Any Secretary of State of any political persuasion at any time can conjure a reason and call it the public interest.

The amendment in my name and that of my noble friend Lord Sharpe of Epsom would remove those words and make the listed grounds exhaustive. It would ensure that when Ministers say that these are exceptional powers subject to a robust public interest test, it is actually true—not merely true for now with this Secretary of State in these circumstances but true in the legislation for every Secretary of State who follows.

The Government may say that there need to be other grounds, beyond national security, the economy and critical infrastructure. I would genuinely like to know what they are. What situation could possibly arise that those three criteria do not already cover? If the Government can answer that question, let them do so today. Let them set out on the record what additional circumstances they have in mind. If they cannot, these words should not be in the Bill.

We have a Bill that, as we just discussed in the first group, can capture businesses with only a peripheral connection to steel. We now have a public interest test with no effective limit. Will the Minister confirm that the powers in the Bill cannot be triggered simply because of industrial pressure; for example, because a trade union decides that the answer to a dispute is public ownership? Will he rule that out?

On Amendment 3, the Government’s impact assessment describes the difficult environment in which the steel sector operates, including high domestic operating costs and a lack of long-term investment. It recognises that these pressures bear directly on the ability of UK steel producers to compete. Yet Clause 2 refers only in the broadest terms to “supporting the economy”. That phrase could cover almost any intervention; it does not require Ministers to demonstrate that the intervention will leave the United Kingdom with a stronger, more productive or more internationally competitive steel sector.

There is a difference between preserving an undertaking for the moment and putting it on a sustainable footing for the future. Nationalisation may avert an immediate crisis, but it should not become a means simply of transferring losses, risks and difficult decisions from a company to the taxpayer. The question must be whether public ownership can help to secure the investment, modernisation, productivity and commercial resilience needed for this sector to compete successfully.

There is also a point of consistency with the Government’s own drafting. The Bill makes clear that the public interest test is not intended to be limited to the matters specifically listed. It says that the test includes but is not limited to national security, critical infrastructure and the economy, as I said earlier, so the Government have already chosen not to confine the public interest test. In those circumstances, why would they resist including economic growth and international competitiveness expressly within it? Growth is the Government’s stated number one priority. International competitiveness is plainly fundamental to the future of a sector exposed to intense overseas competition and high energy costs. If the Government consider national security and critical infrastructure important enough to name in the Bill, surely growth and competitiveness should also be named. I invite the Minister to explain why those two objectives do not appear in the Bill. How will the Government assess whether an intervention is likely to strengthen competitiveness? Will that assessment include energy costs, investment, productivity, output, technological modernisation, export potential and the undertaking’s ability to operate sustainably without indefinite support from the taxpayer?

On Amendment 8, the Government have confirmed that they have already provided approximately £555 million to British Steel for working capital, including raw materials and salaries. The National Audit Office reported that, as at 31 January this year, the Department for Business and Trade had spent £377 million on its intervention. At the then current rate of spending, total costs were expected to exceed £642 million by the end of this month. More importantly, the National Audit Office warned that if spending continued at the then current rate, costs could exceed £1.5 billion by 2028—and that figure was before any potential transformation of the business, compensation to the current owner or the eventual costs of exit. The NAO also found that the intervention has

“no clear end date … has not stabilised the company’s finances”

and began

“without a clear exit strategy”.

This Bill is not simply emergency legislation to keep the furnaces operating over a weekend. It creates enduring powers to transfer businesses, assets, rights and liabilities into public ownership. Before those powers are exercised, the Government must be able to demonstrate that the proposed course represents value for money.

The facts since the emergency intervention underline why this matters. We are told that the business in its present form is structurally unprofitable. We know that substantial decisions remain to be made on its future, including any transition in production technology, the cost of investment, the length of any transition period and the eventual route to a viable and sustainable business. The taxpayer needs protection against an open-ended commitment.

The Government may argue that the Treasury’s Managing Public Money framework already requires departments to consider value for money. I suppose I could look forward to the day when there is some evidence of the Treasury acting responsibly in this way. Can the Minister tell us what value-for-money assessment will be undertaken before a principal transfer power is exercised? Will it include the expected costs of compensation, operating losses, capital investment, decommissioning, restructuring and any eventual exit?

This amendment would not frustrate the Government’s ability to act where action is genuinely justified. It would simply ensure that before nationalisation takes place, the Secretary of State is satisfied that it is a responsible use of taxpayers’ money. I beg to move.

[Lord Sentamu (CB)]

My Lords, Amendment 2 would replace

“includes (but is not limited to)”

with the word “means” so that we knew what we were describing. The worry is that leaving it as it is could create a public interest so large that there was a mission creep that I do not think should be in the Bill, which is trying to nationalise steel. We need to be slightly more economical in the words we are using, so that we need not fear that on another day, if another public interest was being taken into account, the definition would prove far too loose. The word “means” does the job: we know exactly what one is talking about, and it lists the three elements. The noble Lord, Lord Hunt, wanted to include two other areas but, for me, limiting it to those three objects seems to be where we should stop. The word “means” would stop mission creep.

[Lord Redwood (Con)]

My Lords, I welcome these three amendments. Amendment 2 is a necessary slight curtailment but would still leave the Government with enormous scope, given how wide-ranging the three cited reasons for public interest intervention are. Like my noble friend, I cannot think of any other reason why they might want to do this that could not be adequately covered by the wide-ranging proposals in the existing text.

I agree that it would be a good idea to change the language through Amendment 3 to stress that intervention should, in the longer term, be interested in economic growth, profitability and successful investment. Surely the Government do not want a lame-duck investment that costs a large sum of money for a limited period of time but then they have to disappoint all those people who thought that it was going to be kept going for a rather longer period or that it might break through to profitability and success. If I had to choose between the three amendments, I hope my noble friend would particularly press Amendment 8 on value for money, which sums it all up.

At Second Reading, in looking at the general legislation, we had some discussions asking: what is the medium and longer-term future of blast furnace steel? As I think we have agreed across the House, at Second Reading and now, the main reason for the previous emergency legislation and this legislation is the temporary cessation of closure of two very important blast furnaces, which are our last blast furnace-making capabilities in the country. But I believe—I would love to have the Government either confirm or deny this—that it is still their medium to longer-term intention to close all blast furnaces in this country, as previous Governments have been doing, and to transfer to electric arc steel-making, preferably with private finance and successful competitive private sector businesses doing that work. In the previous exchanges, I think the Minister signalled that the Government do not wish to build a nationalised electric arc business with these powers, although for understandable reasons they have to be general and will most likely be exercised in the case of the blast furnaces. It would be helpful to workers and taxpayers if there were greater clarity over the time period for keeping these blast furnaces open, and whether there are any limits on the costs that the Government are prepared to run, so that people can make proper plans concerning their jobs and their futures in this important steel industry, and so that taxpayers could have some reassurance.

17:00

My noble friend rightly quoted from the quite worrying National Audit Office report. I too had the misfortune to have to read it and discover how difficult this problem is and how expensive it is becoming and could become. There surely must be some limits to how much loss the Government will compensate and to how much working capital and maybe additional capital investment they might put into two ageing blast furnaces if their medium to longer-term plan is to close them down anyway. From the Government’s point of view, it obviously would be very bad politics if they paid hundreds of millions or even well over £1 billion to keep the blast furnaces going for another year or two and then had to admit that they had to close just before a possible next election, with the great disappointment of the workforce who, after a year or two, might have thought that they were going to carry on financing these things indefinitely.

I hope the Minister will show some sympathy for this idea of a value-for-money test or audit—there always is in government anyway but, in this case, I think my noble friend is right to ask for a specific one. I would have thought that the Government would want to set out how they are going to report the escalating losses. These will become a very important matter which will get picked up in normal public expenditure reporting, but, given the importance and sensitivity of this policy, it would be good to know that both Houses will be kept informed regularly of the costs and therefore of the impact on public spending. I assume, for the foreseeable future, it will be taken out of the budget heading of £2.5 billion which was available for modernising the steel industry, but you cannot call this modernising expenditure. It is really a virement of money that was there to try to pump-prime a more successful, more modern private sector and this money seems to be being drawn down now to subsidise a couple of ageing blast furnaces where there is still a huge gap between the value of the product they can produce for customers and the costs incurred by manufacturing it.

On top of needing proper financial reporting to see how we are doing, we should surely be due some kind of business plan. Of course, that would be redacted or edited because there may be commercially sensitive issues—and you would not want to share all your details about who you might sell steel to and what prices and so forth—but the general outlines of the business plan should be made available to the public and taxpayers through both Houses so we can see what the intentions are, form our own judgments about whether that plan looks feasible and have some way of testing whether the Government are on track or need some more help or whether things might have gone wrong. That would also be helpful for the Government.

Ministers have placed themselves in a very important but also very difficult position. Because they supervised this emergency intervention under past legislation, they are now, in effect, having to sign off on all the costs, expenses, marketing plans and all the rest of the stuff they have chosen to put into the Chinese-owned plant. They also have to handle successful negotiations with the Chinese owners, who, I think, are demanding unrealistic compensation. This country does not have a tradition of stealing the assets of people who come here from abroad to invest. That would obviously be a very unfortunate precedent because, as a country which depends on a lot of inward investment, we would not attract very much of it if people thought that an Act of Parliament could take their assets away from them—however impaired those assets might be—without any agreement about the basis of that transfer.

I hope the Government will look favourably on the need for some financial reporting, maybe quarterly, and the need to have constructed a business plan for their own concerns and interests. They should be able to share at least the general outline of that plan with the wider public to give some reassurance that the intervention to date was well based and that any successful purchase of the assets or compensated acquisition of the assets from the current owner was also in the best interests and provided value for money.

[Lord Fox (LD)]

My Lords, one of the things that the briefing from the high value catapult team confirmed is the enormous difficulty there will be in creating a viable business from what His Majesty’s Government intend to take control of in Scunthorpe. There is the age of its blast furnace, the potential cost of any replacement of a blast furnace, the expense of conversion to an electric arc furnace—if that is what is intended—and the hugely competitive landscape of the global steel markets. These are just the headlines of the complexity, but the choices go beyond blast furnace or arc furnace.

If investment is found to install a new electric arc furnace, what will it produce? Will it aim to produce the full range of steels that we need—longs, flats, rebar—or will it specialise in particular steels that perhaps are more strategic and less easy to source? If it goes down the specialisation route, the UK will probably need access to much more direct reduced iron, or DRI. It is likely that this would have to be imported, and these would be very high CO₂ emission imports from most countries, because making our own DRI would need a whole new bit of kit which is very pricey. Choices and making the right calls will determine whether Scunthorpe has a long-term future and what that future looks like. It will determine whether it is indeed an investable prospect and whether it can attract the private sector.

When the Government begin—assuming this Bill becomes an Act—to use the terms of the Act to take ownership of this plant, that will change the focus of these choices. Of course, there will be a new board and management to run the plant, but the cost of the choices will rest with UK taxpayers, at least at first. We will be providing the capital. As we have heard, we have already made available £555 million in working capital, but clearly these sums could increase massively at scale. It is the scale of risk that the Government are taking on that is guiding my approach and our approach, because this Bill needs more scrutiny from Parliament at all levels. From these Benches, we will be pushing those buttons.

These three amendments start at least to open up that point around accountability. I am a bit intrigued because while I do not always agree with the noble Lord, Lord Hunt, he is normally internally consistent. However, the noble Lord started out by saying there should be no expansion of the terms of Clause 2 and then put forward two pretty reasonable ones about growth and expanding the economy. I have one that I think the noble Lord, Lord Redwood, would agree with, which is cost. We should have a clear understanding of the cost before the public interest test. I completely disagree with Amendment 2 because there needs to be a broader discussion around “public interest”. We need to understand the numbers around it, otherwise we do not know whether it is interesting to the public. I do not agree with Amendment 2. I have some sympathy with the other two amendments, and I am sure we will talk more about public interest tests as we deal with other groups.

[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Hunt, Lord Redwood and Lord Fox, and the noble and right reverend Lord, Lord Sentamu, for their contributions to this group. There are several amendments to the articulation of the public interest test in Clause 2. This is a key clause in the Bill; it is a necessary safeguard to ensure that the powers are used proportionately in response to a clear need.

Amendment 2 would limit the public interest factors that the Secretary of State may consider to those set out in the Bill. The Government agree that the three factors of national security, critical national infrastructure and support for the economy are likely to be the most relevant to the steel sector. Accordingly, the current approach ensures that they are given particular weight when assessing whether to pursue an intervention. However, circumstances may arise in which a case for intervention may not be clearly made on the basis of these three factors, yet it would clearly be in the public interest to take action. It is therefore pragmatic to build some flexibility into the Bill to address this issue.

I turn to Amendment 3. It has been suggested that the third public interest factor should refer specifically to

“economic growth and international competitiveness”,

rather than “supporting the economy”. With respect, this is a distinction without a meaningful difference. It is largely a matter of drafting rather than substance. The phrase “supporting the economy” is deliberately broad. It clearly encompasses economic growth and international competitiveness but also recognises that the economy is more than growth figures alone. It includes strengthening economic resilience, protecting strategically important industries, supporting employment, safeguarding supply chains, encouraging investment and ensuring the long-term productive capacity of the United Kingdom. By contrast, narrowing the text to

“economic growth and international competitiveness”

could unintentionally exclude other legitimate public interest considerations that any responsible Government should be able to take into account.

There may be circumstances where intervention is necessary to preserve critical industrial capability or economic resilience, even where the immediate effect on growth or competitiveness is less direct. The Government’s intention is to provide Ministers with a sufficiently broad framework to consider the full range of economic factors that may arise. The existing wording achieves precisely that: it is flexible, comprehensive and future-proofed, while fully capturing the objectives that the amendment seeks to emphasise. For those reasons, I do not believe that the amendment would improve the Bill. The Government believe that protecting our sovereign capability in what is a foundational sector for the economy will help to underpin our resilience and leave us less exposed to volatile international trading conditions. The Government therefore cannot support the amendment.

I turn to the amendments tabled by the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, and by the noble Lord, Lord Fox. In different ways, all three noble Lords seek to require the Secretary of State to consider value for money or the impact on the public finances before exercising the principal transfer powers.

[Lord Fox (LD)]

My amendment?

[Lord Leong (Lab)]

I am referring to the noble Lord’s later amendment.

I fully agree with the principle that taxpayers’ money must be spent wisely. Any decision to bring a steel undertaking into public ownership would be among the most significant interventions that a Government could make. Such a decision should never be taken lightly, and it would not be. However, these amendments seek to place into statute an obligation that already exists as a fundamental principle of government. Every significant spending decision is subject to the rigorous disciplines of managing public money—as stated by the noble Lord, Lord Hunt—Treasury approval where appropriate, and the established accounting officer framework. Ministers are already required to demonstrate that public money is being used properly, proportionately and with due regard to value for money.

