Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Cyber Security and Resilience (Network and Information Systems) Bill
(1 day, 7 hours ago)
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Baroness Neville-Jones
Member’s explanatory statement
This amendment would narrow the definition of “incident” in regulation 1(2) of the NIS Regulations so that it covers events likely to have an adverse effect, rather than events capable of having one, aligning the definition with the likelihood tests applied to notification later in the Bill.
Baroness Neville-Jones (Con)
My Lords, in moving Amendment 17, I will also speak to Amendment 28, which is closely related. Amendment 17 is in part a probing amendment about what constitutes an incident and the circumstances in which reporting is obligatory. It does not affect the amendment that I think the Government will move immediately afterwards.
As drafted, Clause 15 gives the very strong impression that an incident “capable of having” an adverse effect on security must be reported. If this is the case, it constitutes a much wider definition of what should be reported than if it were described as an incident “likely to have” an adverse effect. I think it is a widely held view—it is certainly the case in the industry and a point with which I agree—that “likely to have” would be far too wide a definition and would lead to extensive overreporting and an undue and unnecessary burden on regulators. Looking at the drafting, I asked myself what was the point of the “capable of having” definition in Clause 15.
I shall put forward a hypothesis. It would be very helpful if the Minister could confirm that it is a correct understanding of the existing draft, and that it does not mean that all incidents capable of having an adverse effect on security will need to be reported. Is it right to say that the definition in Clause 15 of what constitutes an “incident” applies across the whole of the regulations, and therefore feeds into security as well as reporting duties? That is to say, firms have a preventive duty to defend against what could be and what could happen, as well as what is likely to happen. That is a preventive duty. Can the Minister confirm that the phrase “capable of having” means that firms should have adequate preventive policies, but it is not—this is where the point comes in—the trigger for an incident to be reported, because in each case this requires it to have affected or be affecting the system?
I am making a distinction between “capable of having”, which applies to a duty to pursue preventive policies, and the trigger of the duty to report, which lies not in the phrase “capable of having” but in “likely to have”. Then there are examples of what I am saying in the regulations, and I can cite them: Regulation 11(3)(a), on page 21 at line 35; Regulation 12A(2)(a), on page 26; and Regulation 14E(2)(a), on page 29 at line 27. If the Minister can confirm that, within existing structures, what I have said is correct—there are no circumstances in which “capable of having” would be the reporting trigger—that would be a very helpful clarification. I will listen closely to the Minister’s reply on this point.
There is a “however”: there is a snag when it comes to the introduction of data centres, and that is the object of my Amendment 28. Data centres sit outside the existing structures that I have just talked about but, as yet in the drafting, there are no reporting trigger regulations for them. It is intended that the data centres should be, in future, big players in the system, so it matters that there is a gap in our information about the circumstances in which they would have a duty to report. It is an odd anomaly. New Regulation 11A(3)—on page 23, from lines 13 and 14 onwards—makes reportable
“an incident which could have had … a significant”
effect, whether or not it had any impact at all or anything was affected. As there is no list of factors for judging what constitutes a significant attack in the Bill, it makes it quite difficult to interpret.
For the operators of essential digital services and managed service providers, such factors are set out expressly in the new regulations in the Bill. However, they are absent for data centres. Why is this the case? What is the rationale for what appears an anomaly? It means that, when reporting an incident, a data centre has to do so when any of the following have had, or were likely to have,
“a significant impact on the operation or security of the network and information systems relied on to provide the data centre service … a significant impact on the continuity of the data centre service … or … any other impact, in the United Kingdom or any part of it, which is significant”.
These are very wide definitions of liability to report, and the discrepancy between them and those applying to other operators seems neither sensible from a security point of view nor fair for different business circumstances, as there will be all sorts of different businesses using data centres.
Although I hope that this will not be the case, I fear that the Government may say that the thresholds and factors for all categories of business will be set out in secondary legislation and subject to consultation. I ask the Minister to think hard about the adequacy of that reply. We are talking here about a penalty-backed duty, which is the core element of the Bill; it is not some minor point. It would seem a poor legislative approach in a foundational Bill for a new regime to fail to define the factors leading to a penalty for a significant segment of providers, when there are indicators in the Bill for other categories of provider. Those other players have different, less demanding and more sensible terms for a trigger for reporting. If data centre regulations need to be different from those for the other players that I have mentioned and the rest of the market, can the Minister explain why? It is the kind of complexity that will give the sectoral approach to regulation a controversial reputation, because it immediately raises the issue of making different rules for people who are apparently, in practice, in the same category. I hope that is not the case and that the issue can be resolved by remedying the drafting.
To sum up, in addition to my request for a clear statement from the Minister about the trigger for a duty to report in existing structures being related to the likelihood of an adverse effect on security and not on capability, I hope she will also take seriously the need to level the playing field for data centres on this issue and remedy what seems an important defect in the drafting of the Bill. I beg to move.
Lord Clement-Jones (LD)
My Lords, I will speak to this core group of amendments on incident reporting, in particular to Amendment 165, standing in my name, while addressing the other amendments in this group. First, Amendment 17, which was very cogently set out by the noble Baroness, Lady Neville-Jones, addresses what has emerged as one of the most contentious technical faultlines, in our view, across Part 2 of this Bill: the statutory threshold that triggers mandatory incident reporting to the designated competent authority, the NCSC. As the Bill is drafted, Clause 15 fundamentally widens the reporting net by redefining a reportable incident to include any event that is merely “capable of having” an adverse effect on the security of network and information systems, as the noble Baroness described.
While one can readily understand the cyber security community’s desire for complete visibility, in practice, the phrase “capable of having” is an operational disaster. In the daily reality of enterprise networking, thousands of automated port scans, routine phishing lures and perimeter firewall probes occur every hour. Almost every single one of these low-level events is technically capable of having an adverse effect, if multiple defensive layers were to fail simultaneously. By forcing businesses to notify regulators under threat of £17 million penalties whenever an event is merely “capable” of causing harm, the Government will unleash an administrative tsunami of defensive reporting.
Rather than enhancing national security, this compliance overload will drown NCSC analysts in background noise, making it far harder to detect sophisticated state-sponsored attacks. Amendment 17, in our view, would resolve this by replacing “capable of having” with the objective standard of “likely to have”. This would restore the established probability threshold used across UK regulatory frameworks, ensuring that mandatory notifications are reserved strictly for genuine material threats where there is a real likelihood of operational compromise.
This issue is compounded by the Government’s own drafting amendments, specifically Amendments 19, 36 and 44, which replicate the ultra-broad definition of compromise throughout parts 2 and 3. By removing “users” from Clause 15 and redefining data compromise to cover any event affecting data stored or processed on a system, the Government are dramatically expanding the notification net to include technical data anomalies that cause zero destruction or loss to actual customers. Combining this sweeping definition of data compromise with the low “capable of having” trigger will hugely affect responsible operators. It will force critical suppliers and small digital providers to spend their limited resources filling in compliance paperwork, rather than actively defending their infrastructure.
We risk creating a reporting system that captures everything and understands nothing. We must have objective reporting thresholds. By accepting the noble Baroness’s Amendment 17, restoring the “likely to have” test, we would ensure that mandatory reporting delivers high-quality actionable threat intelligence, rather than an unmanageable flood of routine notifications.
Under the new reporting regime, hundreds of incidents will be notified to regulators and the NCSC, but at present the Bill lacks any mechanism to ensure that aggregate intelligence is shared with Parliament or industry. Under Amendment 165 in my name, I propose that the Government lay an annual anonymised report before Parliament, detailing incident volumes, sector breakdowns and principal attack vectors. This would provide software developers and CNI operators with the situational awareness needed to harden defences.
Viscount Camrose (Con)
My Lords, I start by thanking my noble friend Lady Neville-Jones for introducing this group and setting out her stall so clearly and compellingly. I apologise that some of the amendments that have been looked at here I had in my record as being part of the next group. So, if I do not cover them all now, they will be covered by my noble friend Lord Markham as we get into the next group.
Let me begin by outlining the amendments in my name and those of my noble friends Lord Markham and Lord Holmes of Richmond. The need for action on ransomware has never been higher. The NCSC handled 204 nationally significant ransomware attacks in the year to September 2025 that we know about—up by 130% on the year prior, leading the NCSC to name ransomware as the most pressing threat to the country in its annual report. Of course, one of the challenges we face with ransomware attacks is not knowing when they happen, to whom and how often. The victims too often have strong reasons, generally associated with legal liability, not to report them. This makes it challenging, if not impossible, for any government agency seeking to identify commonalities across attacks to pursue repeat offenders and warn vulnerable organisations.
We could seek to make reporting of such attacks mandatory, but at the risk of placing hacked organisations in an impossible position where public reporting creates a legal bind that worsens the damage already done by the attack. I take on board the cogent concerns expressed by the noble Lord, Lord Clement-Jones, but the moral hazard occurs today where companies do not report ransomware attacks, thereby damaging our collective ability to defend others yet to be attacked.
Our amendment therefore seeks to find a channel that reports the facts of the hack and the metadata around it in a way that is not disclosed beyond the agency charged with cyber protection and does not become public knowledge. I do not pretend that this will be straightforward. For instance, we would have to understand how to deal with FoI requests and so on. That is why we propose a consultation. But if we were able to achieve something on this basis, we would greatly enhance our ability to protect UK PLCs from these hugely damaging attacks.
Amendment 172 seeks to require a review on the impact of the new reporting requirements introduced by the Bill. Again, this is fairly straightforward. The strengthened incident reporting requirements are being introduced to allow the regulators and the Government to help with providers and suppliers who have been attacked. Whether these requirements actually serve that purpose, and whether they do so at the expense of providers, cannot yet be known, but we must be able to form an assessment and adjust if necessary. Everyone in this Room would accept that we need statutory agility in the face of fast-moving technology, and a review on these lines could and would enable just that.
For a similar reason, I support the desire for transparency in Amendment 165 in the name of the noble Lord, Lord Clement-Jones. This may even overlap with our own amendment; we could probably think about merging the two in some way. It seems clear that both Houses of Parliament should be informed as to what the reporting regime is being used for and whether it is fulfilling its function. I hope that the Minister agrees.
I very much support Amendment 17 in the name of my noble friend Lady Neville-Jones. We are going from an incident constituting an actual adverse event on the security of network and information systems to it being capable of having such an effect. Arguably—the noble Lord, Lord Clement-Jones, made this point very well—almost any incident would meet this condition. We need language that expresses genuine risk to avoid all incidents being caught in the net. This seems wholly pragmatic to me and I commend it to the Minister, to whose response I look forward.
The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)
I thank noble Lords for their amendments in this group; in fact, subsequent groups also speak to this question of the nature, scope and timeliness of incident reporting. What we are all trying to do, I think, is to get the right balance in reporting actionable information that can be used by regulators and the NCSC to improve the security of the United Kingdom and the entities that operate essential services within it. That is obviously what the Government have put forward. I have heard clearly the arguments made by noble Lords, some of which probe the intention and the detail, and I will attempt to clarify those as I speak.
First, I shall speak to Amendments 19, 36 and 44 in my name. Improving incident reporting under the NIS framework is a key pillar of the Bill. Without an understanding of incidents, our regulators and the NCSC cannot assist in recovery, assess risk and bolster resilience. The amendments that I have tabled will ensure that the incident reporting measures for regulated entities reflect what we are trying to achieve.
The Bill already requires relevant regulated entities to consider a list of factors when determining whether an incident is likely to have a significant impact and be reportable. This includes whether data relating to users is, or is likely to be, compromised. Government Amendments 19, 36 and 44 remove the reference to “users”, meaning that all data compromises relating to the relevant network and information system are in scope of incident reporting. This will enable key incidents to be reported, including the compromise of commercially sensitive information or the exposure of access details or usernames of the regulated service.
These incidents will need to be reported to the NCSC and the relevant regulator. I say in response to the noble Lord, Lord Clement-Jones, that that is the motivation behind the change to that categorisation. This will ensure that the regulators have full oversight of significant security compromises, supporting them to keep the UK safe and secure. We will shortly consult on what constitutes a significant impact and put further detail in secondary legislation and guidance.
I turn now to the amendments tabled by—
Lord Clement-Jones (LD)
May I interrupt the Minister before she moves on to the next set of amendments? I do not intend to ambush her as regards her amendments this time around, but I seek an assurance, given that there seems to be quite a philosophical difference between her amendments today and those put forward by the noble Baroness, Lady Neville-Jones. There is considerable industry concern about the disproportionality involved. I seek an assurance from the Minister that, between Committee and Report, she will actively consult on the impact of this part of the Bill—Clause 15—and not just when it is in black-letter form. There is quite a lot of concern from many industry voices. It is incumbent on the Government to listen to those voices on the impact of this reporting structure and these duties before they go ahead in a way that many of us believe will not be helpful for the running of these businesses.
Baroness Lloyd of Effra (Lab)
We have already undertaken some consultation and I am happy to commit to contact affected businesses and business organisations and have further conversations between now and Report. Perhaps if I progress a little more, I may be able to answer some of the questions that may have given rise to some of this but, equally, there are different rationales for some different thresholds in the Bill, which, again, I am just about to come on to. I will set out the rationale for those because I think that they are well motivated and are linked to the risk profile that we see in the country and the connectedness of certain regulated entities in the country.
I turn to the amendments tabled by the noble Baroness, Lady Neville-Jones, and her questions to me on the link between the definitions and whether they apply beyond incident reporting. They apply to the security duties within the Bill, which means that regulated entities have a duty to prevent or minimise the impact of incidents. The amendments from the noble Baroness would limit this and reduce their security and resilience. We think that not every incident should be reportable but that organisations need to take appropriate and proportionate steps to mitigate the risks before, during and after a broader set of incidents.
On the second part of the noble Baroness’s amendments and her second question, the Government have recognised that the reporting threshold for data centres is broader than that for other regulated entities under the Bill. This reflects the distinctive role and risk profile of data centres. They are the physical infrastructure underpinning digital services across the economy and the public sector. Unlike the virtual cloud layer, for instance, they combine cyber, physical, personal and operational technology risks. This is particularly important in collocation facilities where infrastructure belonging to numerous customers is concentrated in one location. Then they need physical access to the premises and information about facilities or operational systems. A single incident could therefore exploit both physical and digital vulnerabilities, potentially affecting the confidentiality, integrity or availability of services belonging to multiple customers and sectors. The consequences may also extend beyond the facility’s immediate geographic location, because the hosted service can support users and central services elsewhere. That is the rationale for having this threshold applying to data centres.
To come on to the questions raised, including by the noble Lord, Lord Clement-Jones, on the use of the phrase “capable of”, and the points made in the amendment from the noble Baroness, Lady Neville-Jones, replacing “could have had” or “capable of having” with “likely to have” would exclude some incidents because their eventual impact was uncertain or successfully contained. It would also constrain the security duties, as I mentioned. In reference to the incident reporting definitions introduced by Clause 15, the subsequent detail sets out how the notification of incidents applies in each regulated sector, except for data centres. That is how the definition is made for regulated sectors other than data centres.
There are a lot of safeguards in the Bill to ensure that reporting remains proportionate. It is intended to capture significant near misses, not routine scanning, unsuccessful low-level attacks or ordinary operational events, and clear guidance will ensure that the industry understands this threshold. As the noble Baroness, Lady Neville-Jones, pointed out, we will set this out in secondary legislation and that will allow the consultation to take place that the noble Lord, Lord Clement-Jones, emphasised is so important—we agree with that. We have undertaken extensive engagement to date and will continue to do so.
Baroness Neville-Jones (Con)
My Lords, I have listened carefully to what the Minister has said. I had hoped that we would get greater clarity; I fear that the fog has increased. I entirely accept the point that companies have a general duty to take as many preventive measures as they can to increase security. That is a different matter, it seems, from what should trigger the reporting duty. Precisely what the Minister has laid out leads to a situation of an overload of reporting of items that do not require that kind of treatment.
I am extremely concerned that the industry fears—and it has a real point—that it will be caused to be active in areas which lead the regulators to be swamped and which reduces the real level of security, because it is doing things that it does not really need to. For those of us who are willing to contemplate a system of regulation that allows for differentiation between sectors—in other words, a sectoral approach—it is the kind of thing that will lead to a terrible muddle. I am unhappy about the response that has been given to that general point. It strengthens the cause of those who say that we should have one general regulator and that it should set the rules.
Secondly, on the question of data centres, I cannot understand that a data centre could alter the rules under which companies, if they happen to be located in a data centre, are operating and doing their business. I fear that this is an issue to which we will have to return on Report, because as things stand we are not heading in the right direction. I beg leave to withdraw the amendment.
“(c) if requested by the designated competent authority following the full notification, an intermediate report containing such information on the status of the incident, and updating the information given under paragraph (2)(b), as the authority may specify, and(d) a final report containing the information listed in paragraph (5A) in relation to the incident.”Member’s explanatory statement
This amendment is part of a set of amendments in the name of Baroness Harding that strengthen the staged reporting requirements for OES, except so far as it provides an essential service of a kind referred to in paragraph 11(2) or (3) of Schedule 2 (data centre services).This amendment enables competent authorities to require an intermediate update from the affected regulated entity within 14 days and a final report within a month.
Baroness Harding of Winscombe (Con)
My Lords, I rise to introduce a large number of amendments, for which I apologise: Amendments 18 to 23, 25 to 31, 33 to 39, 41 to 47 and 49 and 50.
Baroness Harding of Winscombe (Con)
Full house. Fear not—it is not as complex as it seems. These amendments, which I have introduced, and I am grateful for the support of the noble Baroness, Lady Kidron, and my noble friend Lord Holmes of Richmond, seek to strengthen the staged reporting requirements of the four different groups of entities, so each change must be repeated four times. Because of the way in which the Bill is drafted, I was unable to introduce the change just once; I had to put in each micro phrase, hence so many amendments. The aim is to strengthen the staged reporting requirements for operators of essential services, data centres, relevant digital service providers and relevant managed service providers, so everything is multiplied by four.
The Bill, as it stands, requires only an initial report within 24 hours and a full notification within 72 hours of an incident. My amendments would add two further stages: an intermediate report which is capped at 14 days after the incident has first been notified, or sooner if the relevant regulator requires, and a final report within one month. In all four cases, the reports must be given without undue delay, so that regulated entities cannot use the timeframes as an excuse to delay until the end of the time period.
These amendments are in line with the EU’s NIS2 directive. The reason why I have introduced them, as I said at Second Reading, is that I have lived this. I absolutely understand what the fog feels like. In the first moment when you have been attacked, you do not understand what has happened: you do not know who is attacking you, you do not know what they could have stolen, you do not know where they have gone, but you do know that it is serious. That is your first report. You start to understand, 72 hours later, quite how awful it could be. That is your second report, where you start to get real data, because your teams have worked all night, usually all around the world, to try to work out where the malign actors have gone. But it is really only after a couple of weeks that you have a proper sense of what has happened.
I recognise that my experience is, obviously, 10 years old, but quite recently I had a long conversation with some of the leaders at Marks & Spencer. The thing that scared me most was that it seemed so similar to my experience 10 years ago and that this basic process is likely to be the same. So we need the requirement to properly update whatever you learn two weeks on, and then a month later the fog starts to clear and you have a proper sense of the real scale of the problem.
The reason why we need to put this in legislation is that, throughout that entire period, all the incentives for you, as a corporate leader, are not to say anything. This is the biggest corporate taboo. Your board will be encouraging you not to tell everyone, the public will be telling you not to tell everyone and there is a real risk, unless you are forced to, that you just make it easier for the blackmailers to do their work. My personal experience was of being blackmailed during this process. Obviously, at the time, there were none of these regulations. I can tell your Lordships that there were so many voices saying, “Why don’t you just shut up? You don’t know what’s going on yet. Keep quiet”. Yet if, in the fog, you share this information with regulators and with law enforcement agencies, that is how the law can prevail. It is how regulators can work out what is happening and how they can warn others who might be affected. It is how the law enforcement agencies can do their work to try to find the bad guys.
This really matters if we want the rule of law to exist in the digital world, because the incentives, even for entirely well-meaning and upstanding leaders of corporations—and government departments, dare I say—are to keep quiet. We need to put these reporting requirements in the Bill. All the amendments would do is bring our own legislation in line with the NIS2 framework. To be honest, many of these companies and these incidents are likely to need to be reported in Europe at the same time as they are in the UK. As my noble friend Lady Neville-Jones said, there is a real primacy on keeping things simple. The more we can mirror and have exactly the same reporting requirements, the easier it will be when you are in that terrifying moment when you realise that you have a serious incident. I beg to move.
Baroness Kidron (CB)
My Lords, I am very glad to support all the amendments; I will not read them out again. The noble Baroness, Lady Harding, has already convincingly set out the case. I really hope that the Minister recognises that these amendments are born out of lived experience, which is characteristic of this House and very precious when considering how legislation actually impacts in the world at times of crisis.
The amendment specifically calls for staged incident reporting, to create a drumbeat of information and oversight so that damage can be minimised. Cyber attacks move quickly and are extremely confusing for those involved. Staged incident reporting enables regulators to have a more immediate understanding, so that they can offer support, anticipate spread and learn lessons for strengthening guidance in the future.
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to support these amendments. I have signed all of them, although in doing so I almost got a serious case of electronic RSI. They have the great good fortune of being clear, precise and aligned with existing regulations in other jurisdictions. As my noble friend Lady Harding has already pointed out, many businesses will have operations in multiple jurisdictions. For something as significant as reporting, why would we not follow NIS2 in this respect?
The clarity of the amendments is their strength, even more so when compared with what is currently in the Bill in this respect. What we are trying to achieve from these changes is clear. The 24-hour initial reporting period makes sense: of course it does. As my noble friend Lady Harding pointed out, what one knows at that point is that something is happening and a report is made. In many ways, that is all that needs to be known and all that needs to be reported.
To have a situation as currently set out in the Bill, 24 then 72, means that in that period so much would need to be known to comply with the provisions set out in the Bill that it is just not realistic. This staged approach is both clear and precise. It enables what the purpose of the Bill is all about, which is to support the individual business or entity that is under attack. Crucially, as other noble Lords have said, it puts the power in the collective. As a consequence of one attack, the collective can benefit if there is a sense of commitment to this reporting schedule. That will come only if it is in this stage 4, as clearly set out by my noble friend Lady Harding.
If we want to enable businesses and other entities to really commit to this process—not just be dragged there by force of statute but have it as a means of business as usual, a real cultural change and a commitment to the positivity of this—it has to work for them. This staged process not only does that but, by aligning with NIS, stops this being yet another burden added to business: added unnecessarily and less effectively than what these amendments propose. I very much look forward to the Minister’s response.
Lord Arbuthnot of Edrom (Con)
My Lords, good can come out of bad events. The experience, as well as the speech, of my noble friend Lady Harding is one such good aspect. If it combines with bringing us into line with European practice, which so many businesses already have to follow, so much the better. I hope the Minister will be as sympathetic as she possibly can to my noble friend’s amendments.
Lord Clement-Jones (LD)
My Lords, I very strongly support this set of amendments on the staged notification of incidents. This is a significant group of amendments from the noble Baroness, Lady Harding, and so well supported by the noble Baroness, Lady Kidron, and the noble Lord, Lord Holmes; he has illustrated this extremely well. As has been described, the noble Baroness, Lady Harding, has a great deal of experience. She brings an invaluable perspective to this Committee, having led a major telecommunications provider through one of the most high-profile corporate cyber breaches in British history. She speaks from real experience and understands very clearly what happens inside an organisation in the immediate aftermath of a severe attack. We should listen extremely carefully to what she has to say.
In those critical opening hours, incident response teams and forensic engineers are working under an intense fog of war, so to speak, actively fighting to contain the malware, to isolate compromised servers and to protect customer data. We cannot expect an organisation to produce an exhaustive, multivariable forensic post-mortem within the first few hours of a fast-moving operational crisis. Yet, as Clause 15 currently stands, the reporting pipeline that follows the initial notification is left thin and unstructured. The noble Baroness’s amendments fix this with three-stage architecture, which is mirrored clause by clause across each category of regulated entity: operators of essential services, data centres, relevant digital service providers and relevant managed service providers.
I will not add much more, as noble Lords have already spoken extremely eloquently. Cyber incidents do not likely conclude on the day a final report falls due. Where an incident is still live at the point that the final report is owed, the entity must instead give a progress report on the information known to date, followed by the final report within one month of the incident ceasing. That seems to me to be a very sensible and realistic accommodation of how live incidents unfold.
Finally, I turn to the amendments tabled by the noble Lord, Lord Ashcombe, although I do not see him here in Committee. They would extend the deadline for the full notification from 72 hours to 30 days. I understand the underlying concerns, as 72 hours can be an unforgiving window in which to complete a full investigation and analysis. However, it is the amendments from the noble Baroness, Lady Harding, that deliver what we need. Intermediate reporting exists precisely so that the authorities are not left in the dark for weeks at a time. Taken together, the noble Baroness’s amendments replace a single blunt deadline with a structured, predictable reporting line, which gives business clarity on exactly what is required and when, while ensuring that the NCSC and our competent authorities receive high-quality, structured intelligence, rather than a single, rushed snapshot. As she said, this is the kind of staged discipline that the EU’s NIS2 directive already reflects and which this Bill should emulate.
Lord Markham (Con)
As per the points made by other noble Lords, this is a prime example of when you realise how valuable it is to have in this House and, in particular, in this Committee people who have lived experience. Because of that, this is a well thought out set of proposals; I thank my noble friend Lady Harding for bringing them before us, and I thank my noble friend Lord Holmes and the noble Baroness, Lady Kidron, for supporting them.
These amendments mirror a lot of what I saw from the other side when I was the Health Minister and we had the problems with Synnovis and testing. That is where I am coming from: you realise that you need some real teeth because, even though you have public bodies such as the NHS, which you think would listen to the Minister on certain requirements, that that does not always follow. The point made by my noble friend Lady Harding about everyone telling you to keep quiet applies to state organisations just as much as it does to private companies. Having teeth is an important part of all this and of making things happen.
The staged approach has been mentioned. In your first 72 hours, it is all about wanting just to get the information out there. One of my questions—I will come on to the rest in a minute—is: what are we doing on our side with that information? We must make sure that it is being used valuably and used to alert others. Only later on, around the 30-day mark, do you get into the “lessons learned” stage. So staged reporting would be a very sensible and well thought out approach.
That brings me on to another point; I would be grateful if the Minister could address it. If we are requiring businesses to provide such information to the Government very quickly, what will they get back? The strong justification for rapid incident reporting is surely that the NCSC can aggregate the intelligence, identify common attack vectors and vulnerabilities, and rapidly warn other organisations before they, too, are attacked. Obviously, that is the difference between regulatory reporting and genuine national cyber defence. I would be grateful if the Minister could explain the planning and what will happen operationally when one of these early notifications is received. How quickly will the information be assessed? How quickly will actionable intelligence be disseminated to other potentially vulnerable organisations? What obligations will there be on the Government and the regulators to ensure that the information provided by one organisation improves the resilience of everyone else?
Of course, there is a wider point here. Throughout our consideration of the Bill, we need to guard against measuring success by the number of organisations regulated or the number of reports submitted. Rather, the real test is whether fewer attacks succeed, whether we identify attacks faster, whether organisations can recover more quickly and whether intelligence from one attack prevents the next one. That is the outcomes we want this regime to achieve.
I hope that the Minister will look seriously at the principles behind these amendments, and in particular at whether we can achieve a reporting structure that gives the Government the information they genuinely need quickly while allowing organisations to concentrate their scarce cyber expertise on the thing that matters most: defeating the attack.
Baroness Lloyd of Effra (Lab)
I thank noble Lords for their amendments in this group. We have spoken previously about the importance of effectiveness, proportionality and clarity. I absolutely hear the experience of the noble Baroness, Lady Harding, in leading a telecommunications company and the experience it had.
We have learned from experiences across all sectors in introducing the new regime that is in the Bill, which puts in, as others have said, a staged approach that includes an early alert to regulators and the NCSC within 24 hours. That will provide awareness and enable the NCSC and regulator to provide early support, as well as potentially understand whether it is impacting multiple regulated entities.
Lord Clement-Jones (LD)
My Lords, before the noble Baroness, Lady Harding, stands up, I heard what the Minister had to say about consulting across sectors. I was reminded that, at Second Reading, I mentioned the fact that the law firm with which I am associated, DLA Piper, was subjected to a NotPetya ransomware attack back in 2017. What the Minister said is completely at odds with not only what the noble Baroness, Lady Harding, said, but the experience that we had in the way that we needed to understand how these events unfold. It would be really helpful to know from the Minister, or for her to publish, the sectors where the Government have had those discussions and which parts of industry have agreed that this is an appropriate form of incident reporting.
What we are trying to do, throughout the Bill, is to ground it in what is practical. At the moment, despite the fact that we are letting through some government amendments, it seems that we are heading in the wrong direction with this clause. It is going to be disproportionate in the way that it impacts on business and is not even going to be fit for purpose, despite the disproportionality. It is just not going to work.
Baroness Lloyd of Effra (Lab)
I think we all agree that we want a proportionate and clear regime. The noble Lord supports further incident reporting here—additional stages of incident reporting. In our impact assessment, we clearly set out the implications of that in its cost to business and so on. We will come on shortly to discuss potentially broadening the scope of incidents that would be reported. We have not been able to quantify that potential impact, as a sort of counterfactual, because we are only just discussing that.
Baroness Harding of Winscombe (Con)
My Lords, I have listened really carefully to the Minister and thank her for her response, but I feel that we just had a completely black and white no, which is extremely disappointing. We have had something almost worse than a black and white no, because if I heard her correctly—I will need to go back and read it again—I think she has added uncertainty, because suggesting that it is okay because regulators have the ability to ask for extra reporting is a company’s worst nightmare. What you want is really clear black and white guardrails, as we have been trying to introduce in these amendments.
I had hoped that we could have follow-up discussions between now and Report, but I feel like the door has been rather slammed in my face. I would be very keen to understand, as the noble Lord, Lord Clement-Jones, has just said, what consultation has really happened and to have a recognition that you need to consult organisations that have experienced a substantial cyber attack. If an organisation has not, then I am afraid it will want to keep quiet and will not want to report anything. It is easy to ask broad groups of organisations, “Would you like more reporting?” We all know what the answer to that would be. That is an easy consultation.
I would really value more detailed discussions with the Minister and her officials between now and Report, because I feel that we will come back to this, particularly given the support that my amendments have received from across the Committee, for which I am extremely grateful. I beg leave to withdraw the amendment.
Baroness Lloyd of Effra
Member’s explanatory statement
This amendment would require an operator of an essential service to consider whether any data relating to the essential service has been compromised (not just data relating to users of the service) when determining whether an incident should be reported.
Baroness Lloyd of Effra
Member’s explanatory statement
This amendment would require a relevant digital service provider to consider whether any data relating to the relevant digital service has been compromised (not just data relating to users of the service) when determining whether an incident should be reported.