The question, therefore, is not whether value for money should be considered—it absolutely should—but whether it is necessary to restate an existing, well-established constitutional obligation in the Bill. I do not believe it is. Doing so would add no new safeguard, create no new accountability and impose no duty that does not already exist. More importantly, this legislation is intended to ensure that, where a vital national interest is at stake, the Government can act decisively. Decisions of this nature will always involve weighing immediate fiscal costs against the far greater economic and strategic costs of inaction. The loss of sovereign steel-making capability, thousands of skilled jobs and critical supply chains, and industrial resilience could ultimately impose a far greater burden on the taxpayer than timely intervention would. The Government will continue to ensure that every decision made under the Bill is subject to the highest standards of financial discipline and accountability. Those safeguards already exist; they are robust and will continue to apply.

17:15

I turn to the point made by the noble Lords, Lord Redwood and Lord Fox, about turning British Steel around. Should we decide in the public interest to transfer British Steel into public ownership, we will act swiftly to put in place a new board to provide leadership to the organisation and to be responsible for continuing work to drive improvements in health and safety performance and to stabilise operations and manage costs. The board would explore the options for the long-term viability of decarbonised steel-making at Scunthorpe and develop transformation plans in a way that manages the impact of that transition of the workforce in the local area. We will be debating this more in groups 10 and 13 in day 2 of Committee. For those reasons, I respectfully request that the amendment be withdrawn.

[Lord Hunt of Wirral (Con)]

My Lords, I am grateful to all noble Lords who have contributed to this debate and to the Minister for his response. I reiterate what the noble Lord, Lord Fox, said earlier about the way in which the Minister has given us every opportunity to think ahead into the future and to receive expert advice as to the way ahead.

To summarise these three amendments, they do not sit easily together, as has been pointed out, but they have provoked a widespread debate. The noble and right reverend Lord, Lord Sentamu, was absolutely right to point out that mission creep should stop here. There should not be ways that the Minister could include all sorts of other reasons. In Amendment 3, I suggested two reasons, but the Minister carefully responded by not ruling them out and not ruling anything else in. It seems that either the noble and right reverend Lord, Lord Sentamu, is right, or the noble Lord, Lord Fox, is right or the Committee is confused. It has considered all the various options, but it would be useful, as my noble friend Lord Redwood said, to have greater clarity in the form of some draft business plan that could look to the future and work out the way ahead. Value for money, as my noble friend said, sums it all up. Although the Minister thought that the noble Lord, Lord Fox, had signed Amendment 8, either it has not come to my attention that he has or he has not signed it. It may be a later amendment which suggests that value for money is required.

I remain far from convinced by the Government’s case. These amendments address three basic questions which ought to be answered before the state is given a power of this significance. First, in what circumstances will the power be used? Secondly, what is it intended to achieve? Thirdly, as my noble friend Lord Redwood pointed out, how will the taxpayer be protected? The Government’s response seems to be that Ministers will behave reasonably, that the powers will be used sparingly and that the existing public interest test provides sufficient protection.

As my noble friend Lord Sharpe of Epsom said in the previous group, this Bill sends a message well beyond the immediate circumstances of British steel. Investors considering whether to commit capital to the United Kingdom will examine not simply what Ministers say today but what the legislation permits tomorrow. The Government say those risks are mitigated by a clear public interest test. But the reality is there is no actual test. There is much in this debate for the Government to consider, but for now I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

Amendment 3 not moved.

Amendment 4

Moved by

[Lord Wigley]

4: Clause 2, page 1, line 20, at end insert—
“(d) supporting the local economy of any steel-making location which may be adversely affected by this Act.”Member's explanatory statement
This amendment seeks to ensure that consideration is given to the impact on the local economy arising from decisions made under this legislation.

[Lord Wigley (PC)]

My Lords, I beg to move Amendment 4 standing in my name and to speak to Amendment 36, which is also in my name and which is grouped with it—as is Amendment 29 in the name of the noble lord, Lord Fox, and Amendments 30, 31, 43, 44 and 46 in the names of the noble Lords, Lord Sharpe and Lord Hunt.

I quote Amendment 4, just to bring it to everyone's mind. It would add, at the end of line 20 on page 1, a new subsection:

“(d) supporting the local economy of any steel-making location which may be adversely affected by this Act”.

I would have thought that those words would commend themselves very much to this House. All these amendments have to do with the impact of the Bill when enacted—an impact which may be so significant to various aspects of the economy, and indeed on the communities which may benefit or may suffer directly or indirectly from this legislation. I shall look forward to hearing the Opposition Front Bench when they speak, particularly on Amendment 43, on the possible impact of this Bill when enacted on inward investment—a subject close to my heart, as the noble Lord, Lord Hunt, will recall, from prior incarnations. But I digress. Amendment 4 in my name would specifically impose a duty on the Secretary of State, in relation to his responsibilities regarding the public interest, to broaden that responsibility to include, via the proposed new subsection (d),

“supporting the local economy of any steel-making location which may be adversely affected by this Act”.


I have deliberately drawn this new subsection widely and not confined it to Wales, as I know from our experiences in Wales how badly steel-making communities across these islands can be hit when steel-making is ended or run down, wherever those communities may be located. I saw this with my own eyes when I was living in Merthyr Tydfil in the 1970s, at the time of the rundown of the steel manufacturing in nearby Ebbw Vale. The economic decline of the Blaenau Gwent area has been staggering, as the noble Lord, Lord Murphy, mentioned in the Second Reading debate of this Bill. It is now amongst the poorest areas, economically speaking, not only in Wales but throughout Britain. Decisions arising from the operation of this Bill, when enacted, could have far-reaching consequences for communities that have depended on steel in the past, and which may be facing dire consequences of specific and deliberate action undertaken by the Government through this Act. A duty surely lies on us to help safeguard those communities.

There will inevitably be winners and losers as a result of actions taken under this legislation. Hard-working, skilled industrial communities may be undermined through no fault of their own. Indeed, the decisions taken by the UK Government may be, in some regards, for the good of the industrial base of these islands, but do not tell me that, to an unemployed skilled steel-worker in Margam or Shotton or Llanwern—or, for that matter, in Teesside or Sheffield or Doncaster—this does not matter. If the actions of the Government in consolidating steel-making in a limited number of locations has that knock-on effect, then the Government surely have a responsibility to support those local economies hard hit. I cannot believe that a Labour Government will not readily acknowledge this. I invite them to accept Amendment 4 or at least to undertake to return with their own amendment on Report to secure the objectives I have outlined.

Amendment 36 in my name is also in this group. It would provide a vehicle, via Clause 58, whereby the financial aid outlined in Amendment 4 could be channelled through local authorities in steel-making areas hard hit by this Bill so that they were compensated for the adverse effects on local communities arising from the exercise of the powers in the Bill relating to steel-making in their area. As I stated at Second Reading, I support the objectives of this Bill but, with all the good will in the world, there will inevitably be losers as well as winners. As such far-reaching changes will be triggered by Act of Parliament, surely it behoves Parliament to safeguard those who may be adversely hit as a direct consequence. I beg to move.

[Lord Fox (LD)]

My Lords, this is a mixed bag of amendments. I will speak primarily to Amendment 29 in my name but also to some of the others.

Amendment 29 highlights the potentially distorting effects that CBAM—the carbon border adjustment mechanism—would have on various elements of the steel industry, from supplier to steel user. On the one hand, if applied fairly, CBAM could and should deal with the currently distorting global steel market, whereby Chinese steel, with a high carbon investment, is competing unfairly with greener steel in Europe and the United Kingdom. So far, so good, but the effects of CBAM on other steel users and manufacturers could, if applied wrongly, be very detrimental. That is why the international picture, particularly our future agreement with the EU, will be so important in ensuring that manufacturers do not have one hand tied behind their back.

The way that CBAM interacts with tariffs, which has not been discussed terribly much, is important and issues around energy costs have been put in this group, but in truth CBAM, the EU and energy costs fall outside—or at least at the very edges of—the scope of this Bill. However, Amendments 4 and 36 in the name of the noble Lord, Lord Wigley, and Amendment 44 from the noble Lords, Lord Sharpe and Lord Hunt, are front and centre within it. Tata, for example, is making considerable investments on its own account and should not be disadvantaged by any publicly owned business. Similarly, the communities in which the industry is located are vital and must be a key part of decision-making.

The nature of the amendments in this group is almost a snapshot, whereas in reality it will be a long-term issue. That is why, later in Committee, I have proposed a stakeholder advisory committee in Amendment 22 and an explicit role for Select Committees in Amendment 38. This will be an ongoing issue and we will need ongoing parliamentary review of it. While I support elements of this group and the intentions within it, I think the heavy work will be done in a different way going forward.

17:30

[Lord Sharpe of Epsom (Con)]

My Lords, I will speak to Amendments 30, 31, 43, 44 and 46 standing in my name and that of my noble friend Lord Hunt of Wirral. I thank the noble Lords, Lord Wigley—who I thought made a very powerful case—and Lord Fox, for their previous speeches.

Amendment 30 goes to the valuation of a steel undertaking and the need for that valuation to reflect the real commercial environment in which the undertaking will operate. That environment is not fixed; it is being shaped directly by government policy and, in particular, by the new steel trade measure coming into effect from 1 July. Only days ago, the Government changed the detail of that policy, relaxing the original proposals somewhat, with tariff-free quota reductions pulled back from the level first proposed. We will no doubt discuss that in more detail when the Statement is taken tomorrow, and I do not intend to rehearse that debate now.

However, the fact is that the Government’s choices on trade policy will have a material effect on the commercial position, and therefore the value of any steel undertaking. A tighter quota and a higher above-quota tariff will limit import competition. The way quotas are set will affect downstream industries, supply chains, customer relationships and the availability of particular steel products. The Government cannot, on the one hand, present their trade policy as central to the future of UK steel and, on the other hand, resist any requirement for that policy to be factored into what a steel undertaking is actually worth.

The need for clarity is made more acute by the uncertainty of recent weeks. Businesses have been trying to understand what the new quota levels will be, how quickly quotas may be exhausted, which products will be covered and what the practical effect will be for producers and steel-consuming industries alike. Do the Government accept that the new steel trade measure will affect the value of steel undertakings? If so, why should the independent valuer not be required to consider it?

On Amendment 31, electricity costs are among the central determinants of the viability, competitiveness and future value of steel. The position facing British industry is stark. The United Kingdom has had some of the highest industrial electricity prices in the developed world. UK industrial users pay substantially more than competitors in France and Germany, and—on the most widely cited international comparison—around four times as much as businesses in the United States.

For steel-makers, the gap remains significant. That is particularly serious as the sector moves towards more electricity-intensive production methods, including electric arc furnaces. A business may have the workforce, the plant, the orders and the ambition to modernise, but it cannot compete indefinitely if one of its principal inputs costs materially more than it does for its overseas competitors. These costs, I am afraid, reflect recent policy choices by the Government. The fact that the Government provided some limited relief from network charges to eligible energy-intensive industries rather demonstrates the point.

The Government now say that further measures will bring prices closer to those in competitor countries, but closer is not the same as competitive—and nor is a future scheme with questions of timing and eligibility still to be resolved an adequate basis on which to value a business today. This amendment would require the valuer to consider the prices paid by UK steel producers, the disparity with comparator countries and the effect of any support intended to reduce energy costs, including both the costs after existing reliefs and the risk that relief may be time-limited, incomplete or dependent on eligibility. It should also include a clear comparison with major competitor countries.

Is the Government’s objective genuine parity in industrial electricity prices with our principal competitors? If not, what continuing cost disadvantage do the Government consider acceptable for a strategic trade-exposed industry? How will the valuer assess the effect of support, which is prospective rather than guaranteed, particularly where broader measures are not expected to operate fully until 2027? The Government’s own impact assessment accepts the seriousness of this problem. It states that energy costs threaten the sector’s long-term viability and its ability to compete. It also acknowledges that UK steel producers face higher electricity prices than comparable countries, and that contributes to the uncompetitive production costs and pressure on margins.

On Amendment 43, as we raised at Second Reading, the Government’s impact assessment recognises the risk of a chilling effect on investment if businesses and investors perceive a greater risk of state intervention—a point very well made by my noble friend Lord Redwood in the last group. The United Kingdom has long depended on its reputation as a stable, predictable and rules-based place in which to invest. The risk is greater in the current climate. Steel businesses are already dealing with high electricity costs, rapidly changing trade policy and significant regulatory burdens. Adding an open-ended power of nationalisation can only increase the sense of risk for those considering whether to invest in the United Kingdom. If the Government are confident that their actions will strengthen confidence and attract private capital, they should have nothing to fear from transparency.

Amendment 44 addresses a basic point of fairness. If the Government take a steel undertaking into public ownership, that business must not receive selective advantages which place comparable privately owned steel businesses at an artificial disadvantage. Without this safeguard, there is a clear risk of distortion through subsidies, preferential access to public contracts, more favourable regulatory treatment or other support unavailable to private companies. The Minister in the other place stressed the need for flexibility and for the Government to act quickly, but flexibility need not mean unfairness. It is entirely possible to support a strategic undertaking in exceptional circumstances while maintaining a level playing field for the wider sector.

On Amendment 46, if we accept the Government’s central argument that British Steel is critical national infrastructure and that domestic steel production is essential to our national security and without it we cannot build our Navy, jets or submarines, they must accept the logic of what follows from that argument: you cannot declare something critical to national security then leave it defenceless. Amendment 46 states that, where the Secretary of State has exercised a principal transfer power where steel has been brought into public ownership precisely because it is in the public interest, the Secretary of State must have the power to prevent industrial action destroying the very thing that public ownership was meant to protect.

We have seen what happens when Governments are all too timid to act. We have watched the railways held to ransom by the RMT, and we have seen it in healthcare where the former Health Secretary himself felt compelled to call out what he described as “cartel-like behaviour”. The Government have made themselves more vulnerable still. The Employment Rights Act 2025 stripped away strike safeguards that existed for a good reason. The ballot thresholds are gone: the Government unlocked the door and then expressed surprise when it was pushed open.

If a steel undertaking is nationalised in the name of national security and a trade union then calls a strike that shuts down production, what will the Secretary of State do? Will he stand at the Dispatch Box and explain that our defence supply chains have been severed because he did not want to upset the unions? Do the Government seriously want domestic steel production halted because a union decides the moment of public ownership is the moment to press its advantage?

The Government cannot have it both ways: they cannot argue that steel is so vital to this country that it must be brought into public ownership and simultaneously argue that, once it is in public ownership, it should be just as exposed to industrial disruption as any other business. The whole point of this public interest test, if it means anything at all, is that some things matter too much to be left to the ordinary run of commercial risk. Industrial action that threatens critical national infrastructure is precisely such a risk.

I invite the Minister to tell the House that the Government have considered the risk. I invite him to explain what powers the Secretary of State would have on the day a strike is called at a nationalised British Steel to keep the blast furnaces lit. If he cannot answer that question satisfactorily, this amendment provides exactly the answer that is needed.

[Lord Redwood (Con)]

My Lords, I am grateful to my noble friend for raising the crucial issue of electricity prices. As the strategy is to convert more and more to electric arc furnaces, the price of electricity becomes the critical variant in determining how successful those businesses will be, how competitive their prices will be and whether they will generate cash and profit to reward those who ventured in them, or whether there will be problems for those businesses, just as there are problems in the British Steel carbon-based system through its blast furnaces. I hope the Minister can give us a little more background by way of reassurance, given that the steel strategy has been, and is still to be, based on electricity as the prime source of energy. There needs to be a policy that will consistently deliver competitive electricity prices because the current prices, without specific and targeted subsidy intervention, are way out of sync with the electricity prices in the more competitive world of our major competitor countries.

It is very important that this group of amendments raises the issue of tariffs. Of course, anybody valuing the assets that might be acquired under this legislation, or valuing what we already have by way of control and operating responsibility, will need to look at the impact of tariffs. It is a good idea to stress this because these are a very major change to the background for the conduct of steel businesses in this country, and we cannot be sure exactly what the impact is going to be. We have two types of impact arriving around the same time. There is the carbon border adjustment mechanism, which is, in effect, a fairly universal tariff based on the carbon content of imported material, which is clearly going to apply substantially to this industry. Then there are the specific tariffs which the Government have announced to come shortly, which target competitive steel coming into Britain with a very large increase in tariff and a rather low protected quota so that there will definitely be a substantial increase in cost for import.

You could argue, as I presume the Government do, that this is completely benign for our steel industry because it means that the combination of the immediate tariff and the soon to come CBAM tariff will make imported steel so much less competitive, and will therefore help reduce the pressures on our existing electric arc furnaces in the private sector and the two blast furnaces now, in effect, under the control—but not in the ownership—of the public sector. There will be some relief, as the policy intends. However, there can be other consequences which a valuer would have to take into account.

For example, the higher the cost of imported steel, the more difficult it will be for those many companies and industries that use and add value to steel in our wider steel-using industry. There will be limited scope for all users of imported steel to find exactly the right specifications of steel, and the right availability and pricing, from the rather limited-scale industry that the United Kingdom now has as a steel producer. There could well be financial difficulties, reductions in turnover and activity, or the collapse of steel-using businesses in the United Kingdom that face these very high tariff impositions on their main raw material. If they acquire more by way of import than at home and they cannot immediately substitute, you could have the paradoxical effect that the tariff designed to protect the British industry lost orders to the British industry as well as to the exporting industry from abroad. You could well have businesses here collapse—those that are substantial steel users but can no longer carry on the business efficiently to sustain their limited purchases from the UK, because of the cost of the expensive imports.

This needs careful policy examination. I am glad that the Government had one rethink about the tariff quota arrangements for this, but they probably need to do a bit more homework about the balance between the rather larger turnover at risk in steel-using businesses in the United Kingdom and the rather too small turnover available in steel production. They therefore probably need to consult a bit more widely over the medium- to longer-term impact on steel demand from domestic as well as imported sources.

I am interested in the proposals on impact on the economies, but I am not quite sure what is in mind and how it would work out. It is quite right, as the noble Lord, Lord Wigley, said, that there will have been impacts from previous closures or redundancies, and there could be future bad impacts as steel plants become more productive and need less labour, or as the final conversion is made from blast furnaces to electric arc, when there would clearly be a substantial loss of employment. There will need to be assistance and help for those who lose their jobs or have lost them in the past but still have not been able to retrain or find good alternative employment. One needs rather more by way of detail, and I am not quite sure that this Bill is the right place to do that, because it relates to a series of other government initiatives, funds and programmes that are more generally available. However, the noble Lord, Lord Wigley, might be right that they need to be improved. That is a subject for another conversation on another day.

17:45

[Lord Leong (Lab)]

My Lords, noble Lords have raised a number of amendments to ensure that there is a level playing field across the steel industry. I thank noble Lords for their commitment to ensuring that the Bill positively impacts the UK steel industry. A number of amendments have been tabled on this topic so, with this in mind, I will address those before turning to the new clauses proposed for the Bill. I will consider Amendments 29 to 31 together, as I believe they are intended to have the same effect.

Amendment 29 seeks to specify that compensation regulations under Clause 54(4)(b) allow the independent valuer to take into account external tariffs, as mentioned by the noble Lord, Lord Redwood, and the carbon border adjustment mechanism when valuing the steel undertaking, as mentioned by the noble Lord, Lord Fox. Meanwhile, Amendment 30 seeks to require that any valuation of a steel undertaking takes into account the steel import quota and tariff measure that is due to take effect from 1 July 2026. Amendment 31 would require any valuation to consider the anticipated effects of electricity prices.

I am sympathetic to concerns about the impact that these trade-related measures and electricity costs may have on steel undertakings, and therefore on any compensation determinations made by an independent valuer in relation to them under any compensation scheme regulations. However, I emphasise that the Government consider it unnecessary to add these amendments to the non-exhaustive list of examples of matters for a valuer to take into account under any compensation regulations. Any valuation would reflect the wider economic and market context, including the trading environment in which the steel undertaking operates, with or without tariffs, without the need to single out specific factors in primary legislation. This means that the valuer will ultimately have discretion to determine what they consider to be the relevant factors in making their determination.

Valuing a steel undertaking would be complex. The independent valuer would necessarily have, or be advised by those who have, expertise and experience in this area and would be well equipped to make informed decisions on their approach to valuation. For this reason, the Government do not consider these amendments necessary.

I turn to Amendment 43, which would place a duty on the Secretary of State to report to Parliament on the impact that any nationalisation of a steel undertaking would have on inward investment in the UK. I emphasise the commitments the Government have already made to support investment in the steel sector. The Government’s steel strategy set out commitments to removing barriers to investment and creating a more supportive business environment so that steel companies are better able to compete, are protected from carbon leakage and unfair trading practices, and have greater security and certainty. The Government welcome new entrants to the UK steel industry, which would foster a more competitive business environment. Government funding is available to support this.

I reassure noble Lords that the impact of nationalisation would be taken into account in any impact assessment on the use of transfer powers. This is the most appropriate mechanism for reporting on any expected impact on the economy. Given the complexity, interlinking and scale of investment trends, it would be difficult to report further on the exact impact of a single intervention. It is for this reason that we ask for this amendment not to be pressed.

Amendment 44 seeks to ensure that the powers in the Bill do not confer any advantage on publicly-owned steel undertakings which could distort competition and trade. I understand the concerns from the noble Lord, Lord Sharpe, that the Bill may unfairly distort competition and investment across the steel sector. However, I reassure your Lordships that this is not the Government’s intention. Any financial assistance provided to publicly-owned steel undertakings will be time-limited, targeted and proportionate. Furthermore, we will continue to comply with domestic and international subsidy control obligations to avoid market distortions. I hope this clarifies that the Government are committed to ensuring a level playing field between state and privately-owned steel companies. This amendment is therefore not required.

Amendments 4 and 36 were tabled by the noble Lord, Lord Wigley, who has raised concerns about what he considers to be the potential adverse impact of the Bill on local communities in steel-making areas. Amendment 4 would create an additional public interest factor for a Secretary of State to consider ahead of exercising the principal transfer power. This would be to support the local economy of any steel-making location adversely affected by the Bill.

The Government have introduced the Bill to support domestic steel-making, not to threaten it. Additionally, one of the three factors set out under the public interest test in Clause 2 is supporting the economy, including any part of the UK economy. The same applies to Amendment 36, which would allow financial assistance to be provided to compensate communities adversely affected by the Bill. I do not expect the Bill to have any adverse impacts on local communities, so I do not consider this amendment appropriate.

I emphasise to the noble Lord that the steel industry in Wales is the only part of the industry with a ring-fenced fund: £500 million for Port Talbot to transform the steelworks and secure steel production at that site and to secure the future of the south Wales steel industry. This is a significant investment that will benefit the local community in that area for years to come. This demonstrates the Government’s confidence in the Welsh steel community and the crucial role that Tata plays in it.

I understand the objective of Amendment 46, tabled by the noble Lord, Lord Sharpe. We all want to ensure that any publicly owned steel undertaking can operate effectively, maintain production and continue to serve the national interest. On that objective I do not believe there is any disagreement within the Committee; where we differ is on the means of achieving it. The amendment would give the Secretary of State the power to prohibit or restrict industrial action where it is considered to pose a sufficient risk to the public interest.

The Government do not believe that curtailing workforce rights is either necessary or the right way to secure a successful and resilient steel industry. The people who work in our steel plants are not an obstacle to operational success; they are the reason it is possible. Their skills, commitment and professionalism keep furnaces running, fulfil customer orders and sustain a strategic industry on which our economy and national security depend. The long-term success of a publicly owned steel undertaking will be built on partnership with this workforce, not on restricting their rights.

Moreover, good industrial relations are an asset in themselves. Constructive engagement with employees and their trade unions is far more likely to ensure stable operations than legislation that risks damaging trust and co-operation. Indeed, imposing additional restrictions could prove counterproductive, making disputes harder rather than easier to resolve. The Government have established constructive relationships with the trade unions representing workers at British Steel and across the wider steel sector. We value the role they play in representing their members and in helping secure the future for this vital industry.

Existing industrial relations legislation already provides the legal framework for industrial action. The Government see no justification for establishing a separate and more restrictive regime merely because an undertaking has entered public ownership. Public ownership should not mean fewer workers’ rights; it should mean responsible stewardship of a strategically important industry, working with the skilled men and women whose expertise will determine its success.

I thank all noble Lords for their amendments, which aim to ensure that the Bill does not distort the market to create inequality between public and private sector steel companies. I hope I have reassured noble Lords that the Government remain committed to revitalising the steel sector, which should be achieved through co-investment from the private and public sectors. I respectfully ask that the amendment be withdrawn.

[Lord Wigley (PC)]

My Lords, I am grateful to the Minister for his response on the whole range of diverse amendments we have before us. No doubt the Opposition Front Bench will have their own opinion on which ones of these they may want to return to on Report, because there are important issues that undoubtedly have arisen from those amendments.

Amendment 4 seeks to support

“the local economy of any steel-making location which may be adversely affected by this Act”.

I noted the Minister’s response, that this may be taken to be covered by other words in this subsection and in other parts of the Bill. But, with respect, words such as

“supporting the economy of the United Kingdom or any part of the United Kingdom”,

are so general that they do not actually address the point we are specifically addressing in Amendment 4, which is the impact on local communities of steel-making locations which may be adversely affected by the Act. It may well be that some such locations are not adversely affected by the Act—they may not be helped by the Act, but they may be able to get on with it—but some almost certainly will be, and there should be express and specific provision to ensure that the needs of those areas are on the face of the Bill.

In Committee, we are quite clearly only probing these matters. But I ask the Minister whether, between now and Report, he will come back and consider that. This is because the reaction against the Act will not be from the generality of the UK economy, or regional economies; it will be from specific places that are in danger of losing out because of the changes, some of which are perhaps inevitable, but which need to take place in order to facilitate the general objective of the legislation. Therefore, in begging the leave of the House to withdraw Amendment 4, I ask the Minister to consider that specific aspect between now and Report.

Amendment 4 withdrawn.

Amendment 5

Moved by

[Lord Hunt of Wirral]

5: Clause 2, page 1, line 20, at end insert—
“(2A) The Secretary of State may not exercise a principal transfer power unless the Secretary of State has commissioned an independent assessment of whether the exercise of the power is in the public interest, and that assessment has demonstrated that it is in the public interest.(2B) The Secretary of State may appoint such independent person as the Secretary of State thinks fit to carry out an independent assessment under subsection (2A), and may pay remuneration and allowances to that person.”Member’s explanatory statement
This amendment would require an independent assessment of whether the public interest test had been met before the Secretary of State could exercise the principal transfer powers.

[Lord Hunt of Wirral (Con)]

My Lords, Amendments 5, 6 and 42, standing in my name and that of my noble friend Lord Sharpe of Epsom, go to three basic questions which ought to be answered before the Government exercise powers of this scale. They are: on what evidence is nationalisation justified, by what criteria will Ministers make that judgment, and what will be the financial and economic consequences?

Amendment 5 would require an independent assessment before a principal transfer power is exercised, establishing that the proposed transfer is in the public interest. That is not an attempt to prevent the Government acting in a genuine emergency. It is an attempt to ensure that before private assets are transferred into public ownership, there is an objective check that the case has been made.

The sums involved may be very substantial. Once the state acquires a business, it may assume not only its assets but its liabilities, its working capital requirements, its investment needs, and the risks of continuing operating losses. These may be decisions with billions of pounds at stake. They should be based on evidence, not merely urgency or political pressure.

Amendment 6 is the natural counterpart. It would require the Secretary of State to lay before Parliament the full criteria by which the public interest test has been judged. The Bill currently gives Ministers a broad discretion. I believe that Parliament is entitled to know how that discretion has been exercised before a transfer takes place. What precisely has been considered? How have national security, economic consequences, competition, costs to the taxpayer and the future viability of the undertaking been weighed? Those are not matters which should be left to assertion after the event.

18:00

Amendment 42 would complete that framework by requiring a published impact assessment before the Secretary of State exercises a power under the Act. A proper assessment should set out the financial costs, economic implications and risks. It should address the expected need for public funding, the consequences for competitors and supply chains, the effect on investment and the realistic alternatives available to the Government.

The Government may say that they will act responsibly. I hope that they will. But the Bill will create lasting powers, and ministerial assurances are just not a substitute for statutory safeguards. The Bill, as we have said before, risks leaving taxpayers with an open-ended bill, and that is most unsatisfactory. I beg to move.

[Lord Redwood (Con)]

I am very glad that my noble friend raised the issue of an impact assessment, because if the Government press ahead with the acquisition of British Steel under the legislation, that could be the first opportunity we have for a realistic impact assessment. Yet, the taxpayer has been responsible for the losses in working capital and investment funds for over a year now, with the lack of clear reporting that we have commented on before.