Baroness Lloyd of Effra
Member’s explanatory statement
This amendment would require a relevant managed service provider to consider whether any data relating to the relevant managed service has been compromised (not just data relating to users of the service) when determining whether an incident should be reported.
Baroness Harding of Winscombe (Con)
I apologise, I stand to speak to a whole other group of amendments that suffer from the same challenge of needing to be repeated four times, which is why I suggested to the clerks that we degroup them, otherwise we would have got into a real muddle.
This group seeks to address the obligation to report incidents to customers, as the Minister referenced in her remarks earlier. Currently, the Bill requires notification only where a customer is,
“likely to be adversely affected”.
The obligation is to explain the nature of the incident and why the customer is affected. My amendments seek to broaden and deepen that duty. Customers must be notified where an incident has caused or has the potential to cause severe operational damage or financial loss, where I hope my drafting has not fallen prey to the issue that my noble friend Lady Neville-Jones, addressed in Amendment 17. If it has done so, we obviously need to address that.
The duty is extended to cover related natural or legal persons who could suffer considerable damage as a result. The regulated entities must also advise customers on what measures to take in response. Probably most importantly in this group of amendments, the entities must keep customers updated until the incident is resolved, whereas at the moment the Bill only requires them to notify customers once and then leave them hanging, waiting to find out what is going on. Together these amendments would ensure that customers are told promptly what to do and are kept informed throughout the incident until it is resolved. They also follow the NIS2 directive in requiring advice on protective measures and go a little further by making it a requirement to communicate to related persons as well.
Sadly, I have personal experience in this, not from my TalkTalk times but much more recently. I suspect anybody who is on a board or who has chaired a business has experienced this. An organisation that I chair is the customer of a managed service provider that recently experienced an incident. It did not tell us. The incident was to do with some of our staff payroll information, so it was sensitive and important. When it did tell us, it then did not keep us informed about what was going on. So I feel that pain.
I know that some noble Lords may have concerns that we do not want to create panic by endless notification. I absolutely agree. Hence my attempt to define this as severe operational damage. I would very much welcome input between now and Report if we can tighten that wording to make sure that this does not represent lots of unnecessary email alerts telling you that a system three stages back in the tech stack might have been affected. But when your customers’ data has been exposed in a cyber attack through a managed service provider, data centre or digital service that you use, it is entirely reasonable that those companies have a requirement to inform and keep you updated during the incident. That is all that these amendments seek to do. I beg to move.
Baroness Kidron (CB)
My Lords, for reasons that I do not understand, I do not have my name on these amendments, given all the others from the noble Baroness that I do, but I support them. It is funny, because when I came back from holiday in August, I had no fewer than five emails from companies saying that there had been data breaches in which I was involved, and I had that exact thought—“What now? What do I do? What’s next? How serious?”—and did nothing.
Lord Holmes of Richmond (Con)
My Lords, I support all these amendments. They bring the customer perspective well into focus, which the Bill is currently chronically insufficient on, in my view. As the noble Baroness, Lady Harding, identified, if these amendments do not quite get to the precision of it, how will the Government bring something forward that will do the trick perfectly? This is a critically significant element which is currently not within the Bill. On an allied point, which has already been nodded to, I ask the Minister, since the Bill’s drafting seems to like “likely to”, and, in earlier additions “capable of”, why would there not be coherence through the Bill as to the type of legal construction that is being used throughout? Surely, that would not only be beneficial and more precise, but it would give greater clarity to all those who have to engage with the issues therein.
Lord Clement-Jones (LD)
My Lords, I, too, support these customer notification amendments tabled by the noble Baroness, Lady Harding of Winscombe. As I have said, the noble Baroness brings vital lived experience, in more ways than I thought, from the front line of corporate crisis response. When a major cyber breach occurs, vague statutory requirements to notify customers
“as soon as reasonably practicable”
lead to corporate delay. Amendment 58 would replace this with a strict statutory 24-hour notification clock, while Amendment 65 would establish explicit harm triggers and require providers to provide actionable remediation advice to affected customers. Look at what Amendments 60 and 65, in particular, would achieve across Clause 16.
Under Amendment 65, notification would be explicitly triggered whenever an incident causes or threatens severe operational disruption, substantial financial loss or material harm to downstream users. Furthermore, Amendment 71 would place a positive duty on the provider to advise customers on immediate remediation steps that they can take. In the cyber realm, time is the attacker’s greatest ally. If a hospital, bank or small supplier is informed within 24 hours that their cloud or managed service provider has been breached and given technical instructions on how to isolate their systems, they can prevent contagion before it paralyses their operations. We must ensure that customer notification is prompt and meaningful, empowering downstream businesses to isolate compromised systems before contagion spreads, so we very strongly support these amendments.
Viscount Camrose (Con)
My Lords, I, too, thank my noble friend Lady Harding of Winscombe for tabling this important set of amendments, which we welcome, and for clarifying the refinements of the grouping process, which had slightly eluded me up to that point. As with the previous group, this would amend four key areas of, on this occasion, customer reporting. It would tighten the timing to notify customers; widen the incidents expected to be reported by removing the adverse impact criterion; add extra reporting triggers; and add an “advice on remedies” duty.
Of course, businesses should be supported in the case of cyber attacks and our priority must be preventing, containing and controlling such incidents, but this cannot come at the expense of the customers that businesses serve and depend on. Customers deserve to know when a firm they depend on is targeted, even if such an attack does not necessarily directly adversely affect them. They deserve to be informed promptly and they deserve to be informed of potential remedies.
It is worth saying that there is a welcome side effect to doing so, based on the premise that behaviours are the best guard against cyber attack. Constantly being aware that cyber attacks are going on will improve behaviours. As was said earlier, the goal is not to create panic but, on a continuum between insouciance and panic, we must imbue a point closer to concern more widely in the population to keep people aware that we are constantly at risk of being hacked. On these Benches we feel these are wise, pragmatic and helpful changes. I certainly hope the Minister agrees.
Baroness Lloyd of Effra (Lab)
I thank the noble Baroness for raising important points around customer communication. As set out in the Bill, it takes forward the current duties to notify customers that the Bill places on data centres, OESs, RDSPs and RMSPs. That duty was designed to ensure that providers of key digital and data infrastructure services consider whether their customers are likely to have been adversely affected by a reported incident—whether through disruption of service, compromise of their data or exposure of their systems to cyber threats—and to notify them.
I will explain the logic in response to the point of the noble Lord, Lord Clement-Jones, about the importance of meaningful communication with customers. The reason we have drafted the Bill so that customer notification follows the 72-hour incident report is to ensure that regulated entities can focus on understanding the nature of the incident and contact customers when they are more likely to understand its potential impacts.
We have discussed the question of what an organisation might reasonably be expected to know within 24 hours of identifying an incident. The point is that customers should be communicated with in a timely manner, with sufficient information, so that they can take the necessary action. On that point, the rationale for 72 hours was to time it, for simplicity, with the 72-hour report. I am happy to consult further with the noble Baroness to explain the logic of the 72-hour and 42-hour requirement to communicate with customers, because the motivation is exactly the same: to have actionable and meaningful communication with customers.
I turn to the degree of depth of communication, the advice that can reasonably be put on regulated entities on technical measures, and what technical mitigations customers should take on their own. It is reasonable that the regulated entity should share what they know about the nature of the incident. The question about whether the regulated entity is in the right position to provide advice to customers on what mitigations they should take is both practical and technical. Would they have enough insight to have an effective understanding of the situation of the customers and a detailed understanding of the customers and their businesses in order to give effective meaningful advice in that way—or would that just be a requirement on the entities that would not have the intended impact? On that point, I am not quite persuaded that the line is drawn in the right position.
On keeping in touch, mentioned by the noble Baronesses, Lady Kidron and Lady Harding, I am happy to come back to that on Report to make sure that we have the right balance between the initial notification and the right type of customer communication.
Baroness Harding of Winscombe (Con)
I thank all the noble Lords who, again, have supported my long list of amendments and I thank them for their excellent contributions. It feels as if we made a very small breakthrough, for which I am extremely grateful, and I thank the Minister. I will not delay anyone any longer as we have another group of my amendments to come, but I look forward to some detailed discussions between now and Report to see if we can bring this back in a form that we are all able to support. I beg leave to withdraw the amendment.
“Notification of near misses, cyber threats and sub-threshold incidentsAfter regulation 14G of the NIS Regulations (inserted by section 16) insert—“Notification of near misses, cyber threats and sub-threshold incidents(1) A regulated person must notify the designated competent authority without undue delay and in any event no later than 72 hours after becoming aware of—(a) a cyber threat,(b) a near miss, or(c) a sub-threshold incident,affecting the regulated person’s network and information systems.(2) A person other than a regulated person may notify the designated competent authority on a voluntary basis of a cyber threat or a near miss or a sub-threshold incident affecting that person’s network and information systems, regardless of whether that person is subject to any requirement under these Regulations.(3) Without prejudice to the prevention, investigation, detection and prosecution of criminal offences, a person who gives a notification under paragraph (1) or (2) is not, by reason only of that notification, subject to any additional duty, liability or requirement to which that person would not otherwise have been subject.(4) In this regulation—“cyber threat” means any potential circumstance, event or action that could, if it occurred, adversely affect the network and information systems of a person, or the users of a service provided by means of such systems;“near miss” means an event that could have compromised the availability, authenticity, integrity or confidentiality of data, or of a service provided by means of network and information systems, but that was prevented from having that effect or did not in fact have that effect;“regulated person” means an OES, an RDSP, an RMSP or a critical supplier;“sub-threshold incident” means an incident affecting the regulated person’s network and information systems which the regulated person is not otherwise required to notify under regulation 11(2), 11A(2), 12A(1) or 14E(1) but which is close to the thresholds for notification under those regulations.”” Member’s explanatory statement
This new clause seeks to ensure that regulated persons must report to their designated competent authority any near miss incident, cyber threat, or sub-threshold incident that could adversely affect the network and information systems of a person, or the users of a service provided by means of such systems.
Baroness Harding of Winscombe (Con)
I am sorry, it is me again. In a break with tradition, we have only one amendment in this group. That is because this amendment would insert a proposed new clause, as opposed to lots of small changes to existing clauses. Amendment 72 is in my name and, once again, I thank the noble Baroness, Lady Kidron, for adding her name.
This proposed new clause seeks to ensure that organisations regulated under the Bill must report any near misses, cyber threats or incidents currently under the thresholds as set out in the Bill that could affect their network and information systems. I am, again, mindful that it is important that this is consistent with the extremely well-made points of my noble friend Lady Neville-Jones in Amendment 17. It is welcome to have discussions on whether the wording is right, because the purpose is to get the near miss, rather than a huge deluge of meaningless reporting.
As it stands, the Bill requires regulated entities to report only what has happened, and only if it crosses a threshold based on factors such as scale, duration and the number of people affected. However, my amendments look to close the gaps in the event of, for example, an attack an organisation has stopped before it has caused major damage, but had the attack had been successful, it would have had a substantial effect across the whole industry. Other examples are where there are very credible warnings of an expected attack that does not occur, or where there is an incident that falls just below the thresholds that could still be significant.
The intention of this amendment—unlike in my other two groups, it is quite a probing amendment to see if we can work together to capture the spirit of this—is to close a reporting gap where significant incidents may not be reported simply because of the way we have drawn up the definitions in the Bill.
As in the other two groups that I have led, this follows the EU NIS2 directive, although the NIS2 directive creates a voluntary rather than a mandatory reporting provision for this. My view is that the taboo for going public on cyber attacks is so great that voluntary reporting is not the way to do this. It is better for all organisations to know the black and white of what they can do, what they should do and what they do not have to do. In some sectors, certainly the one I worked in—telecoms—there is a fair amount of voluntary sharing. But even there, there is such a taboo about speaking to your regulator about a problem that this needs to be made this mandatory rather than voluntary. Other than that, this seeks to replicate what is in the EU NIS2 directives. With that—I think noble Lords have probably heard enough of me—I beg to move.
Baroness Kidron (CB)
My Lords, I support Amendment 72 and I have signed it. I recognise the probing nature of this, but I also recognise the problem it seeks to address. The knowledge that a cyber threat or cyber attack has failed may be incredibly important intelligence because, on the whole, someone trying to create a cyber threat will not retire after the first time that it did not work out; they will try somewhere else, so the intelligence element of this is so crucial.
Some of the people in cyber security talk about seven stages of cyber attack. The first stage is reconnaissance: you are just having a look round and trying to identify vulnerabilities. The second stage is weaponisation: you are developing the means to target that weakness, which can be as simple as an email. It is not until the third stage that the attack begins. But there are still three or four more stages, each of which can provide a barrier and each of which can be the place at which the attack stops. It is not uncommon for attackers to carry out multiple attempts to find or exploit a vulnerability, or indeed to do a small-scale attack in order to then do something larger down the line. In all these cases, there is something absolutely critical for the regulator and possibly the enforcement community to know.
Lord Birt (CB)
I, too, support the amendment from the noble Baroness, Lady Harding, as I do all the amendments previously discussed. By definition, a near miss means a severe threat narrowly avoided that would have had substantial consequences if it had not been avoided. The interesting thing is that everyone tells me that the near-miss reporting in the aviation industry proved to be massively significant and fundamentally changed the whole approach to air safety, with very beneficial consequences. The case is very sound that it should be applied here.
Lord Holmes of Richmond (Con)
My Lords, I support this amendment, particularly in terms of its probing nature and what work can potentially be done between Committee and Report in this respect. It is really about the question of mandation. There should not be any question of a voluntary requirement. This is something that is not about the individual organisation, business or entity. It goes broader than that. It is about the community, the greater good and the country. The fact of a near miss says nothing about the severity of intent and the intel that can thus be gleaned to benefit at that point across the sector, the community, the country and beyond. Mandation has to be the standard for this provision.
Lord Clement-Jones (LD)
My Lords, I cannot possibly compete with the Shakespearean seven stages—as opposed to ages—of the noble Baroness, Lady Kidron. We support Amendment 72 in its entirety. Voluntary reporting is the bit of the amendment that we particularly like. Our national security services and sectoral competent authorities desperately need early upstream visibility of emerging threat patterns before a full-blown systemic crisis unfolds. In the cyber domain, the precursors to the catastrophic attack—the subtle network probes, the exploratory reconnaissance and near misses—often appear weeks before a critical system is actually breached.
At present, the Bill creates a bit of an all-or-nothing trap. If any entity experiences a sophisticated near miss that fails to cross the statutory threshold of an active disruptive breach, it has a powerful legal incentive to keep quiet. It fears that, if it approaches a regulator voluntarily, it will expose itself to regulatory scrutiny, compliance investigations and potential enforcement action. In our view, including a dedicated statutory framework into the NIS regulations specifically for the voluntary notification of near misses, sub-threshold anomalies and early-stage cyber threats would be a significant beneficial addition to the Bill. In effect, it would establish a safe harbour for intelligence sharing.
As the recent “Analogue 72” green paper powerfully argued, we must move away from a culture of fear and silence in this area and we must encourage continuous proactive information flows between our critical infrastructure operators and the NCSC. We strongly support this amendment.
Lord Reay (Con)
My Lords, I thank my noble friend Lady Harding of Winscombe for her amendment, to which the noble Baroness, Lady Kidron, has added her name. We believe that this is a straightforward amendment. If we are to tackle cyber attacks seriously and to create a generally resilient cyber system, we should not simply stop at the reporting of incidents that happen. A key way of ensuring that we build not just a responsive but a preventive cyber system is by knowing what potential risks exist and who is attempting to commit cyber attacks, even if they have not done so yet. This is a reasoned amendment that places a requirement only on those already considered regulated persons, with the opportunity for others not regulated to report voluntarily. I hope that the Minister will agree.
Baroness Lloyd of Effra (Lab)
My Lords, I thank the noble Baroness for raising this question about the requirement for regulated entities to report cyber threats, near misses and sub-threshold incidents within a 72-hour deadline.
I turn first to the question of voluntary reporting, which we touched on a little in the context of discussing the industry groupings on Tuesday and the trust groups that exist and are often facilitated by the NCSC. These are incredibly valuable groups. We absolutely encourage voluntary reporting, whether through those groups or other industry bodies. There is a question about whether putting such groups and mechanisms on a statutory footing helps or hinders that objective, because we need to engender the confidence to share information, as the noble Baroness and others mentioned. There is a question about whether that is within the regulatory perimeter, as it were, and whether it encourages that or not. I am happy to come back to that on Report.
I turn to the question of reporting sub-threshold incidents. The amendment concerns incidents that have been successfully contained or have proved ineffective, incidents that fall somewhere below the current reporting thresholds and any potential circumstance or event that could, if it occurred, affect a regulated entity’s systems or the users of a service provided through these systems. We discussed that in the context of data centres. Let me answer the question from the noble Baroness, Lady Kidron. In the discussion on data centres, I was speaking about near misses. We made the point highlighted by the noble Baroness, Lady Neville-Jones: near misses and those types of incidents would be captured for data centres, given the particular role they play in our digital infrastructure.
The extension of similar requirements—although, as we read it, they are much broader requirements—to all regulated entities would increase regulatory reporting very significantly. The noble Baroness, Lady Neville-Jones, made the point right at the beginning—although it could have possibly been someone else—about the ability of our regulators to effectively utilise the threat intelligence and manage it so that it can be conveyed into actionable advice and trend data. These are the considerations that we take.
Another consideration is that the entities that have more sophisticated surveillance and mitigations may be able to identify attacks more effectively. We would not want to set up a situation where there were any perverse incentives in the system for those who have very adept surveillance and assessments away from reporting or developing that.
Even though I heard very clearly that the motivation is that the amendment is just to catch to those incidents that just fall below, our reading of it is that it would be much wider, and it may indeed have some other effects. At this stage, I would not support the amendment as drafted.
Baroness Harding of Winscombe (Con)
It was my suggestion to break up these amendments into different groups, otherwise we would have had about 100 amendments in one group. There is an awful lot of overlap in the discussion on this group in particular and Amendment 17 in the name of my noble friend Lady Neville-Jones. Would the Minister commit to having a joint meeting, where we could try to work this through together? I think we share a common goal of wanting to give as much relevant, immediate and up-to-date intelligence to the network as possible, without overwhelming, and recognising that, as the noble Lord, Lord Clement-Jones, said, time is absolutely everything in these cyber attacks. If we could discuss that together rather than separately, that would be extremely valuable.
Baroness Lloyd of Effra (Lab)
That would indeed be very valuable to discuss the questions around definition, scope, coverage, timeliness and impact on potential entities—sorry, I have just expanded our agenda.
Baroness Harding of Winscombe (Con)
I have heard very clearly the willingness to discuss and collaborate from the Minister, which is extremely welcome, as were the contributions from all noble Lords. If the last hour and half has shown anything, it is that there is a genuine cross-Committee desire to work—this is what the House does at its best—to genuinely improve, with a shared goal of a piece of legislation that the country will benefit from if we can get it right. I beg leave to withdraw the amendment.
Lord Markham
“Exemption from disclosure: right to a fair trial(1) Nothing in paragraphs (1)(d) to (f) of regulation 6, or regulation 6A, permits a NIS enforcement authority to share information with another NIS enforcement authority or with a person within paragraph (2) of regulation 6 if the Secretary of State determines that—(a) the receiving jurisdiction is one in which the right to a fair trial cannot be guaranteed, or(b) the disclosure could result in actions being taken that would be incompatible with the right to a fair trial.(2) For the purposes of making a determination under paragraph (1) above, the Secretary of State must have regard to the opinion of—(a) subject matter experts, and(b) competent civil society groups.(3) Every 12 months the Secretary of State must publish and lay before Parliament an annual report detailing the determinations made under paragraph (1) in the previous 12 months.(4) The first report under paragraph (3) must be published and laid within 12 months of the day on which the Cyber Security and Resilience (Network and Information Systems) Act 2026 is passed.”
Lord Markham (Con)
My Lords, Amendment 73 stands in the names of the noble Lords, Lord Alton of Liverpool and Lord Hunt of Kings Heath, and the noble Baroness, Lady Ludford, and in my name. Unfortunately, the noble Lord, Lord Alton, is unable to be here today, and I am very pleased to move the amendment on his behalf. The principle behind it is very simple, and I am delighted to see that it has cross-party support. I am sure and trust that it will have cross-Committee support as well.
We all recognise that cyber threats do not respect national borders. Effective cyber security therefore requires international co-operation and information sharing. I think that is something that we all believe in. A lot of measures that we have been talking about would actually give teeth and powers to these organisations to make sure this happens. However, the amendment shows when things can go too far and the risks around that. There must surely be limits on where information obtained under UK statutory powers can subsequently be sent and how it can be used.
The Bill will give NIS enforcement authorities the power to share information with overseas authorities. Amendment 73 would prevent such information being shared where the Secretary of State determines that the receiving jurisdiction cannot guarantee the right to a fair trial, or where disclosure could result in actions incompatible with that right. This is not a theoretical concern. We know that authoritarian states increasingly use apparently legitimate law enforcement processes as instruments of transnational repression. China provides perhaps the clearest example. There are well-documented concerns about the independence of its judiciary, particularly in national security cases, and the treatment of dissidents and human rights defenders.
Baroness Ludford (LD)
My Lords, having exchanged some gestures with the noble Lord, Lord Hunt, I think it is me next. I am pleased to support this amendment, which I have cosigned, and I very much agree with everything that the noble Lord, Lord Markham, said.
My remarks will principally have China in mind. China is not the only repressive regime, of course, but certain examples come to mind. Take, for example, the political prisoners in Hong Kong, such as Jimmy Lai and Joshua Wong, who was in the news recently when he was outrageously imprisoned, on so-called national security grounds, for democratic expression and protest. There are many other such examples, of course. There are also concerns about electroshock weapons being demonstrated inside the Chinese embassy here, and we recently saw a considerable eight-year sentence under our National Security Act for the manager of the Hong Kong Economic and Trade Office in the UK because of attempts at repression in the UK. So there are problems of justice—or, rather, injustice—in Hong Kong and China, but the tentacles of repression are very much reaching into this country, particularly for the Hong Kong diaspora.
We have seen other examples, such as Interpol red notices being misused, so there is a great concern that requests for digital information sharing that have a nefarious purpose could be made by authoritarian states under the Bill. We have had examples in Hong Kong of residential surveillance and holding individuals incommunicado for up to six months, without access to a lawyer or family, which amount to enforced disappearance and increase the risk of torture. We have the lack of judicial independence, as the noble Lord, Lord Markham, mentioned, which explicitly prevents a fair trial, particularly in so-called national security cases. The treatment of imprisoned activists undermines any semblance of a fair trial. There are concerns about the admission of evidence obtained through torture in Chinese courts, which includes Hong Kong. The situation in prisons is intolerable. I understand that Jimmy Lai is being held in conditions where he is practically boiling in the heat of his cell. Anyway, this gives the Committee an illustration of everything that I think noble Lords are already aware of.
I understand that, under the Extradition Act, co-operation between the UK and Hong Kong authorities is permitted on a case-by-case ad hoc basis; if that is incorrect, I would accept correction. But if, under the Bill, NIS data—including sensitive information such as IP addresses, digital fingerprints and user-level logs from digital service providers—could increase the risk of extradition to a country without a bilateral treaty with the UK then that could trigger special extradition arrangements, bypassing traditional human rights safeguards. We are on a slightly uncertain basis of extradition to Hong Kong, into which the Bill could add another element, so there are no permanent safeguards against extradition to Hong Kong and this data sharing could serve as an intelligence-gathering tool, which facilitates that process by providing the evidence which then justifies the filing of an ad hoc extradition request. So we could increase the likelihood of an ad hoc extradition request, which would make it more difficult for the British authorities.
Of course, we all know that many of the diaspora in the UK are living in fear of their lives—not just fear for their safety but for their lives, with bounties on their heads. We are also aware of all the cyber attacks that we understand are being launched from a Chinese direction. This NIS data could help to identify the architecture of the UK’s critical systems and choke points. It could also assist with the harassment of dissidents and human rights defenders living in the UK.
For all these reasons, I very much support the amendment. As the noble Lord, Lord Markham, said, if the Government believe that there are institutional drafting problems then it is incumbent on them—if they agree with us that there is a danger in this zone of sharing data with a repressive regime, and I cannot see how they would not—to come up with something which fits the existing parameters but prevents opening the door to assisting repression. That would certainly be against any values in this country.
Lord Hunt of Kings Heath (Lab)
My Lords, I will briefly follow the noble Lord, Lord Markham, and the noble Baroness, Lady Ludford, in supporting this amendment. The noble Lord, Lord Alton, who is the architect of the amendment—indeed, of many amendments relating to China and human rights—unfortunately cannot be here, but both the noble Lord, Lord Markham, and the noble Baroness, Lady Ludford, explained eloquently why this is important, particularly the focus on China.
Over the years, British Governments of all colours have had a very ambiguous policy towards China. On the one hand, in terms of trade and the economy, it is crucial. On the other, we have to admit that Chinese repression and China’s appalling human rights record mean that the Government need to tread very carefully in their relationships with China.
My interest in this came from the problems, particularly in Xinjiang province, with enforced organ harvesting of dissidents and followers of Falun Gong. When we say “forced organ harvesting”, we essentially mean that prisoners are killed so that their organs may be taken and sold, in essence, on an international market. China makes billions of pounds from this appalling practice.
Over the years, the noble Lord, Lord Alton, has chipped away, legislatively, at a number of pieces of legislation to, in essence, preclude British companies from supplying China with goods, medicines or chemicals that could then possibly be used for organ harvesting. There are a number of pieces of legislation where this happens. Obviously, this Bill is different, but I note the argument that the noble Baroness, Lady Ludford, and the noble Lord, Lord Markham, made about why we should have special provisions for fair trials and the release of information to authoritarian countries.
I fully take the point from the noble Baroness, Lady Ludford, who, like the noble Lord, Lord Markham, referred back to the debates in the other place and the difficulty of drafting. I hope that the Government might be prepared to talk, particularly to the noble Lord, Lord Alton, about whether we can find a way forward here.
Baroness in Waiting/Government Whip (Baroness Ramsey of Wall Heath) (Lab)
I thank noble Lords for their amendments. Obviously, we miss the noble Lord, Lord Alton, who spoke to me this morning to emphasise his regret at not being able to be here. I think many noble Lords know the important reason why he cannot be, which he was keen to stress.
I thank all the noble Lords who spoke on this important amendment, which seeks to restrict overseas information sharing where there could be a risk to an individual’s right to a fair trial. I am sympathetic to noble Lords’ concerns. We must be rigorous in protecting fundamental liberties and the rule of law, both nationally and internationally. I understand that DCMS officials—there is a double D in DCMS; the first D is silent, so I hope that noble Lords been advised accordingly—have been working with teams across government to consider these concerns carefully. From this, I am confident that the risks identified by noble Lords are very low.
The information-sharing powers are discretionary. Regulators are under no obligation to share information overseas under the Bill. We work closely with all regulators and know that they are extremely cautious, sharing information internationally only when it is necessary to do so and after considering whether disclosing that information is in line with their public duties, including those under the Human Rights Act. I have listened carefully to the noble Lord, Lord Markham, my noble friend Lord Hunt and the noble Baroness, Lady Ludford, who all have their particular areas of interest and expertise. I will turn to a couple of those points in a minute.
In addition, the Bill adds further explicit safeguards that information must be disclosed only if it is relevant and proportionate. This requires regulators to exercise judgment and limit information only to that which is necessary for the purposes of the sharing. Requiring the Secretary of State to convene panels of experts in order to judge every instance of information sharing internationally would add a significant layer of bureaucracy. Given the very low risk and the safeguards already in place, that would be disproportionate and would slow or even halt legitimate essential international regulatory co-operation.
International collaboration has long been central to the NIS framework, with information-sharing essential to ensuring that tackling cyber threats is a global effort. The Bill ensures that our regime reflects the UK’s post-Brexit position by enabling effective co-operation with trusted international partners including close allies such as the US and Australia.
On the Hong Kong point raised by the noble Baroness, Lady Ludford, there is no uncertainty regarding UK-Hong Kong extradition. The UK suspended the treaty in 2020 and passed legislation to reflect the suspension in UK domestic law in 2025, completing the severing of ties between the Hong Kong and UK extradition systems. I hope that that addresses that point.
Baroness Ludford (LD)
I apologise for interrupting the noble Baroness. My understanding was that, although the treaty had been suspended, there could be consideration on a case-by-case, ad hoc basis. Is that wrong? Is there a complete ban on extradition or, notwithstanding the suspension of the treaty, could there still be a case-by-case, ad hoc extradition?
Baroness Ramsey of Wall Heath (Lab)
I thank the noble Baroness. I will write to her on the case-by-case point.
Finally, I know that my noble friend the Minister will be very happy to meet noble Lords again to discuss this further, as she has done quite recently with the noble Lord, Lord Alton.
Lord Markham (Con)
I thank the Minister for her response and noble Lords for their involvement. As suspected, the Committee is completely united in what we are trying to achieve, and I am pleased to hear that the Minister is sympathetic. I think we all agree that the devil will be in the detail. That is why I am grateful for the offer of a meeting, which I am sure that the noble Lord, Lord Alton, and many of us here will be delighted to take up.
I have a couple of concerns, and we will cover these in the meeting. As the Minister mentioned, there is no obligation for regulators. The question is: why leave it to their discretion? The Minister later said that there was concern about it being overburdensome on the Secretary of State’s officials to have to determine these cases. If it is too much of a burden for a group of experts, surely it is even less likely that regulators in all sorts of different fields are going to try to apply that same knowledge.
The concern about all of this is that, while the intentions are good, unless there are firm constraints in the Bill, it will just be something which, through no malcontent or wrong reason, is overlooked. That is why we feel it is very important that we have something in the Bill to add teeth to this. That is something that we would be delighted to explore further in meetings and on Report but at this point, I beg leave to withdraw the amendment.
Baroness Kidron (CB)
“Liability of senior executivesAfter regulation 18 of the NIS Regulations insert—“Liability of senior executives(1) This regulation applies where a designated competent authority or the Information Commission has reasonable grounds to believe that—(a) a person that is a body corporate, a partnership (including a Scottish partnership) or an unincorporated body has failed to comply with a duty referred to in regulation 17(1), (2), (2ZA) or (2ZB), and(b) the failure was committed with the consent or connivance of, or is reasonably attributable to any neglect on the part of, a senior executive or group of senior executives, deliberately or carelessly. (2) The competent authority or the Information Commission may serve a notice of intention to impose a penalty on the senior executive(s) if it considers that a penalty is warranted having regard to the facts and circumstances of the case.(3) Before serving a senior executive(s) notice, the authority or the Information Commission must inform the senior executive(s), in such form and manner as it considers appropriate having regard to the facts and circumstances of the case, of—(a) the alleged failure and the office’s alleged consent, connivance or neglect, and(b) how and by when representations may be made in relation to the alleged failure and any related matters.(4) A senior executive(s) notice must be in writing and must specify the following—(a) the reasons for serving the notice;(b) the alleged failure or failures and the senior executive(s) alleged consent, connivance, neglect or carelessness which are the subject of the notice;(c) any remedial actions required;(d) the amount of the penalty and the number of penalties which the authority or the Information Commission is minded to impose.(5) The authority or the Information Commission may, after considering any representations made in accordance with paragraph (3)(b), serve a penalty notice on the officer with a final penalty decision if satisfied that a penalty is warranted having regard to the facts and circumstances of the case.(6) A penalty imposed under this regulation must be of an amount which the authority or the Information Commission determines is appropriate and proportionate in the circumstances, having regard to the matters mentioned in regulation 18(6) for each infringement individually.(7) If the authority or the Information Commission is satisfied that no further action is required, having considered any representations submitted in accordance with paragraph (3)(b), it must inform the senior executive(s) in writing as soon as reasonably practicable.(8) In this regulation “senior executive(s)”—(a) in relation to a body corporate, means a CEO, director, manager, secretary or other similar senior executive of the body, or a person purporting to act in any such capacity;(b) in relation to a partnership, means a partner or a person having control or management of the partnership business, or a person purporting to act in any such capacity;(c) in relation to an unincorporated body other than a partnership, means a member of its governing body, or a person purporting to act in any such capacity.””Member’s explanatory statement
This amendment seeks to create provision in the Bill for executives or senior managers to be held responsible for failure to comply or report on the measures placed upon regulated bodies within the Bill.
Baroness Kidron (CB)
My Lords, Amendment 74 is in my name and those of the noble Baronesses, Lady Morgan and Lady Ludford. The noble Baroness, Lady Morgan, is very sorry that she cannot be in the Committee this afternoon but she particularly wanted me to thank the Minister for their helpful meeting last week. This amendment and Amendment 167 in the name of the noble Baroness, Lady Ludford, relate to the governance of regulated bodies that will be caught under this Act. The reason for this legislation is to reflect the rapidly changing cyber environment and to strengthen areas of current vulnerabilities of those organisations providing services critical to societal or economic life.
As we have discussed, regulators will be given powers to designate critical suppliers whose disruption could have a significant impact on essential services. As we have discussed in previous groups, many of us think the Bill does not go far enough in setting out who those critical suppliers are. We are going to see similar amendments in other forthcoming Bills that make provision for senior manager liability when new responsibilities are legislated. This is something that we have been through in other Bills: the only way to change the culture of an organisation is to start at the top.
I am sure that boards will grumble when they accept new duties, but they will keep their regulators happy were they to be in sight of the law. What really makes the difference to successful implementation is knowing that if it can be proven—I shall read out proposed new subsection (1)(b)—that
“the failure was committed with a consent or connivance of, or is reasonably attributable to any neglect on the part of, a senior executive or group of senior executives, deliberately or carelessly”,
that individual will be held responsible. I point noble Lords to recent court cases in the area of social media, where disclosure has repeatedly shown that senior executives knew of harm or stood in the way of harm mitigation for years. The idea that this might capture an unwilling or unwitting senior executive is shown clearly not to be the case by what I have just read out.
I understand that the Minister and the noble Baroness, Lady Morgan, also discussed this in the context of financial services and a regime introduced after the 2008 financial crash with the very intention of changing the culture of financial service businesses and focusing senior minds on the damage those businesses can do if they do not meet their responsibilities. A more recent example is the introduction of the consumer duty by the Financial Conduct Authority, which required relevant boards to appoint an individual consumer duty champion, something that the noble Baroness, Lady Morgan, was involved in. I also point to the Building Safety Act that was a response to the Grenfell Tower disaster.
I am hoping that the Government are sympathetic to this amendment, but if they find themselves unable to be sympathetic, I would be interested also to hear the Minister’s thoughts on whether we could require the relevant regulator to introduce a named senior manager regime, which indeed we did in the Online Safety Act.
The final point I make is that the senior manager must be senior. The intention behind the amendment is to change the culture of an organisation to ensure preventive action is taken to avoid penalties. As I said at the outset, culture change starts at the top. The services covered in the Bill are, by definition, considered by Ministers to be critical to national life, which means that the most senior governing body should be discussing them and responsible for them. While day-to-day management may be delegated, overall oversight and responsibility should sit at the top. For that reason, I support—as I know the noble Baroness, Lady Morgan, supports—Amendment 167, tabled by the noble Baroness, Lady Ludford. Her proposed new clause would focus the minds of those at the most senior levels of organisations caught by the Bill, and I really hope that the Government support this ambition. I beg to move.
Baroness Ludford (LD)
My Lords, I am pleased to speak to Amendment 167 and grateful for the support from the noble Baroness, Lady Kidron—the support is mutual, as I co-signed her amendment. The two amendments are complementary, because Amendment 74 is about the liability of senior executives while Amendment 167 is about board oversight of an individual executive, responsibility and accountability. I was interested to hear the noble Baroness refer not only to financial and consumer conduct but to building safety as areas where such responsibility exists.
I am simultaneously involved in the Public Office (Accountability) Bill—the Hillsborough law—which will introduce a duty of ethical conduct, candour and transparency on public authorities and public officials. Perhaps what some of these other sectors have in common is that it has been an after-the-event thought that maybe boards and senior executives ought to have some kind of responsibility in this area. If we have had a catastrophe, often with a great deal of harm created—such as Hillsborough—maybe it would be a good idea if the people at the top, who are often extremely highly paid, took some interest in the area, rather than regarding it as some sort of lowly service, rather like cleaning the loos in the HQ building. I know it is now routine to refer to examples such as Jaguar Land Rover and Marks & Spencer, but there have been huge financial effects of cyber attacks. This is not some negligible issue; cyber security ought to be a core responsibility for senior people.
I am sitting close to the noble Baroness, Lady Harding, who today has referred to her own personal experience—we all remember it. I am sure it was painful for her and very public. She has actually been through it, so nobody knows better what it can be like when you have a big cyber data breach or cyber attack. It really is long past due that this ought to be a top responsibility of boards, directors and senior executives. Yet we understand—I think I get this from my noble friend Lord Clement-Jones—that the Government’s own Cyber Security Breaches Survey reveals that board-level ownership of cyber risk in the UK has declined from 38% to 27% over the past three years. It is going precisely in the wrong direction.
I do not think I need to persuade anyone here of how important it is for senior people in an organisation to be aware and carry not only responsibility, awareness and accountability but liability, so that it hits where it hurts if something goes wrong. Personally, it seems pretty much a no-brainer, and I hope the Minister will agree.
Lord Arbuthnot of Edrom (Con)
My Lords, I have added my name to Amendment 167, in the name of the noble Baroness, Lady Ludford, and I also support Amendment 74. I have done that in the knowledge that it is perfectly possible that the Minister will say that she wants to minimise regulation wherever possible—I get that. But I also get that we have been saying for years now that cyber security should be a board responsibility, that it requires knowledge and that that knowledge requires training. That is what Amendment 167 would provide for. We have been saying that, but very little has actually happened. If we are not to legislate about this, what will make people act? If the noble Baroness, Lady Ludford, is right that board ownership of cyber security has declined, we have to do something.
I understand that people who start, say, a wine business or a book business are probably interested in wine or books, rather than cyber security. If they were interested in cyber security, they would probably start a cyber security business, in which they would probably make a great deal more money. But they have to be interested in cyber security in exactly the same way as they have to be interested in money—hence this proposed new clause, which I support.
Lord Birt (CB)
My Lords, I strongly support the drift of both amendments spoken to by the noble Baronesses, Lady Kidron and Lady Ludford. As I said the other day, I have sat on many boards with many distinguished people that contained a variety of experience in many jurisdictions, but I have not often come across a board that contains anyone with a pronounced understanding of technology, let alone the extremely narrow but deep area of complexity that is cyber security.
I hope noble Lords will forgive me for reminding the Committee of what I said on Tuesday: the way to achieve this objective is to require boards, at an appropriate level—I do not mean every board in the land—to have a cyber resilience audit each year, in the way that all major organisations have a very searching financial audit each year for the whole board, even though it may contain people who are there for different reasons: they may have marketing or sector expertise. But believe me, for every single board, when the team of auditors—who have been in the business for weeks and sometimes months—reports, it is listened to, and anything it advises is acted upon. We need to do exactly the same for cyber resilience.
Baroness Neville-Jones (Con)
My Lord, this Bill is largely directed at a given segment of the corporate sector. That reminds us, however, that there is a very large swathe of the corporate sector that we are not focusing on directly.
However, in the corporate sector generally, the board has to be interested in all risks, not just financial risks, or whether the book market or the wine market is in good shape; it must be able to protect the business and its shareholders. The board has a duty to the shareholders to do that. This is a very good opportunity to try to raise the level of performance in this area. The record is demonstrably not very good. This is an opportunity to help raise the level of performance and make it clear that if you take on a responsibility as a board director, you will have to be able to help conduct the business of that organisation at the highest possible level. I very strongly support Amendment 167.
Baroness Harding of Winscombe (Con)
My Lords, I also support Amendments 74 and 167. My experience is that boards that tell you that their cyber security is really good are the ones you should be most worried about. Boards that are really worried about it and can tell you where they think they are exposed might be in a slightly better place. There are too many organisations that will tell you that they are fine. Boards that are not doing what is set out in Amendment 167 are in trouble. It is entirely appropriate, and I fully support that amendment.
On Amendment 74, I would just like to draw a thread between the financial services senior management regime, what we have learned in the Online Safety Act and Tuesday’s debate about whether frontier AI models are included in the scope of the Bill. We have learned from the financial services senior management regime that when you make individual human beings accountable, they change. There is no doubt that the senior management regime in financial services has served to move the dial on the culture in financial services, and all previous attempts have failed.
Through the Online Safety Act, we have learned that various companies—not ones regulated by this Bill—have not taken seriously fines from Ofcom and simply refused to obey. We are living through an era when the tech sector wants to believe that it is exceptional and that laws from individual countries do not apply to it. It is therefore very important that we put into the Bill liability for senior executives, precisely because of what we have learned: in a sector that is doing it, you get culture change. In other digital legislation, where we do not have this, regulators’ decisions have actively been flouted. This is even more important if the Minister were to accept the amendments we debated on Tuesday—the noble Lord, Lord Tarassenko, has arrived just in time—because I firmly believe that the single most important part of regulating AI is holding the creators of the model accountable for their actions. Given that the biggest cyber security threats we face are the actions of agentic AI, I want to be able to build the framework that enables us to hold the managers and leaders developing those models, who currently say that this has nothing to do with them, accountable for their actions. I may be stretching it a bit, but I hope that Amendment 74 would be the beginnings of a framework that would enable us to hold senior tech titans to account.
Baroness Berger (Lab)
My Lords, I will speak quickly. I was just checking my records, particularly on Amendment 167. It was just under a year ago that I completed the FT board director programme, which was specifically around cyber risk for boards. In a room of around 50 people, we had a tabletop exercise on a real-life scenario about what one should do in the event of a very serious cyber crisis and cyber risk. I was struck by a number of things. In the room were people with vast waves of expertise and experience, none of whom was a technology expert. All said that no other members of their board had attended training like this. They were there because, having completed a board director programme, it piqued their interest, as it did mine, it was freely on offer and they decided to attend.
Having gone through that session, we covered things such as the regulatory experience, issues around how to challenge management in the event of one of these incidents, how you need to test organisational resilience, how you need to look at the risks involved, and how to respond decisively and to have the expertise and understanding to do so. It was very clear to me, even during that half-day exercise, that that training was not sufficient for me as a board director and member to be able to fulfil that role.
Having gone through that experience, I think for many reasons that this amendment is so important to ensure that boards across this country—be they private boards, FTSE boards or boards of regulated companies—can do their jobs effectively. In this world, which is extending—I echo the points made about AI—it is even more imperative that we have this amendment to ensure that boards are able to fulfil their roles effectively.
Lord Clement-Jones (LD)
My Lords, this has been a really useful debate, particularly because it has distilled all the considerable board experience—and, indeed, board training experience—around this Committee. I very much hope that the Minister listened to it with interest.
Amendment 74 in the name of the noble Baroness, Lady Morgan, moved by the noble Baroness, Lady Kidron, would align the UK with the EU’s NIS2 framework. It would introduce personal civil liability for senior executives who deliberately or carelessly neglect cyber duties. My noble friend Lady Ludford’s Amendment 167 would mandate board-level oversight and technical training. In our view, to build national resilience, cyber security must become a fiduciary director’s personal responsibility. As the noble Baroness, my noble friend and the noble Lord, Lord Arbuthnot, have said, this change is long overdue and would be additional to other existing sectors. We need to learn from experience in the way mentioned by the noble Baroness, Lady Harding; I very much hope that we will do so in the course of the Bill.
Together, these two amendments target arguably the single greatest cultural—the noble Baroness, Lady Kidron, rightly emphasised “culture”—and behavioural failure in UK cyber security today: the persistent treatment of cyber security by company boards as a delegated technical IT issue rather than a core personal and fiduciary leadership responsibility. The Government’s approach to corporate cyber governance has been almost entirely passive to date, I am afraid. Ministers have relied on voluntary guidance, such as the Cyber Governance Code of Practice, hoping that boards would voluntarily prioritise digital resilience.
The proof of this policy failure is undeniable. My noble friend quoted the Cyber Security Breaches Survey, which showed that board-level ownership of cyber risk has declined over the past three years. Of course, if boards neglect cyber security, that carries massive public costs, as seen in the recent major supply chain disruptions where, although company directors face strict personal legal liabilities under company law for signing off on financial accounts, they are permitted to treat systemic cyber vulnerabilities—vulnerabilities that can wipe hundreds of millions of pounds from the economy and paralyse critical national supply chains—with complete personal legal impunity.
My noble friend also reminded us of the catastrophic real-world cost of this boardroom neglect in the automotive sector, where a supply chain breach at Jaguar Land Rover cost an estimated £500 million, halted production lines for four months and forced the Government to step in with a £1.5 billion loan guarantee. We have seen the same in retail, also mentioned by my noble friend: the cyber attack on Marks & Spencer cost £300 million and contributed to a 99% collapse in pre-tax profits.
Amendment 74 would provide the direct legislative teeth that the Bill is missing by introducing personal civil liability for senior executives. It would amend the NIS regulations to establish that, where a regulated entity fails to comply with core risk management duties, and that failure was committed with the consent, connivance or deliberate or careless neglect of a senior executive, the regulator may impose a personal civil penalty.
Viscount Camrose (Con)
My Lords, I thank the noble Baroness, Lady Kidron, for opening this debate on behalf of my noble friend Lady Morgan of Cotes. I will come to her amendment in a moment, after I touch on Amendment 167, tabled by the noble Baroness, Lady Ludford. Her comments, particularly about board ownership of cyber risk, were well founded and an extremely important foundation for the debate—as indeed were those of the noble Baroness, Lady Berger, who pointed out the difficulty of accelerating from zero cyber knowledge to sufficient. That is a non-trivial undertaking.
Amendment 167 is absolutely in line with the principle that we raised on the first day of this Committee in the form of Amendment 92B. It is the idea that executives should be held accountable for cyber security and resilience plans by their board and their shareholders, by reporting consistently on protections. This amendment, perhaps a little more explicitly, would require the same thing and I am very happy to support it.
I think Amendment 74 largely follows the same sentiment: that companies should and must be held accountable for their own cyber security. On this one, however, I need a little more persuasion. I am going to tread a little tentatively here, because I very much take on board the comments of my noble friend Lord Arbuthnot that we have not solved this problem yet and that carrying on as we are is probably not that sensible.
However, I do have some inner alarm bells ringing about this one. So, while we support the goal of making companies self-sufficient and accountable to their shareholders, this amendment would give the Information Commissioner powers to enforce compliance and sanction individual negligence. The concern here is that, as a matter of principle, the inner working of companies—who is accountable internally, to whom and for what—should be placed in a different category from the requirements placed upon them.
We should encourage companies to figure out internal issues themselves. By all means require board oversight of cybersecurity plans, as we have attempted to do, but my understanding is that this amendment would make it the Information Commissioner’s job to decide which individual is responsible when cyber attacks take place and are not adequately defended. I find this quite a tricky path forward, but I am clearly willing to keep talking and to be persuaded.
I am also concerned about the disincentives to become a director that this might put in place, because of what feels to me like the inherent uncertainties of the liabilities that may hang over board directors as they undertake these responsibilities. That being said, I, of course, completely agree with the underlying principle and look forward to hearing the Minister’s response.
Baroness Lloyd of Effra (Lab)
I thank the noble Baronesses who introduced their amendments, including the noble Baroness, Lady Kidron, who did so on behalf of the noble Baroness, Lady Morgan, for raising the incredibly important topic of board accountability and senior management oversight. It is absolutely right that organisations, especially those delivering our essential services, are held properly accountable for their activities. That is why the Bill creates a more meaningful enforcement regime in terms of the maximum fines that can be levied—up to £17 million or 4% of turnover, whichever is higher—alongside a simpler process for taking that forward.
I also agree with the points made by the noble Baronesses, Lady Ludford and Lady Neville-Jones, and by my noble friend Lady Berger, on the extent of this being within the regulatory perimeter as well as the non-regulatory perimeter. Boards upskilling themselves and taking training seriously is absolutely imperative. That is why we have our Cyber Governance Code of Practice, which is at the heart of our approach to board and executive accountability. I personally feel that I am an extremely active proponent of this. For those who feel that we are not doing enough, I request their support in continuing to highlight that important code of practice in their own organisations, and on all the numerous boards they sit on, to make sure that we are governing cyber risk appropriately—and that many of the board directors they sit alongside are aware of it.
That is obviously not the limit of the approach that we are taking. We are going to introduce new security and resilience requirements in our secondary legislation. Our proposals will include a dedicated requirement on board-level governance, which will be consistent with the NCSC’s cyber assessment framework. It will cover issues such as organisational capability, senior responsibility, accountability for security and resilience, and effective risk escalation. In that way, we will connect the clarity on what is expected of boards with accountability through the enforcement regime.
I will touch on the point alluded to by the noble Lord, Lord Clement-Jones, on the EU’s regime. Individual liability for board-level members is not mandatory under NIS2. Different EU member states have taken different approaches to implementing the directive in this respect, so there is not a single model of implementation that the EU is following.
To conclude, I would also concur with the point that the noble Viscount, Lord Camrose, made on the importance of attracting those with cyber expertise to take on board-level roles and be able to contribute as part of the board accountable to shareholders in that way. We do not want to introduce anything that might disincentivise either senior executives with cyber expertise or those at board level from taking these very important roles.
I believe that, together with the enforcement regime and the security and resilience requirements, those two things will cement the importance of board and executive accountability firmly into the regime, in the way that noble Lords have highlighted today. That is the right approach.
Lord Clement-Jones (LD)
My Lords, can I just check something before the noble Baroness, Lady Kidron, rises? The Minister has uttered some very warm words about the responsibilities of directors, but am I right in thinking that in nothing of what she said is there any intent for the Bill to create a legal liability that compels directors in the way that these two amendments do, or any form of personal financial fiduciary duty on a director? What she is arguing for, despite the warm words, is, essentially, a voluntary scheme.
Baroness Lloyd of Effra (Lab)
We will consult on the security and resilience requirements that will come out of the Bill. They will contain a requirement on board governance and those expectations will be set out as a result of the Bill. The regulators and others enforcing the Bill will take that into account in their enforcement regime.
Lord Clement-Jones (LD)
I am sorry to press, but the Minister is saying that these are expectations. Will she write to us? There is a huge lack of clarity in the middle of those warm words. We take encouragement from the fact that the Government want to see boards take responsibility, but where are the teeth?
Baroness Lloyd of Effra (Lab)
Obviously, we have not yet gone out to consultation on the security and resilience requirements; we will do that after the Bill passes. I can certainly update on the process, the expectation and how that links with the enforcement duties in further detail.
Lord Clement-Jones (LD)
The Minister is also going to have to point out the power under which the Government are going to act to actually fix that liability, or make sure that the guidance, or whatever it is, is complied with, because we are talking about the power and the duties in primary legislation. It is all very well for the Government to say, “We’re going to produce guidance”, but unless there is something in the Bill that permits that and makes sure that the Government can make it stick, we are all going to feel dissatisfied.
Baroness Lloyd of Effra (Lab)
I am happy to write to explain how the security and resilience requirements fit into the structure of the Bill and the consultation and scrutiny that they will undergo.
Baroness Kidron (CB)
The noble Lord, Lord Clement-Jones, has done a lot of my work for me. I thank everyone who contributed. I was really struck by the expertise in this Room. We started this afternoon by talking about the importance of lived experience. I say very strongly to the Minister that I have been in the House long enough to see Acts of Parliament pass, be regulated and fail because we did not really understand how they were going to hit when they were in the world.
The comments on this group are really worth listening on, particularly those on Amendment 167. I say both to the noble Viscount, Lord Camrose, and to the Minister that there is such a high bar of connivance in Amendment 74. There is no accident. The words are “deliberately”, “knowingly”, et cetera—I read them out as part of my introduction. I will take up the noble Viscount’s offer to come to speak to him and persuade him, and I ask the Minister to really think about this, because we have heard that culture does not change without an incentive. This is an incentive to say that if you are seen to grossly mislead and undermine the regulation, then you are liable. That is what good law does. I beg leave to withdraw the amendment.
Baroness Ludford
“Services to support political parties to be specified as essential activities(1) The Secretary of State must, within six months of the day on which this Act is passed, make regulations under section 24(3) to specify that an activity carried out for the primary purpose of the operation of a registered political party is an essential activity.(2) In this section “registered political party” means a party registered under Part 2 of the Political Parties, Elections and Referendums Act 2000.(3) Regulations made under subsection (1) must designate one or more appropriate regulatory authorities for the specified activities.”Member’s explanatory statement
This new clause would require the Secretary of State to specify services with the primary aim to support the operation of political parties as essential activities under Part 3, bringing them within the scope of the Bill’s security and resilience regime.
Baroness Ludford (LD)
My Lords, this is a group of rather wide scope. I am kicking off. I will also speak to Amendment 168 in my name so as not to speak twice. It is on an entirely different subject from Amendment 79, so we will probably have quite a long debate on this group.
Amendment 79 is about including political parties in this Bill. My honourable friend Victoria Collins MP made the same case in the other place, tabling a proposed new clause to designate political parties as carrying out essential activities. We have discussed, over several days, how cyber security is not just a technical matter confined to server rooms and IT departments; it is a matter of national resilience, economic strength, the functioning of society and, I argue, democratic integrity. On this last count, the Bill is silent.
I remind the Committee that, between August 2021 and October 2022, as we later learned, hostile actors sat undetected inside the systems of the Electoral Commission and exfiltrated copies of the electoral registers—an intrusion the Government attributed to a China state-affiliated actor. There was apparently reconnaissance against the email accounts of parliamentarians who had spoken out against China. So we are hearing of more and more denial-of-service attacks and other incidents affecting critical national infrastructure, which may have some knock-on effect on our democratic structures. Think about what political parties hold: membership lists, canvassing databases covering millions of electors, data on political opinion and special category data of the most sensitive kind—perhaps precisely the material valuable for espionage, transnational repression and targeted disinformation in a campaign period.
Let us think about the kind of defences that are protecting this information. Those of us who have experience of local party activity know that we are normally talking about a small office with a handful of staff and many volunteers, not massive enterprises—and they themselves have been the subject of cyber attacks. We perhaps have quite a weak link at the heart of our democracy.
The National Cyber Security Centre has defending democracy guidance, but this is voluntary, done on an opt-in basis and unenforced; there is no duty to report an incident, no assessment framework, no designated regulator and no floor beneath which a party cannot fall. So there is weakness around the cyber security of political parties and of electoral infrastructure. I am sure that the Minister will tell me that parties are not infrastructure—indeed they are not—but the Bill encompasses data centres and managed service providers on the basis that disruption there would significantly affect the day-to-day functioning of society. If the compromise of a major party’s voter database in the final week of a general election would not meet that test, I struggle to think what would.
Nothing in this amendment invites the Government into the internal affairs of parties; it asks only that the organisations through which the British people exercise their democratic voice are held to a basic standard of resilience. Democracy is essential infrastructure. It is a privilege that we must defend with the utmost priority, and the Bill should reflect that.
I will cover another, completely different matter in my Amendment 168. This amendment was prompted because, probably like others here, in July I had several notifications from either a charity, an arts organisation or an academic organisation—I cannot remember; I think I had four or five altogether—warning me of a data breach. This was a named company—I think it has been in the public domain—called Beacon. It experienced a cyber security incident involving unauthorised access to its systems. I understand it stores data on the membership and customers of a lot of organisations—about 1,000, I read.
This is a probing amendment because I am asking the Government where organisations like this sit. They are variously described as a customer relationship management service provider or a software as a service relationship provider. I do not think they fall into RMSP or RDSP; they are not cloud computing, they are not an online marketplace or search engine and so on. Maybe, arguably, they are a managed service or IT management, support, maintenance or monitoring. I do not know what the precise relationship is between the organisation and the Beacon customer relationship management service provider. I do not really understand it, and the point of the amendment is to find out whether the Government know where it sits in the sphere of cyber and data services. They will often have lots of personal data, including date of birth, contact data, records of donations and memberships, and the booking of events. There is quite a lot where you could profile somebody and find out a lot about them, so it is quite risky to have all of that in unauthorised hands.
I think these breaches triggered reporting duties to the Information Commissioner under the GDPR, but, as far as I know, I do not think that a comparable incident would trigger this Bill’s incident reporting duties. I do not know where these organisations fit, so can the Minister tell me where they live in the ecosystem and what could or should be done to try to increase their support for the organisations that they work for? I beg to move.
Baroness Berger (Lab)
My Lords, I wish to speak to Amendment 81A in my name. I was glad to add my name to Amendments 3, 8 and 13 in the name of the noble Baroness, Lady Kidron. I am sorry that I was unable to speak to them on Tuesday due to some caring responsibilities.
Amendment 81A is all about education. Our British educational institutions sit at the heart of our communities. They are key to developing our children and young people, and helping them grow, supporting them through the most important developments of their lives. This year, the UK was ranked as having the third best public education system in the world, something that we should be so proud of but which we must safeguard. We have seen our education system change rapidly in the past decade. We now have exam results revealed via an app. We have homework set through online portals. I receive it weekly for both of my children. Increasingly, vast amounts of student data is being stored online, including around attainment. If our young people are to be properly supported, that must extend beyond the classroom to the network and information systems now essential to their education—a point only reinforced as universities and colleges continue to further embrace online learning.
Exam results determine a young person’s future opportunities. We all remember just a couple of weeks ago the pictures, the interviews of the young people and the elation of many 16 and 18 year-olds as they received and revealed their GCSE and A-level results. We owe it to the next generation to do everything we can to give them the best possible chances—to protect the integrity of the system that determines their future and to prevent the chaos that could follow if, for example, university place allocation, clearing or accommodation processes could not proceed. Anyone who might have friends or family whose 18 year-olds are currently going through that process knows it is frenetic enough at this time—scrambling to get a place for young people who might not have made their grades, changing universities, changing courses, trying to get a university spot or university accommodation.
We have already seen what chaos looks like on a small scale. Noble Lords perhaps will recall students who sat their A-level physics paper with Cambridge International who had their results voided after just one paper was leaked online, with a substitute mark calculated from other components. That was just one paper from one exam board, and it was still enough to undermine confidence in the results for every student affected. We need to look no further than the terrible experience recently in India where the National Testing Agency’s medical entrance exam results were withdrawn after a paper was leaked. It triggered mass protests and, tragically, at least 21 reported suicides among students who had sat the exam. If a single compromised paper can cause that level of devastation, we cannot afford to leave our education system exposed to a compromise on a grand scale.
Amendment 81A would establish that the education sector is an essential activity by requiring the Secretary of State to make regulations under Part 3 of the Bill. This would bring within scope any institution that provides primary, secondary, further or higher educational and vocational training. It includes exam boards involved in setting, marking or awarding and grades, higher education admission bodies, and any body that is essential to the provision of primary or secondary education that holds substantial volume of student or staff data. The obligations would require that education bodies take appropriate and proportionate technical and organisational measures to manage risks to the security of their network and information systems. The bodies must: take appropriate and proportionate measures to prevent and minimise the impact of cyber incidents, with a view to ensuring continuity of service; have regard to the state of the threat; ensure that they have a high level of security appropriate to the risk; and have regard to any relevant guidance issued by their regulator.
Lord Birt (CB)
Let me just say, very briefly, that, as I made clear earlier in the week, the scope of the Bill is far too narrow. I suggested and will continue to suggest that we have to extend the definition of essential services. I remind all noble Lords, despite all the things we have been talking about this afternoon, that the organisations in the framing of the Bill, as drafted, are our national infrastructure sectors, not the great width of the economy or the public sector. In my amendments, I have suggested that we should have a definition of essential services that covers the economy—JLA and Marks & Spencer are not covered in the Bill—and society in general. We have just heard an excellent account of why education has to be included, as does defence and security. I do not think that we should be picking and mixing and putting a small number of sectors in the Bill. We need a conceptual approach to what we bring into the orbit of the Bill and we need a process in the Bill to ensure that that happens.
Lord Russell of Liverpool (CB)
My Lords, just quickly, I will back up the noble Baroness, Lady Ludford, on Amendment 168. I, like many other noble Lords, have been involved with a variety of charities that were impacted by the cyber security breach at Beacon CRM, which has about 1,500 charities that store an enormous amount of personal data. I looked at its website, and perhaps this will emphasise to the Minister the problem that we face. This is what this website, which had a major security breach in the past, says about its security:
“The secure choice for security-conscious charities. Beacon has all of the security certifications and features that you should expect from your CRM, and we’re adding more all the time”.
It says that it is ISO 27001:2022 certified and Cyber Essentials Plus certified and that
“Cyber Essentials Plus is the highest level of certification in the UK government’s Cyber Essentials scheme, and includes a technical audit of the Beacon team’s endpoint devices”.
It says that it has “World-class infrastructure” and that it is “A UK-based system”. If I was a potential customer of Beacon reading all that, I would feel a very false sense of security about the level of knowledge and defence that its systems have. That is clearly not the case. There is a clear, major mismatch between the degree of confidence that organisations such as Beacon have in their own cyber security and the reality of how feeble and weak they actually are. Before this happens again and again, it would be helpful to look at this more closely and see whether we need to do more.
Lord Clement-Jones (LD)
My Lords, the noble Lord, Lord Birt, was right to remind us that we perhaps need something rather more generic and comprehensive when we are assessing whether a particular sector should be brought into the Bill, but that does not mean that we should not use this group of amendments to illustrate that the Bill at the moment is not nearly comprehensive enough in the way it is structured and the sectors that it contains.