We have an impact assessment for this piece of legislation. Understandably, it says that there are not any costs or benefits to report, because there is not a transaction. These are enabling powers, which would enable the Government to undertake and complete a transaction. But it would only be at that point that officials tasked with the difficult question “What is the impact?” would be able to come up with some numbers, because we would then presumably have some visibility on the cost of acquisition, if any, the operating costs and working capital costs that will go forward. That would be very helpful, in connection with the difficult investment at Scunthorpe, where, as we heard earlier, the NAO reported that there has already probably been £642 million of taxpayer expenditure up to the current month, with a very high run rate going forwards. So, I hope that the Government will offer us reassurance—if not a new clause in the Bill—to say that there will have to be a proper and timely impact assessment.

That, too, would clearly require proper due diligence, which I trust has been under way, now that the Government are responsible for the business. We would need to know that there had been a proper study of Anne and Bess, the two blast furnaces, which were either built or last substantially modified in the early 1950s. These are ageing assets. They have had deep maintenance in this century, but we would need a condition statement on that, so that the Government are reassured that however long they think they can run these blast furnaces for is feasible in terms of the condition of the plant. In order to sustain the employment for the next month, year or whatever it may be, we would need to know that there will not be major maintenance required or no question of having to cool the furnaces down, because that is a dangerous and expensive process and would raise issues about how easy it would be to spend enough money to reinstate these particular assets.

Of course, it would also require proper reporting to the Government—not supplying all the detail to us, but proper reporting on market prospects and how the steel product produced at Scunthorpe is perceived, and what the market opportunities, in general terms, might be and other supporting documents. It will require a serious impact statement, for the benefit of democratic accountability. More importantly, that would prove that the Government have done their homework, because the Government should not be taking on a plant like this unless they have a condition report, a marketing report, a proper cost examination and so forth, which I and my noble friends have been referring to.

[Lord Fox (LD)]

My Lords, I do not want to be the bringer of bad news to the noble Lord, Lord Redwood, but I suspect that it is pretty clear that the condition of the blast furnaces is poor and whatever happens, either to reinstate them to the level that would take them forward or to invest in electric arc, will take a lot of money. That is the point that we are focusing in on, and that is why we are focusing in on the public interest test. We have not yet gotten past Clause 2 yet, because this is the crunch.

I have a group of amendments in the next group, so I will reserve almost everything I have to say. The noble Lord, Lord Hunt, has already disobeyed his Amendment 2, because we are seeking to broaden the scope of the public interest test. With respect to the noble and right reverend Lord, Lord Sentamu, there is such a number of issues that have to be addressed within the particular field of potential investment that the public interest really requires focus. I will leave it at that for this group and then come back to these in the next group.

[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Redwood, Lord Fox and Lord Hunt, for their contributions.

The noble Lords, Lord Hunt and Lord Sharpe, tabled Amendments 5, 6, and 42 to provide for an independent person to assess the public interest. Further amendments tabled by the noble Lords would require the Government to publish both the criteria used to assess the public interest and their assessment on how those criteria are met, before exercising the principal transfer power. Amendment 42 would require an impact assessment to be published before any intervention or the exercise of any power under the Bill. As these amendments deal with similar issues, I will address them together.

I start by saying that I understand and sympathise with the desire for the greatest parliamentary and stakeholder scrutiny of a decision to intervene under the powers in the Bill. Stakeholder engagement is a key part of the Government’s policy approach to the sector, with Ministers regularly meeting key industry groups and representatives through the steel council and other forums. The Government have published an impact assessment alongside the Bill, explaining how the public interest test will be considered. A further impact assessment will be published alongside any secondary legislation exercising the transfer of power.

The framework for decisions to intervene will stem from what has been included in Clause 2, with regard to the three public interest factors. There is no attempt on our part to obfuscate or hide the criteria that will be applied in practice. The Government will not only consider whether a steel undertaking is engaged in activity that serves the public interest; they will also consider whether the activity is at risk of not receiving government intervention.

The Government cannot support these amendments as each would create additional hurdles and process pre-intervention. In the kinds of situations that the Bill envisages, speed will be crucial. Likewise, commercial and market sensitivities mean that swift action will, in most circumstances, be necessary to avoid uncertainty.

None the less, I am aware that there are strongly held concerns about this issue, and I can confirm that the Government will consider options for Parliament to scrutinise decisions taken either at the time of or after the exercise of the transfer of powers ahead of Report stage. I hope that this offers some reassurance to noble Lords, and I look forward to continuing further conversations with the noble Lord, Lord Fox, ahead of Report. With that, I ask that the amendment be withdrawn.

[Lord Hunt of Wirral (Con)]

My Lords, I am very grateful to the Minister for his response, particularly his closing words. My hopes were raised when he started by saying that he understood everything that I had said and was sympathetic. Then the situation clouded a little as he said that these amendments would present additional hurdles at a time when speed would be essential, but then he said that the Government would consider options between now and Report—and that is what I was seeking to hear.

I am very grateful to my noble friend Lord Redwood for putting it all in the historical context. It is easy to forget the pace at which we entered this debate, by being summoned to Parliament in April of last year. As the noble Lord, Lord Fox, reminded us, Clause 2 is the crunch. It is a key part of this Bill. To remind colleagues, Amendment 5 would require an independent assessment confirming that nationalisation is in the public interest before transfer powers could be used. Therefore, as we approach that amendment, I obviously cannot press the Minister on the options that the Government will consider, but it would be a way forward if we could find a solution comparable to that in Amendment 6, requiring the Secretary of State to lay before Parliament the criteria used to assess the public interest before using transfer powers—and then Amendment 42, which would require an impact assessment.

I recognise the point that the Minister has made about the practical difficulty of preparing a full assessment before the exercise of emergency powers—particularly, as he explained, where Ministers may need to act quickly to prevent serious harm. However, that cannot mean, as I believe the Minister accepts, that the financial consequences are treated lightly. The cost to the taxpayer of taking on a steel undertaking—its liabilities, its working capital needs and its future investment requirements—may be substantial. As my noble friend Lord Redwood pointed out, Parliament has a proper understanding and an interest in understanding those costs, the risks assumed and the basis on which the decisions have been made. Parliamentary scrutiny should not be seen as an obstacle to action. It is surely a necessary part of ensuring that exceptional powers are used responsibly and transparently.

We await the decision of the Government. I had hoped that the Minister would commit to publishing an impact assessment alongside the exercise of the power. I will examine his words carefully, because that assessment is the key. It should set out the costs incurred, the economic implications, the liabilities assumed, the anticipated future costs and the risks to the taxpayer. There is much for the Government to reflect on. I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Amendment 6 not moved.

Amendment 7

Moved by

[Lord Fox]

7: Clause 2, page 1, line 20, at end insert—
“(2A) The Secretary of State may not exercise a principal transfer power unless they have laid a statement before both Houses of Parliament explaining their reasons for concluding that it is necessary to exercise the power in the public interest.”Member's explanatory statement
This amendment would require the Secretary of State to lay a statement before Parliament explaining their reasons for concluding that it is necessary to exercise a principal transfer power in the national interest, before exercising that power.

[Lord Fox (LD)]

My Lords, I shall speak also to Amendments 10 and 11 in my name.

Agreement appears to have broken out. The noble Lord, Lord Hunt, the Minister and I all agree that the wording of Clause 2 is central to how we move forward. I always suspected that the public interest test element would be the hardest bit to resolve in this Bill. We are beginning to see that this might be true.

18:15

Following discussions, my understanding of how things would go with the Bill as currently formed is that the Government would publish a public interest test immediately after the use of its transfer powers under this Bill. To their mind, this would focus on the underlying rationale for intervention in a particular steel undertaking and to some extent show how it would be determined to be in the public interest. However, as things stand, it would not address the cost of taking any asset into public ownership. The Government will say to Parliament that it is in the public interest to nationalise asset X, Y or Z but, in essence, “at any cost or no cost or at a cost that we are not going to tell you what it is”. That self-evidently cannot be true. There is a value to any asset which any acquirer must not pay. I have sat around executive boards where potential acquisitions that are strategically perfect fits turn out to be too expensive. The board cannot sanction the acquisition of those assets. The same must be true here to some extent. The weighing is a different weighing, but the principle is exactly the same. Furthermore, the idea that there is a price strengthens the hand of the government negotiators to the counter parties. They will be able to say, “Parliament will not wear this number; we need a better number”. Therefore, it strengthens negotiation.

The Minister talked about the need for speed but there is “repent at leisure” if you move too quickly. There is an element of speed. Parliament has demonstrated that it can move at speed. Just before Easter 2025, we did important things on behalf of the steel industry in a day. Both Houses can move at speed, but they need the information to make those decisions. The Minister will say that it is a matter of sequencing—establish the public interest first and then negotiate the cost. He will say more generally, as he already has, that any acquisition under the Bill will be subject to the usual Managing Public Money principles—I would ask him how those principles differ from those that were used to safeguard the investment in HS2. Moreover, the Government have been clear that the modernisation of the steel sector is dependent on both public and private investment. How will that play into the decision-making?

This approach has made me more adamant that there need to be changes to Clause 2 to take this into account. The amendments in this group start to address the fundamental point. While I acknowledge and welcome the reporting provisions in the Bill, these would take place post hoc. It is not right to expect the Houses of Parliament to vote on regulations regarding nationalisation without any indication of the cost attached to that nationalisation.

In a later group, I will propose a role for Select Committees on this by amending Clause 58. However, these three amendments focus on Clause 2. Amendment 7 is quite similar to Amendment 6 tabled by the noble Lord, Lord Sharpe, and would require the Secretary of State to lay a statement before Parliament explaining the reasons for concluding that it is necessary to exercise the principal transfer power in the national interest before exercising that power. Amendment 10 would require the public interest test to consider the impact of nationalisation on the public finances. In other words, how much does it cost? Amendment 11 would require the public interest test to consider the investability of the steel undertaking. In other words, how does the private sector get involved in this, as that is the stated government aim for this legislation?

We must find a way of ensuring that the anticipated cost of any nationalisation is an integral part of a public interest test and one that Parliament can influence rather than debate post hoc. I am very happy to discuss ways of doing this with the Minister and his team. In the meantime, I beg to move.

[Lord Sharpe of Epsom (Con)]

My Lords, I am very grateful to the noble Lord, Lord Fox, for bringing forward these amendments. As he has observed, there are similarities with some amendments of ours and we are happy to work together to clarify them. He could also have said that Parliament will be acting at speed tomorrow on the National Security (State Threats) Bill from the noble Lord, Lord Hanson—so it can be done.

We have already raised significant concerns about the breadth of the public interest test in Clause 2. The amendments in this group go directly to those concerns. The noble Lord is quite right that, before such exceptional powers are used, Parliament should be told why nationalisation is considered necessary. It is also right that the Government should have to consider the effect on the public finances and whether the undertaking has any credible short-term and long-term prospect of being investable. A business may be capable of being kept open in the short term, but that is not the same as being viable, competitive or capable of attracting the investment needed for its future. The public interest also cannot be assessed without proper regard to the liabilities and continuing costs that may fall on taxpayers.

The Government’s approach so far has relied heavily on broad discretion and ministerial assurance. These noble Lord’s amendments would introduce greater transparency, discipline and realism into that process. For those reasons, we support them.

[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Fox and Lord Sharpe, for their contributions. I also thank the noble Lord, Lord Fox, for his constructive engagement over the past few weeks. I understand that he is trying to support the steel sector and the Bill while ensuring value for money, which is the Government’s objective as well.

Amendment 10 would require the Secretary of State to take into account the impact on the public finances when applying the public interest test. Of course, any decision to nationalise a steel undertaking should not be taken lightly, given the significant costs that could be incurred. However, the principle of securing value for money for the taxpayer is already well established and embedded in government decision-making, as I said on an earlier group. Any decision to exercise the powers in the Bill is subject to the usual Managing Public Money governance and the framework of accounting officer checks, which includes consideration of the impact on the public finances. I therefore respectfully suggest that incorporating the amendment into statute would not serve any particular purpose, but we are mindful of ensuring that costs associated with the Bill are well managed.

The noble Lord, Lord Fox, also proposes, in Amendment 11, that the Secretary of State should take into account the short-term and long-term investability of a steel undertaking when considering whether to intervene in the public interest. I understand the sentiment behind the amendment, but I do not think that investability should directly inform the public interest test.

If a steel undertaking is an investible prospect in the short term, it is unlikely that there would be a case for government intervention, as the need could be met by the private sector. The intention behind the Bill is not to crowd out private investment but to act where private ownership has failed. Whether a steel undertaking is investible in the longer term is highly speculative, so I do not think it would be particularly helpful for it to form part of the statutory framework for the decision. By intervening, the Government would hope to turn a steel undertaking that is not investible into something that may become investible. To the extent that this is what the noble Lord hopes to achieve, we share his ambition, but I do not think that the amendment is workable.

Amendment 7 would prevent the Secretary of State exercising the principal transfer powers until a statement explaining how the public interest test is met has been provided to Parliament. I am sympathetic to the desire for greater parliamentary and stakeholder scrutiny of any decision to intervene under the powers in the Bill.

As I said previously, the Government have published an impact assessment alongside the Bill, explaining how the public interest test will be considered. Any further impact assessment would be published alongside any secondary legislation exercising the transfer powers. The framework for the decision to intervene will stem from the three public interest factors included in Clause 2. The Government will consider not only whether a steel undertaking is engaged in activity that serves the public interest but whether that activity is at risk without government intervention.

The Government cannot support this amendment, as it would create additional hurdles and processes pre-intervention. In the kinds of situations that the Bill envisages, speed will be crucial, as I said previously. Likewise, commercial and market sensitivities mean that swift action will, in most circumstances, be necessary to avoid uncertainty; I take note of what noble Lords said about speed. None the less, I am aware that there are strongly held concerns about this issue and I confirm that, ahead of Report, the Government will consider options for Parliament to scrutinise decisions taken either at the time of or after the exercise of the transfer powers. I hope that this of some reassurance to the noble Lord and ask that his amendment be withdrawn.

[Lord Fox (LD)]

My Lords, I thank the noble Lord, Lord Sharpe, for his support for these amendments and I was pleased to hear the closing part of the Minister’s statement. We all want the costs of any nationalisation to be well managed; we are looking for those costs to be well understood in advance of any commitment by the Government on behalf of the people of this country. We look forward to those discussions and I beg leave to withdraw Amendment 7.

Amendment 7 withdrawn.

Amendment 8 not moved.

Amendment 9

Moved by

[Lord Wigley]

9: Clause 2, page 1, line 20, at end insert—
“(2A) In assessing the “public interest” in regard to the exercise of transfer powers relating to a steel undertaking located in Wales, the Secretary of State must consult the First Minister of Wales before exercising such principal transfer powers.”Member’s explanatory statement
This amendment is to ensure that the UK Minister and the First Minister of Wales work together in taking forward transfer powers which involve a steel undertaking in Wales.

[Lord Wigley (PC)]

My Lords, the amendment proposes inserting a new subsection (2A), which provides that:

“In assessing the ‘public interest’”—


which is the whole dimension underpinning the Bill—

“in regard to the exercise of transfer powers relating to a steel undertaking located in Wales, the Secretary of State must consult the First Minister of Wales before exercising such principal transfer powers”.

This is surely basic common sense, since many, if not most, of the responsibilities impacted by such transfers in Wales rest with Senedd Cymru. These powers include economic development, town and country planning, roads, education and training, and the environment. Each one of these may, and almost certainly will, be impacted by the consequences of transfer decisions.

To those who argue that responsibility to co-operate already exists, I say that, if that responsibility is spelled out in the Bill, it would trigger an earlier and more thorough approach. Otherwise, it would be so easy to treat such dialogue and mutual action as an afterthought when it should be a cast-iron statutory requirement.

This brings me to the associated Amendment 19. Clause 50 provides powers to the Secretary of State

“to modify law in connection with … property transfers”.

Clause 50(3) is very serious as it provides for retrospective legislation. This should always trigger alarm bells, in whatever context it arises. As many of the legislative responsibilities that might be impacted by this are fully devolved to Senedd Cymru, any such regulations must be made only with the prior agreement of Senedd Cymru. This must be included in the Bill, otherwise it would be open to a Pandora’s box of utter chaos.

Amendment 19 specifically provides a route to avoid such consequences by requiring the prior agreement of Senedd Cymru to any such regulations that involve devolved powers. Including this in the Bill would avoid misunderstanding and unhelpful polarisation, so I beg to move Amendment 9 and would like to hear the Minister’s response to both it and Amendment 19.

[Lord Fox (LD)]

I will be very brief and speak with some support for the noble Lord, Lord Wigley. As far as I can tell, the Bill does not require legislative consent from either Cardiff or Edinburgh. Perhaps the Minister could confirm that. If it does not, the principle set out by the noble Lord, for both Wales and Scotland—I know that there may be industrial differences, but the two things apply—would be very important. I look forward to hearing what the Minister says in that regard.

[Lord Hunt of Wirral (Con)]

My Lords, I very much echo what the noble Lord, Lord Fox, has just said, and I thank the noble Lord, Lord Wigley, for his amendments, which raise very important points. There are considerable concerns about what is happening at steel plants in Wales and the consequences for the workers, their families and the much wider community. It is right that, where these powers may affect a Welsh steel undertaking or devolved responsibilities, Wales should be properly involved. I urge the Minister to respond positively to the concerns so rightly raised by the noble Lord.

18:30

[Lord Leong (Lab)]

My Lords, in this group of amendments, the noble Lord, Lord Wigley, has raised important concerns about the ways in which the Bill includes the Welsh Government and legislature in decision making. Amendment 9 would amend Clause 2 on the public interest so that the Secretary of State would be required to consult the First Minister of Wales before exercising the principal transfer power in relation to an undertaking located in Wales.

The Government have been keen to engage closely with the devolved Governments throughout the passage of the Bill, and I am grateful for the approach taken by all parties in that engagement. I am delighted to inform your Lordships that the Scottish Parliament granted its legislative consent to the Bill on 23 June. I record my thanks to Ministers and officials who worked swiftly to complete the legislative consent process ahead of the Scottish Parliament’s Summer Recess.

I am happy to confirm that the Government will ordinarily consult the relevant devolved Ministers if it is likely that the principal transfer power will be used in relation to a steel undertaking with its principal place of business in Scotland, Wales or Northern Ireland. If this is not possible because swift action in the public interest is required, Ministers will engage with their ministerial counterparts at the earliest opportunity following the exercise of the principal transfer power. I also understand that my colleagues, Ministers and the Secretary of State for Wales will meet their counterparts in the Welsh Government tomorrow to discuss the Bill further.

Amendment 19 would require the Senedd to give approval to any proposed use of the modification power that would relate to devolved regulations. Again, I am sympathetic to the sentiment of this amendment and reassure the noble Lord that the modification power in Clause 50 is targeted and limited to applications necessary to ensure that transfer powers can be exercised effectively. It is not a general power to amend legislation. The drafting does not permit any changes to other laws unless they are for the purpose of ensuring that the powers in the Bill can be exercised effectively.

Although I cannot agree with these amendments, I reiterate the Government’s desire to continue engaging closely with our partners in the devolved Governments. In particular, the Government are continuing to discuss the Bill with the Welsh Government, and I hope to be able to provide noble Lords with further updates later in the Bill’s passage. However, I ask the noble Lord to withdraw his amendment.

[Lord Wigley (PC)]

Well, well, well—I thank noble Lords for their positive responses. I thank the noble Lords, Lord Fox and Lord Hunt, and indeed the Minister, for the tone and content of their support for the principles here, if not the exact wording on the Order Paper. I noted with interest the ongoing discussions with colleagues in Cardiff and that there are further discussions about to take place. If, arising from those discussions, the Government feel it is appropriate to tweak the Bill to cover those points, I am sure that would be widely welcomed all round. On the basis of this general positive approach, I beg leave to withdraw the amendment.

Amendment 9 withdrawn.

Amendments 10 and 11 not moved.

Clause 2 agreed.

Clause 3: Sunset for exercise of principal transfer powers

Amendment 12

Moved by

[Lord Sharpe of Epsom]

12: Clause 3, page 2, line 10, leave out subsections (3) to (5)
Member’s explanatory statement
This amendment seeks to prevent the Secretary of State extending the sunset of the principal transfer powers.

[Lord Sharpe of Epsom (Con)]

My Lords, I hope that this outbreak of agreement means that the Government will accept my Amendment 12. The Government have repeatedly spoken of a long-term plan for steel—securing private investment, increasing domestic production, safeguarding jobs and creating a viable future for the industry. Against that background, Clause 3 comes as something of a surprise. Earlier, the noble Lord, Lord Fox, indicated that he was somewhat reassured by its presence, but I suspect that its actual terms have escaped his usual vulpine scrutiny. A sunset clause is intended to place a clear limit on exceptional powers, but the Bill allows the Secretary of State to substitute, by regulations, a different period for the two-year limit.

Subsection (4) makes it clear that this can be done more than once. Therefore, in practice, the powers could be extended again and again, which gives no reassurance at all. Two years could become five years, 10 years or longer. That is not a meaningful sunset clause; it is a potentially perpetual sunset clause. It is an indefinitely renewable power.

What does that say about the Government’s confidence in their own ability to secure a viable private sector-led future for British Steel? If Ministers genuinely expect these powers to be exceptional and temporary, why do they require the ability to extend them without any stated final limit? This goes directly to the concerns raised throughout our debates—the risk of open-ended liabilities for taxpayers, uncertainty for investors and a lack of clarity about the Government’s intended endpoint.

The Constitution Committee of your Lordships’ House has considered this point and has been unequivocal. It said:

“The use of delegated powers to bypass sunset clauses undermines their purpose, and sets an unusual and unwelcome precedent”.


It recommended either that the final period of extension be set out in the Bill or that there should be a statutory time limit each time the power is used. This would not prevent the Government seeking additional time when there is a compelling case, but it would require Ministers to return to Parliament with a clear final boundary rather than retaining power capable of perpetual renewal.

Will the Minister accept the Constitution Committee’s recommendations and bring forward amendments before Report? Will the Government set a final limit on these powers and demonstrate that they have genuine confidence in securing a thriving, investible and private sector-led future for British Steel? I beg to move.

[Lord Fox (LD)]

My Lords, I see the point that the noble Lord, Lord Sharpe, has made, and I commend him for getting past this amendment before 9.21 pm, which is of course sunset.

[Lord Leong (Lab)]

I thank the noble Lord, Lord Sharpe, for his contribution. I note the Constitution Committee’s comments on this clause in its recently published report on the Bill. The inclusion of the sunset provision demonstrates the Government’s commitment to ensuring that powers remain on the statute book for as long as necessary to serve their purpose. Ultimately, we want to see the domestic steel sector return to a more sustainable and stable state in which government intervention is unnecessary.

As we have said, we do not currently see another use case beyond the possibility of British Steel. Therefore, we hope that noble Lords get their wish and there is no need to extend the sunset period. However, the current geopolitical landscape creates a volatile backdrop for this sector, making it difficult to anticipate what may transpire in the coming months and years. We have therefore built in some flexibility to extend or shorten the two-year sunset timetable if circumstances change. We consider this a reasonable precaution to take.

The drafting ensures that there will be full parliamentary scrutiny of any change to the sunset period through the affirmative procedure, meaning that parliamentarians will be able to test and debate any regulations brought by the Government to extend the sunset period. We anticipate needing to use this extension power only in extenuating circumstances. I therefore request that the amendment be withdrawn.

[Lord Sharpe of Epsom (Con)]

My Lords, that was a very brief debate, and I am grateful to the Minister for his response, but I am afraid I remain unconvinced. The Government say they want to secure a sustainable private sector-led future for British Steel. But a power capable of being extended repeatedly without any final statutory limit sends exactly the opposite signal. It risks making investors more, not less, cautious about committing capital to the sector. There must be a reasonable period that the Minister can identify and put in the Bill. If the Government genuinely regard these as exceptional and temporary powers, they should be willing to set out a clear limit.

The noble Lord cannot realistically blame external circumstances. There are always external circumstances. This has fallen foul of the Constitution Committee for very clear reasons, which it has set out. Speaking personally and from experience, I think it is unwise to fall foul of the Constitution Committee.

We urge the Government to take seriously the recommendation of the committee and either specify the final extension period in the Bill or impose a statutory limit on each extension. I think we will have to return to this matter at a later stage, but for now I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

Clause 3 agreed.

Clause 4: Share transfer regulations

Amendment 13

Moved by

[Lord Hunt of Wirral]

13: Clause 4, page 2, line 30, leave out “negative” and insert “affirmative”
Member’s explanatory statement
This amendment seeks to require regulations transferring securities of a steel undertaking to be subject to the affirmative procedure.

[Lord Hunt of Wirral (Con)]

My Lords, Amendment 13 makes regulations transferring securities in a steel undertaking subject to the affirmative procedure. Amendment 14 makes regulations transferring the property rights or liabilities of a steel undertaking subject to the affirmative procedure. Amendment 15 makes regulations on continuity obligations subject to the affirmative procedure. Amendment 18 in this group makes enforcement regulations subject to the affirmative procedure. I will begin by referring to those amendments but speaking to the question of whether Clause 50 should stand part of the Bill.

This clause gives the Secretary of State a very broad power to modify primary legislation, secondary legislation and common law in connection with a share or property transfer. It may be used retrospectively and, in some circumstances, before Parliament has had the opportunity to approve the regulations. These are considerable powers, particularly when we are discussing property rights, contractual rights and the compulsory transfer of businesses and their assets. My noble friend Lord Sharpe of Epsom has already referred to the report of the Constitution Committee, and he speaks from personal experience of knowing the dangers of ignoring the recommendations of that committee. The committee is pretty clear about Clause 50, and I will quote from its report:

“We recommend that the broad power granted to the Secretary of State in Clause 50(1) to modify the law in relation to share or property transfer by regulations should either be removed or significantly tightened to specify the circumstances in which such law may be modified”.


I believe that the Government should take that recommendation seriously.

The Government’s delegated powers memorandum sets out at some length why Ministers believe that a broad power may be needed. It refers to the complexities of company law, insolvency law, commercial law and supply chains, and the possibility that an obstacle to a transfer may emerge unexpectedly. A compulsory transfer may well give rise to legal complications, but the memorandum does not provide concrete examples of the circumstances in which primary legislation would need to be disapplied or modified. If those circumstances can be identified, they should be placed in the Bill, or at least the power should be more tightly defined.

On Amendments 13 and 14, the Government’s own delegated powers memorandum confirms that the transfer powers in Clauses 4 to 29 are subject to the negative procedure. That is a very wide suite of powers. They not only concern the initial transfer of shares or property but include the legal effect of those transfers, continuity arrangements, the conversion and delisting of securities, the position of directors and senior managers, licences, termination rights, foreign property and supplemental onward, reverse and connected transfers. Amendments 13 and 14 focus on the central powers, the compulsory transfer of securities and the compulsory transfer of property rights and liabilities. Those are the acts by which the state takes control of a private business, or part of one.

18:45

The Government argue that the negative procedure is necessary because a transfer might be commercially sensitive and fast moving. They point to the risk that assets might be moved or contracts terminated, key personnel might leave or counterparties might take action to frustrate the transfer. We recognise that there may be genuine urgency in particular cases, but we do not accept that this makes affirmative scrutiny inherently obstructive. The Bill already demonstrates that Parliament can accommodate urgency where it is genuinely necessary.

Clause 50 provides for a “made affirmative” procedure. Ministers may act immediately where required, but Parliament must subsequently approve the regulations for them to remain in force. Why should the Government not use a comparable approach for the actual transfer of securities, property rights and liabilities? Indeed, the need for security is greater because, once the principal transfer power has been exercised, the Bill permits a range of supplemental onward, reverse and connected transfers without a new clause covering public-interest determination. Parliament should therefore have a proper opportunity to scrutinise the initial act that unlocks that wider suite of powers. These amendments would not stop Ministers acting swiftly where there is a real emergency. They would ensure that compulsory transfers of private property and liabilities are subject to meaningful parliamentary approval. That is not obstruction; it is surely the minimum level of scrutiny appropriate for powers of this constitutional and commercial significance.

Amendment 15 concerns Clause 39 and continuity obligations. Clause 39 allows the Secretary of State to make regulations specifying matters that are to be taken into account or disregarded when determining reasonable consideration and the terms of arrangements that parties would be expected to make at arm’s length. The Government’s memorandum says that this power may be used to provide detail about how consideration and terms are to be determined and that its purpose is to ensure fair compensation for parties subject to continuity obligations. That raises an obvious question. Why should matters going directly to fair compensation and the terms imposed on affected parties be left to the negative procedure? These regulations may determine what constitutes reasonable consideration and what terms can be expected from parties who may have little practical choice but to continue arrangements after a transfer. It is our view on these Benches that this should surely be done by the affirmative procedure.

Amendment 18 concerns enforcement. Clause 45 permits regulations on the enforcement of obligations under share or property transfer regulations. The regulations may confer jurisdiction on a court or tribunal. Again, the Government say that this is necessary to ensure that obligations can be enforced from the moment of transfer, but the fact that enforcement may involve courts or tribunals makes scrutiny more important, not less, and therefore it should be subject to the affirmative procedure. I beg to move.