The Bill remains stubbornly wedded to what we might call the traditional 2018 five utilities model: water, energy, transport, health and core telecoms. But we have moved on from that world. Today, systemic digital risk does not respect what might be called 20th century arbitrary utility boundaries for critical national infrastructure. An adversary seeking to disrupt our society or blackmail the UK does not need to compromise a power station; it can strike our democratic institutions, food distribution networks, university research labs, orbital satellites or software supply chains.
Amendment 79, tabled by my noble friend Lady Ludford, designates services supporting registered political parties as essential activities. Hostile state actors, from Russian GRU units to Chinese state-sponsored espionage networks, are actively targeting our political parties. As my honourable friend and my noble friend have argued strongly, political parties are a vital part of our constitutional machinery, yet they operate on shoestring budgets with high staff turnovers, heavily reliant on consumer-grade IT and voluntary workers, while holding vast tranches of confidential voter files, donor databases and what we might call strategic policy intelligence. If a hostile power exfiltrates or manipulates a major political party’s systems, the threat is not just a commercial data breach but the subversion of our electoral integrity and democratic sovereignty. To leave our political parties outside statutory NCSC cyber standards is an indefensible democratic blind spot that Amendment 79 would decisively rectify.
Amendment 80, tabled by my noble friend Lady Northover, who sadly cannot be present, addresses the fact that the Bill remains frozen in that 2018 world. It will bring critical manufacturing, industrial food production and large-scale food distribution networks under statutory cyber resilience duties. Our contemporary manufacturing and retail logistics networks are no longer purely mechanical operations; they are vast, hyper-automated cyber-physical systems. They run on automated warehouse robotics, internet-connected telemetry and algorithmic just-in-time delivery pipelines.
Consider the manufacturing of critical transport equipment. When Jaguar Land Rover suffered a catastrophic supply chain cyber breach, the damage was not confined to a single company balance sheet. Production lines were frozen for four months, hundreds of component manufacturers were dragged to the brink of collapse and the economic fallout cost between £1.6 billion and £2.1 billion, making it the costliest cyber attack in British history and forcing the state to step in with loan guarantees. In an economy that depends to a large extent on vehicle transport and haulage equipment, leaving critical automotive and transport manufacturing outside statutory NIS protections is an invitation to systemic economic blackmail.
Even more acute is the vulnerability of our food supply. Modern food processing and supermarket distribution operate with less than 48 hours of inventory buffer. When Marks & Spencer was hit by a major ransomware incident, it cost £300 million to remediate and wiped 99% from its statutory pre-tax profits. As I said earlier, if a hostile state or sophisticated ransomware syndicate executes a co-ordinated attack against the central routeing software of two major distribution operators, supermarket shelves across our cities would begin emptying within two days.
Amendment 80 provides a clear, proportionate statutory safeguard. It includes an explicit turnover threshold of £12 million, ensuring that local bakeries, independent farmers and small shops face zero regulatory burden. It targets solely the industrial food processors and large-scale distributors whose distribution would threaten the daily functioning of society. In doing so, it aligns the UK with the EU’s NIS2 directive, which has already brought food production, processing and critical manufacturing under statutory cyber obligations. Our European neighbours recognise that you cannot have national resilience if your food supply can be halted by a single malicious click, so why are this Government leaving Britain’s food supply chain completely exposed?
That brings me to Amendment 81, also in the name of my noble friend Lady Northover, which designates the space and satellite sector as an essential activity under Part 3. The omission of the space sector from primary cyber security legislation in 2026 is nothing short of extraordinary. The space sector is formally identified in the Government’s own industrial strategy as a core national growth driver. Yet the Bill treats orbital infrastructure as if it were entirely invisible. Our entire critical national infrastructure, from financial transaction timestamps across the City of London and automated container port logistics, to emergency blue-light dispatch, cellular networks and high-voltage grid synchronisation, relies absolutely on satellite positioning, navigation and timing—PNT.
Ground-truth economic studies demonstrate that a five-day blackout of satellite positioning systems would inflict a staggering £5.2 billion direct loss on the UK economy. Furthermore, the UK possesses world-leading capability in earth observation and small satellite manufacturing, with sovereign launch facilities advancing at SaxaVord. But satellites, ground uplink stations and space telemetry are dual-use systems. As the House of Lords special inquiry committee on space, which I sat on, has heard throughout its evidence sessions, satellite communications and orbital command links are under relentless, daily cyber probing, jamming and spoofing by hostile state adversaries. An exploit deployed against the satellite operator’s ground command software can sever communications, blind environmental monitoring or hijack commercial orbital satellites.
Amendment 81 would rectify this strategic blind spot. It would place a statutory requirement on the Secretary of State, within six months, to make regulations bringing the space sector into scope as an essential activity. It specifically covers the operation of space objects and launch facilities, satellite communications, earth observation and critical PNT services, while requiring the Government to designate an appropriate regulatory authority such as the CAA or Ofcom to supervise compliance.
Before moving on to my own amendments, I welcome Amendment 81A, moved by the noble Baroness, Lady Berger, covering the education sector. Our world-class universities are the engines of the UK science and technology prowess, holding billions of pounds of cutting-edge IP, defence research and quantum computing prototypes. They are under relentless cyber espionage assault from foreign adversaries, while centralised bodies such as UCAS and qualification boards, as the noble Baroness said, hold sensitive data on millions of young people. Bringing education into scope under Part 3 is an urgent national security necessity.
I have tabled new amendments—Amendments 81B, 81C and 81D—which address the single most gaping, indefensible and dangerous structural failure of the Bill: the complete and absolute exclusion of central government, public authorities, local councils and our core democratic electoral infrastructure from the scope of our national cyber security perimeters. How can we claim to be building a genuinely cyber resilient nation when the public administration itself is left out entirely in the cold? I wish I had more time to expand on those three amendments, but I will content myself with hoping that the Minister will have considered those amendments and will come back with a positive response. Of course, we strongly look forward to an answer to my noble friend Lord Russell of Liverpool’s questions on Amendment 168.
Lord Markham (Con)
My Lords, we have heard very compelling cases from all noble Lords who have spoken on this group about why a particular sector should be included. I will not go through the list—it was gone through very well by the noble Lord, Lord Clement-Jones, a moment ago—but I think we can all agree that each one was a compelling case. That probably illustrates the wider problem, because we are almost getting into a game of cyber whack-a-mole here, where we can see them popping up left, right and centre. So our approach, with Amendments 92 and 92A in my name and those of my noble friends Lord Camrose and Lord Holmes, is to try to take a more strategic view, very much reflecting some of the views that the noble Lord, Lord Birt, was mentioning earlier as well. They ask the Government to assess strategically important entities outside the current NIS regime and consider whether they should be brought into scope where a cyber attack would have a sufficiently serious impact on the economy or the day-to-day functioning of society.
We are not asking for another long list of businesses to be regulated, because we need to be careful about the regulatory burdens that we are putting on people. Instead, Amendment 92A proposes a risk-based test and asks these questions: what would actually happen if this organisation went down? Would essential services stop? Would very important supply chains fail? Would significant parts of the economy cease to function? If the answer to those is yes, surely the Government should at least assess whether that organisation belongs within our national cyber security perimeter. This also illustrates why we need to see the national cyber action plan. It was promised this summer; we are now in September and, considering that this is very pertinent to everything we are talking about in Committee, I ask the Minister when we will see the plan.
I will highlight one further issue, which the noble Baroness, Lady Berger, illustrated very well, in the area of the data held in certain organisations, particularly in education. We all know that the reason that a lot of these organisations are attractive targets is not because of the essential services they often carry out but because they carry enormous quantities of valuable and sensitive data. Again, this was very much my experience with the attack on Synnovis when I was Health Minister. It caused massive disruption for operations and diagnostic services in London, but the question was: why was that organisation holding so much information in the first place? It had names and addresses of people going back 20 years, their test results and their full medical records, and it did not need any of it at all. It could all have been anonymised, and it definitely did not need to hold it for 20 years.
To me, the question we really need to answer—this speaks to an amendment we will be talking about later—is: what data do all these public bodies really need to hold? Of course, if the data is not there in the first place to be stolen, or if it is not interesting or valuable, then that is the best line of defence, because there is no reason for there to be a cyber attack on it. As I say, we will talk further on that on Amendment 174E, but the principle is directly relevant to what we are talking about here.
Before I come to the end, I have a special request from my colleague here, who I think knows a thing or two. I am told on good authority that the last government AI regulation White Paper has a lot of relevance and synergies here, so I would request the Minister to look at that between now and Report to see where, as I say, there are synergies and learnings from it.
In summary, first, we should systematically identify the organisations whose compromise would cause the greatest damage, as per our Amendment 92A, and, secondly, we should reduce both their vulnerability and attractiveness as targets, including by reducing the data prize available to the attacker, as per our Amendment 174E, which we will come to later on. That, to me, is genuine cyber resilience: not merely making the safe harder to crack but, wherever possible, ensuring that there is nothing valuable inside the safe to steal.
I hope the Minister will respond both on the important sectors raised by noble Lords and to the central question behind Amendment 92A: what systematic test are the Government applying to determine which strategically important organisations should fall within the NIS regime, and will that regulatory perimeter keep pace as technology and the threats change?
Baroness Lloyd of Effra (Lab)
My Lords, I thank noble Lords for raising so many aspects of the scope of the Bill. I recognise the sentiment among noble Lords today about the importance of expanding its scope. Our approach has been to target regulatory requirements on a select number of essential services, while using non-regulatory but effective measures to improve the cyber security and resilience of the wider economy.
As I set out at Second Reading, I have asked my officials to work across government to consider what additional services would merit being brought into scope of the regime in future. This will allow us to make a holistic and considered approach. To ensure our assessment is appropriately prioritised, I would first like to focus on the CNI sectors not already covered by the NIS regime.
I share the intent behind the objective from the noble Viscount, Lord Camrose—which the noble Lord, Lord Markham, spoke to—that the process to expand the scope of the regime should be rigorous and evidence based. As set out in the Bill, for something to be defined as a new essential activity under its powers, the Secretary of State must be satisfied that the activity is essential to the economy or the day-to-day functioning of society in all or part of the UK. This is reserved for the most vital activities in our nation. To the point raised by the noble Lord, Lord Birt, I believe that that is a clear test. In reaching a decision, the relevant departments would need to carry out a risk assessment and any economic assessments, and consider whether inclusion is proportionate. This is part of normal policy development. After that, proposals would be subject to consultations and the affirmative procedure.
The noble Viscount proposed in his amendment that assessment for inclusion be carried out on an entity-by-entity basis, which obviously differs from the sectoral approach we have taken thus far. Setting out the detail that would need to be published according to the amendment could lead to a release of information about individual companies that could pose commercial or national security risks, due to their criticality. I think that the sectoral approach is better. As others have said today, looking at a systemic approach to the sectors is the right way to look at what is in the statutory approach.
Lord Clement-Jones (LD)
I am sorry to interrupt the Minister, but clarification along the way would be very helpful. She has asked her officials to see what other sectors should be brought in and has given an indication of the kind of test, but we are dealing with a bit more fog here. Is she promising us something in primary legislation or will it appear in secondary legislation? Will it just be something that government policy will cover, and we will have no say on the kinds of sectors that should be included?
For instance, the Minister is the Space Minister. Do we have an indication that space, or any of the key activities within space, will be included? Do we have any white smoke from the department as to whether that sector will be included? Will we hear by Report what sectors might be included? It is all a bit vague, and that does not give us a great deal of assurance.
Baroness Lloyd of Effra (Lab)
I was referring to the process by which sectors can be brought into scope of the Bill, as set out in it and using the powers in the Bill. That would follow the process I just mentioned, which would be subject to consultation and the affirmative procedure. That is the process that I am referring to.
Lord Clement-Jones (LD)
But the powers are further down the track; they are under secondary legislation. I am assuming the Minister is promising that the Secretary of State will set out the criteria by which a new sector is brought in. Is that right? Do we have any indication, apart from what the Minister has said today in response to the noble Lord, Lord Markham, as to what those criteria will be?
Baroness Lloyd of Effra (Lab)
I have highlighted a few of those criteria regarding the extent to which the activity is essential to the economy or the day-to-day functioning of society in all or part of the UK. Obviously, we already have the list of critical national infrastructure. We need to go through a whole process, as others have mentioned. We would need to make our assessment and then consult with industry on that, so there is a process to go through here. That process of consultation and talking to industry, or any affected sector, is absolutely critical. I am absolutely happy to update noble Lords and engage further ahead of Report on this.
In terms of the report referenced in Amendment 92A, I do not think we would need a statutory obligation to bring this report back, as set out. I mentioned the focus on entities rather than sectors, and it is better to look at the sectoral approach.
Lord Clement-Jones (LD)
My Lords, if the Minister could commit to adding that to the conversations we are bound to have to have between now and Report—
Baroness Lloyd of Effra (Lab)
I am not only committing; I am offering, so I am happy to have the noble Lord confirm that that would be good. I am absolutely offering that as part of the engagement ahead of Report.
I have heard the numerous areas that have been raised for inclusion in the Bill. We should look in a methodical and sensible way at these and at the implications—as we have previously discussed—for the obligations that will placed on any entities that come within the scope of the Bill, such as incident reporting, board accountability and so on, so that we do this in a very sensible manner. That is why this is the right approach to take.
Lord Birt (CB)
Can I ask the Minister to comment on another point that the noble Lord, Lord Clement-Jones, raised? Why should this not apply to the higher reaches of government? I ask the Minister specifically: what is her view of 607,000 records being stolen, just weeks ago, from the Department for Education?
Baroness Lloyd of Effra (Lab)
I absolutely intend to talk about the public sector. Given the numerous sectors that have been raised, I also want to respond individually on each sector. I absolutely agree that all sectors need to improve their cyber resilience; it is not the case for only those in the regulatory perimeter. It is also not the only way to improve; we should improve things right now. There is funding, and there are activities going on in all of these sectors that we might talk about—sometimes with public funding, sometimes with public advice and sometimes through industry groups.
I have spoken a little already about the cyber resilience pledge, which over 100 companies have now signed. It sets out the absolute best practice and what actions to take, including making cyber a board-level responsibility, following the Cyber Governance Code of Practice, signing up to the early warning service and taking a risk-based approach to requiring cyber essentials across supply chains.
In the retail sector, the DBIST industry-led Retail Sector Council is working with experts and business representatives to consider cyber security.
In respect of the space sector, it is absolutely critical; I could not agree more on the importance of PNT and satcoms, which underpin a huge amount of UK economic activity. The UK Space Agency is already strengthening cyber resilience in practice through the development of a space cyber assurance framework for the space sector, intending to help operators understand and demonstrate cyber resilience in a proportionate and practical way.
The UKSA also supports the provision of threat briefings and is working with industry on the potential development of a space information-sharing analysis centre. This would improve the flow of threat information, warnings and good practice between government and industry, and support links to international networks, such as the US-led global Space ISAC model. That would help operators to understand emerging threats and to act quickly.
Lord Clement-Jones (LD)
My Lords, at the risk of irritating the Minister even further, it is great to hear of some of this activity, but that is not the same as bringing it under the terms of the Bill.
Baroness Lloyd of Effra (Lab)
It is not the same. I wish to stress that the importance of strengthening cyber resilience can happen outside of legislation being put in place. There are many efforts that can go on to improve cyber resilience.
Moving on to the amendment of the noble Baroness, Lady Ludford, and her question about the scope, as well as the questions of the noble Lord, Lord Russell of Liverpool, about CRMs and so on, I do not know the specifics of this CRM. I am very happy to write after hearing of the attributes that were enumerated for its characteristics. Businesses that offer software as a service are in scope of the NIS regulations as cloud computing services, under the RDSP definition, if they meet the definitions in the Bill. In the case of the particular company that was mentioned, I do not know whether that would meet any definitions in the Bill.
Data protection legislation is obviously in place already, and processors are meant to have the systems in place for regularly testing, assessing and evaluating the effectiveness of their measures for ensuring the security of that processing. That legislation is already in place.
Moving on to the public sector, I will respond to the questions from the noble Lords, Lord Birt and Lord Clement-Jones. The Government are already taking equivalent steps to secure their own essential activities through the Government Cyber Action Plan, published in January this year. That plan applies to government departments, arm’s-length bodies and wider public sector organisations. It sets out clear expectations, targets and milestones at all levels to transform cyber security and resilience in the public sector. The outcomes of the plan are aligned with those of the Bill; there will be a consistent approach to strengthening cyber resilience across the public sector. Government departments are accountable for setting expectations and overseeing resilience across the sectors and organisations within their purview, while individual organisations remain responsible for managing their own cyber security and resilience.
This brings me on to Amendment 81A—
Viscount Camrose (Con)
I thank the Minister for her point about the Government Cyber Action Plan, but do the strength of her arguments there not completely reinforce the urgent need to have the national cyber action plan, so that we can assess overall the cyber strategy of the nation and the role of the Bill within that strategy?
Baroness Lloyd of Effra (Lab)
The cyber action plan is a very thorough document. It sets out a plan over many years to improve the cyber resilience of the Government and the public sector, which I think we all agree is absolutely needed. The fact that incidents are still occurring in the public sector reinforces the need to act. We will publish the cyber action plan and, as I mentioned two days ago, I will keep the Committee and the House updated on progress on that.
Education is an incredibly important sector, and the Department for Education takes an active approach to supporting the sector. This includes the Cyber Security Hub, providing schools in England with guidance, while the standards for schools and colleges help institutions to understand their cyber security requirements. Colleges have been required to meet cyber essentials since 2024, with more than 80% of colleges now meeting this requirement.
I come to the question of MHCLG and local government. The department is also taking meaningful steps and working with local authorities to increase their cyber defences. This includes the rollout of the cyber assessment framework for local government, which would be the equivalent to what is required in the cyber Bill, and the recently proposed revisions to the best value statutory guidance to set new expectations for local authorities on cyber resilience. That best-value duty provides an immediate and proportionate route to improving through existing governance and accountability mechanisms. In addition, MHCLG is supporting councils directly.
The question of electoral infrastructure and political parties, raised in Amendments 79 and 81D, is also incredibly important, as noble Lords have set out. The Government work with the NCSC to mitigate risks there. MHCLG specifically works with local authorities to strengthen their electoral cyber resilience and ensure electoral data is adequately protected. The Joint Election Security and Preparedness Unit has responsibility for co-ordinating election security. The MHCLG digital electoral services team maintains robust incident response arrangements to protect electoral systems and citizen data. As the noble Baroness, Lady Ludford, mentioned, the NCSC also has a broad package of support for political parties, candidates and elected representatives. This includes regular engagement with parties, which can access the NCSC’s active cyber defence services, as well as NCSC providing tailored advice to parties and candidates.
I have set all that out because the motivation behind bringing these matters into scope is to engender further action. I want to emphasise that further action is happening, whether or not it is within the scope of the regulatory perimeter.
Baroness Berger (Lab)
The Minister pointed to three examples of where education is considering issues around cyber security, specifically in schools and only 80% of colleges. One of the concerns I outlined in my contribution was around the examining bodies for both our secondary schools and universities. There was no mention of universities. Can I understand a bit more about how they are currently being considered, if they are not going to be included within the scope of this Bill?
Baroness Lloyd of Effra (Lab)
The general approach is that the lead government department has responsibility for ensuring cyber security in the areas that it covers. I will need to write to my noble friend specifically on exam boards and examining authorities. I know that the DfE supports bodies that support higher education and further education, but for further details, I will come back to her.
More broadly, I am happy to talk further with noble Lords between now and Report, and perhaps after, on the approach to assessing what should be within the regulatory perimeter and at what speed that can be advanced.
Baroness Neville-Jones (Con)
Can I ask a couple of questions and make one comment? The more we hear about the conversation that is taking place on the Bill, the more anomalous the factors that have been chosen or included in the scheme become. Let me give the example of space. Plenty of us now receive our internet connection via satellite. It is inevitably an intimate part of the networking system of cyber security. What we appear to be told is that some parts of the telecoms and internet world are going to be governed by the Bill, but other parts, which are equally integrated and important, are going to be covered separately by a special different arrangement—they are not included. For example, as I understand what the Minister said about space, it is not going to be included in this Bill. With the greatest possible respect to the Minister, it does not make sense.
My question is: in the period ahead of us, could the Government have another look at the whole question of the scope of the Bill? This seems to be one of the problems that lies between us. As a result, Members are now trying to shove into the Bill all sorts of things on the grounds that they are essential services—some of which clearly need to be there, but for others it is arguable that they do not.
I heard what the Minister said about the action plan. I have read the action plan, and it is a good plan, but it lays a heavy responsibility on a department that no longer exists—DSIT. The function is set out so well and is important to keeping government departments up to the mark, which is going to be done separately. Where is that responsibility now going to sit? It will require a very considerable degree of expertise on the part of those conducting this system of keeping people up to the mark. How is that going to be done?
It seems to me that local government requires something of the same. Government is a whole thing. It is not that some things can be done in central government without regard to their implementation by local government or vice versa. Are the Government going to extend the system that is being mapped out in the action plan for government to local government as well, in order to get the same standard of performance and integrity of systems?
Baroness Lloyd of Effra (Lab)
Let me work backwards here. The noble Baroness makes a very good point: the services delivered at local level often mirror those at central government level. At the moment, we are consulting on the question of the best value duty to give additional prominence. One of the issues with mapping these requirements into local government is that many different services are indeed provided. We may need to come back to that in more detail.
The government cyber unit now resides within DCMS. The team has transferred over and is up and running; I have spoken to them many times recently. The unit is very active in progressing the government cyber action plan as per the timetable and the target plan.
On the question about the approach to looking at other sectors to bring in, that is why I mentioned at Second Reading that I had already asked my officials to work across government to consider what additional services would merit being brought in. I mentioned earlier today that focusing on CNI services not already covered by the NIS regime would be the right place to start.
Lord Clement-Jones (LD)
My Lords, will the Minister show some greater enthusiasm for her own regulatory scheme? I hope that the criteria that she adopts within the department as to whether certain sectors are going to be brought in will be about not only the criticality of the services but the need for transparency on the incidents themselves. We have had this whole debate about notification being beneficial so that organisations such as the NCSC actually know what is going on, that we the public know what is going on and the level of threat, and that our intelligence services are fully apprised.
The noble Baroness, Lady Neville-Jones, was entirely right on critical sectors, such as space. If there is no duty of notification on, say, a satellite manufacturer or something, we will all be in the dark. The Government rightly introduced this Bill to introduce greater transparency and duties on some very important sectors. We simply want to make sure that we capture all the important sectors and that they are all subject to the duty. This shying away from the Government’s own framework seems completely contrary.
Baroness Ludford (LD)
I cannot possibly reply on any matters other than political parties. I am left unpersuaded that political parties are sufficiently supported and protected. Maybe bigger parties are not run on a shoestring as much as some of us. I am not talking about national level, but at the local level it could be justified to see some beefing up of the obligations and the support required.
Political parties come in for a lot of flak. They are always getting bashed around—“Who wants parties?”—but, actually, we would not have democracy in most cases without it being channelled through political parties, so they are an obvious target for any malefactor who wants to get at our democracy. It is really unsatisfactory not to give further support to political parties. Perhaps between now and Report we could reflect more on that.
On CRMs, the noble Lord, Lord Russell, prompted me to look at the website of the company Beacon—it is out there, so I am not giving away any secrets. It claims that 1,500 charities, NGOs and other organisations were affected. One was the English National Ballet, which I got a notification from. It manages an awful lot of personal data that has been subject to a cyber security incident. That happened in July, and I tabled this amendment in July, so I would welcome something from the Minister and her team to get a little more of a steer about where an organisation such as that stands in relation to this Bill and whether it should be encompassed to some extent within it.
From this company’s website, you would not know that anything had happened. Maybe that is par for the course. It lists all these security credentials and so on, saying how wonderful it is—I am sure it is, and I do not wish to impugn it—but the fact is that it has had a major cyber security incident affecting apparently maybe 1,500 organisations and the personal data of millions and millions of people in this country. Yet I did not feel we got much back from the Minister, so perhaps we can think more about that between now and Report. I beg to leave to withdraw Amendment 79.
Baroness Kidron
“Digital Sovereignty Strategy (relevant network and information systems)(1) The Secretary of State must prepare and maintain a Digital Sovereignty Strategy (“the Strategy”) in relation to relevant network and information systems.(2) The Strategy must—(a) set out the Government’s assessment of the risks to relevant network and information systems arising from or related to—(i) dependence on hardware, software, or digital products and services that may be subject to foreign influence or interference,(ii) extra-territorial legal requirements that may be imposed on non-domiciled suppliers,(iii) vulnerabilities, undue control, or supply-chain dependency on foreign states or entities,(iv) inadvertent or deliberate extraction or training on UK datasets without licence or permission, and(v) foreign actors’ access to UK sovereign data assets and data held in trust on behalf of the public including, but not limited to, the National Health Service, the British Broadcasting Corporation, the Meteorological Office, security and surveillance assets, defence assets, education assets, and assets from museums and other cultural institutions;(b) set out the technological developments, market concentration, or strategic dependencies that may affect the security or resilience of relevant network and information systems in the UK;(c) set out the Government’s approach to mitigating the risks identified under paragraph (b); (d) include an assessment of—(i) the role of open source software, open standards, and open architectures in strengthening the resilience, transparency, and security of relevant network and information systems,(ii) the security and maintenance needs of open source software components used, or proposed to be used, in relevant network and information systems,(iii) the skills, capabilities, and capacity of UK-based developers, maintainers, and technical experts required to support the use of open source components in relevant network and information systems,(iv) options to increase the use of open source components and to diversify open source suppliers, reduce strategic dependencies, and enhance domestic capability in key technologies used in relevant network and information systems,(v) options for international collaboration in the production of open source components used in relevant network and information systems,(vi) options to prioritise procurement from UK-based businesses, services and suppliers used in relevant network and information systems,(vii) capital markets and pension funds holding capital in UK-based relevant network and information systems, and(viii) any legislative, regulatory, procurement, or policy measures the Government considers necessary to support digital sovereignty through open source components and reduce systemic risk in relation to relevant network and information systems.(3) The Secretary of State must, within the Strategy, set out a Digital Sovereignty Dashboard used to measure the technological sovereignty of the UK in relation to relevant network and information systems, including relating to—(a) infrastructure, including infrastructure concentration,(b) data-jurisdiction exposure,(c) value of information and cultural assets of the United Kingdom, and(d) dependency on foreign states.(4) In preparing the Digital Sovereignty Dashboard, the Secretary of State must consult—(a) the Office for National Statistics,(b) the Competition and Markets Authority,(c) the National Cyber Security Centre,(d) the AI Security Institute, and(e) any other persons the Secretary of State deems relevant.(5) The Secretary of State must publish the Strategy and any revisions to it, subject to the redaction of information the publication of which would be reasonably likely to prejudice national security.(6) The Strategy must be reviewed at least once in every three-year period but may be updated whenever the Secretary of State considers that significant new risks have arisen.(7) In this section—“Digital sovereignty” means the ability of the United Kingdom to maintain secure, resilient, and reliable access to and control over the hardware, software, data, and digital services on which relevant network and information systems depend;“open source” has the meaning given to it in the definition published by the Open Source Initiative;“relevant network and information system” means a network and information system belonging to—(a) an operator of an essential service, (b) a relevant digital service provider,(c) a relevant managed service provider, or(d) a critical supplier,within the meaning of the NIS Regulations.”Member’s explanatory statement
This new clause would require the Secretary of State to prepare, maintain, and lay before Parliament a Digital Sovereignty and Resilience Strategy addressing risks to relevant network and information systems from foreign ownership, interference, and technological dependence. The Strategy would include a Digital Sovereignty Dashboard, which would provide evidence on UK procurement, innovation and resilience and keep an up-to-date understanding of emerging risk.
Baroness Kidron (CB)
My Lords, Amendment 83, in my name and those of the noble Baroness, Lady Ludford, and the noble Lords, Lord Holmes and Lord Tarassenko, would require the Secretary of State to publish and maintain a digital sovereignty strategy. Before the Recess, many of us participated in a debate on digital sovereignty, and the level of agreement across the Chamber was absolutely overwhelming about the importance of UK national sovereignty and the current threats to it from our current arrangements with the tech sector, particularly US-based behemoths. The same sentiment is articulated by Amendment 166 in the name of noble Baroness, Lady Ludford, and it is a sentiment shared in the other place, where Conservatives, Liberal Democrats and Greens all tabled similar Motions.
During the debate, I identified four areas in which the UK has surrendered its leverage to make its own decisions. We surrendered our political leverage by deferring to the power of US tech; we surrendered our economic leverage by placing UK businesses at a structural disadvantage and entering into expansive and extractive contracts; we surrendered our technological capability as we failed to invest in UK capacity and businesses; and we ensured our strategic vulnerability by depending on foreign companies for key infrastructure. Together, these weaken our economy, our security, our safety and, above all, our autonomy: the ability to choose. I doubt that any single government strategy put us in this position, but it reveals a lack of strategy that we find ourselves here.
Amendment 83 would set out a requirement for the Secretary of State to establish a digital sovereignty strategy. Proposed new subsection (2)(a) would require an assessment of the risks to networks and information systems from
“dependence on hardware, software, or digital products and services that may be subject to foreign influence or interference, extra-territorial legal requirements that may be imposed on non-domiciled suppliers”—
such as cloud providers through the US CLOUD Act—
“vulnerabilities, undue control, or supply-chain dependency on foreign states or entities”,
the use of
“UK datasets without license or permission”
and vulnerabilities to valuable data assets that belong to the British public, including those related to the NHS, BBC, and Met Office. The rest of proposed new subsection (2) sets out further requirements to assess the risk of
“technological developments, market concentration or strategic dependencies”
and give consideration to vital elements of sovereignty, including open source technology and assets, talent procurement, capital markets and international collaboration with mid-sized partners whom we retain leverage with.
Finally, proposed new subsections (3) and (4) call for the development of a dashboard enabling the measurement of digital sovereignty. I am working with computer scientists at the British Computing Society who are developing a prototype for this and I urge the Government to look at this work and consider developing it, for their own procurement purposes and to provide it as a tool for the wider business community.
I set that out in some detail because I rather suspect that, if we had a proper strategy across the nation, we would not have had the conversation that we just had in our debate on the previous grouping. Sovereignty is now firmly on the agenda. This is partly due to the export ban on Anthropic and Claude Fable 5 introduced by President Trump in June, but stories highlighting our sovereign vulnerability across the digital stack predate that event and have continued since.
Dependency is not built overnight. It is the result of a systemic and concerted effort by entrenched big tech companies across many years to make themselves indispensable to the UK state, businesses and society, and of successive UK Governments failing to invest in our businesses, communities and people and choosing always to buy oven-ready tech, irrespective of the economic, societal and individual costs.
Just as dependence is not built overnight, neither can sovereignty be reclaimed overnight; nor is it a zero-sum game in which every part of the stack can or should be replaced. None the less, to restore any independence at all, we require an equally systematic and concerted approach to build where we can, to buy only products and services that adhere to our laws, to recognise our unique skills and assets, and to work co-operatively with other like-minded countries. That begins with a strategy that establishes a clear route for government and is fed into experts, free from lobbying and scrutinised by Parliament—which is the very purpose of the amendment in front of us. I beg to move.