[Lord Fox (LD)]

My Lords, I have to say I was a bit grumpy when the Conservative Party tabled these amendments that we had tabled in the Commons, but in retrospect I am very pleased. No joking—that was a tour de force from the noble Lord, Lord Hunt. This is his specialist area, and that was his best speech on Henry VIII that I have heard. All the points were points that I would have made except that I am not good enough to have made them, so in that respect I am glad that he was the person proposing this, rather than I. The only thing that stops the noble Lord from being risen to the pantheon is that, having won affirmative powers, he and his colleagues never actually exercise them through fatal Motions. Frankly, that is the only flaw in what we have just heard.

I countersigned Amendments 13 to 15 and 18 but my pen ran out when we got to Clause 50 stand part. All the points that the noble Lord made are valid. I hope the Government are able to take on board both what he said and what your Lordships’ committees have said about the shortcomings in this draft.

[Lord Leong (Lab)]

My Lords, before I turn to the amendments in this group, I thank the members of the Select Committee on the Constitution for their report on the Bill, which relates to this grouping. The report recommended that in Clause 47 the provisions for dispute settlement should be set out more fully in the Bill. The approach to drafting here is in line with existing precedent under the Banking Act 2009 and reflects the approach taken for similar powers, such as enforcement powers. We think it is appropriate to provide for dispute settlement on a case-by-case basis through regulations.

Noble Lords have tabled a number of amendments relating to parliamentary scrutiny of and procedure on the transfer regulations. In particular, the noble Lords, Lord Sharpe and Lord Hunt, have tabled amendments which would change the parliamentary procedure for the principal share and property transfer powers, continuity obligations and enforcement powers from negative to affirmative. I understand the concern expressed by the noble Lords. From the outset, I reassure all noble Lords that the Government take parliamentary scrutiny extremely seriously. For that reason, we have ensured that a number of substantial powers in the Bill, such as the compensation and tax powers, are subject to the affirmative procedure. However, the Government consider that changes to the procedure for transferring powers would adversely affect the Government’s ability to effect a smooth transfer where necessary in the public interest.

Steel is fundamental to the UK’s industrial base and our national resilience, making it critical to secure supply. Any delays, especially in a non-consensual transfer, would prevent the transfer from taking place, particularly if the transferer was unco-operative. I draw noble Lords’ attention to the recently published report from the Delegated Powers and Regulatory Reform Committee, which did not raise any cause for concern about these powers, including the level of parliamentary scrutiny attached.

To set out the necessity for the negative procedure for these powers, I will discuss them in turn. I will address Amendments 13 and 14 together as they seek to amend the procedures for the share and property transfer powers respectively. It is important that the principal transfer powers can be exercised with speed and operational and legal certainty. The Government expect that, if these powers were exercised, it would be in a fast-moving, commercially sensitive situation. The affirmative procedure would introduce a substantial delay, creating a vacuum in ownership. Such uncertainty would significantly affect the business, particularly the supply chains and third-party contracts.

Amendment 15 seeks to amend the procedure for continuity obligations. The continuity obligations in the Bill are essential to ensure that the company continues to operate as normal following the transfer, minimising disruption and maintaining operations at the steel undertaking. This is achieved by imposing obligations on residual steel undertakings and their group companies to ensure that all services and facilities required by the transferred business continue to operate as normal. Any changes to the procedure would affect the effectiveness of the transfer. The Government’s primary objective with this provision is to ensure a smooth transfer of ownership. As I have set out, it is imperative that there be no delay to any transfer of a steel undertaking into public ownership.

Amendment 18, in the name of the noble Lord, Lord Sharpe, aims to amend the procedure for enforcement regulation. Clause 45 gives the Secretary of State the power to make provision in regulations for the enforcement of obligations under the share and property transfer regulations. As with the other amendments, if the Government consider it necessary to enforce obligations, they must do so at pace. Any delay in using these powers risks interrupting the transfer process and reducing its effectiveness.

For those reasons, the Government do not consider these amendments necessary. However, I have reflected on the argument made by the noble Lord, Lord Hunt. While it is critical that the Government are able to preserve their ability to enforce as necessary, there is a reasonable rationale for further parliamentary scrutiny. I cannot accept this amendment but I will consider this issue further, ahead of Report.

The noble Lords, Lord Sharpe and Lord Hunt, have given notice indicating their intention to oppose Clause 50 standing part of the Bill. That would remove the modification power in Clause 50. This power is not taken lightly, but it is a necessary measure to ensure that the transfer powers under the Bill can be used effectively. The clause has precedent because the same power was used in the Banking Act 2009 to resolve complex companies in the financial sector. Given that the transfer powers would be used only in circumstances where a public interest test was met, it is crucial that the Government have the necessary tools to ensure that any such transfers can be implemented effectively to deliver the intended outcome.

The powers in Part 1 of the Bill interact with commercial, company and insolvency law. This is the law that normally governs the consensual acquisition of companies or of their businesses. The legislative environment is therefore varied and complex and, because general legislation was not designed with compulsory transfers in mind, as the Bill envisages, there will be some tension between applying the Bill’s powers to a steel undertaking and the highly complex private law that it will inevitably cut across. The clause therefore provides a necessary power to modify other laws that may ordinarily interact with a transaction of this nature in order to integrate the Bill’s powers into the existing legislative and commercial landscape.

The use of the modification power is limited to the purpose of enabling the transfer powers to be used effectively. It is not a general power to amend legislation; it is targeted and limited. It cannot be used in isolation from the use of powers in respect of a particular steel undertaking to amend or disapply laws, and it cannot be used to amend the Bill—or Act—itself. In the absence of these powers, there is a real and significant risk that the Secretary of State could not fully and effectively implement a transfer. This could result in an ineffective or incomplete transfer to public ownership, affecting a company’s ability to continue operation. If a smooth transfer is not achieved, the public interest aims could be undermined.

I turn to the potential retrospective effect of the power. The Bill permits it to be applied retrospectively but does not require it. Preserving the possibility of applying this power retrospectively anticipates circumstances in which the transfer powers may need to be exercised at pace and in which there may be limits on the ability to conduct the level of due diligence necessary to support acquisition. Similarly, it may not be possible to identify all legislative interactions in the transfer scenario before making a transfer. This may mean that any secondary legislation made under the transfer powers may not fully affect the transfer that was intended. In such circumstances, it would be necessary to address this through the modification power, with the modification backdated to the time of transfer. The use of the power will be subject to the affirmative procedure unless there are particular circumstances that justify the Secretary of State proceeding on an affirmative basis, likely due to time pressures.

I hope that I have provided some clarity on the need to include the provision, and its retrospective effect. For these reasons, I respectfully ask that the amendment be withdrawn.

[Lord Fox (LD)]

On a number of occasions, the Minister has painted a picture of a breathless process, where all the organs of government have to operate at breakneck speed. Taking the Government at face value, we are talking largely about a particular asset that we have been talking about for around 15 months, since the discussion at Easter last year. At some point, perhaps not at the Dispatch Box but when we are having our meetings, the Minister will explain why there is this predisposition to putting everything in place to have things moving at the speed of light when, in reality, they have been moving relatively slowly.

19:00

[Lord Leong (Lab)]

I am happy to give that commitment in our further conversations.

[Lord Hunt of Wirral (Con)]

My Lords, I am grateful to the noble Lord, Lord Fox, not only for his generous praise, which I felt was completely undeserved, but for his support. At some stage, this great Chamber of ours will consider better ways to deal with secondary legislation. He will know that I gave quite a lot of support, when I chaired the Secondary Legislation Scrutiny Committee, to one of his noble friends who moved that there should be a new Bill—the Statutory Instruments (Amendment) Bill. But that is for another occasion. In the meantime, I thank the noble Lord for his strong support.

There is clearly much now for the Government to consider, in particular in view of the commitments made by the Minister. How do we achieve the right balance between acting swiftly where necessary and, at the same time, ensuring that Parliament has a meaningful role in scrutinising powers, particularly where they affect property rights, liabilities and commercial arrangements? I am sure these issues will merit further discussion as the Bill progresses. For the present, I beg leave to withdraw the amendment.

Amendment 13 withdrawn.

Clause 4 agreed.

Clauses 5 to 14 agreed.

House resumed.

19:03

Sitting suspended.

Climate Change Act 2008 (International Aviation and International Shipping) Regulations 2026

Monday 29th June 2026 Lords Chamber

Motion to Approve

19:30

Moved by

[Lord Whitehead]

That the draft Regulations laid before the House on 14 April be approved.

Relevant document: 58th Report from the Secondary Legislation Scrutiny Committee, Session 2024–26

[The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)]

My Lords, I thank the House for its consideration. The draft Climate Change Act 2008 (International Aviation and International Shipping) Regulations 2026 were laid before the House on 14 April.

This instrument makes the necessary regulations under the Climate Change Act to include emissions from the UK share of international aviation and shipping in the sixth carbon budget, all subsequent carbon budgets and the 2050 net-zero target. It formalises the Government’s long-standing planning assumption that the sixth carbon budget, starting in 2033, will be the first to include emissions from the UK share of international aviation and shipping. This has been the position of successive Governments. In 2021, the previous Government set the sixth carbon budget, factoring in the UK’s share of international aviation and international shipping. It also reflects the advice of the independent Climate Change Committee.

This debate is not about whether we take action in these sectors—we already are. The Government are committed to ensuring that long-term growth in the aviation and shipping sectors is compatible with our climate obligations. We have been working multilaterally to reduce aviation and shipping emissions within the International Civil Aviation Organization and the International Maritime Organization. We are now formally reflecting this effort in our domestic legal framework.

For earlier carbon budget periods, international aviation and shipping were not formally included in our legally binding targets. Instead, we left headroom, setting tighter limits for other sectors in order to deal with the assumptions of being in those targets in general. We are now revising this approach by legislating to formally include these emissions in the overall emissions limit from the sixth carbon budget onwards.

Accounting for international aviation and shipping emissions within the formal framework is clearer and more flexible than accounting for them outside the framework. It allows the Government to choose the best overall pathway to meeting our targets. For example, if progress in reducing aviation emissions is faster than expected, it will make it easier to meet our targets overall. Equally, faster progress in other sectors could allow more flexibility for international aviation and shipping.

Although aviation is a hard to decarbonise sector, we are already taking great strides towards greener aviation. This includes implementing the sustainable aviation fuel mandate last year, providing a further £219 million to scale up SAF production through to 2030, and up to £2.3 billion over 10 years for the Aerospace Technology Institute to support the development of more efficient and zero-emission aircraft technologies. We are also driving cost-effective decarbonisation through carbon pricing mechanisms, including the UK emissions trading scheme, or UK ETS, and the global offsetting scheme, CORSIA.

We are also committed to decarbonising shipping through the UK maritime decarbonisation strategy, investment in clean maritime technologies and support for low-carbon fuels. The UK is proud of our leadership at the International Maritime Organization, ensuring the sector contributes fully to our net-zero ambitions while maintaining the UK’s competitiveness as a global maritime nation.

To note, this statutory instrument does not alter the stringency of the UK’s climate targets, introduce new sector-specific limits or set new policy requirements for the aviation or shipping industry, and nor does it alter the climate considerations in the draft Heathrow expansion national policy statement. What it does provide is legal clarity—something colleagues in the Environmental Audit Committee and the Transport Select Committee have called for repeatedly. Successive Governments have pledged to legislate for this change as soon as parliamentary time allows; now we are keeping our word.

I recognise the amendment tabled by the noble Lord, Lord Moynihan, for discussion today. The noble Lord raises two points of concern, which I shall address in turn. First, the noble Lord regrets that the draft legislation does not define a methodology for accounting for the UK’s share of international aviation and shipping emissions for the purposes of carbon budgets. That omission is for good reason. Not prescribing a specific methodology now allows for continued methodological development in the period before the sixth carbon budget period commences—that is, in 2033. That will be in line with developments in international carbon reporting practice, in which the UK participates in ongoing discussions. That has to be an international discussion with the international agencies responsible for getting that right on an international scale. I am sure that the noble Lord would not wish to tie the Government to an outdated methodology, out of sync with wider international practice. It is not that there is no methodology; it is a question of making sure that the final methodology is fit for purpose when the sixth carbon budget comes in.

That final methodology will be determined separately by the Secretary of State before laying the first annual statement of UK emissions for the sixth carbon budget period. In the meantime, I refer the noble Lord to the technical annex of the Government’s carbon budget and growth delivery plan, which sets out the Government’s working assumption on defining a UK share of international aviation and international shipping emissions when setting and making policies for future carbon budgets. If the noble Lord wants to cut to the chase early, I suggest that he refers to paragraphs 125 and 126 of the technical annex to do just that.

Secondly, the noble Lord suggests that the regulations will place additional costs on industry. As I noted earlier, this is an accounting change that clarifies how emissions are counted within UK targets; it does not set new policies for international aviation and shipping. The Government will continue developing policies to reduce emissions in international aviation and international shipping, and these will be subject to their own assessments.

Notwithstanding that, I emphasise that the Government are acutely aware of the importance of international aviation and international shipping to UK economic growth. We are committed to pursuing solutions that do not risk displacing emissions to elsewhere in the world or damaging UK competitiveness, working closely with industry to ensure that our high climate ambition is deliverable and affordable for them and passengers. Indeed, schemes such as the sustainable aviation fuel mandate are carefully designed to protect against excessive cost increases. At the same time, measures such as the Sustainable Aviation Fuel Act and grant funding will tackle barriers to investment and support UK manufacturers to gain a share of the growing global advanced fuels industry, with all the economic benefits that entails.

I urge noble Lords to consider these points when and if they consider voting in favour of the amendment tabled by the noble Lord. The measures formalise an approach supported by successive Governments and reinforce the credibility of the Government’s strategy for aviation and shipping decarbonisation, both domestically and internationally. I beg to move.

19:38

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I thank the Minister for introducing today’s regulations. I know my noble friend Lord Moynihan is disappointed not to be here for this debate—the second one in a week on an instrument that we all believe will be deeply damaging to the economy. He offers his apology as he has to attend a long-standing political appointment to which he is committed. I declare my interest as the unremunerated chair of Eq.flight, working towards the development of nuclear-derived sustainable aviation fuel.

This House voted to regret last week’s instrument due to the nationwide effects that it will have on our economy and our way of life. Although this week’s is not quite so wide-ranging, we regret that the Secretary of State is taking his economic wrecking ball to two specific industries.

Before I speak to the economic impact that this statutory instrument and other associated measures the Government are taking will have, I first note that the implementation of the instrument raises concerns. The Explanatory Memorandum states:

“The exact methodology for determining the UK’s share of IAIS emissions for the purposes of measuring and reporting emissions from CB6 onwards will be determined separately by the Secretary of State, and before laying the first annual statement of UK emissions for the CB6 period”.


The Government are putting the cart before the horse.

International aviation and shipping will be expected to comply with regulations to help the Government reach their net-zero target without being told how and even when their emissions will be measured. But I note the Minister’s explanation of the methodology of the calculation of emissions for carbon budget 6 period.

This is becoming a worrying trend within the department. Two weeks ago, my noble friend Lord Moynihan rightly pointed out that the legislation brought forward to implement the RO to Exchequer policy in Northern Ireland was done without a comparable offer having been agreed with the Northern Ireland Assembly. Now, entire industries are to be expected to comply with net-zero policies without being told how to do so. Regardless of the policy’s aim, that is not how to instil business confidence in the Government’s plans. I hope that the Minister can today outline when we can expect to see the accounting methodology and more generally reassure the House that the department takes the practical implementation of policy as seriously as it does the principles behind it.

On the economic impact, this instrument is merely a formalisation of the Government’s recent drive to ensure aviation and shipping compliance with net zero. It will set into statute the adverse effects that government policy is already having. By carbon budget 7, shipping emissions are projected to have been reduced by more than 60%, at a net cost of more than £1 billion annually. This is to be done primarily through fuel switching. To incentivise this transition away from carbon-intensive fuel, the Government have extended the UK ETS scheme to the sector, at an up-front cost of more than £0.25 billion. That is despite the fact that alternative fuels still cost four times more than conventional fuel, while there are only two shore power facilities in the country.

The industry has said that these shortfalls would be manageable if the Government set out a clear revenue recycling plan to reinvest ETS proceeds into maritime transition, but they have yet to do so. The result is that the ETS scheme will operate as a tax rather than as a decarbonisation incentive for the industry that moves 95% of the UK’s goods. I hope that the Minister can outline how net zero-derived revenue will be recycled back into these industries in his response.

Similarly, the aviation industry will be forced to transition not through economic incentives but through state-mandated demand management. CB7 states that the supposed cost savings that net zero will bring the sector will come almost entirely through a reduction in demand operating capabilities. This will not happen naturally, but through “demand management” that will

“increase ticket prices, either directly through taxes or indirectly through technology costs”.

That is a highly unnatural market distortion. The industry will be forced to invest in net-zero technology, and if that fails in reducing emissions to the Government’s desired extent, they will simply raise taxes. This too is expected to cost over £1 billion annually by CB6.

These regulations incorporating these sectors into carbon budget accounting will now present an incentive for future regulations upon them. My worry is that aviation and shipping will now be seen as fair game to be sacrificed for the Government’s rushed drive to net zero. Given that the impacts of current regulations have already been highly damaging, I hope that the Minister will be able to reassure us that the regulations are entirely formal and that these sectors will not be subjected to future punitive measures.

19:43

[Lord Teverson (LD)]

My Lords, though it has been far from perfect, I would like to start by congratulating the Prime Minister on what has happened over climate policy over the last two years. Unfortunately, he seemed to forget it in his speech in Downing Street, but perhaps we could put on the record that the last coal-fired station was closed; onshore wind has started again; we have carbon budget 7 agreed; the future homes standard at last has been published; solar capacity has gone up substantially; and we had a very successful AR7 round in comparison with AR6. I was disappointed that the Prime Minister failed to mention these matters when he talked about his resignation in Downing Street last week.

What strikes me, remembering the Climate Change Act itself back in 2008, pretty well everybody around the House regretted at that time that it was pretty well impossible—for all sorts of technical reasons and where we were in terms of the start of this process—to include international air transport and international shipping. It was seen as a hole in the system that needed to be repaired as time went on. So, there we were, back in 2021, when the carbon budget 6 was agreed under the previous Government and they took that step on the Carbon Budget Order 2021 to put this into practice at last. Hallelujah from all of us who had been waiting since 2008 for that to happen. I congratulate the last Government on achieving that.

It is a shame that there seems to be this regression in terms of appetite to make sure that the climate for our children and grandchildren is on the mend rather than degrading from here. Let us be clear: we are kidding ourselves if we believe that this sector can be left out of our equations. It accounts for something like 10% of carbon emissions in terms of our own emissions, or part of them, and globally—much more for airlines than for shipping, but both are important and both are growing, which is the important thing. As we know, if you do not measure it, you cannot manage it, and if you do not manage it, it will not happen—and it needs to happen. These are important sectors.

To the Front Bench of the Opposition, I say that this is one of the occasions when we are liberated from the European Union. This is a Brexit win: in terms of airlines, the European Union still relies on the Coursier scheme, mentioned by the Minister, which is the offsetting system that the EU has been part of. We welcomed it as well, apparently, but it is a system that is far from perfect: much better that we include it within these systems ourselves.

I agree entirely that we have big challenges in terms of sustainable aviation fuels. There is a lot to do there and we certainly cannot grow crops to get us out of that problem.

19:48

[Baroness Hayman (CB)]

My Lords, it is a pleasure to follow the noble Lord, Lord Teverson. I agree very much with the final point that he made. I find many things depressing at the moment in reactions to issues of climate change, but one of them is the lack of enthusiasm about British innovation. We can grow the green economy; we can tackle climate change; we can tackle emissions; and we have the intellectual firepower and the companies and the individuals who are interested in doing that. Yet here we are tonight with a perfectly reasonable proposition being put to us by the Minister to approve these regulations. I will not be insulting and say it is a bit of process-ology, but it is part of a process, and it is a process that has been going on for a long time.

It is certainly not new news. It was announced in April 2021, nearly four Prime Ministers ago, by the then Conservative Government when the noble Lord, Lord Sharma, was our COP 26 president-designate, and when the atmosphere and the cross-party consensus on the need to change and to make progress was very much accepted. So what we are debating here tonight in terms of the regret amendment is something that has been agreed for many years—decades, actually—that has been accounted for in our forthcoming carbon budgets, and that industry has known about for many years. As I say, it is not new news.

I know that the noble Lord, Lord Turner, who I think could not be here this evening, would be telling us that he discussed this issue when he was chair of the CCC over 15 years ago. I look forward to hearing from the noble Lord, Lord Deben, as a more recent chair.

I understand that the methodology is not yet perfect, but the Minister clearly explained why it is sensible to allow ourselves some room to develop it and, I hope, for it to be widely adopted by others. However, it makes no sense whatever for aviation and shipping to be left out of our carbon budgeting. They are important areas; progress is being made and we should be leading in what they are doing, not cavilling. At the moment, the rest of the UK economy is captured under our carbon budgets. Although there have been many arguments about the benefits and disbenefits and the pace of transition, I have never heard it said that the simple act of having carbon budgets has imposed cost on any industry. What they will do is place a legal requirement on the Government to ensure that these industries, alongside all the others, reduce their emissions. We have already legislated in the Sustainable Aviation Fuel Act to get started here. Enshrining this in law will create the legal certainty that businesses need, especially after the political upheaval of recent years, to invest and innovate.

I am tempted to say, “Nothing to see here”. I see the Whip would like me to sit down, so I end by saying that, if we do need to have a vote, which I consider unnecessary, I would certainly support the Government.

19:52

[Baroness Jones of Moulsecoomb (GP)]

I am very annoyed that the Government and the Opposition keep talking about sustainable aviation fuel. That is a nonsense; it does not exist and it never will. However, I will direct most of my remarks at the regret amendment, which is ludicrous. I cannot even believe we are debating something like this. It is climate-denying nonsense. It is time that everybody understood and read up on the science. We have just had record temperatures for June and could easily be into the hottest year ever recorded. We cannot sit and talk about the economy being more important than the human ecosystem that the economy is destroying. We have to make the economy different.

Here is a better suggestion for debate. We could start naming those heat domes that sit over Europe in the way that we name hurricanes and storms. We could call them “Exxon”, “Texaco”, “BP”, or after any other highly polluting fossil fuel company that created them. We talk about the economy—what do you think will happen when we have the consequences of flooding, heatwaves and droughts? Do you seriously think that will benefit the economy? It absolutely will not. Insurance companies will be hit hard, food supplies will devastated and I will still be calling you clods.

Today, we heard a really anodyne, supercilious answer from Defra about the dangers to our food supply and food security—“No, it’s fine; it’s all sorted out. You don’t have to worry your pretty little heads about it”. That is absolute nonsense. Our food supplies are threatened. If we do not do something about it, we will be very hard hit. The Government are not warning the public about food supplies and food security; they are not moving fast enough. I spoke today to Tim Lang, a professor of food policy who wrote a report for the National Preparedness Commission that has still not been implemented. I suggest that the Government get on it very fast, as well as the Opposition so that they can attack the Government when they do not move fast enough.

I despair that, next year, climate deniers will be saying exactly what this regret amendment says and I will be standing here saying the same thing I am saying now. We will not have moved forward. We will not have made ourselves safer. We will have an economy that is slowly disintegrating because of the impacts of climate change. If we do vote on this ridiculous amendment, can we please all vote against it?

19:55

[Lord Deben (Con)]

My Lords, I remind the House of my declared interests and the fact that I was for 11 years chairman of the Climate Change Committee, appointed, reappointed and extended by Conservative-led Governments.

What is being proposed today was presented by the Conservative Government. My noble friend who spoke here supported that with me. I heard nothing explaining what has suddenly changed. This is just like last week. The Opposition are constantly putting forward these things without explaining why they have changed their view from what was the concerted view of every Conservative Government going back to the speeches that I used to write with Lady Thatcher.

Let us realise that this was a Conservative proposition and that the Climate Change Committee proposed it because it is a necessary way of explaining what will happen once we get the methodology right. Of course, we have to get the methodology right with the IMO and the international aviation authority. That is a perfectly reasonable way to do this. Had a Conservative Government been doing this a few years ago, they would have done exactly the same thing. There is no need for us to argue about it.

This is 10% of our emissions. It is not acceptable to come to this House objecting to what the Government are doing without an alternative. If you are not going to do this, you have to say that you will do something else. I exclude the noble Lord, Lord Moynihan of Chelsea, from this, because he has never believed that climate change is something that you need to fight. That is his position. He is entirely wrong, although we will listen to him, but he is not blameworthy. I think the Opposition are blameworthy, as they are coming forward without an alternative for what we need to do.

The reality is that this could become the largest-emitting sector if it is left out. It is stupid to leave it out. You need to have it in and help the industry get through and make its proper contribution. You cannot ask agriculture or manufacturing to make their contribution if you are not asking the aviation and shipping industries to do so. Only last week, the noble Lord, Lord Moynihan, was complaining that he thought we were sending emissions abroad and shipping them here. This is one of the things we have to get right to meet the proper complaint that he made.

I have to say to my noble friend that, if this is an economic wrecking ball, it was one created by the Conservative Party. This is what we did—and thank goodness we did, because it is not an economic wrecking ball. It is a means of enabling this country to play its proper part in ensuring that our children and grandchildren have an economic system of any kind. This general comment about how difficult things are ignores the fact that we are facing an existential danger. Thank goodness that the voices who speak out on that side, including the Pope with Laudato Si’, and all those who really bother about the future of our society and our children, are making it very clear that we have to make these changes.

This is a very modest thing for the Minister to have brought forward. I have real complaints about the Government not moving quickly enough, but I am very pleased that they have moved as quickly as they have. It is not acceptable to argue about these issues unless you have an alternative, particularly when what is being proposed is something you yourself put forward.

19:59

[The Lord Bishop of Manchester]

My Lords, it is a privilege to follow the noble Lord, Lord Deben, on matters of climate change. The way he spoke with such passion and wisdom is an example of this House at its best.

Climate change presents the greatest collective action problem of our age. Every nation would prefer others to act first, which is why strong climate leadership matters. I found myself challenging the Government for not doing enough earlier this afternoon in Committee of the Financial Services and Markets Bill, so I want to commend these regulations tonight.

Emissions from aviation and shipping have grown rapidly over the past 20 years. According to the Climate Change Committee, as the noble Lord, Lord Deben, has just said, aviation emissions are projected to become the largest sector by 2040. Legislating specifically to incorporate these industries into carbon budgets is, therefore, the fair and proportionate thing to do. These regulations are not introducing new sector limits or altering targets. As the Government have already said, they are fulfilling prior commitments set out in carbon budget 6, which has already been legislated for, and carbon budget 7.

Embedding these commitments in legislation empowers the Government to hold these industries to account for their emissions. It sets a clear example to other nations of our commitment to international climate goals. Omitting aviation and shipping from carbon budgets would weaken the credibility of our climate framework and damage our position when it comes to international climate diplomacy, which is so important.

Earlier today, in Grand Committee, one noble Lord sought to persuade us—if I understood the argument—that, because there are other nations with a worse record than ours on combating climate change, it would be detrimental to our competitiveness, and therefore a mistake, for us to take carbon emissions seriously. Britain’s role in the world should never be to seek to win some unsavoury race to the bottom.

Turning to theology, if I may, most serious modern Christian theologians—including the Pope, as the noble Lord, Lord Deben, has just referred to—have long discarded the old argument of dominion. At its least pernicious, this assumed humans could disregard our impact on the environment because God had given it to us to exploit. At its worst, often among ultra-conservatives in the USA, it positively encouraged exhausting the planet’s resources in the belief that destroying our environment would hasten the return of Jesus Christ. Those views may be less often publicly stated now than 20 years ago, but I fear their malevolent presence still lurks behind some of the most vehement opposition to limiting carbon emissions. We are not the planet’s despotic overlords; we are a part of creation. We have a responsibility, as others have said, to pass on to future generations a world as beautiful as the one we inherited.

We are already witnessing, as the noble Baroness, Lady Jones of Moulsecoomb, has reminded us, the effects of climate change through fluctuating weather patterns, pressures on food production and more extreme climate events. As time goes on, it will be the most vulnerable, those experiencing poverty and the generations after us who will feel the effects most strongly. This lunchtime, I was at the Trussell Trust food bank in Hammersmith and Fulham for the launch of a much-needed inquiry into the need for food banks, for which I am a member of the panel.

The rapid increase in prices of basic foodstuffs over recent times, so impacting on our poorest sisters and brothers, is a direct consequence of the increasingly extreme weather climate change we are already experiencing and which, last week, we lived through. If noble Lords had been trying to take a service wearing fancy robes on Sunday in Manchester Cathedral, they would be very much on my side.

The window of opportunity for action is quickly closing, but these regulations present an important step towards ensuring that every sector fairly plays its part in meeting our climate commitments. I commend them.

20:03

[Lord Hunt of Kings Heath (Lab)]

My Lords, it is a pleasure to follow the right reverend Prelate. Like the noble Lord, Lord Teverson, I very much welcome the regulations themselves; they have been a long time coming, but it is good that we are now including aviation and maritime within the sixth carbon budget. It is going to be challenging, and I certainly understand the need for flexibility in methodology. The Committee on Climate Change has set out some of the challenges we are going to face, but that we should do it I am absolutely convinced.