Baroness Ludford (LD)
My Lords, I shall speak to my Amendment 166. It offers an alternative route to the same destination, although the amendment in the name of the noble Baroness, Lady Kidron, is probably superior because it is fuller and more comprehensive; I readily concede that. Her amendment would add an important element—a digital sovereignty dashboard prepared by the Office for National Statistics, the Competition and Markets Authority, the National Cyber Security Centre and the AI Security Institute—so that we can measure whether anything is changing. The cross-party agreement on this matter, which the noble Baroness referenced, is important and might help persuade the Minister of the force of the argument.
The Competition and Markets Authority puts Amazon Web Services and Microsoft together at between 70% and 80% of the UK’s public cloud market. That is not only a duopoly but a digital sovereignty issue. In its report Rewiring the State, which was published in June, the Science, Innovation and Technology Committee in the other place found that major departments, including HMRC and the NHS, were locked into multiyear agreements that further entrench those dependencies. The National Audit Office has found no shared strategic approach across government towards the handful of very large suppliers that now dominate these markets and are, to a large extent, American. Research done by the British cloud provider Civo found that 83% of UK IT leaders believe that geopolitics threatens their ability to control their data, while only 35% know precisely where that data resides.
I have a history, as a Member of the European Parliament, of being involved in all the arguments about transatlantic data transfer and what happens to the data when it is in the US; this was all in the wake of the war on terror, Guantanamo and so on. We are back in that territory, I guess. It is not just about the economic side of non-national control; it is also about your vulnerability to decisions—including, sometimes, decisions that you do not like—about what happens to the data.
Lord Tarassenko (CB)
My Lords, I shall speak in support of Amendment 83 in the name of the noble Baroness, Lady Kidron, to which I have added my name. In my speech, I will focus just on the aspects of the digital sovereign strategy that are relevant to the NHS. I speak as someone who held an honorary contract with the Oxford University Hospitals NHS Foundation Trust until November 2025, enabling me to be a co-investigator on research projects involving patient data.
Cyber attacks against NHS trusts and their supply chains occur with very high frequency, from regular automated phishing attempts, which are blocked daily, to major incidents causing significant clinical disruption. Health and social care consistently rank among the top sectors reported for cyber incidents and data breaches to the ICO. I am sure that we all remember the WannaCry cyber attack in May 2017, which affected 81 of our 236 NHS trusts at the time, causing nearly 20,000 appointments to be cancelled in a week.
Less than two years ago, in November 2024, there was a major cyber attack against the Wirral University Teaching Hospital NHS Foundation Trust, which compromised the trust’s electronic patient record. I know that EPR well as we have the same EPR in Oxford: Cerner Millennium. As a result of the cyber attack, staff in the Wirral hospitals lost all access to patient records, electronic prescribing tools and diagnostic results. All elective surgeries and outpatient appointments across the trust had to be cancelled, and members of the public were told not to use the emergency department at one of the hospitals in the trust. All clinical systems remained completely offline for nine days.
I mentioned the EPR Cerner Millennium. Cerner is now part of Oracle Health. Together, Oracle and Epic, both of which are US companies, account for about 40% of hospital EPR contracts in England and Wales. In primary care, EMIS software manages just under 60% of the patient records—the records of 35 to 40 million patients across England and Wales. EMIS was bought by Optum, part of the UnitedHealth Group, in 2023, but, in March this year, the UnitedHealth Group sold Optum to a US private equity firm, TPG, for just under £300 million. I will come back to that briefly later.
In 2023, NHS England and the Department of Health and Social Care launched a 2030 cyber security strategy. The noble Lord, Lord Markham, when he was a Health Minister, wrote the foreword—he will remember this, I am sure—to the strategy document. In it, he wrote—we all agree with him, I am sure—that
“the cyber security of our health and social care … underwrites patient safety”.
The group director for cyber security for the DHSC has recently written to all NHS trust boards informing them that, from this month, September 2026, new cyber policies will be included in the next data security and protection toolkit, covering issues such as multi-factor authentication, high-severity alerts and endpoint detection. There is nothing about AI, which is perhaps the subtitle of this Bill—something that will, I hope, have been removed by Report. Yet we know from Tuesday’s debate and last week’s open letter from 100 companies, including large tech firms, that AI-enabled cyber attacks are about to become more widespread and more sophisticated within months.
This prompts three questions. First, are officials from the Minister’s department, which has overall responsibility for cyber security, co-ordinating with the cyber security group in the DHSC—especially with respect to the latest threats from AI agents?
Secondly, have the recent reports from the AISI been communicated to the cyber security group in the DHSC, and have their implications for the NHS been discussed with them? I note here that the new Minister for Science and Innovation, Chris McDonald MP, is a Minister in both the DBIST and the DHSC, so I am hopeful that the answer to these two questions might be yes.
Thirdly, given the high prevalence of foreign ownership of companies, such as Epic and TPG, that are responsible for managing patient data within the NHS—notwithstanding the single-supplier agreement with Palantir, another US company, for the Federated Data Platform—has the Minister’s department assessed the risk to relevant network and information systems as a result of our technological dependence on these companies?
What I have described for the NHS also applies to other sovereign data assets such as those held by the BBC or the Met Office. If the full value to the UK of these sovereign data assets is to be realised as part of the Government’s growth strategy, we need to be optimally protected against cyber attacks, including AI-enabled attacks. For that to happen, we need a coherent digital sovereign strategy across government departments, led by the Minister’s department.
Lord Russell of Liverpool (CB)
My Lords, I echo the words of the noble Baroness, Lady Kidron: in the previous group, we probably would not have had anything like that debate if a clear strategy were indeed in place.
I will speak very briefly and in the context of other countries’ views of the safety and security of doing business with the UK and UK entities. Part of the backdrop is an attempt by His Majesty’s Government to try to do a reset with the EU, not least because of the problems we are having with our erstwhile colonial possessions across the Atlantic. We need to be viewed as a safe haven for the security of our business and data. If we look at what the EU, for all its bureaucratic idiosyncrasies, has been doing with NIS2, in many instances that is an extremely good model for us when looking comprehensively at the different sectors that need to be involved. NIS2 covers energy, transport, banking, financial market infrastructures, health, drinking water, wastewater, digital infrastructure, ISP services, public administration, space, postal services, waste management, chemicals, food, manufacturing, research and other critical parts of the economy. The EU is ahead of us and has done a great deal of groundwork; if we were to talk to the EU, we could benefit hugely without reinventing the wheel.
It is imperative not only that we give noble Lords and parliamentarians a feeling that we know what we are doing and where we are going but that other countries currently doing, or thinking of doing, business or more business with us have faith in the security of our data and cyber security infrastructure. If I were looking to invest in a company, that is an area I would look at very carefully—but, frankly, at the moment, I would not feel very confident.
Lord Birt (CB)
My Lords, these amendments are highly pertinent. We simply must ensure that non-UK providers of services in this sector are firmly and wholly within the scope of the Bill—they are only partly in scope. For noble Lords who were not at Second Reading, I read out a coruscating report by the American Government that damned Microsoft for its poor cyber security. I am sure that it is not true across the whole of Microsoft, but in that particular instance it manifestly was.
I observe that our previous debate was absolutely excellent; it uniformly focused on organisations in the UK that are providing services. There was a danger that somebody hearing that debate might think that all those organisations are themselves responsible for breaches. The data on whether breaches chiefly occur through failures in organisations mentions the absence of multifactor authentication or that they are caused by failures in the quality and design of the services that those organisations consume. By the way, the organisations consume literally hundreds and hundreds of services, and the reality is that it is a huge challenge for organisations to ensure that all the services that they buy are secure. We might say that it is a near impossibility. Again, it is absolutely vital that we keep providers firmly within the scope of the Bill—I am not saying that they are not there, but they are certainly not there in their totality—and, dare I say, firmly under regulation.
Baroness Berger (Lab)
My Lords, I support the principles behind these amendments. A point was raised by the noble Baroness, Lady Ludford, and I wish to make the point in a different way. Many reasons have been shared during this debate, which I share. The noble Baroness, Lady Ludford, referred to the questions asked by Chi Onwurah MP in the other place. It is interesting because I submitted a very similar Question just before the end of the summer in July. I asked:
“what proportion of the computing and cloud services used by government departments are provided by suppliers that are … headquartered outside the UK, or … subject to the jurisdiction of a government outside the UK”.
I asked that specifically in the wake of recent events and the debate we had in July.
The Answer came back on Tuesday. I accept that the Question asked by Chi Onwurah MP was specifically about AWS, but I was asking about all services hosted outside the UK. The Answer was:
“This information is not held centrally. Individual government departments are responsible for managing their own commercial arrangements for computing and cloud services and would need to confirm the proportion of services provided by suppliers headquartered outside the UK”.
The Government do not know how much they are collectively relying on other countries for our key government digital infrastructure. Our Government’s critical systems, public services and citizens’ data are increasingly reliant on foreign-hosted clouds and data centres. While the Answer refers to “commercial arrangements”, I think it is about much more than that. This is a question of our national security and resilience. I believe we urgently need a digital sovereignty strategy to ensure that we know the answers to these questions, that we can act on them and that we can prevent any future challenges happening to ensure that we are as resilient as we should be.
Lord Clement-Jones (LD)
My Lords, I will speak to this very strategic group of amendments. I use that word again because the noble Baroness, Lady Kidron, made it quite clear from the outset that that is exactly what we lack: a clear national strategy. I pay tribute to her tenacity in tabling Amendment 83, following what I thought was an extremely useful debate on the last day before we went into recess. That is still very much top of mind at the moment, as the Minister can see from the contributions today. If we had another debate today, I do not think we would feel any greater assurance than we did on the day of that debate.
I also thank my noble friend Lady Ludford for having tabled Amendment 166, which is along very much the same lines. We have at the moment, particularly in the public sector—I thought the noble Baroness, Lady Berger, put this extremely well—near total and escalating digital dependence on foreign technology monopolies and foreign jurisdictions. It is quite prevalent in Whitehall. There is a kind of ignorance about the geopolitical reality that so much of what might be described as the digital stack is owned, operated and controlled from abroad. I will come on to our procurement policies shortly.
Amendment 83 defines the pillars of true digital sovereignty. It would tackle extreme market concentration. As we have heard, three American technology giants— Amazon, Google and Microsoft—control a staggering 73% of the cloud computing and enterprise hosting supporting our UK financial sector and public services. If an AWS region or Microsoft Azure network suffers a systemic failure, three-quarters of the City of London and vast swathes of government administration are instantly paralysed. Concentrating our critical national infrastructure into a handful of corporate choke points is the very antithesis of national resilience.
Secondly, it directly confronts foreign extraterritorial legal exposure. Because our critical public data is predominantly hosted on foreign cloud architectures, that data remains legally exposed to foreign statutory instruments, most notably the US CLOUD Act, and is subject to sudden unilateral geopolitical shifts. As my noble friend Lady Ludford said, we saw a chilling preview of this vulnerability only recently when the US Administration temporarily cut off European and UK financial institutions from accessing Anthropic’s AI model, Claude Mythos. Whatever the rights and wrongs of Mythos and its capabilities—we have a pretty good idea of what the wrongs were from what the AI Security Institute had to say—suppose that we had adopted this powerful model in a cyber defensive role; if an ally can pull the plug on front-line cyber security tools overnight, we do not possess true digital sovereignty. If a foreign ally can pull the plug on critical cutting-edge technology at a moment’s notice, we do not have true national resilience but a dangerous dependency.
My noble friend Lady Ludford’s Amendment 166 would force the Government to publish a formal digital sovereignty strategy within 12 months, assessing foreign reliance and reforming public procurement to prioritise secure home-grown UK technology. In fact, both amendments would tackle a glaring failure of current government procurement. The UK possesses world-leading academic institutions and an exceptional cyber security start-up ecosystem. But we suffer from a chronic scale-up failure. Time and again, major public contracts, such as the recent NHS and defence platforms, are automatically handed to dominant foreign tech giants such as Palantir, rather than nurturing and scaling home-grown British technology.
Proposed subsection (2)(c) of Amendment 83 and my noble friend Lady Ludford’s Amendment 166 would provide the solution. They would legally require the Government to use public procurement as a strategic lever to prioritise secure, interoperable and sovereign UK-developed technologies. That is how we build long-term sovereign capacity on our own soil, create high-wage tech jobs and prevent our best innovations being swallowed up by our international competitors.
In an era of contested supply chains, autonomous AI warfare and geopolitical instability, a nation that cannot secure its own digital foundation cannot truly govern itself. I very much hope that the Government will take heed of these amendments, even if they do not take them on board in this Bill. The former Secretary of State for DSIT is on the record as being very much in favour of digital sovereignty, and I hope that that carries through into the current Government.
Lord Reay (Con)
My Lords, I thank all noble Lords who have added their names to the amendments and who have spoken in this debate. Both amendments in this group are underpinned by the same principle that national security and national technological capabilities deserve a unified plan—not one that targets some sectors and entities and not others, but a holistic plan that brings together all sectors and industries into a single framework. His Majesty’s Opposition therefore support the intention behind the amendments.
However, at risk of repetition, the Government could avoid the need for these propositions. They could do away with your Lordships’ worries if they would commit, as mentioned by my noble friend Lord Camrose, to publishing a national cyber action plan within a set timeframe, and commit to including national digital sovereignty as part of that plan. In light of Tuesday’s debate on AI, we request a review and update of the previous Government’s AI White Paper to ensure that AI regulation and cyber regulation are aligned. They need to operate in lockstep, and this Bill is an appropriate place to do it. It is evident that national sovereignty and a reduced reliance on foreign technology is vital to ensuring national wholesale cyber security. I commend these amendments in their aims to achieve that, and I look forward to the Minister’s reply.
Baroness Lloyd of Effra (Lab)
I thank noble Lords for continuing the debate with which we ended the previous session: the very important topic of the technological and digital sovereignty of the UK. That is very important to this Government and we are taking action on it. It possibly has not been focused on enough in past years but, across many areas, that is what we are doing.
We are clear that we need a coherent approach and a clear direction. We obviously need to take into account that technologies and markets evolve, and the core of that approach was set out in the modern industrial strategy and the Digital and Technologies Sector Plan. That set out the direction of travel, and the Government will continue to consider how our priorities are best articulated.
Our objective, as I articulated at the end of July, is not complete independence but strategic resilience through a combination of domestic capability, diversified international partnership and targeted management of critical dependencies. This allows us to access the best of global markets while capitalising on our domestic capabilities. That is why we already have in place a range of regulatory and non-regulatory frameworks that enable us to embed those objectives through existing industrial, technological and resilience strategies. I will talk to some of those now.
For essential services in scope of the network and information systems regime, such as drinking water, health and energy, all entities are required to manage and mitigate the risks posed to their systems that deliver essential services. This includes the risks set out in the amendment of the noble Baroness, Lady Ludford.
On market concentration, which the noble Baroness, Lady Kidron, and the noble Lord, Lord Clement-Jones, referred to, the CMA is acting. It concluded an investigation into the cloud services market in July last year, highlighting competition issues arising from market concentration. It has since announced packages of actions to improve competition in cloud services. This work has directly informed our thinking, as we develop a more strategic approach to how the public sector procures cloud services.
Lord Clement-Jones (LD)
My Lords, I point out to the Minister that not all is rosy in that particular cloud services garden. The CMA failed to designate those major US hyperscalers as having strategic market status, which, for many of us, was a rather extraordinary outcome.
Baroness Lloyd of Effra (Lab)
It has announced a series of measures, including actions from Microsoft and Amazon, to support greater choice for UK businesses and the public sector.
On my noble friend Lady Berger’s question, it is true that cloud spend is distributed across departments and managed through a range of departmental contracts and commercial arrangements. We have established a cross-government cloud consumption dashboard to improve the visibility of cloud usage across the public sector, and we are working with both suppliers and departments to further improve the quality and completeness of our cloud infrastructure spend data to provide a joined-up view today and for the future. That is something that the Government are acting on.
Baroness Berger (Lab)
For clarification, that is on the spend, but my question is specifically about where the cloud services are hosted and/or whether they are under the jurisdictions of Governments beyond the UK. It was not just about what money is being spent; it was about who is responsible for it and where it is located.
Baroness Lloyd of Effra (Lab)
That is well noted.
For all digital services, as many noble Lords have pointed out, government departments are required to carry out robust security and resilience assessments in their procurement to ensure that the actions of foreign states or hostile actors cannot disrupt the delivery of public services. In June, the Cabinet Office published procurement policy note 025, Protecting the UK’s National Security through Public Procurement, and AI will be one of four key sectors recognised as critical for national security, with new guidance for departments prioritising contracts for British business where necessary to protect our national security.
Lord Birt (CB)
Before the Minister sits down, I ask her to reflect, at the end of our second day in Committee, that the noble Viscount, Lord Camrose, has mentioned more than once that he would like to see a national cyber security strategy, but is not the takeaway from these two days that we are all very clear on the challenges facing the UK? There is a great deal of uniformity across the Room, as well as in the quality of the Minister’s answers, but does the Bill not need to deal with all the issues that have surfaced and been addressed? Frankly, it does not do that at the moment. If the Bill passes in its less ambitious form, how long will it be before we get another Bill to address the strategies? If we have to wait that long, how much more damage is going to be done to our economy and our society in the meantime?
Baroness Lloyd of Effra (Lab)
Going back to the point made by the noble Lord in an earlier intervention, the Bill is a substantive Bill that substantially increases coverage of the digital infrastructure on which much of our economy relies. That is a very important point. As I mentioned at the start of my remarks just now, the question of whether the Bill is the right place to articulate the breadth of many of the issues that have been raised is, indeed, a good one. I am not sure that it is the right place to articulate all the very good questions that have been asked, because some are much more wide-ranging than the scope of the Bill.
Baroness Kidron (CB)
My Lords, I thank all who have spoken for their excellent contributions. I will make three quick points. First, in the course of the afternoon, I opened the Explanatory Notes, which is always a bit of a danger. I just want to put on the record that paragraph 2 states:
“These reforms are intended to better protect the services and other activities that are essential to the day-to-day functioning of society in the UK, and the economy, through safeguarding relevant network and information systems (the systems that allow computers and other devices to communicate with each other) and their surrounding environment”.
I do not think that the Bill, as it stands, does that job, and the last two groups have absolutely illustrated that.
The second thing that I would like to say to the Minister, and I absolutely recognise all the things that she mentioned, is that I did find myself counting, and it was 11. We do not have a strategy. It is 11, but it does not cover the scope of what we are discussing; it does not even cover the scope of security.
The third thing, which I am slightly loath to say but will now say, because otherwise we will get nowhere, is that I have been in the room with Ministers when they have indicated directly that they cannot do something because of America’s desire—absolutely categorically, yeah? That is the bit that we did not get from the Minister. Sovereignty is about being able to impose and choose our laws, and to decide what we can and cannot do and what we are willing to risk and give up for it.
I am not saying that it is easy, but I think everybody in the Committee has been completely reasonable in saying that we are not trying to replace the stack; we are trying to talk about chokeholds and we are trying to be strategic. What we are really trying to do is make the country safe and secure and, dare I say, make it respond to its own laws. I do not think that anything that the Minister said has dealt with that fact. It was not asking for much to actually have a think about what strategy is and have a look at how we might get to a better place. Let us have a vision of where we want to go and work out how to get there. Individual things and departments and leaving things out is not the answer.
This is an easy amendment for the Government to say yes to and I hope that, by Report, they will. I beg leave to withdraw the amendment.
House of Lords
Introduction: Baroness Mackenzie of Sherwood
Introduction: Lord Sarwar
Opt-out Collective Court Actions and Connected Litigation Funding
(1 day, 7 hours ago)
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Lord Carlile of Berriew
To ask His Majesty’s Government what plans they have to reverse the effect on opt-out collective court actions and connected litigation funding resulting from the Supreme Court decision in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others; and, if so, when it is intended that the necessary legislation will come into force.
Lord Carlile of Berriew (CB)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and I declare the interest of having some professional involvement in collective actions.
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Lemos) (Lab)
The Government recognise the critical role litigation funding plays in supporting access to justice and the need for such arrangements to be fair, transparent and commercially viable for funders. To support these aims, the Government have accepted the Civil Justice Council’s two key recommendations. First, we will legislate to mitigate the effects of the PACCAR judgment. Secondly, we will introduce proportionate regulation of litigation funding agreements. We will implement these changes when parliamentary time allows.
Lord Carlile of Berriew (CB)
I am grateful to the noble Lord for his reply. He is aware, and the House will be aware, that collective actions give consumers the power to pursue legal actions for which they cannot obtain legal aid, however egregious the wrongs that have been committed against them. Why is it that the Government have broken a promise made before the last election, in 2024, that a Bill of about two or three pages would be produced to reverse the unintended effects of the PACCAR case, so that such actions can be brought and the legal funding industry, which is making a great contribution to the British legal world, can proceed with such cases?
Lord Lemos (Lab)
We are committed to legislating. I hear the noble Lord’s concern about that, but I want to reassure the House that we are committed to legislating when parliamentary time allows. We are working urgently to identify a new legislative vehicle to take this forward. Legislation will clarify that litigation funding agreements are not damages-based agreements, and this will mitigate the effects of the PACCAR judgment.
Lord Arbuthnot of Edrom (Con)
Does the Minister accept that without litigation funding, Alan Bates would never have been able to bring his fantastic legal action against the Post Office, and does he recognise that this is an urgent matter?
Lord Lemos (Lab)
I do recognise that, and I know the history of Sir Alan Bates’ involvement in this. Sir Alan Bates has spoken openly about how, without a litigation funding agreement, he and the sub-postmasters would not have had their day in court. We agree with Sir Alan that third-party funding is crucial for enabling ordinary people to access justice. The access to justice point is the centre of why we think this is important, and I know that is what noble Lords feel too. With group and consumer claims, third-party funding under a litigation funding agreement is often the only option people have to bring a claim. I note the comments of the noble Lord, Lord Carlile, about access to legal aid as well. I want to reassure the noble Lord, Lord Arbuthnot, that we understand the importance of it in relation to the sub-postmasters and to Sir Alan Bates.
Baroness Brinton (LD)
My Lords, the Minister for Justice, Sarah Sackman, said in her Written Statement in December last year that legislation would be an absolute priority, and she quoted Sir Alan Bates earlier in the Statement. It is vital that any regulation ensures that claimants and victims, especially of the Post Office Horizon scandal, are given full information before they make decisions about whether it is worth continuing with the scheme. Can the Minister say whether there will be such help for claimants and victims?
Lord Lemos (Lab)
That is why we think light-touch regulation is important here. Transparency is important for consumers in these situations. I see the noble Baroness smile. I know the phrase “light touch” receives a hollow laugh—I used to be a financial services regulator myself. The Government do feel that there is a need to get this on to a proper regulatory footing. I can say a lot more about this; I promise not to be boring. I suspect a lot of the questions I am going to be asked are about urgency and getting on with it. As well as what I have said about finding the appropriate legislative vehicle, I will go back to Minister Sackman to have a discussion about this. As the noble Baroness knows, I have had rather a busy week. It is above my pay grade to give a commitment, but I will press the case. If I get anywhere, I will buy the noble Lord, Lord Carlile, a cup of tea, and if he likes the answer, he can buy me a glass of champagne.
Lord Keen of Elie (Con)
My Lords everyone agrees that the Supreme Court decision in PACCAR should be reversed by legislation. Until it is, satellite litigation will proliferate. The last Conservative Government introduced the Litigation Funding Agreements (Enforceability) Bill in 2024, so the necessary legislation is ready and waiting. The Starmer Government were notorious for doing nothing very slowly. I ask the Minister: will the present Government deal with one simple and uncontroversial matter very quickly and thus avoid the bottomless quicksands of parliamentary time?
Lord Lemos (Lab)
Bottomless quicksands are best avoided. I know the history of all this and the legislation the previous Government proposed. As I have made clear, we will legislate. The noble and learned Lord knows I cannot give him a date, but I will do my best to move this forward with Minister Sackman.
Baroness Butler-Sloss (CB)
May I ask the Minister: does he know what is holding this up?
Lord Lemos (Lab)
Yes, I do. I can tell the noble and learned Baroness what is holding this up: it is people like me and other Ministers competing for legislative time. I am sorry to say I am going to be arguing with myself, but I promise to take noble Lords’ side on this. I understand the issues about access to justice. I take them very seriously and I will do my best.
Lord Hamilton of Epsom (Con)
The Minister has made it quite clear that he wants to see this on the statute book. Is it being blocked by the Treasury?
Lord Lemos (Lab)
No, it is not being blocked by the Treasury. Sorry, I must not be too bold and assertive—I appreciate that that is not my role. But no, it is not blocked by the Treasury. The Treasury has no say in this. We are looking for an appropriate legislative vehicle. The noble Lord, Lord Wilson, told me last night at dinner that it is more fun if I am rambunctious at the Dispatch Box.
Lord Watts (Lab)
My Lords, does not everyone have their own favourite piece of legislation that they want introduced, and as quickly as possible? It is for the Government to set the agenda, and once they have promised to do something, they will do it within the timeframe of that Government. As far as the Starmer argument goes, we had very little legislation coming from the Opposition when they were in government, and the legislation we did have did a lot of damage to the country.
Lord Lemos (Lab)
I almost always agree with my noble friend, but on this occasion, I would suggest a tentative correction. Actually, the previous Government did put forward legislation, as the noble and learned Lord, Lord Keen, mentioned. But we are committed to doing that, and as my noble friend says, there are some competitive pressures. I know something about competition for legislation. I know a lot less about competition law, but I am learning fast.
Office for Students: Academic Misconduct Allegations
(1 day, 7 hours ago)
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Lord Young of Acton
To ask His Majesty’s Government whether they will consider giving the Office for Students power to investigate serious allegations of academic misconduct where a university has declined to commission an independent inquiry.
Lord Young of Acton (Con)
In begging leave to ask the Question standing in my name on the Order Paper, I declare an interest as the director of the Free Speech Union.
The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)
My Lords, our world-class higher education system is built on the principle of institutional autonomy. As autonomous institutions, universities are responsible for setting and maintaining the academic standards of the qualifications that they award. The Office for Students regulates these standards through its regulatory framework. When providers fall below minimum requirements, it already has the power to investigate and take regulatory action.
Lord Young of Acton (Con)
I am grateful for that reply. Does the Minister accept that the Jason Arday case, where serious allegations of academic misconduct were initially dismissed by Cambridge as a “vile smear”, with an investigation launched only after months of damaging public scrutiny, illustrates why the Office for Students needs this power? Will the Government commit to consulting about it?
Baroness Smith of Malvern (Lab)
I have already identified that the Office for Students has that power already. The death of Jason Arday is of course a tragedy. I am sure that, for many people, our heartfelt condolences are with his family and friends and everybody who cared about him. Cambridge is rightly establishing an independent investigation. I had the opportunity yesterday, along with the Secretary of State, to talk to the vice-chancellor and senior leaders of Cambridge University about that, and they will be imminently announcing the detail of the terms of reference for that investigation. Importantly, they gave assurances to me and the Secretary of State that it would be independent and rigorous.
Baroness Gohir (CB)
My Lords, one area of academic misconduct that does not get addressed is the exploitation of junior academics, particularly women and minority-ethnic academics, by older academics who sometimes force their names on to papers to which they have not contributed, use the work of junior academics to secure millions of pounds of research funding and then discard them from projects. Sometimes there are tribunals, settlements and NDAs, but there is no accountability and the cycle continues. What are the Government doing, and what can the Office for Students do, to address this?
Baroness Smith of Malvern (Lab)
That would clearly be an unsatisfactory position for any junior academic involved in that situation. It is slightly less a job for government and slightly more for the leadership of universities, which, as I have said, are autonomous institutions that are rightly responsible for maintaining their academic standards. I am sure that they and others will have heard the concerns that the noble Baroness has expressed today.
Lord Mohammed of Tinsley (LD)
My Lords, I also pay tribute to Jason Arday. In the Minister’s response to the noble Lord, Lord Young, she talked about the Office for Students having the powers already, but is she willing to carry out a review to ensure that it has sufficient powers and, if possible, look at the possibilities of beefing up its powers if she found that it needed more?
Baroness Smith of Malvern (Lab)
We always keep the powers of the Office for Students under review. I am sure that it, like others, will want to look carefully at any recommendations that come out of the independent inquiry that Cambridge University has instituted. Universities UK may also want to think about the way in which any lessons learned from this episode can be reflected across the whole sector, and we will obviously want to work with it on that as well.
Baroness Warwick of Undercliffe (Lab)
My Lords, this is a serious and difficult case that clearly raises legitimate questions, but surely we should await the outcome of the various inquiries under way before passing judgment. Universities, as the Minister said, are already subject to a range of checks and balances, and indeed Cambridge has already started its review process. I suggest that the most responsible course of action at this stage is to let the investigations establish the facts, look carefully at what they tell us about the robustness of the existing checks and then consider whether any regulatory or other intervention is necessary.
Baroness Smith of Malvern (Lab)
I agree with my noble friend. Much has been said about this issue, not all of it, I suspect, either helpful or correct. It is important that we allow a relatively speedy—I hope—and independent investigation into the issues raised by this very sad case, which may well relate to the processes for the recruitment of academics, the levels of academic and research standards and the processes in place, both within individual institutions and across the sector, for ensuring that in our higher education system those are maintained at the very highest levels. I am sure it will be helpful to wait for the results of these inquiries and any recommendations that are made in order for all of us to be able to review what further action might be necessary.
Baroness Fox of Buckley (Non-Afl)
My Lords, on Tuesday we heard some moving and powerful speeches about breaking through the defensive institutional cover-ups of wrongdoing when we discussed the Hillsborough law. Even honest mistakes can be made toxic by a lack of accountability. Can the Minister assure us that universities are also held to these high standards of candour, that their autonomy cannot be used as an excuse for marking one’s own homework, as in the instance of what Cambridge proposes, and that she takes seriously the fact that academics, whistleblowers and journalists were threatened and smeared for simply doing their job? Does she accept that academic freedom and academic standards are threatened if nothing is done, and can she assure us that she will keep her eye on this? What has happened here is very serious.
Baroness Smith of Malvern (Lab)
As I think I have already made clear, both I and the Secretary of State have been doing more than just keeping our eye on this. It was important for us yesterday, in our meeting with the vice-chancellor, to have the assurance that she was able to give us that the detail of the reviews would be imminently announced, that the reviews would be carried out independently and that recommendations that came from them would be made available for all of us to consider whether any further action is necessary.
Baroness Cash (Con)
My Lords, the department at the centre of this summer’s tragic events is not any university faculty. It trains teachers with public money under DfE accreditation. Parents and schools are entitled to know that those who train our teachers meet the standards that we demand of the teachers themselves. Will the Minister confirm which regulator—the Office for Students, Ofsted or her own department—is responsible and accountable for the integrity of academic qualifications in accredited teacher training providers? Will she accept that nobody in England currently has the power to investigate across institutions? If she agrees with that, will she say which body should do it?