This debate follows last week’s rather dispiriting debate, when the Conservative Opposition essentially turned their back on net zero and on any concern about climate change. In criticising the Government last week, the noble Baroness and the noble Lord, Lord Moynihan, said nothing about the impact of climate change and nothing about what they would do in relation to net zero.

The Commons debated last week’s and this week’s SIs together, and I read the debate. The shadow Energy Secretary, Claire Coutinho, made not one mention of what the Conservatives would do to mitigate or adapt to climate change. Instead, her sole response was to get rid of carbon tax and repeal the Climate Change Act—as noble Lords here will know, we were the first country to establish a long-term, legally binding framework. Are the Conservatives really serious about wanting to axe this landmark piece of legislation? In 2019, they beefed it up with commitments on net zero under the noble Baroness, Lady May, and the last Conservative Prime Minister stated that energy transition and net zero were among the greatest opportunities facing this country.

We come back to the issue of economic growth. I thought that the noble Baroness, Lady Jones, was absolutely right: the real catastrophe to prosperity and economic growth is climate change, not the actions we are taking to try to mitigate and adapt to them. Noble Lords will have read the CBI report that came out a couple of weeks ago, looking at the green economy. It is massive. It is one of the only sectors which is really growing in this country, and we can add aviation and maritime to that. We now have a £105 billion net zero sector and 1.1 million full-time equivalent jobs—and they are good-quality jobs as well.

The issue of other countries taking advantage of the UK taking leadership is absolute nonsense. There is huge advantage to the UK in being a key player in a net-zero economy. We know from the work of the International Energy Agency that actually, despite what some leaders say, many countries are speeding on with a transition to net zero. We need to be part of that, and aviation and maritime need to be part of that. So I very much support the statutory instrument. Tonight, we are seeing that, around the House, there is a strong consensus in favour of dealing with climate change and moving to net zero as fast as we can.

20:06

[Baroness Foster of Aghadrumsee (Non-Afl)]

My Lords, I declare my interest as chair of InterTrade UK, which is beginning a piece of research on ports and connectivity between Northern Ireland and Great Britain. We believe this is an important piece of work, given what has happened in terms of the Windsor Framework.

I will concentrate my remarks on the shipping industry and the lack of methodology, which has been referred to by most of the speakers. That is not a criticism; it is just that I think there are things that need to be put on the record when it comes to adopting a methodology to deal with shipping, particularly in relation to Northern Ireland. As further carbon and climate policies are introduced, it is important that His Majesty’s Government recognise Northern Ireland’s specific circumstances and ensure that the cumulative impact does not disproportionately disadvantage businesses and consumers that rely on maritime services. Around three quarters of goods entering or leaving Northern Ireland do so by sea, meaning that additional costs imposed on shipping are borne ultimately by the exporters, importers and, of course, consumers. Does the Minister and the Government recognise that Northern Ireland has particular geographic and economic circumstances which should be taken into account when the methodology is adopted in relation to shipping?

The existing UK ETS recognises this. It has a 50% concession for Northern Ireland-Great Britain ferry routes. Of course, there is a zero concession for the Highlands and Islands, which we would say should apply to Northern Ireland as well. The existing UK ETS comes into effect this week, on Wednesday 1 July. Maintaining that concession for the industry is a priority and, despite the concession that the UK ETS implementation gives to Northern Ireland traffic, it will add £9 million annually in additional costs to the shipping industry.

It is important that the Government continue to monitor the real-world economic consequences. I hear voices saying that we should not be worried about them. Well, frankly, I am worried about economic consequences for Northern Ireland. There is no stand-alone economic impact assessment of this SI, but given Northern Ireland’s reliance on maritime services, its geography and economic circumstances, it would be very helpful to all if the Government would undertake a dedicated economic impact assessment for Northern Ireland, perhaps in conjunction with the Northern Ireland Assembly, because decarbonisation must be of course environmentally sustainable but also economically sustainable. As the Government pass decarbonisation into law, we must ensure that climate policy does not inadvertently undermine our economic competitiveness across the UK, including, in this instance, in relation to Northern Ireland.

I note from the Secondary Legislation Scrutiny Committee that both the Scottish and Welsh Governments have laid legislation to include international aviation and shipping in their carbon budgets. Can the Minister say what has happened in relation to the Northern Ireland Assembly?

Lastly, in his opening remarks, the Minister said that there will be flexibility between the different sectors impacted by this. Will there also be flexibility within the sectors—in other words, within international aviation and shipping—given our unique position in the United Kingdom? I welcome the debate on this issue and look forward to the Minister’s response.

20:11

[Lord Moynihan of Chelsea (Con)]

My Lords, I have three brief points to make and three questions for the Minister, and I hope in speaking to avoid the hysteria noticeable in some speeches this evening.

My first point is that this whole ETS approach is yet another failed attempt at “We know best”. I could give many examples, but perhaps the most interesting recent one is that with the recent collapse of scenario RCP 8.5—on which much of the climate catastrophists’ claims have been based in the past couple of decades—and with the complete collapse as being agreed as no longer plausible, those catastrophist claims can now be seen as disinformation. That is a good reason for the noble Lord, Lord Deben, to understand why change is needed. By 2050, despite the “net zero” words, 50% of aviation fuel will still be fossil fuel. Again, so-called clean fuels, as the noble Baroness, Lady Jones, so eloquently said, are not at all carbon zero. Does the Minister agree that the whole ETS is built on shaky foundations and is better off abandoned?

My second point is that the ETS market itself is a confected artefact. The intent was to create a free market in carbon. In fact, it is all government controlled and that is the direct opposite of a free market. In the end, and at the moment, 100% goes to government, so it is just another tax. It does not reduce carbon generation; it just transfers it to another country. Economic activity here is lower; economic activity elsewhere is higher. Does the Minister accept that the ETS is, in essence, another way of generating tax to “pay for more benefits”, in the words of one of his own MPs?

My third point is that it ends up as yet another hit to economic activity in the UK. Net zero has already hollowed out the economy. Adding ETS for aviation and shipping just worsens it. The ETS carbon price has gone from £34 to £70—so there is a cost, despite what the Minister claimed. Refineries have spent some £175 million on ETS and aircraft operators have spent over £200 million. There is a cost to all this. Our economy suffers, while not a dent is made in global carbon emissions. In India they recently increased their number from 74 to 164 airports, and they are adding another 50—there is no ETS there. Will the Minister agree that charging the ETS on aviation and shipping further damages our four remaining refineries, the only manufacturing entities that incur this in the UK, further accelerating the deindustrialisation of our nation?

20:15

[Earl Russell (LD)]

My Lords, I thank the Minister for introducing these regulations and all those who have spoken.

Extreme heat records and regret amendments appear to be competing with one another for frequency at the present time. Last week, the UK broke the record for the hottest June day three days in a row, reaching 37.3 degrees Celsius on Friday. Six NHS trusts declared critical incidents, and the London Ambulance Service recorded its busiest day in its entire history, with demand higher than even at the peak of the Covid pandemic. Europe is the fastest-warming continent on earth, and forecasters are warning that future heat events are likely very soon. I find it genuinely difficult to hear arguments that we are doing too much, too fast on climate change.

I will say something about the politics before turning to a couple of comments for the Minister. I want to return to the cross-party consensus on these issues, but I will first challenge the unravelling of our climate policy. When I hear calls from some to repeal the Act, abolish carbon taxes and cut renewable subsidies, with no credible alternative offered in their place, it becomes very hard to sustain the view that opposition to every government climate measure is made in good faith. If the Conservatives challenge settled climate policy, they should expect a response.

The challenge put today, and in our last debate, by both the noble Lords, Lord Hunt and Lord Deben, was: if not this then what? The policy assumption underlying these regulations was not made by this Government. It was made, as others have said, in April 2021, by the then Conservative Government, announced personally by Prime Minister Boris Johnson, who declared that the UK would set what he called the most ambitious targets to cut emissions in the world. That Government confirmed explicitly that the sixth carbon budget would incorporate the UK’s share of international aviation and shipping emissions as an important part of their decarbonisation efforts. These regulations do no more than formalise that commitment in statute. The Conservative Party supported this policy in government; the question before this House is simply whether to honour it.

I want to be clear about what this instrument does and does not do. It introduces no sector-specific limits, no levies, no charges and no cuts to aviation or shipping. It is an accounting measure. It formulates a framework already assumed in policy since 2021, and we are pleased to see it. If we exclude aviation and shipping from our accounting, we do not make those emissions disappear; we simply allow them to consume a disproportionate share of the UK’s available carbon removals and offsets, at the direct expense of agriculture and heavy industry.

I have two comments for the Minister. First, on methodology, I really appreciate the way the Minister set that out. I recognise the need for international negotiations and that those are also complicated at the moment. I simply seek a reassurance that we will continue to work internationally on these issues, and that the Government will continue to engage with the aviation and shipping industries to give them a formal role in that process. On economic impact, I similarly call on the Government to continue to monitor the impact of this and to continue to work with industry to make sure that this system and these processes are as streamlined as possible.

The honest answer to the noble Lord’s concern, introduced by the noble Baroness, is this: a clear framework actually helps these industries by giving investors the certainty and legal clarity needed, as the Minister said, to back sustainable aviation fuels and green maritime technologies. Uncertainty is the enemy of investment; these regulations reduce it. They fulfil a commitment made by a Conservative Prime Minister, have passed the Commons already and align with our Climate Change Committee’s advice. I support them and I urge the House not to support this regret amendment.

20:19

[Lord Whitehead (Lab)]

My Lords, I thank all noble Lords for their valuable contributions to the debate. I am greatly buoyed up by the tremendous speeches in support of this measure. It has restored my faith that this House is facing the right way on climate change and is behind measures to tackle climate change and get us to net zero. That is great.

In that respect, I recognise that I was gently chided by the noble Baroness, Lady Hayman, for being rather proceduralist in my first comments. I would like to put that right now by saying hurrah! We now have this on the statute book. It is something that the noble Lords, Lord Teverson and Lord Deben, and many others—including me—have been banging on about for many years. It always seemed that it was a terrible gap in our armoury to fight climate change that we were apparently allowing international aviation and international shipping to have a free pass as far as climate change contributions were concerned. In those days, it was partly because people could not think of how to do it easily.

The noble Baroness, Lady Bloomfield, underlined the point that we are not discussing methodology because we cannot think of what to do but because there is a still emerging and developing consensus across the world in the negotiations with the international aviation authority and the International Maritime Organization on exactly how this can best be done—not that it cannot be done, but to get it right.

As far as aviation is concerned, it is a question of getting a point-to-point arrangement, where your contributions are relevant for the outward flight and someone else’s contributions are available for the flight back. How to establish the point-to-point arrangement internationally and make it work within each country that agrees it is part of the discussion that is going on with the international aviation authority.

As far as shipping is concerned—and this is relevant to the contribution made by the noble Baroness, Lady Foster—we are now talking about international shipping coming into climate change arrangements. Obviously, domestic shipping has been in there for a while. The noble Baroness and I were engaged in an interesting discussion just recently about exactly how Northern Ireland gets treated as far as domestic shipping is concerned and the particular circumstances for Northern Ireland. As the noble Baroness said, they have led to a half-price arrangement for Northern Ireland shipping so that it is not disadvantaged compared with Republic of Ireland shipping.

There are things already that can be put into place in terms of taking account of particular circumstances. But the particular thing that has to be taken account of as far as international shipping is concerned is the fact that ships do not go to one place and then back to another place; they go to multiple places around the world. So how do you get a fair arrangement for what international shipping is paying in? You go through international bunkering arrangements and things such as that, but there is still some work to do in getting that absolutely right.

It is right that we do not put something down now on a statutory instrument and that we make sure, along with our international partners, that we have got this right on an international basis. This has to be done on an international basis to make sure that people do not escape or get out of their obligations and that it is fair to people all round. That demonstrates that this is clearly not a wrecking ball to UK industry. Indeed, as the noble Lord, Lord Deben, mentioned, if it was a wrecking ball, it would have been a wrecking ball firmly in the middle of the last Conservative Government’s arrangements for the economy, because that is what they did at the time.

It is not a wrecking ball because it will be fair to everybody. This will be the basis on which international aviation and international shipping will continue. There will not be people who get a free ride on the back of it. It will be fair shares for everybody. That is why it is important that we get the methodology right.

I do not think I need to go on a great deal about the rest of this SI, because noble Lords have made such a good case for it this evening and I do not need to add to it. If I have missed anything out in my contributions, I will write to the relevant noble Lords.

I do not agree that ETS is a method of tax raising. It is in the form of a tax, but it works with the market rather than against it to distribute properly how those contributions can be raised. It makes the cost of high-carbon activities higher than that of low-carbon activities—that is one of its purposes. However, it is not unfair taxation for particular groups of people or economies; it is a fair, market-based method of ensuring that the move towards a low-carbon economy is distributed among all people.

This measure should be passed by consensus among everybody in this Chamber. It is so important that that consensus is maintained. It was embedded in the Climate Change Act originally and has provided stability, certainty and credibility to our framework. These regulations do not raise our ambition or weaken it but ensure that it is applied consistently. I therefore urge noble Lords to support these regulations and, in doing so, uphold the United Kingdom’s status as a global leader in tackling climate change. Should this matter be put to a vote, I would urge that this Chamber vote solidly against the idea that there should be a regret amendment attached to it.

20:27

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I thank all noble Lords for their contributions to this important debate and genuinely take note of their comments.

It is the speed of the rush to net zero that is harming our industry. I accept the entirely correct focus of the noble Lord, Lord Hunt, on the 1.5 million jobs and the contribution to the economy of the burgeoning green economy. However, these Benches are united on the focus needing to be on cutting energy bills. Our grandchildren will equally never forgive us if we destroy our economy with high energy prices. That must be a concern for us all. We currently have electricity prices which are four times higher than those of the US. That is the issue that we need to address.

Let us not ignore warnings from Tony Blair, who said that the net-zero policies being pushed forward are “unaffordable, ineffective” and “politically toxic”, or Gary Smith of the GMB, who recently said that the policies being pursued by the Government are “economic madness”. Even Unite the Union said:

“No ban without a plan”.


These points are worthy of consideration because the North Sea issue is very important. While everyone was distracted by Makerfield, an important referendum was, in effect, being undertaken in Aberdeen South. It was an overwhelming rejection of both measures in these climate change carbon budget regulations and the Government’s currently policy on the North Sea, which is referred to.

Having said all the above, I beg leave to withdraw the amendment standing in the name of my noble friend Lord Moynihan.

Amendment to the Motion withdrawn.

Motion agreed.

House adjourned at 8.29 pm.