Baroness Smith of Malvern (Lab)
First, to reiterate what I said, it is right that institutions themselves are responsible for maintaining academic standards. It is a fundamental part of the reason for the success of our higher education system that they continue to maintain high academic standards. The noble Baroness raises an important point about regulation with respect to teacher training, where I think there is a role for Ofsted, but I will come back to her with more detail.
With regard to the university itself, as I have made clear, the Office for Students already has the ability to regulate with respect to academic standards and processes that might be undermining them. She makes an important point, which I touched on earlier, about the extent to which the system itself, rather than simply individual institutions, maintains the quality of academic standards. That is something that we and Universities UK will want to look at in more detail.
Baroness Goldie (Con)
My Lords, the Minister—inadvertently, I am sure—creates an impression of if not complacency then certainly inertia. I emphasise that I am sure it is inadvertent. What many of us find surprising is the question of what would be necessary to allow the Office for Students to launch an investigation, rather than a general periphery discussion going on among institutions. Surely that office should have the power to take dynamic action.
Baroness Smith of Malvern (Lab)
It is unlike the noble Baroness to make the charge that she has just made to me, and, frankly, I think it is unfair. I have been pretty clear that, in talking to Cambridge University, we have been assured and are clear that there will be an independent investigation into the particular circumstances here. I have also been clear, in response to the question from the noble Lord, Lord Mohammed of Tinsley, that when we know what the conclusions of that review are, there may well be further action that we want to take. If the noble Baroness wants me to take knee-jerk action on the basis of news headlines, I am afraid that is not something I am willing to do.
Voter Registration, Election Turnout and Compulsory Voting
(1 day, 7 hours ago)
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Lord Rennard
To ask His Majesty’s Government what assessment they have made of (1) the means whereby Australia has achieved far greater voter registration and general election turnout levels than the UK, and (2) compulsory voting and automatic voter registration schemes in the UK.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, we have examined the electoral system in Australia, where they have introduced more automated forms of voter registration. Their experience highlights just how much time, iteration and rigorous testing are required to build processes and data sources of sufficient quality. Over the coming years, we are working to create a new automated voter registration system, thereby removing a key barrier to eligible citizens participating in our democracy. It is likely that Australia’s long-established policy of compulsory voting, automated forms of registration and public engagement in democratic participation may have contributed to the higher levels of turnout at its elections. Different democracies make different choices about how they encourage electoral participation.
Lord Rennard (LD)
My Lords, the turnout level in Australia’s most recent general election was 91%, compared to only 60% in the UK, and Australia has achieved voter registration levels of 98%, compared to just 86% in the UK. The Government’s impact assessment suggests that the moves towards automatic voter registration will increase voter registration rates by less than 0.8% in two years—perhaps in time for the next election. Do the Government accept that low turnouts and there being perhaps 8 million people missing from our electoral registers severely weaken the health of our democracy? What more will they do to address these issues?
Baroness Taylor of Stevenage (Lab)
I stress to the noble Lord that I said it has taken a long time for Australia to get where it has. It started off with compulsory voting in 1924. The 1922 election saw a less than 60% turnout. That has risen, as he said, to 91% in the 2025 election, but that is a result of a number of steps it has taken, including the registration steps that we are looking at now. It is an iterative process and we need to move ahead with it carefully. We make different choices in different countries about the way we move this forward. At the moment, the Government believe that we have to focus on taking down barriers to participation. That is why we are taking steps in the Representation of the People Bill, which we will be debating shortly, to make voting easier and more accessible before we go forward with any further steps.
Lord Brennan of Canton (Lab)
My Lords, to some, compulsory voting might seem a rather illiberal proposal. Have the Government considered incentivised voting instead, perhaps in the form of a National Lottery draw for all voters on the occasion of each general election, with the winning prize going to one of the voters—or, if they object, it could be donated to charity instead?
Baroness Taylor of Stevenage (Lab)
I am all for innovation in election processes, but that might cause some problems among members of our community who do not like to take part in gambling. However, we have been doing some voter piloting. The key thing here is to tackle the barriers to people getting involved in the democratic process. We know what they are. The Electoral Commission did a review very recently on this, and people were very clear that it is lack of information about parties and candidates, negative perception of the voting system and that voting is too complicated. Anyone who has been on the doorstep trying to persuade someone to go out to vote will realise the misconception about how voting works. We have to tackle those barriers before we start thinking about the more exciting innovation that my noble friend speaks about.
Lord Robathan (Con)
My Lords, is this not a question of letting people choose whether they wish to vote or register to vote? This seems an easy thing. I hate to agree with the Government on this, but taking caution is a very sensible thing to do.
Baroness Taylor of Stevenage (Lab)
I did not expect to get that support, but I am very grateful for it. The Government support the use of pilots to test and evaluate electoral reforms—which is exactly what we have been doing through this process—where there is a clear case for doing so, but we do not have any plans for piloting compulsory voting at this time. We want to remove those barriers to participation, make it easier for eligible electors to register and vote, and make sure that we encourage the 7 or 8 million voters who could vote but who are currently not registered to get on the register.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, the Minister very kindly gave me a Written Answer saying that Government have no current plans to introduce compulsory voting. However, since an amendment will be proposed by my noble friends Lady Royall, Lord Kinnock and Lord Blunkett, and me to the Representation of the People Bill, will she talk with her colleagues in government and see if this is an opportunity to consider compulsory voting, since there are no rational arguments against it?
Baroness Taylor of Stevenage (Lab)
I very much look forward to debating this when we start the Representation of the People Bill on 14 September. I am sure there will be lively discussions about all matters to do with elections. Of course, I am always happy to debate things that are already in the Bill or things that people want to have in the Bill as we go through that process.
Baroness O'Neill of Bexley (Con)
My Lords, the Representation of the People Bill proposes automatic voter registration, which will obviously involve new computers and new data systems. Can the Minister clarify how much this is expected to cost?
Baroness Taylor of Stevenage (Lab)
We want to make sure that the system is adequate to deal with all voter registration. We are assured by the Electoral Commission and the electoral administration authorities that we have sufficient processes in place, because the system is set up to register all voters who are eligible to vote. What we need to do is encourage them to do so and make sure they are on those systems.
Lord Storey (LD)
My Lords, if 16 year-olds are able to vote in future, at the first election after their 16th birthday, how will they all be registered to do so? Do not local authorities face a problem with non-registration, whereby it enables some people to claim single person discount on their council tax?
Baroness Taylor of Stevenage (Lab)
In terms of voting at 16, the Government intend the franchise change to be in place in good time ahead of the next general election. We were elected on a clear mandate, which included extending that right to vote to 16 and 17 year-olds, and that will be a major change to the electoral franchise. We need to get it right. It is not just the change to the electoral law but making sure we have the democratic and civic education process in place, and I know that my noble friend the Minister for Education is working on that as we speak. We are putting all that in place before we get to the stage where 16 and 17 year-olds will be asked to cast their vote.
On the issue of single person council tax discount, that is a matter for people’s declarations. They make a declaration to their local authority which is renewed regularly when they renew their council tax bill. They have to say consistently that they still wish to claim that single person council tax discount.
Lord Hayward (Con)
My Lords, the Minister may have been somewhat disconcerted by receiving support from my noble friend Lord Robathan. She will be even more disconcerted that she is receiving support from me as well on compulsory voting and compulsory registration. Can she confirm that she has looked carefully at the way Northern Ireland provides access to everybody to check the register? Would that not provide the opportunity for good online voter registration without the cost to which my noble friend on the Front Bench referred?
Baroness Taylor of Stevenage (Lab)
We worked very closely with the devolved Administrations as we went through this process. There were a number of pilots in Wales, for example, and we are working with our Welsh colleagues to explore what they learned from their experience. We are looking very carefully at open registers because, as we explore and adopt those more automated approaches, we want to remove the presumption that citizens will be added to an open register unless they opt out. I think it will work the other way round, in effect, once we have automated voter registration. All those issues are being explored very carefully, and we are very much looking at the experience in our devolved Administrations to learn what we can with them and from them.
The Lord Bishop of Leicester
My Lords, democracy is of course about a lot more than simply voter participation. What are the Government currently doing to enable civic participation at this time, particularly by minoritised groups, which will aid in safeguarding our democracy?
Baroness Taylor of Stevenage (Lab)
I am grateful to the right reverend Prelate, because he enables me to answer in a better way the question that the noble Baroness, Lady Nicholson, asked me yesterday about how we are involving and engaging people in the democratic process. Electors’ attitudes and motivations are arguably more important than process issues in stopping them registering and voting, as I am sure the right reverend Prelate will be aware. The Electoral Commission, as I said, explored the reasons for that. Backed by a total of £2.5 million, the democratic engagement fund will provide grants of £1,000 to £50,000, with most awards expected to be around £25,000. We expect projects on that democratic engagement to be completed by January 2028, and we will be exploring many different ways of having better democratic engagement, particularly across groups that are less inclined to vote.
Summer Drought: Future Supply Disruption
(1 day, 7 hours ago)
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Lord John of Southwark
To ask His Majesty’s Government what lessons they have learned from this summer’s drought; and what plans they have to ensure that water companies minimise future supply disruption.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, this year’s drought follows exceptionally dry weather, record-breaking heatwaves and sustained high demand for water. Climate change presents increased risk of more frequent dry summers, and we take drought preparedness very seriously. In response, we have increased engagement with the water sector and key stakeholders, including through hosting more frequent National Drought Group meetings. Our response to the Environment and Climate Change Committee’s drought preparedness inquiry also demonstrates our commitment to improving drought preparedness for the country.
Lord John of Southwark (Lab)
I thank my noble friend for her Answer. She referred to this summer’s drought, but that followed a particularly wet winter, with southern England seeing 58% more rain than usual. Despite that, most regions have still faced hosepipe bans and other significant restrictions this summer. It is clear that we have insufficient reservoir capacity. What can the Government and water companies do to ensure that we build the necessary additional reservoir capacity now and not at some point in the distant future?
Baroness Hayman of Ullock (Lab)
I am sure noble Lords are aware that the Government have pledged to build nine new large reservoirs to ensure sufficient water supply for the future. At the same time, we need to protect and enhance the environment and we are looking at how best to do that. We changed some of the planning rules to enable this to happen more quickly. At the moment, we are looking at how we co-ordinate the delivery programme. We have the Water Delivery Taskforce, which is bringing together officials from Defra, the Environment Agency, Natural England and other government departments as necessary to make sure that we have a good, co-ordinated delivery plan. The current timelines are that the reservoirs would come into service from 2035 and in 2031 Havant Thicket would become the first large water supply reservoir completed in 30 years.
Baroness McIntosh of Pickering (Con)
My Lords, I welcome the response to the Environment and Climate Change Committee’s Surviving Drought report to which the Minister referred, but she will be aware of the impact on farming, the horticultural sector and the fruit and vegetable sector that this year’s drought has caused. There is a very strong case for small on-farm reservoirs, and this needs to be dealt with urgently. We cannot wait another 10 years for these major reservoirs, for which there is a need, to be built. Please will she authorise her department to proceed with these small, much-needed on-farm reservoirs?
Baroness Hayman of Ullock (Lab)
I have said previously to noble Lords that enabling farmers to hold more water and manage water better on their land is something that the Government are very keen to see and enable. We are also very aware of the huge problems that drought causes farming. We have been looking at how we can support farmers facing lower crop yields, for example. There are also increased feed costs and irrigation issues. I have held meetings with the poultry sector, for example, specifically on the problems of heat stress on poultry. It is something we are very keen to resolve because this will be a long-term problem.
Baroness Grender (LD)
My Lords, does the Minister think it sends the right signal that failing water companies which are currently losing 3 billion litres a day in leakage can find £75 million for an ad campaign to tell households to use less water, while government support for farmers hit by this summer’s drought was £65 million? Can she tell us whether that farmer support package will be in any way increased?
Baroness Hayman of Ullock (Lab)
We are currently working with farmers to look at what support they need, not just in this area but in other areas because farmers are under pressure in many different areas. I agree with the noble Baroness about the issues around the water companies, which is why I hope to be bringing the new water Bill to this House shortly.
Baroness Butler-Sloss (CB)
Can I suggest to the Minister that in addition to what has been suggested there should be a campaign to encourage people who have any sort of land to start saving water on it? For instance, I am thinking of whether I can put down a borehole—I have only 16 acres. Things such as that might be helpful if the Government could push people to see what they could do to save water themselves.
Baroness Hayman of Ullock (Lab)
One important thing we need to be doing is not necessarily asking people to drop boreholes on their land but water saving more broadly. It is something we could definitely improve on as a country. The Government are keen for water companies to look at how they encourage more water saving across all their customers.
Baroness Jones of Moulsecoomb (GP)
My Lords, in the past few weeks the Prime Minister has been talking about public control of water companies. What we have had since privatisation has been a disaster. Yesterday he actually mentioned public ownership. Does that mean renationalisation in other words? By the way, Havant Thicket is a disaster and I would be very happy to meet the Minister to explain exactly why and bring some campaigners as well. I save water in water butts.
Baroness Hayman of Ullock (Lab)
I would be very happy to meet the noble Baroness. She may be better off meeting the Water Minister, to be honest, but I am always happy to meet her. She raises important points, but we have to get this right. On public ownership, my understanding is that that same report stressed that public ownership was not the same as nationalisation. I need to understand better what the different options are.
Lord Roborough (Con)
My Lords, it is obvious that we need more investment in reservoirs but the easier, cheaper and quicker improvement is to restore natural water storage through rewetting, riparian tree planting, de-canalising rivers and, as my noble friend mentioned, creating on-farm water storage. What are the Government doing through ELMS and freeing water companies to invest to incentivise these improvements in resilience? I refer the House to my registered interest as a farmer and landowner.
Baroness Hayman of Ullock (Lab)
Within Defra we have a number of programmes to do with rewetting, tree planting and supporting farmers—we have talked about reservoirs for farmers—but also holding water better. We can look at balancing ponds, for example, which the Government have been supporting through the different river trusts. There is a lot of work going on there. The important thing is to make sure that it is co-ordinated and happening in the right place.
Baroness Ritchie of Downpatrick (Lab)
Over the last few days, the Secretary-General of the United Nations, António Guterres, has indicated that the world is facing an exceptional El Niño impact that will have a direct effect on food production and food security, notwithstanding on communities. I urge my noble friend the Minister to have immediate conversations with her ministerial colleagues in Defra and other departments to see how the UK could be battle ready to deal with this phenomenon that could impact on all our lives, particularly in our farming communities.
Baroness Hayman of Ullock (Lab)
We must all be aware of the reports about the excessive El Niño we are experiencing at the moment. I am sure that this winter is going to be very difficult for many parts of the world. In this country, the National Drought Group is meeting weekly. We have the working group on flooding as well. We are looking at long-term water resources management plans to ensure sustainable water supply. The Environment Agency is reviewing all the plans in this area because we need to make sure that long term we are prepared for drought, flooding and storms, all of which cause serious disruption to water supplies, electricity supplies and so on. There is co-ordinated work across government so that when we have these serious concerns about existing and future weather, we are better prepared than we have been before.
Lord Bailey of Paddington (Con)
My Lords, reducing consumption and leakage is expected to meet more than 65% of England’s projected water shortfall. Will the Government make executive bonuses and dividends, and future bill increases, conditional on companies meeting binding water leakage reduction targets and preventing supply interruptions?
Baroness Hayman of Ullock (Lab)
Water companies already have leakage targets, which they are expected to meet. I say from a personal point of view that United Utilities seems to be going like the clappers at the moment—virtually every road around our village is shut as it beavers away mending leaks. Perhaps the issues around water shortages this summer have focused water companies’ minds a bit more on the need to ramp up that work.
Arrangement of Business
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
My Lords, before we consider the next Motion, I remind Members that, as set out in today’s list, speeches in the debate should be limited to three minutes, with the exception of those of the mover and the Minister. I am sure I speak on behalf of Members across the House when I say that I would be grateful if they would stick to this advisory speaking time to ensure that the Minister has adequate time to respond to the points raised.
Skills, Vocational Training, and Further and Higher Education
(1 day, 7 hours ago)
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Baroness Morgan of Huyton
That this House takes note of the action needed on skills, vocational training, and further and higher education to improve outcomes for those from deprived and disadvantaged communities and strengthen regional growth.
Baroness Morgan of Huyton (Lab)
My Lords, I declare my interests as set out in the register. There have been so many reports about the importance of vocational education and our inability as a country to deliver. Many of us in this House have been part of these arguments for years—it is good to see the noble Lord, Lord Baker, in his place—and there is real expertise and experience here. This issue is too important for point-scoring or positioning from any of us. The change needed demands detailed work and we need to thrash this through together, not to seek a fuzzy consensus but to get solutions that survive longer than a Parliament.
I hope we can start by agreeing on four principles: first, the importance of aspiration for all students; secondly, the importance of literacy and numeracy for all; thirdly, the need to avoid completely separate vocational or academic pathways; and fourthly, a recognition that a significant group of young people are failed by the current system. I declare an interest as a member of the independent inquiry into white working-class educational outcomes, co-chaired by my noble friend Lady Morris of Yardley and Sir Hamid Patel. Its findings run through what I want to say. I will also draw on the Milburn review and a range of other evidence for which I am grateful.
The facts are stark. About 1.25 million white British pupils are eligible for free school meals, of whom only just over a third achieve a grade 4 or above in GCSE English and maths. Of course, that reflects a gap that starts pre school and is picked up at the phonics screen and at the end of primary. As inquiry members, we did not find a lack of aspiration; rather, there was pride, resilience and solidarity, and young people who want good lives in the places they come from. But we did hear of structural barriers and a slow erosion of trust—a growing sense that the system is not designed for people like them. That said, we found great schools and colleges achieving strong outcomes for exactly these children, so none of this is inevitable.
That brings me to the second principle, and I want to be blunt: no vocational offer can compensate for weak literacy and numeracy. Alun Francis, chair of the Social Mobility Commission, makes the point sharply. FE colleges already have many young people whose general education has been poor, large numbers are resitting English and maths, and a quarter of 19 year-olds still have limited literacy and numeracy. For most of that group, a technical course will not solve the problem. For those with very low grades, endless resitting helps with neither motivation nor prospects. The Government are right to identify that those with very low grades need another way to develop literacy and numeracy. Those who have a good chance of getting the grades should try again: Mr Milburn’s review identifies English and maths at grade 4 as one of the best defences a young person has against becoming NEET.
The answer at key stage 4 is not straightforward and it needs work. We need sustained investment in subject expertise, curriculum leadership and instructional coaching in English and maths in particular. In my view, the full range of GCSEs should remain but not be the only option for all students. There needs to be a new focus on work-readiness skills, and that means that accountability measures will need change.
Thirdly, and most importantly for this debate today, we must not build two separate systems. The idea that we should sort children at 14 or 16 into the academic and the practical is recurring, simplistic and wrong. Academic and technical learning are not alternatives; they are complementary and, increasingly, people need both. Technical jobs require cognitive as well as practical skills. We all begin with a general education and many then move into vocational training. What differs is the stage at which the transition happens: a solicitor after a degree, a construction craft apprentice at 16, a higher apprentice in cyber security at 18, and so on. The danger comes when we conflate technical learning with a solution for disengaged pupils. Britain has done this repeatedly, and each time we have reduced the cognitive content and lowered the bar. NVQs separated competence from knowledge and flattered league tables. Too often, the 16 year-olds who took them were not ready for work and could not progress. It was not fair on the students, so let us remember that lesson.
There is also a delivery question that we tend to duck. We know that health and social care cannot be taught out of a textbook by a biology teacher. Serious technical learning needs teachers with industry expertise, employers involved in curriculum design and delivery, and environments that simulate the workplace. The Wolf review’s answer, that colleges should deliver options for 14 to 16 year-olds alongside GCSEs, probably remains the right one, and strategic authorities or mayors could now broker it across groups of schools. But the offer must be high quality, delivered by specialists and targeted at those who want it—not aimed primarily at disengaged pupils and not there to replace academic progress.
The fourth point is the scale of the failure. Teach First defines persistently disadvantaged pupils as those on free school meals for at least 80% of their education. Its research shows that these students are three times more likely to disappear than their better-off peers. It suggests that the Government should formally define persistent disadvantage, track these pupils’ destinations and name them in the risk-of-NEET guidance. Those are modest asks, and I hope that the Minister will look at them. This matters because of where these young people end up. Alan Milburn’s interim review found more than one million 16 to 24 year-olds not in education, employment or training, at an annual cost to the country of £125 billion—more than we spend on education. How crazy is that?
Further education colleges should be local engines of progression, and they need serious investment in staff, facilities and long-term employer partnerships to become them. Their funding was decimated post 2010, and the 16-19 review of funding for schools and colleges that will happen in the next couple of years is important. The 16-19 cohort is the poor relation in the system. FE colleges enjoy popular support in many communities, more than any other part of the post-16 system, so there is much to build on, but they too need to change. Too much provision is still shaped by what colleges have historically taught and by what recruits students, rather than by what local employers need.
I have found alternatives and want to talk briefly about Wigan. The college there has aligned itself deliberately with the local care sector—one of the borough’s largest employers, which is facing chronic recruitment pressure. Working hand in hand with the local authority, it has built a specialist centre for health and social care. It runs a traineeship, developed with the council, which takes local 16 to 24 year-olds and combines work experience, on-the-job training and recognised qualifications—a direct pipeline into care careers. On campus, it has created a simulated home environment where students train on the care technology and adaptations that they will use at work. Practitioners from the sector teach alongside college staff. Young people leave with a job to go to, employers get the workforce they cannot otherwise find and the public purse spends less on vacancies, agency staff and unemployment.
Now imagine that repeated properly: colleges in coastal towns building provision around ports, energy and engineering, colleges in manufacturing areas co-designing courses with the funds on their doorstep, colleges everywhere working with the NHS, councils and care providers, which are so often the largest employers in exactly the towns we are talking about. That is the bargain. Employers, public and private, shape what colleges teach. Colleges give employers a reason to invest, to offer placements and to hire locally.
On apprenticeships, let us be straightforward here: the system is not working. We need a massive expansion of opportunity in poorer communities. There has been a repeated, systemic failure to deliver the scale that successive Governments have promised. Indeed, apprenticeship starts for 16 year-olds have fallen by 40%. Apprenticeships are skewed to older people and affluent areas. In areas dominated by smaller employers, there are simply fewer to be had overall, and the levy bureaucracy favours large organisations in urban economies. It must be made far easier for small and medium-sized employers to take on apprentices: simplify levy transfers, cut the admin burden, provide funding certainty and give combined authorities the money and the responsibility to broker locally, and deal with the mundane barriers that decide real lives. Do not let a bus fare be the reason a young person turns down a college place.
The Government have rightly made economic growth their central mission, but we cannot complain of labour shortages, low growth and rising welfare bills while the talent of over a million young people goes to waste. As our population ages, we will depend ever more heavily on this generation to work, pay taxes and sustain our public services. Perhaps for the first time in two centuries, ill health among the young is now actually shrinking the labour supply. What I have described is not a welfare programme; it is supply-side economics for the places growth has forgotten. Wigan’s answer to its care workforce shortage costs far less than the price of continuing to fail, and there is a version of it waiting to be built around the country.
Let me be clear: this is not an argument against university. Higher education remains and must remain an important destination for academically able young people, whatever their background. The scandal is that too few from poor communities get there. Some are deterred not by lack of ability but by fear of debt. This means looking again at maintenance and living cost support alongside bursaries, scholarships, and employer co-investment. The failure is twofold: too few young people from these communities who could thrive at university are getting there, and too few of those for whom university is not the right route have a high-quality alternative worth choosing. Higher education needs to change too: more modular, commuter-based and work-integrated study, stronger level 4 and 5 pathways, and employer-backed degrees tied to local industries. Young people should not feel that accessing high-quality higher education is possible only by leaving home or taking on excessive financial burdens.
In particular, I ask the Minister whether the Government will respond to the inquiry’s report and to the Milburn review together, because they are, in essence, two halves of one problem. Will they act on the specific proposals to open apprenticeships to smaller employers, and to reform accountability so that sustained progression into apprenticeships and skilled work counts equally alongside progression to university? Will they back further education with both the investment and the expectation of appropriate delivery—it has to be a deal—so that more colleges are tied into the needs of local economies? Crucially, will the Government commit to the long haul? Closing this gap is the work of a decade, not a Parliament.
I end these comments not in despair but with ambition. I think we know what is needed. We also know that it needs real rigour to get the right policies and the delivery. What is needed now is the collective will to do it. I beg to move.
Lord Baker of Dorking (Con)
My Lords, I congratulate the noble Baroness on initiating this debate. We have not debated practical and technical education in this House since 2010, so this is the first time in 16 years, and we have three minutes—it is absurd. This House is not holding the Government to account on education; we should have an education Select Committee.
I also congratulate the Minister, the noble Baroness, Lady Smith, on holding her position in government. There was no chance of her being dropped—she is far too talented—but I thought she might be promoted; I am glad she has not been for the time being, because her knowledge in education is profound. What is more, her real virtue is that she supports the colleges I have been promoting for 15 years; that is, university technical colleges.
Those colleges provide education for 14 to 18 year-olds, and we now have 44 colleges and 21,000 students. The thing of which I am most proud is that they have the lowest level of youth unemployment of any schools in the country. If you leave a bog-standard comprehensive, there is an unemployment rate of 16.4%; it is less than 5% for those leaving a UTC. Last year, 22 of our colleges provided no one who was NEET, and that is unique.
So we need technical and practical education in our schools. These colleges are very popular; we have 45, but we have to turn 5,000 or 6,000 children away each year. We need therefore to expand, but we cannot expand by having new schools, because none will be built in Britain for five or seven years due to falling school rolls. We have devised a way in which we can improve technical and practical education fundamentally by inserting into a bog-standard comprehensive a sleeve of practical and technical education from 14 to 18—the UTC sleeve, as it is called. I am glad to say that one of these is going to open next week in Barrow-in-Furness. BAE Systems has its factories there, but it cannot recruit students from the schools in Cumbria suitable for what it wants to do. This school will be operational next week. There will be 120 students starting, and they will decide themselves whether they want to go down the technical or the academic route. Some 90 so far have elected to do the technical route and 30 the academic, all under the same roof. That is a triumph.
Quite apart from that, I am glad to say that Andy Burnham is very keen on UTCs and sleeves, because he asked us two or three years to deliver the MBacc. A sleeve will start in a Manchester school next year, providing practical and technical education between the ages of 14 to 18. We therefore have the support of rather a key figure in this area, but we need many more.
The thing about our schools is that a good technical education needs workshops as well as classrooms; some have to be converted. It needs machines such as milling machines, lathes, laser cutters, metrology mechanics, and CAD and CAM software. It also needs teachers capable of teaching those subjects to the children; that is, people who have had experience in business. It also needs the active support of local companies so that they can take their youngsters into their workshops, into their factories, for practical experience. I suppose that the Government will wait for Mr Milburn on technical education, but I hope that when we hear of their policy, they will recognise that they have a model for expansion, which is the UTC sleeve. That is the real heart of it.
I will give one small piece of advice to the Minister. I hope that when Mr Milburn has replied and the Government develop the policy and announce it, they will not just start technical education at the age of 16. That is too late; it should start at 14. We are the only country in Europe that does not teach its children below 16 practical and technical education. That is one reason why youth unemployment in Germany is exactly half of ours.
This is an important debate; I thank the noble Baroness again for raising it—it is excellent. I hope the Government will come forward with proposals as soon as possible. The thing about the sleeve is that it can be done instantly and quickly. I offer one last piece of advice to the Minister: whatever she comes up with in terms of the policy, it should not start at 16. We must start at 14. We are the only country that does not teach children below 16 a technical education. We are on the cusp of something very important and very exciting, and this will help the Government because it will stimulate economic growth.
Lord Addington (LD)
My Lords, I have listened to the first two speeches. The noble Baroness, Lady Morgan, hit on something towards the end of her speech that I do not think anybody who knows anything about the subject will disagree with. It is the work of a decade to correct the problems here. You have to get into a system and change it, you have to change the cultures and the training, and you have to make people think in a slightly new way.
The NEET problem, according to everything that anyone who has been here has listened to, and according to the Library briefing, has been growing for over a decade. It is a fact that a group of children, who are now young and established adults, have gone through a system of education that does not seem to have touched them or brought them in in any way or form. Many of them left the education process way before they reached the end of compulsory education, and people have been happy about it. I say that because the first report I have seen into off-rolling in the schools system came out of the House of Commons in 2020. Something about our current structure of education means that anybody who is not a benefit to their school in terms of examination grades is a real problem not only to the school but to the professional and personal development of those running it. If we can do something here that starts to address that, we will do something very positive.
The noble Baroness said quite a lot and referred to basic skills, such as English and maths—and the Minister will probably have written that into her response to me. I am dyslexic. I am president of the British Dyslexia Association. I still would not pass a written exam in English. You struggle with maths because it is simply a different language, and the language-processing bits in the brain do not pick it up as fast. The papering over of the cracks of short-term memory is still there, so you will always have these problems—and that is just one group. Anybody who struggles with special educational needs, or who comes from a home that simply does not take them seriously, is always going to struggle with these skills. We have to find better ways forward. I congratulate the Government, and indeed the previous Government, on emphasising the level 2 lower entrance requirements to go on and train. If we are to do this, we must stop people being isolated and branded failures so early. The new SEN paper may well start to address this but, once again, it is the work of a decade.
I see that the Clock is against me. Openers used to get a wee bit longer, but there we are. When the Minister comes to respond, I hope she will emphasise how we are stopping people being branded failures and making sure that schools and the education sector are given a reward for keeping these people in school and not punished when it comes to league tables.
The Lord Bishop of Leicester
My Lords, I too am grateful to the noble Baroness, Lady Morgan, for securing this debate. I also express my gratitude to Alan Milburn and his team for firmly putting the number of young people out of education, employment and training on the political agenda. I think there is real cross-party consensus on the need to address what Alan Milburn was right to call a “moral crisis” facing our young people today. I sincerely hope that when the second part of his review is published, his recommendations will be taken seriously. Mr Milburn referred to the drivers behind rising NEET rates as a whole-system crisis; I would go further and characterise it as a whole-society crisis. There is an important role for community organisations to play—whether they are faith groups, uniformed groups, sports clubs or youth clubs—and for all of us as neighbours, friends and mentors to young people.
In my time today, I want to focus on one area specifically: volunteering opportunities. They provide the intermediate layer between individual and labour markets and can help build young people’s skills and confidence to equip them for the world of work. Many of us will be familiar with the experience trap. When you are first trying to get a foot on the career ladder, you need so many years of experience to get a job, but a job is the only way to get that experience. This is where community groups can make a real difference. In these settings, young people can learn, practise and develop new skills, and ideally have their first leadership opportunities. Developing skills is not simply a matter of absorbing knowledge—which is where the classroom environment is at its strongest. It is about having one’s gifts and talents recognised, put into practice and stretched.
In the most recent government youth social action survey—which, noble Lords might be disappointed to hear, has not been run since 2019—over half of 16 to 20 year-olds said that social action had improved their self-confidence and communication skills. Significant numbers also reported improvements to their ability to work as a team and motivate others, and to their social skills more generally. I urge the Government to think holistically about skills development, the foundations for learning—here the Government’s ambitions for reducing child poverty are especially important—and the many contexts in which all this can take place. These include, but are not limited to, colleges and universities.
I am impressed by the Government’s ambition in introducing work experience placements for young people long out of work—but, as it stands, these placements will reach fewer than one in 10 of the roughly 948,000 young people not in education, employment or training. Will the Government consider adding a supported volunteering strand, delivered through the volunteering community and faith sector, to their skills, vocational training, FE and HE strategy? In so doing, I believe the Government could help thousands more escape the experience trap, realise their potential and help society benefit from their gifts.
Lord Barber of Chittlehampton (Lab)
My Lords, it is an honour to follow the right reverend Prelate; I strongly support the sentiments he described. I also thank the noble Baroness, Lady Morgan, for putting this on the agenda in the way that the noble Lord, Lord Baker, welcomed, because it is such a fundamental subject and theme for us. I also thank her for her excellent speech; I agreed with every word.
Next month will be the 50th anniversary of James Callaghan’s famous speech at Ruskin College, in which he drew attention to the need to focus on standards and employability. We are still working on the legacy of that. The other person I want to draw attention to is the noble Lord, Lord Baker. I am honoured and privileged to follow him in this debate. We are all in his debt, not just for the amazing Education Reform Act 1988 but for his continuing 40 years of work to drive higher education standards. He is an exemplar to us all.
Over the decades since that 1988 legislation, the school system in this country has become globally admired. The reason is not the debates we have had—of course there have been disagreements—but that, underlying them, there have been some fundamental principles that all Governments have stuck to over that time: education is a priority; you need to set standards, devolve budgets and responsibility to schools, hold them to account, intervene decisively if they are underperforming and focus all the time on the quality of teaching. Those principles have been adhered to for the last 30 or 40 years. Conceptually, it is not difficult. The difficulty is ensuring that consistent adherence over time, and this has never been the case with vocational skills and FE. There has been too much chopping and changing and not enough focus on the quality of teaching. We might have led the world in this field too, but so far we have chosen not to. Now is the time we should choose to do so.
Taking the new Prime Minister’s lead, we are now in a position to do exactly that. We can develop the kind of agenda that the noble Baroness, Lady Morgan, laid out. The four principles that she outlined are excellent. I add that we need better articulation between schools, colleges and universities; we need to build further and faster on the welcome recent progress in careers guidance; we need thriving apprenticeships that build a ladder all the way up to degree apprenticeships; we need a demand-led system—as the noble Baroness advocated—and employers who encourage work placements and spell out what they want in detail at a level of specificity; and, above all, across parties we will need to give this consistent priority over the decade that the noble Baroness referred to. Let us now choose to lead the world in skills, employability and vocational education. That is the road to 21st-century prosperity. It will take a decade, but we can start today.
Baroness Fraser of Craigmaddie (Con)
My Lords, I add my thanks to the noble Baroness, Lady Morgan, for securing today’s debate. I will focus on an area too often treated as niche, but which I believe tests our whole approach to skills, vocational training and further and higher education. I am talking of the training pipeline for professional dance.
My researcher, Emilia Braddon, as part of the King’s College London parliamentary internship programme helped produce our report called “Creating the Next Billy Elliot”. It found that specialist dance training, though an internationally renowned area, is under real threat from funding pressures, policy blind spots and declining access. Dance and the performing arts contribute over £11 billion in gross value added to our economy, yet the pipeline behind that contribution—the music and dance scheme and the centres for advanced training—face rising costs, no real-terms funding increase, one-year cycles that leave families unable to plan and lost outreach grants that once found the talent in the deprived and disadvantaged communities that we are focused on in today’s debate.
Talent is, sadly, not enough. Geography matters. A child in Wakefield or Bradford can reach training in Leeds; a child of equal talent in Bournemouth without the means to travel to London often cannot. Nor is this an England-only regional issue. The Royal Conservatoire of Scotland offers training of genuine international standing, but a child in the highlands faces the same barriers as one in Cumbria. Because skills policy is devolved, our funding schemes and our data on where the gaps lie stop dead at the border. I would therefore advocate a pan-UK mapping exercise and far greater cross-Administration co-operation.
Underpinning everything is funding stability. It is disappointing that the Government have yet to confirm funding beyond the current 2026-27 cycle when MDS schools are auditioning for 2027-28 right now. Funding for outreach must be treated as infrastructure, not as an optional extra, or the pipeline will never reach the children who need it most.
Finally, strengthening regional growth in all postcodes across the UK requires genuine four nations co-operation. Westminster, Holyrood, the Senedd and Stormont need to share data, best practice and—where it makes sense—co-funding routes. None of this is about one art form or one sector, region or nation. It is about whether a talented child, wherever they are born, has a fair, funded and stable route to vocational success.
Baroness Hunter of Auchenreoch (Lab)
My Lords, I thank my noble friend Lady Morgan, who is a good friend, for introducing this debate and the noble Lord, Lord Baker, also a good friend, for his customary eloquent insights.
The Milburn review is a shocking read. If the million NEETs were to form a city, it would be the third-largest in the UK—larger than Leeds, Glasgow or Cardiff—costing the taxpayer and the economy, as already mentioned, £125 billion a year. Yet Milburn found that 84% of NEETs want to be in a job, education or training and are held back by low expectations and confusing routes into the adult world. I spoke recently at a school in Kent about the amazing opportunities available to people with STEM qualifications. Two girls came up to me and asked, “Do you really think we could be engineers?”. “Of course”, I said, “Why not?”. “My dad says it’s a boy’s job. He says I should do hairdressing”, came the reply.
I wish to advocate for girls like her who are disadvantaged just by being female. Their aspirations are not being guided towards the STEM skills critically needed—a million more workers by 2030 in AI, robotics, cyber, energy, engineering, health and more. The Royal Academy of Engineering—I declare an interest as a former director—reports that only 17% of its STEM taskforce are female. Women and girls make up half of apprenticeships, but only 14% complete them; 78% of girls aged 11 to 17 express an interest in tech, but only half pursue it. The newly introduced T-levels have only a 12% female take-up. Yet, without welcoming more girls, there is no hope of creating the workforce of the future. Their potential has barely been tapped.
The Royal Academy has called for engagement from primary school on, with STEM-related activities featuring female role models, a modernised curriculum, early high-quality careers advice and clearer routes into work. Girls need to know about someone such as Clare Grey, developing advanced batteries on the Ox-Cam growth corridor, one of the world’s leading science and innovation clusters which is generating £143 billion for the economy every year. I welcome the Prime Minister’s recent announcement on tailored access for children aged 14 to technical skills in every postcode, building on local opportunities and mobilising mayors, local leaders, employers and educators. Young people have not given up on work, and we must not give up on them. I know all noble Lords will do our work to support them.
Baroness Morris of Yardley (Lab)
My Lords, I am very grateful to the noble Baroness, Lady Morgan, for introducing this debate and for the way in which she presented it. I sense, as the noble Lord, Lord Barber, said, that this could be a time when we might make the changes that we have failed to make over the last half a century or more. Despite our pride in what is a good and improving school system in this country, we have a record of relative failure on vocational routes.
The noble Baroness, Lady Morgan, referred to the White Working Class Educational Outcomes report, on which we both served. To be honest, for all my years in education, I was genuinely surprised and frightened by the level of disengagement there is between people living in these communities and what the education and school system is delivering for them at the moment.
Vocational education, which is the type of route to a better life that these communities particularly value, delivers poorer outcomes and poorer opportunities for people from these communities than it does for many people from more affluent ones. Instinctively, we all know that, if you begin to look at the good apprenticeships that we now have, they are not being accessed by people from white working-class communities. Fewer people from deprived backgrounds are taking the degree apprenticeship route than are attending Russell group universities or the university sector in general. This is not about saying, “That’s a route that serves people from this community”, but it is about offering real choice. While the curriculum is less rigorous, the qualifications are less coherent and the routes to employment are less clear, this route will not serve either the people in deprived communities or the nation and the economy in the way that we need it to.
I welcome the Government’s announcements so far in this field, but adding technical education to one basket in 14 to 16 education is not going to cut it. I worry that our thinking is limited by worry about our past failures. Very often when I start a conversation on vocational routes, the first thing anyone says is, “We can’t go back to splitting people into sheep and goats”. Of course we cannot. No one wants that now. A knowledge-based curriculum is there for everyone, but we should not let our past failures blind us to the need to get this right—and we should believe in our own ability to do so.
I have never quite bought into the phrase, “You can’t be what you can’t see”. I never use it. I do not like it. It underestimates the vision, imagination and determination of young people to be what they want to be. But I am sure that those young people cannot achieve what they believe and dream they can if they cannot see a clear route as to how to get there. That is the challenge that we face now. I very much hope that the Minister will build on the work she has already done in delivering it.
Lord Lingfield (Con)
My Lords, I too thank the noble Baroness, Lady Morgan. I remind your Lordships of my interest as chairman of the Chartered Institution for Further Education and the Cadet Vocational College. It is about that FE college that I want to speak briefly this afternoon.
Community cadets are a growing and vital part of our education service in many areas of disadvantage. These are of course the Army Cadet Force, the Royal Air Force Air Cadets, and the Sea Cadets and Royal Marines Cadets. The boys and girls who take part are often those whom conventional training providers find it difficult to reach. We tend to think of cadet activities as being simply of recreational benefit, but it is clear that the cadet experience provides crucial vocational skills as well. The recent four-year review commissioned by the Ministry of Defence and carried out by a team from the University of Northampton concluded that participation in the cadet forces has
“significant positive impacts on … employment and career prospects”.
These are
“particularly strong for those cadets that suffer economic and other disadvantages”.
This, they concluded, is because cadet activities develop self-sufficiency, self-control, confident communication and resilience, all of which are closely correlated with employability.
In addition, for some time, the Cadet Vocational College has made it possible for these young people to undertake vocational programmes through the medium of their cadet forces. Some 4,000 or 5,000 learners each year take advantage of these courses, which support progression into further education, higher education and apprenticeships. Among them are many who do not thrive in traditional school environments but, outside the conventional classroom setting, get a second chance. Qualification completion via the college is regularly around 85%. The reach of the college’s work is UK-wide and represents a very successful partnership between government and the voluntary sector. I sincerely pay tribute to Ministers and officials at the Ministry of Defence and the Department for Education who underpin the college’s work by their encouragement, support and grant funding, which enables many disadvantaged young people to begin their paths to employability at no cost to themselves. Next week, the Cadet Vocational College’s dozen most successful cadets in the country will come with their parents and cadet leaders here to the Cholmondeley Room and the Terrace to celebrate their success.
Cadet-based vocational education reaches young people through organisations they trust and experiences they value. I commend the work of the Cadet Vocational College to your Lordships’ House.
Baroness Warwick of Undercliffe (Lab)
My Lords, I am grateful to my noble friend Lady Morgan for securing this debate. Her presentation was a tour de force. Having spent much of my career in higher education, I will make three points specifically about that.
First, this is one system, not two. The Government’s ambition that two-thirds of young people reach higher-level learning by 25 is the right one. Today, the figure is around half. That gap will not be closed by either colleges or universities alone. We often frame the choice as university or skills, academic or vocational. That is a false choice—Dearing said so in 1997, Augur said so 20 years later, my noble friend Lady Morgan said it today and I am happy to repeat it. Universities should be progression partners for FE and apprenticeships.
The sector itself has taken action. Last autumn, Universities UK and the Association of Colleges published a joint strategy for colleges and universities to collaborate rather than compete. London South Bank’s group structure carries learners from entry-level, technical training and T-levels through to degree level. In Greater Manchester, universities and colleges align provision, avoid duplication and plan against regional need. This matters most to the young people at risk of becoming NEET, who face several barriers at once and whom no institution can help alone.
Secondly, funding should follow the student and should not fall in real terms. I welcome fee caps rising with inflation, and I hope that automatic indexation is honoured in legislation. This is not a subsidy to institutions; it is a guarantee that a student starting in 2030 is not taught on less than a student starting today. This is the hardest graduate market in over a decade, yet the most recent Graduate Outcomes data shows that 88% of graduates are in work or further study 15 months on, and around three-quarters of those work in high-skilled jobs. Our nurses, teachers, engineers, paramedics and social workers all hold degrees.
Thirdly, universities make a substantial contribution to local communities and those from disadvantaged backgrounds, which deserves to be recognised. Across the UK, they generate £265 billion in economic impact annually, support around 768,000 jobs and play a central role in attracting investment, fostering innovation and helping businesses grow. The Atom Valley innovation district in Rochdale has established a centre of expertise in advanced materials and sustainability—CEAMS—jointly delivered by Rochdale Development Agency and the University of Manchester. It is ensuring that businesses with strong potential can access the tools and support needed to grow. Universities should connect skills to employers and regional economies.
We need strong colleges, strong universities and strong partnerships between them. This is an ambition worthy of our support. As the Prime Minister writes his 10-year plan, will the Minister ensure that higher education is treated as part of the answer on opportunity, not as a competitor?
Baroness Blackstone (Lab)
My Lords, I welcome this debate but have just one regret: it is half the length needed to allow over 30 speakers properly to address the important and complex questions it raises. I intend to focus on just one issue: the need to avoid reinventing the wheel and instead return to the Tomlinson report of 2004, which provides a brilliant approach for our curriculum and exam reforms to attacking educational disadvantage among pupils aged 14 and over.
Alan Milburn reminds us in his interim report on 16 to 24 year-old NEETs that they now constitute one in eight young people. He makes it clear that it is not a new problem but is getting worse, with growing numbers demotivated from learning, absent from school and without a job later. This is a drag on economic growth and a huge loss of individual potential. The Prime Minister recognises the need to address it via vast improvements in technical and vocational education from the age of 14 to encourage those turned off by the current school curriculum and to improve their chances of employment. This is welcome, but there is a danger that his proposals will divide pupils permanently at the early age of 14 without the flexibility to move later from one to the other. We ditched the 11-plus; we must not introduce a 14-plus.
Enter the Tomlinson report: it strove to integrate academic and vocational education, recognising that those opting for an academic route need skills too. They also need to acquire an ability to apply their knowledge. All young people need academic and vocational education at school after the age of 14. Those underachieving all need not just vocational study but literacy, functional maths, communication and ICT, as Tomlinson proposed. He recommended the rationalisation of qualifications into a new diploma framework, dropping both GCSEs—which, scandalously, nearly one-third of pupils fail at present—and the narrow and overspecialised A-level system. His report was backed by Education Ministers at the time but rejected by Tony Blair, who feared a fight or row about A-levels. Failing to take it forward was a wasted opportunity and, I believe, led to magnifying the NEET problem we now face. If it had been implemented then, we would have had a totally different and far better system after 10 years. I think it was Blair’s greatest mistake in domestic policy.
Will the Minister and her senior colleagues, including the Prime Minister, return to the Tomlinson report and consult its author and Peter Hyman, a former special adviser under Blair, who advocates it and has thought about a few ways that are needed to update it?
The Lord Bishop of Coventry
My Lords, I welcome the Government’s renewed focus on technical education, youth employment and regional growth. Vocational and technical education can be one of the strongest levers for social mobility, but only where it is genuinely accessible to those who face the greatest barriers. On numerous occasions over the past 30 years of ministry, I have seen young people thrive and flourish into work due to the investment of colleges and businesses working together to enable this to happen.
Although there have been many reasons to be encouraged during my tenure so far in Coventry, it was deeply discouraging to learn of this year’s 9% GCSE attainment gap between London and my region, the West Midlands. If we are serious about opportunity in our nation, we must ensure that high-quality technical pathways are available to all young people wherever they live and not only in areas that already benefit from stronger educational outcomes. I believe that we cannot develop high-level apprenticeships at the expense of levels 2 to 4. These entry-level routes are often the vital first step towards skilled employment and further progression.
Apprenticeships must be accessible to the third of over-16s without a grade 4 in English and maths. Too often, these young people become stuck in a repeating cycle of resits, without means of professional development. Apprenticeships must both remain open to those without GCSE qualifications and provide flexible opportunities to develop literacy and numeracy while employed. This is particularly important for SEND learners, as we have heard, for whom repeated GCSE resits can become a source of frustration and disengagement, despite strong vocational talents. Fewer than 27% of adults with learning disabilities are in paid employment, but Mencap’s research shows that 86% of unemployed people with a learning disability desperately want to work, with all the rights, responsibilities and dignity that this brings. Apprenticeships can also provide an invaluable route into work for those for whom English is not their first language, and whose education may have been disrupted by migration, displacement or family trauma.
We must recognise potential wherever it is found, rather than excluding people because they did not reach a particular academic threshold at 16. Without flexible vocational pathways, capable young people, as we have heard, risk leaving education altogether and becoming NEET. The economic costs of this are significant but so too are the social and personal consequences, and I note especially the mental ill-health crisis prevalent in this generation.
Locally, I have been encouraged by the work of Moreton Morrell College in Warwickshire. For example, its levels 2 to 4 floristry course provides a valuable vocational pathway for young people, and I have seen how their work has enriched churches and communities in my diocese. Importantly, it also provides pathways into careers in farming and agriculture, a vital component of the rural economy.
People flourish best when they can develop their skills holistically while contributing to the common life. This is a vital, dignifying, individual and social good.
Baroness Whitaker (Lab)
My Lords, it is a pleasure to follow the inclusive approach of the right reverend Prelate the Bishop of Coventry. I congratulate my noble friend Lady Morgan on instigating a vital debate, and my noble friend the Minister on policies that widen access to skills and training, but some will not reach these opportunities. Alan Milburn’s searing diagnosis notes that 50.8% of females and 41.3% of males characterised as “White: Gypsy or Irish Traveller” are NEET. He says that
“Black, African and Caribbean young people had the highest NEET rates of all ethnic groups included in large scale national surveys”,
but Gypsy, Roma and Irish Travellers are, in the National Institute of Economic and Social Research report,
“2.5 – 3 times more likely to be NEET”
than average. Their increase in NEET status is 210% for Irish Travellers and 155% for Roma. However, the population context, at 0.16% of 18 to 24 year-olds, is too small for large-scale surveys. My first plea to my noble friend the Minister is to include in government analyses specific research into this neglected minority, and disaggregate Gypsies, Irish Travellers and Roma students so that the experience of these very different communities is clearly seen.
Alan Milburn omits race prejudice, the cause of negative assumptions about motivation and ability. The EHRC reports that Gypsy, Roma and Traveller families experienced the highest level of prejudice of any minority ethnic group. Those who succeed in work often hide their heritage, thus also hiding useful role models. He is surely right that alienation from paths to qualifications and employment begins in school. Gypsy, Irish Traveller and Roma children—again, because their actual experience tends not to be identified—suffer different but widespread bullying and have a far higher dropout rate in all schools from that and other causes than any other minority ethnic group. Often, it is the provoked victim who is excluded, not the perpetrator, but there is no proper research. NGOs point to a lack of valuing of their cultures and history—the Council of Europe ranks the UK lowest in coverage of Roma experience and history in textbooks—lack of positive contact with parents, digital exclusion, especially during the Covid lockdown, and lack of support to get such children up to entry to skills training.
I recommend this month’s Friends, Families and Travellers report on educational inequalities for useful proposals. I declare an interest as its president. FFT’s pledge to get schools to report on progress to welcome their Gypsy, Traveller and Roma students works, as does a successful initiative for higher education institutions, which I was proud to launch in your Lordships’ House. Will my noble friend the Minister affirm her support? The gap is now in further education institutions, of particular importance for the acquisition of skills. How can my noble friend help here?
Without more practical attention, some marginalised families will continue to behave in a marginalised way and very many others will never get the chance they—and we all—could use well. Should we really allow this injustice to continue?
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
Before we move on to the next speaker, this is a very important debate and I am really enjoying listening to it, but we need to stick to the three-minute limit. We are going over only by several seconds, but those seconds add up, and we do need to hear from the Minister.
Baroness Garden of Frognal (LD)
My Lords, I too thank the noble Baroness, Lady Morgan, for this debate and her masterly opening remarks. It is most welcome that this Government have realised how harmful has been the purely academic emphasis of the previous Government, which alienated the many young people whose skills and interests lie in practical, vocational subjects. It generated a harmful waste of potential in the skill areas which the country desperately needs: engineering, construction, hospitality, as well as the arts, music, dance—which the noble Baroness, Lady Fraser, spoke about—and arts and craft skills. Some of those historic crafts have become endangered, as detailed by the Heritage Crafts Association, of which I have the privilege of being a vice-patron. Many of these crafts have regional associations and generate jobs and pride in their localities, as well as producing practical and beautiful artefacts which can be life-enhancing for those who have been marginalised by their formal schooling. Can the Minister say what measures are being taken to ensure that there are trained teachers in the vocational areas to ensure that all children find something at school to enthuse them?
We should also be mindful of speakers of other languages at a time when ESOL—English for speakers of other languages—provision has become fragmented for over 5 million people in England and Wales who do not have English as a first language. Time was when such classes were free and opened opportunities to many people to use their skills and talents in this country. Sadly, those days have gone, but community cohesion is increasingly important as we see divisions in race and religion becoming violent in some of our communities. Surely ensuring that we all have a common language should be given a high priority. Can the Minister say what provision is made available for ESOL classes to enable better integration of our citizens who struggle to speak good English?
As a former chair of the Cadet Health Check Team, I strongly support the words of the noble Lord, Lord Lingfield, in pointing out the value of the cadet forces, which give life-changing opportunities to so many young people. I worked for City & Guilds for some 20 years on vocational qualifications, which opened my eyes to the amazing work of further education colleges, which are too often overlooked. One problem is that nearly all politicians and civil servants have taken the university route and are reluctant to give due attention and funding to a sector with which they have no connections and see as not so worthy. Yet FE carries the hopes and aspirations of millions of young people, and indeed of adults seeking to improve or change their qualifications and chances in life.
For many disadvantaged young people and those with learning disabilities, the prospect of going away to university is daunting and financially unrealistic, whereas their local college is accessible. Colleges offer such a wide range of programmes of learning, from basic skills through to occupational competence and indeed apprenticeships and degrees. Yet their staff are still underpaid and the colleges underfunded. What do the Government propose to do to support and enhance the vital work of further education colleges, which would also be a key factor in solving the NEETs problem?
Baroness Caine of Kentish Town (Lab)
My Lords, I thank my noble friend Lady Morgan for her excellent speech and this important debate, which is ever more critical as we live in and look to a future revolutionised by digital automation.
The evidence is unequivocal: creativity is becoming one of the most critical human capabilities. Deloitte warns of an “imagination deficit” in organisations, where curiosity, empathy and creative problem-solving are now the essential skills that enable people to thrive alongside artificial intelligence. The World Economic Forum identifies creative thinking as a top workforce skill for 2025, and LinkedIn’s global workforce survey shows that senior leaders rank creativity above analytical reasoning as the most important soft skill for the modern workplace.
Creativity is not a luxury; it is the engine of innovation, adaptability and resilience. If we are serious about preparing young people for the future, it needs to be recognised as a core capability, not peripheral or optional but central to the skills and education agenda at all levels, including higher-level skills in higher education. If we lag behind the realities of technological change, automation will not liberate opportunity; it will deepen exclusion, creating new barriers for those who already face the greatest challenges.
Creative and digital industries are two of the biggest growth sectors in our modern industrial strategy. They overlap, and so increasingly do their skill sets. A substantial proportion of England’s local authorities, including 11 of the 19 mayoral combined authorities, identify them as priorities for growth and for their skills policies.
I wholeheartedly believe that enabling devolution, collaboration and flexibilities to local areas is key to success on this agenda. However, it also needs alignment with national policy, which responds to what key industries and devolved Administrations are prioritising, and indeed what the industrial strategy is saying.
For example, in higher education, creative courses are not currently on the list as eligible for modular support through the lifelong learning entitlement, and that list has been cited as key to deciding which courses will be eligible for the soon-to-be announced maintenance grants for those from disadvantaged backgrounds. In addition, this year, no creative courses are allowed to bid to the Strategic Priorities Fund for capital grants. The message that sends out from Whitehall is that these courses are not valued as much as the very important STEM areas, and underlying that, one suspects, is reliance on debatable datasets that relate to earnings and the ability to pay back student loans.
If we want to strengthen regional prosperity and improve outcomes for disadvantaged learners, we must ensure that the skills we value and teach also match the world they are entering, not the world we are leaving behind. That is one where both digital tech and creative education need to be equally valued and ever intertwined.
Baroness Hazarika (Lab)
My Lords, I also thank the noble Baroness, Lady Morgan, for raising this very important debate. I am proud to follow the noble Baroness, Lady Caine, and indeed echo much of what she said about the importance of the creative industries.
I declare an interest: I am a board member of the BPI, which represents the recorded music sector. As we all know, the music sector brings in a huge amount of prosperity to the United Kingdom and brings us a lot of joy. It also puts so many amazing British artists on the map. We know that arts and culture has been a great British success story.
The music industry provides a good model for how we could do skills in the future, where you have industry coming together with government at a national and regional level to create brilliant institutions where young people can get world-class training in skills. Just look at the BRIT School in Croydon, or at ELAM, the East London Arts and Music school. These schools are amazing, vibrant and exciting; you go there and you feel the energy. They are like something out of the TV show “Fame”. I wanted to join, but sadly they were not taking mature students when I went along. We know so many amazing artists who went there: Adele, Olivia Dean, Raye, Lola Young. These people sell millions of albums, bring in so much money to the Exchequer and provide so much joy.
I am delighted that the music industry is working with the Government to establish a new centre of excellence in Bradford, West Yorkshire, with the BRIT School North. That brand new college will offer 500 precious places. The thing that is brilliant about these kinds of collaborations is that you are talking not only about front-of-house stars but about hundreds and hundreds of young people getting trained up with those amazing backroom jobs—production, set design, all that kind of thing—which can provide people with so many rich, interesting, varied careers.
I also just want to make the point about qualifications. We have to make sure we do not kill off the pipeline of creative talent. Last year, A-level music fell to just over 4,500 pupils. That is a great worry. The choirmaster Gareth Malone has flagged that we could be facing a “cultural crisis” due to killing off this pipeline. The number of children taking arts at GCSE level in state school has fallen by 41% since 2010. That is not a great statistic. So we must not kill the goose which lays those golden eggs.
Finally, we talk a lot about technical skills, but we need to instil confidence in young people as well. It is not just what you can do on a computer or on a screen but verbal communication, making eye contact and being able to hold conversations with people. This is a great debate and very timely.
Lord Docherty of Milngavie (Non-Afl)
My Lords, I begin by adding my thanks to my noble friend Lady Morgan for this timely debate.
I do not have time to discuss our school system and its relentless focus on A-levels, whose only purpose is to act as a kind of sorting hat for which university a pupil will attend; or why, as a number of noble Lords have mentioned, many white working-class pupils and their families do not believe that doing well at school reliably leads to opportunity, financial security and a good life; or to discuss the related need for parity of esteem between further education, apprenticeships and higher education. The Prime Minister is right to call for that.
I will instead focus on the headwinds facing adult education, which is used by adults for whom school did not work out or who wish to retrain. From 2010, funding for adult education was slashed: the number of adult learners fell from over 3 million to around half that number. Yet we are in the foothills of an economic revolution, driven by AI, of a scale not seen perhaps since the first Industrial Revolution. No one—including those developing AI—can be entirely sure where it is going to take us.
The impact of new technologies in the short term is often exaggerated, but history shows, if anything, that impact over the longer term is underestimated. So it is universally acknowledged that the impact of AI on employment and the jobs available for people to do will be unprecedented.
The nearest comparison in my lifetime was perhaps the retreat in the early 1980s in the UK from heavy extractive industries, and there are some lessons to be learned. We had long known that change in the UK was coming. In Germany they knew that too. But in Germany they prepared: from the late 1960s they planned for the transformation of the Ruhr Valley, with significant investment in further education, adult education, community engagement and infrastructure to ensure that the change was managed and that no one was left behind. In the UK we just let the market rip, and we are still living with the consequences of that.
The scale of change needed is immense. We will need new levels of innovation and investment, and perhaps, as I think the noble Baroness, Lady Morris, hinted at, the abandonment of conventional thinking, if we are to effectively support people.
Are we up to the challenge of reimagining the role of adult education, rethinking its purpose and scale, in a changing jobs market the like of which we have not seen before? To embrace the spirit of the age we have to be optimistic. We have to navigate this change. We have to plan.
Baroness Alexander of Cleveden (Lab)
My Lords, I also thank my noble friend Lady Morgan.
When I arrived in your Lordships’ House 18 months ago, I had just become the chair of the body that certifies every electrician—there are 170,000 of them across the country. I immediately encountered deep concern among employers about the fate of apprenticeships—the bureaucracy, the cost of training and the support needs of the young apprentices. This malaise deeply pained employers who had invariably come up the apprenticeship route themselves.
Many noble Lords have mentioned what has happened in the last 18 months. The Milburn report published in May has been seminal. As others have said, it has been uncompromising about the moral scandal of a million NEETs, clear that young people desperately want to work and candid about the multidimensional roots of this crisis. As so often in politics, timing matters. There is not a Member among us who did not have conversations during the Recess about the future of the jobs market. Yet the public fear that politicians, in the parlance of today, “craft the narrative” or “tell the story” but too rarely stick around to solve the problem.
So in my remaining time, I will talk about the momentum since the Milburn report—not on the supply side, which has dominated our discussions today about what is happening in the education system, but in stimulating employer demand. In June, it was £3,000 for employers taking on an eligible young person. In July, 22,000 defence apprenticeships were announced. In August, it was £10 billion for new affordable housing, fuelling new construction contracts. This month saw the first of 22,000 extra college places including free apprenticeship training for eligible under-25s. Next month, £2,000 will be paid to small employers for each new under-25 apprenticeship. November will see the nationwide rollout of the Government-backed job guarantee placement scheme for long-term unemployed young people. Altogether, all this ramps up and translates into half a million opportunities to earn or learn over the next three years. It is not the full answer, but it is getting closer to the scale of the challenge.
But success will not just come from investment, but from effectiveness. We need to strip back misplaced red tape and substitute it with a single-minded focus on skills. I am delighted that the Government are now scrapping the laundry list of social value demands for contractors bidding for public works. The complexity was trading out to common sense. From January, job creation and skills development will be the only social value requirements on businesses competing for public contracts. The Milburn report highlighted that the Netherlands has changed the trajectory and outcomes for young people. Giving a generation back their future is a battle to be won in our time. It will be done family by family, firm by firm and postcode by postcode.
Lord Nagaraju (Lab)
My Lords, I also thank my noble friend Lady Morgan for securing this important debate. I declare my interests as set out in the register, particularly as a director, adviser and shareholder in AI and tech companies.
If we are serious about social mobility, education cannot be a one-off event at the beginning of life. Disadvantage does not end at 18. Technology is now changing faster than any single qualification can keep pace with. Lifelong learning is, therefore, not an optional extra. It is part of the economic infrastructure. The challenge is already stark. Young people from lower working-class backgrounds are more than twice as likely not to be in education, employment or training as those from professional backgrounds—it is 22%, compared with 9%. At the same time, Skills England says that demand for key occupations in priority sectors is expected to rise by nearly a quarter over the next decade, with particularly strong growth in the digital and engineering professions. Critically, it says that the education pipeline alone will not be enough. Significant reskilling of the existing workforce will be essential.
Artificial intelligence brings these two challenges together. The Government’s AI labour market research found that 35% of surveyed organisations struggled to fill AI roles. Government-commissioned vacancy analysis also found significant advertised salary premiums for AI skills. Yet in 2023, 60% of expert AI vacancies were advertised in London and the south-east. If the skills, opportunities and higher-value jobs remain concentrated in the same places, AI risks widening regional inequality rather than reducing it.
I welcome the Government’s building blocks—the AI skills boost, the level 4 AI and automation practitioner apprenticeship and the lifelong learning entitlement, supporting eligible courses and modular studies from January 2027. However, flexibility on paper does not necessarily mean access in practice. A learner in a deprived community may need a pathway from essential digital skills through applied training to an apprenticeship or modular higher education alongside meaningful work experience, careers advice and support with practical barriers. This is where FE colleges, employers and regional leaders can be powerful partners.
I welcome the Government’s commitment to reach disadvantaged young people through programmes such as TechFirst. Will the Minister ensure that this opportunity extends beyond schools into lifelong learning and that local skills improvement plans and devolved skills funding will open pathways into AI and emerging technology careers for disadvantaged communities? Will the Government publish the participation, completion and employment outcomes by deprivation and by region? If we do this, lifelong learning can be both a ladder of opportunity and an engine of regional growth.
Lord Young of Acton (Con)
My Lords, I too congratulate the noble Baroness, Lady Morgan, on arranging this debate. I declare an interest as the author, eight years ago, of a Centre for Policy Studies paper on technical education.
I acknowledge the work of my noble friend Lord Baker, who has done so much to set up vocational and technical schools—most of which have been a great success, but not all of which have been an unqualified success. Of the 58 UTCs that have opened since 2010, 14 have closed. Studio schools, which are also vocational and technical schools for 14 to 19 year-olds, have fared worse; 59 have opened since 2010, and at least 26 have closed. The problem is that some of these schools became dumping grounds for children that neighbouring comprehensives did not want because they were expected to do poorly in their GCSEs.
How can we stop technical and vocational education being seen as inferior to a more academic pathway? The answer is to grant these schools the ability to select according not to ability but to aptitude for the occupations for which they are designed to prepare children. The most successful occupational school in the country that admits under-16s is the BRIT School, a performing arts school in Croydon which admits children according to their abilities in the performing arts. Both Tom Holland and Adele are among its most successful alumni. That model has been replicated by Birmingham Ormiston Academy, and a second BRIT School has been approved to open next year in Bradford, as the noble Baroness, Lady Hazarika, said.
Overseas, the most successful technical and vocational schools also select for aptitude, from South Korea’s Meister schools, which place 93% of graduates directly into employment, to the selective vocational academies of New Jersey, which send pupils to Princeton, Yale and MIT. None of these systems treats technical education as a consolation prize for children who struggle with academic subjects. They treat aptitude for trade as no less real or worthy of cultivation than aptitude for science or maths. I recognise that any form of selection is controversial, but I am not proposing selection by ability, only by aptitude. Academies are already permitted to select up to 10% of their pupils for aptitude in particular specialisms, such as music.
Finally, no primary legislation is required to bring about this change. The Secretary of State already has this power, used for Birmingham Ormiston Academy, to grant a derogation allowing an academy, including UTCs and studio schools, to select by aptitude where there is a demonstrable local need. All that is required is the will to use it more widely. If the Minister, when she returns to her place, would like to learn more, I will happily send her a copy of my paper.
Lord Griffiths of Burry Port (Lab)
My Lords, I add my thanks to the noble Baroness both for introducing this debate and for snatching every single remark that I had carefully put together by way of a contribution to this debate. We will have to sort this out at dawn with pistols. It is a great privilege to hear the wisdom that has come from so many quarters in this debate. It gives me an opportunity to offer my thanks to and admiration of the noble Lord, Lord Harris, for all the work he has done, even given the qualifying remarks that we heard a moment ago, which has provided a platform over its longevity on which to build and develop some of the ideas that have been in play.
So here I am, likely to finish before three minutes. Since I think that is worth saying, I do say it. It also allows me to put in a personal word: since I came into your Lordships’ House—nearly a quarter of a century ago now—I have consistently had young teenagers on work experience in my office. They amount now to dozens. Also, a student, either an undergraduate or a postgraduate, has given me 10 hours a week of support with some aspects of my work. One is up there beavering away at the moment on something I will sign off when I go up there.
I mention this not to point to my own virtue but to say that I have become aware of the help that has been given to these young people when they apply for jobs and are able to say they have had some experience in Parliament. It may therefore be an obvious thing for us to say, but we can make our practical contribution to the solving of problems we have been sharing with each other this afternoon. So here I am. I will count the next 40 seconds as a credit on my next speech.
Baroness Nargund (Lab)
My Lords, it is a great pleasure to follow my noble friend Lord Griffiths. I might finish before three minutes as well—I am not sure.
I congratulate my noble friend Lady Morgan on securing this very important debate and on her excellent opening speech. We have heard from so many noble Lords from across the House, highlighting different sectors and opportunities.
Skills, training, employment, health and regional growth are deeply interconnected. If we want to reduce regional inequalities, we must create opportunities for young people where they live. Today, nearly 1 million young people are NEET. Behind that statistic is an enormous reservoir of talent and potential that our country cannot afford to lose.
As a doctor who has served for nearly four decades in the National Health Service, I want to talk about how the National Health Service can help with skills, training, apprenticeships and employing young people who are not in education, employment or training—and, in doing so, support regional growth. We have two challenges: young people who need opportunities and a healthcare system in desperate need of a sustainable workforce. Why not bring them together? We often think of our National Health Service simply as a healthcare provider. We forget that it is the largest public sector employer, and in fact one of the largest employers in the country if we include all legal entities, with a distinct presence in virtually every community across our country. This gives our National Health Service a unique opportunity to become an anchor for skills, training, apprenticeships, employment and regional growth.
This should not be about finding young people any employment; it should be about giving them a career, a qualification, security and a future. A young person gaining skills and securing employment improves their income, independence and health. Their salaries are spent locally, growing the local economy, and communities retain talent so local productivity grows.
Furthermore, an NHS workforce drawn from the local communities it serves will understand the needs of that community, creating a win-win situation for regional growth and wealth. Therefore, I ask my noble friend the Minister: as the Government consider the solutions phase of the Milburn review, will they explore the NHS as an anchor for skills, training, apprenticeships, regional health and growth? The NHS has the potential to deliver a practical solution to the NEET crisis while delivering regional growth.
Baroness Sater (Con)
My Lords, I also thank the noble Baroness, Lady Morgan, for securing this important debate. I would like to raise two points today: financial literacy and careers guidance, which are part of the same conversation and can transform lives. We want young people to be career ready, but they also need to be financially ready. Young people today are growing up in an increasingly challenging financial world, so more than ever they need the confidence to make informed decisions.
I welcome the Government’s direction of travel in strengthening financial education in the national curriculum, as these life skills are important. Although financial education is statutory in primary and secondary education, it is not statutory in post-16 years. Many are urging the Government to embed it into the post-16 pathways. This is especially important when young people are faced with immediate financial decisions, such as wages and renting, for the first time. We need the right resources, more teacher training and curriculum time to ensure that good financial education reaches every child, regardless of where they live and at the right time in their lives.
My second point is about careers guidance in schools. We all welcome the focus on the need to get more young people into further education, apprenticeships, training and employment at 16, but there is an immediate need to do more to ensure that young people know what those opportunities are, where they can lead and how to get there. Some young people already have networks around them to explain different careers, arrange work experience or introduce them to an employer, but many disadvantaged young people do not.
Good careers guidance in schools can be a great equaliser. Ofsted’s 2023 review found that a third of schools reported poor staffing levels and high staff turnover affecting careers provision, while a quarter identified funding as a barrier. Careers departments need to be better resourced, and there must not be a postcode lottery.
The Library briefing makes an important point here: employers have highlighted a lack of workplace experience, confidence and work readiness among young people. Good career guidance has the power to address many of these issues. The Government’s careers guidance, updated in June 2026, cited evidence that high-quality careers provision is associated with around an 8% reduction in the likelihood of young people becoming NEET. The evidence suggests an even greater impact in schools serving the highest proportions of disadvantaged learners. The Library briefing also highlights that among 18 to 21 year-olds there is a 12.7 percentage point gap in participation in education and apprenticeships between disadvantaged young people and their peers.
Opportunity works only if young people have the knowledge, understanding and confidence to take it. If we are serious about social mobility, we must make sure that disadvantaged young people are not disadvantaged twice: first by their circumstances, then again by lacking the support and knowledge to navigate their future. Their future should be determined by their ambition and ability, not by the circumstances into which they are born.
Lord Liddle (Lab)
My Lords, like my noble friend Lord Griffiths of Burry Port, I find that the quality of this debate has left me with very little fresh or new to say. I want to emphasise some of the very important points that have come out in the debate. The first is that our basic school system still has a lot of improvement to make. The report from Teach First showed how children from free school meal backgrounds were pretty much doomed to failure in our system. Something has to be done, and that agenda of reform of schools has still to be pursued.
A lot of people have paid compliments to the Milburn review. It is one of the best documents of its kind that I have ever seen in my political experience. For those noble Lords who have the stamina, there is the debate on an ageing society tomorrow, which I am standing in to lead. We on your Lordships’ Economic Affairs Committee have come to the conclusion that we can afford an ageing society only if the employment participation rates of people over 50 are radically increased. That has all sorts of implications for how people develop their lives in education and how they can continue after the age of 50.
The other point I would like to emphasise is the one my noble friend Lord Barber made about the lack of consistency written into further education, apprenticeships and skills policies. We desperately need that consistency—the kind the noble Lord, Lord Baker, has shown at a personal level throughout the last 40 years or so of his life—in our politics and structures.
My final point is that we should not, as my noble friend Lady Morgan made very clear, see this debate as a choice between further and higher education. The expansion of universities, to which Prime Ministers Harold Wilson and Tony Blair both made an enormous contribution, has been one of the drivers of opportunity and social mobility in this country. We should never forget that, and we should never allow opponents on the right to make the argument that more means worse. It does not.
We have to develop ladders of opportunity between further and higher education, in which the universities have a key role to play. As my noble friend Lady Morris said, we cannot let degree apprenticeships be confined to a socially select few.
Lord Moynihan of Chelsea (Con)
My Lords, I too congratulate the noble Baroness on securing this debate. Although I did not agree with everything she said, I thought she made the most important contribution to this debate when she said that it does not really matter what kind of education you want to go on to or what kind of vocation you have: if you do not have numeracy and literacy, you are done for. Given my meagre three minutes, I will stick with that point—in particular because, apart from the noble Lord, Lord Addington, nobody has referred back to it. In this entire debate, full of good contributions, we are missing that key point.
If you grow up innumerate and illiterate, you cannot use a bank account or fill in a form: you are not capable of participating in our society as a fully functioning adult. Yet one in five children in this country leaves school functionally illiterate, innumerate or both. That number is probably increasing at this time, post-Covid, rather than diminishing.
Yet we know the solution. We have a real-life scientific test going on with the Gove reforms—in England, but not in Scotland and Wales. We have seen the Scotland and Wales results collapse, and the Gove reforms in England are taking us higher and higher in the PISA tables. That is despite the fact that approximately half the schools in this country have adamantly resisted imposing the Gove reforms, which are very straightforward—the imposition of phonics for literacy and Shanghai maths, or something similar, for numeracy.
All over, we get people saying that those reforms have not worked. But when we see them in their perfected way, at a school such as Michaela, where they have discipline, love, high expectations and a knowledge-rich approach, almost no children leave that school innumerate or illiterate. These are not selected children—40% of them come from free school meals backgrounds.
It can be done, including at the school my noble friend Lord Young founded. It is done all over this country, but in many schools, these reforms are not adopted. Why is that? Why are we allowing that? It starts here and it goes on to the colleges of education, and we have seen an appalling glimpse of it in the Jason Arday case. They are all keen on teaching about racism, white privilege and colonialism, and they never teach the knowledge-rich approach—Shanghai or phonics. Unless we all get together and face reality, we will have more children leaving school illiterate and innumerate.
Lord Whitty (Lab)
My Lords, as the last speaker, and having only three minutes, although I would dearly love to contend with what the noble Lord has just said, I will not do so. I also will not comment on the many speeches that have been made, many of which I agree with.
For far too long, one’s educational qualifications at 18—or lack of them—have determined not only what happens to you when you join the workforce but how your whole career develops. We need to alter that.
I will not comment in detail on the various speeches that have been made, and I have dropped my own detailed points. I just make this point, which is as much of a problem for the Prime Minister and the Treasury as it is for Education Ministers and those in the education system. Employment is not seen as one of the key strategies for government, either in the Treasury or Whitehall. We have a department of employment that is to some extent lost within a department that is largely concerned with the details and expenditure of welfare. We need a proper department of employment that covers training skills for the future, as well as the education system, further education and the interface with higher education.
Until we get that, we are not going to get delivery of a proper strategy. We will get details we can improve, but the strategy needs to be accepted by senior Ministers in this and future Governments. For a long time, employment has not been one of the top priorities and has become a poor relation, despite the incredible efforts by many in the education and training system to improve the situation.
As Alan Milburn’s report points out, we have not been short of interventions by government over the past few years. There has been scheme after scheme to improve the situation, and we are going to get a few more. What has been lacking is a strategy and a priority. The lead for that can come only from the top. The machinery of government needs to reflect that, and only then will we gain the respect for all aspects of employment and training that is needed. I do not see the signs, as yet, that we, as the present Government, have fully addressed this. We have the opportunity to do so, and I think the priority is there and has been laid out in many interventions today. It is time that we ensured that the machinery of government reflects the centrality of employment in defining our lives, the quality of our lives and the sense of self which applies to so many people. Until that happens, we are going to have this debate time and again.
Lord Mohammed of Tinsley (LD)
My Lords, I join noble Lords in thanking the noble Baroness, Lady Morgan, for initiating this important debate and I thank all noble Lords who have taken part in it. What has come through is very clear: this is not simply a debate around qualifications. This has been a debate around opportunity, social mobility and economic growth. The central question for me is this: how do we ensure that every young person, whatever their background or postcode, has a genuine route to meaningful work, as we heard earlier, further education or a secure future and do not—as many noble Lords mentioned, in particular the noble Baroness, Lady Alexander—become NEET with all the issues that Alan Milburn has identified? We look forward to his second report.
For too long, the education system has presented universities as the default measure of ambition while vocational education has too often been treated as second best. University is absolutely the right choice for many young people, but it should not be the only route to success. We have heard that clearly in the debate today. A young person who wants to become an engineer, an electrician, a technician, a care professional or a builder should be able to pursue that ambition through a high-quality technical or vocational route and have the same status and respect as someone pursuing an academic degree. That is why I remain attracted to the dual system model that combines classroom learning with sustained structural workplace experience.
We can learn from other countries such as Germany and the Netherlands, as we heard from the noble Lord, Lord Baker, at the start of the debate. Their vocational system demonstrates the value of giving young people both theoretical knowledge and practical competence. That additional workplace experience matters. We heard from the noble Lord, Lord Griffiths, about some of us practising what we preach by giving young people the opportunity to shadow us. I have had one young person, Louie Xenos, shadowing me this week and she is watching the debate. She helped to formulate not only this speech but my Oral Question. It is important that we create work experience opportunities for young people and then go out and advocate for them within industry because, too often, young people are told that they lack experience when the very businesses employing them are the ones that do not give them the opportunity to gain that experience. How can we tell a young person that they need experience when we have failed to give them that opportunity, as I mentioned earlier?
No vocational system will succeed unless employers are properly incentivised to participate. I would like to see strong incentives for employers to recruit young people facing the greatest barriers, including care leavers, young people with SEND and those who have experienced alternative provision. Young people furthest from the labour market—I note the comments of the noble Baroness, Lady Morris of Yardley, about white working-class young people—cannot be those least likely to receive their first opportunity. We must look into the findings of that report and see how we can help that cohort of young people.
We also need to move away from a culture of short-term recruitment and low retention. Training should be seen as an investment in people and in the future workforce rather than as a simple cost. That is why I support greater flexibility in the growth and skills levy. As we heard from the noble Baroness, Lady Morgan, at the beginning of the debate, small and medium-sized businesses, in particular, need a system that allows them to use training and support for the skills their workforce and the local economy generally require.
If we want vocational education to succeed, as we heard from many noble Lords, we must also fund further education properly. As my noble friend Lady Garden said, further education colleges often work with young people who have the greatest need, yet they continue to face significant financial pressures. We should extend pupil premium-style support into post-16 education so that disadvantage does not stop counting when a young person leaves school. They still have those needs. We must also ensure that FE colleges are treated fairly financially, including through the ability to reclaim VAT so that they are not placed at a disadvantage with sixth forms. We should also encourage partnerships rather than competition between institutions. Collaboration between universities and FE colleges can open opportunities that neither can provide alone.
We should also recognise that education does not end at 21. People change careers. People lose their jobs. They may become carers. Industries may disappear, and new industries emerge. That is why lifelong learning matters. The lifelong learning entitlement has the potential to give adults greater opportunities to retrain and upskill, but lifelong learning must mean more than lifelong borrowing. People from disadvantaged backgrounds must be able to access opportunities without financial barriers preventing them participating.
We also cannot seriously address young people being outside education or employment without addressing mental health and other barriers. For some young people, the problem is not a lack of ambition. It may be poor mental health, disability, caring responsibilities, poverty, lack of confidence, or simply not having anyone to help them navigate the complicated system, as we heard earlier about career services in schools. That is why organisations such as the Duke of Edinburgh’s Award are so valuable. Volunteering, physical activity, developing practical skills and working as part of a team can build confidence, resilience, leadership and well-being. Those opportunities are particularly important for young people who may not have the same networks or advantages as their peers.
Finally, I want to turn to regional growth and devolution. The skills needs of a place like Sheffield, where I am from, are not identical to those of Manchester, Cornwall or London. In South Yorkshire we need to think about advanced manufacturing, engineering, construction, clean energy and the future of our steel industry. Others may have other priorities. The people who understand those needs best are the ones that are closest—the local employers, colleges, universities, councils and combined authorities. I therefore welcome the direction of travel towards greater regional decision-making that we have heard from the Prime Minister. But devolution must mean real power, real resources and real accountability. We should not simply devolve responsibility while keeping the important decisions and funding in Whitehall.
There is a danger that we focus on qualifications, structures and funding mechanisms and forget the individual young person at the centre of them—the young person who leaves school without the grades expected of them; the care leaver navigating adulthood without a stable family network; the young person with SEND who wants to work but needs the right support; the adult who needs to retrain because the industry they have worked in for years is changing. They do not simply need more choices on paper; they need a route that actually works.
From these Benches, I make five simple demands. First, to give vocational education the status it deserves; secondly, to make further education a genuine pillar of our education system; thirdly, to give employers the incentives and flexibility to create meaningful training and employment opportunities, particularly for those facing disadvantage; fourthly, to integrate skills with mental health, employment and wider support, because people’s lives do not fit neatly into departmental boundaries; and finally, to devolve power and funding so that regions can build the skills systems their economies and communities actually need.
Opportunity should not depend on postcodes, as we heard from the noble Baroness, Lady Fraser, and others; nor should ambition be defined by whether someone chooses a university lecture theatre or a workshop floor. A successful education system recognises talent wherever it exists, gives people the skills they need to use their talent, and gives them a genuine opportunity to succeed. That is the education and skills system we should all aspire to build.
Baroness Cash (Con)
My Lords, my congratulations to the noble Baroness, Lady Morgan of Huyton, on securing this excellent debate and my thanks to noble colleagues for their contributions. I am struck yet again by the level of expertise we have in this House and the value that brings when we are talking about such important matters. I have also been saved from many of the points I planned to make by hearing from the noble Baronesses, Lady Morgan and Lady Morris, the noble Lord, Lord Baker, and many other colleagues. The best use of time, therefore, is to focus instead on two things I would like to address specifically.
A number of people have referred to the fact—indeed, the review the noble Baronesses have overseen talked about this—that skills do not begin at 14 or 16. These are life skills, and they begin from the very early years. Many noble Lords are aware that this is a passion of mine, and I cannot resist the temptation to address it on this occasion. The very first skills anyone learns are motor skills, speech, relational skills, emotional regulation, and the capacity to learn itself. According to this year’s survey of over 1,000 reception teachers, one in four children started school not toilet trained. Three in 10 could not tell a teacher they were hungry, frightened or needed the toilet. A third could not dress themselves. Many cannot hold a pencil or sit up on the carpet because they do not have the strength built by running, climbing or play. It is beyond tragic. A third, when handed a book, swiped the page as if it were a screen. Reception staff lose two and a half hours of teaching every day helping children catch up.
Last September, 37% arrived not ready, up from 33% the year before. The sharpest regional declines are in the north-east, the West Midlands, the north-west and London. When a peer-reviewed study was done following 8,000 Bradford children for 12 years, those not school ready at four were nearly three times as likely to be out of education, employment and training at 16.
A number of noble Peers today have talked about this being a decade of work. It is a lifetime of work, and it is urgent. Before we even begin to address the skills, the vocational training and the higher and further education issues that so many others have raised today, we need to start urgently to catch these babies and infants at the very beginning of their lives. If we do not, undoing the damage will be too difficult and their chances will already be harmed.
There is hope. In the same survey, 94% of parents wanted national guidance on readiness, and 88% of them believed their own child was ready—but the teachers had that number at only 63%. So there is a gap of parenting knowledge that we cannot and should not neglect.
I know the Minister is looking at all this, and she is aware of my support with everything she is doing in this area. However, I hope she will forgive me if I press further and harder on what else we could be doing and what the Government, in my view, must do. In 2004, Stoke-on-Trent found 64% of its children starting nursery with delayed language. It trained 5,000 practitioners and parents in early attachment and language, and delay fell markedly. Parent Gym, the programme that I founded, a six-week parenting course, was evaluated by the University of Warwick. It found large gains in parents’ confidence in skills at the end of just six weeks, which delivered outcomes in the primary schools that ran it.
The Government’s milestone is 75% school ready by 2028, and there is no time to waste. Once these years are gone, it cannot be undone. Where is the plan for how the definition of school readiness is to be communicated to every new parent? Where are the system and the measures for assessing that progress? I hope the Minister can tell us when we are going to see a national information campaign about what screens are doing to the developing brains of these babies? From infancy they are being sat in front of screens, which is impeding their life chances.
The other thing I want to talk about very quickly, with time running out, is work readiness. Again, the skills that are needed—soft skills, behavioural skills and experience—are crucial, and many noble Peers today have raised this in their contributions. We have to provide the work experience that has gone from young people. The number of teenagers who now work during the time when they are studying has fallen off a cliff since the 1990s. This has been happening gradually over time; it has halved. The self-esteem and confidence built by earning, turning up, getting paid and seeing the result of your efforts have gone. As the mother of a 16 year-old, I know that it has been impossible for her, despite all her best efforts, to find any summer jobs over the last couple of years.
This country is spending £25 supporting a young person on benefits for every £1 helping them into work. The answer to that arithmetic is not better managed dependency. It is a good start to see in the Milburn recommendations the subsidising of work placements and work experience, but we need to do more.
I am grateful to a number of noble Peers today for raising the AI issue, which is at the heart of some of the issues around employment and jobs. The change is happening so rapidly. Young people need to have soft skills and executive functioning skills, as we talk about it now in SEN—knowing how to organise themselves and how to show up punctually. We take these things for granted, but for the Covid generation these are missing. We need to think about what we do in classrooms, whether in schools or in further education, to equip young people to go into the workplace and thrive.
I am very grateful to so many noble Lords for their contributions, but I single out the noble Lord, Lord Lingfield, for his reference to the cadet programme. It is a shame, I always feel, that government has to be run by departments simply because it is so vast, but when we think about our defence needs and the changing face of defence—the fact that it is going to become more technical and home-based, and the fact that we need security in our own borders—we need to think more strategically about mapping and encouraging the jobs that we need for the future. Encouraging young people to take up places with the cadets is just one example of what can be done.
I am very grateful also for the reference today to language skills—an increasingly important issue as we become an ever more diverse and inclusive society. It must be vital for children, to be able to participate in their community, to have those language skills.
Finally, I believe it was the noble Baroness, Lady Morris, but also the noble Baroness, Lady Morgan, in her opening speech, who said how important numeracy and literacy are as the foundation stones of all this. It was with a little alarm that I heard the new Prime Minister on Tuesday talking about some of the changes he is proposing. I flag my alarm that I hope he is not intending to rip up the foundation stones of what has been a significantly improving education system in England during the last 20 years, through both Labour and Conservative Governments—work to which the Minister herself contributed. There is a lot more to be said, but time is ticking and I am determined not to get another warning from our Whip.
The Minister of State, Department for Education and Department for Work and Pensions (Baroness Smith of Malvern) (Lab)
My Lords, as others have rightly done, I thank my noble friend Lady Morgan for securing this important debate, which has ranged widely. I will do my very best to respond to the range of points that have been raised and to receive written representations from anybody who wants to send them—as I believe the noble Lord, Lord Young, promised to do when I took a little comfort break earlier.
As others have said, the breadth of expertise that has been shared today shows that improving opportunity is not the responsibility of government alone; it is a national endeavour. This debate goes to the heart of how we build a fairer and more prosperous country. It is about whether every young person, whatever their background or postcode, can gain the skills, confidence and opportunities they need to succeed, and whether every region has the skilled workforce it needs to grow, attract investment and create good jobs.
The issues before us are clear. Too many young people remain outside education, employment or training. Too many adults lack access to flexible routes to upskill or retrain. Too many employers report skills shortages, while too many communities still feel cut off from the opportunities that growth should bring. That is why skills and technical and further education matter so profoundly. They are not peripheral to our economic strategy or our mission to break down barriers to opportunity; they are central to both.
The debate is therefore about how government, local leaders, employers, colleges, universities and communities work together to make technical and vocational routes more respected, more responsive and more accessible. If we are serious about widening opportunity and driving growth in every part of our country, we must also be serious about where power sits and who is trusted to use it. As the noble Lord, Lord Mohammed, emphasised, there is an important argument for ensuring that power rests with those closest to making the decisions. That is why I want to begin with devolution, which is a practical answer to a practical challenge when we are thinking about how we build a skills system that reflects the needs, strengths and ambitions of the places it serves.
As several noble Lords have noted, opportunity is not distributed evenly across our country and employer demand is not identical from one region to another—a point made by the right reverend Prelate the Bishop of Coventry—and the barriers facing a young person in one community may look very different from those facing a young person elsewhere. Local leaders know their labour markets, employers, colleges, communities and young people, and this Government believe that they should have the powers, funding and accountability to act on that knowledge within a national framework that protects quality, entitlement and access. Our approach is clear: shift power away from Westminster, strengthen strategic authorities and build a skills system that is more responsive to local economic need while staying aligned with the national priorities that matter to us all.
Noble Lords have also been clear about the scale of that challenge, with almost 1 million young people not in education, employment or training. These figures are not abstract. They represent young lives and talent we cannot afford to waste. That is why we commissioned Alan Milburn to produce what is an excellent interim report. We look forward to receiving his final report with recommendations. We are already working to ensure that we will be able to respond effectively to the recommendations and believe we will be building on progress and action already taken.
I reassure my noble friend Lady Morgan and my noble friend Lady Morris, who should be congratulated on the leadership she showed in the white working-class inquiry, that we will want to respond to those issues together. We must ensure that where a young person grows up does not determine what they can become. It is about how we ensure that talented people, wherever they live and whatever their background, can gain the knowledge, confidence and qualifications needed to succeed.
Another theme raised by many noble Lords has been the importance of prevention and early intervention. We know that young people who become detached from education or employment often face multiple and overlapping barriers. These can include disadvantage, low attainment, special educational needs, poor mental health, family circumstances and limited local opportunities. They can affect different groups differently, as my noble friend Lady Whitaker, with her usual tenacity, identified with respect to Gypsy, Roma and Traveller children.
We know that the consequences can be long lasting and that is why this Government are placing increasing emphasis on prevention, earlier identification, stronger transitions and more co-ordinated support. We are improving how schools, colleges, local authorities and partners identify young people at risk of disengagement. We are strengthening post-16 pathways, introducing new technical pathways from age 14, and investing in better data and support systems so that fewer young people fall through the cracks. The noble Baroness, Lady Cash, is right that this starts early and that is why we are improving the quantity and quality of early years provision, tackling child poverty and improving, through our support for families and better start in life information, support and information for parents as well.
The noble Lord, Lord Whitty, argued that there should be machinery of government changes to put skills, training and education at the heart of government. I now straddle the Department for Education and the Department for Work and Pensions following the most recent machinery of government change, which puts skills alongside employment support in the Department for Work and Pensions. I think that was an important change.
It has led us to the development of the youth guarantee, which reflects the principles we have been talking about that every young person should have a pathway forward, whether through further learning, training, work experience and apprenticeship, or employment support. We are investing an additional £2.5 billion over the next three years into that and the growth and skills levy to support almost 1 million young people and to create up to 500,000 opportunities to earn and learn. In response to the right reverend Prelate the Bishop of Leicester, I can say that there are 300,000 work experience places through the youth guarantee, specifically.
I turn to further education. Many noble Lords have rightly emphasised the critical role that further education colleges play. They are anchors within their communities. They support young people, adults, career changers and employers, drive social mobility and connect education directly to the needs of local economies. My noble friend Lady Morgan described the excellent work happening in Wigan. Every time I visit excellent FE colleges, I see staff and leaders engaged with the local economy, building its input into the curriculum and building links back to their students; this is at the heart of their success. But too often they have been left behind. My noble friend Lord Barber emphasised the need for high-quality teaching, which has been harder for FE to deliver, given its vacancy rates and the lack of investment it faces.
That is why this Government are investing in the FE workforce and strengthening the sector’s foundation, including by providing around £120 million in 2026 to support colleges and other FE providers to address recruitment and retention needs, rising to £365 million next year. It is why we have increased the basic funding of FE and supported, in particular, further disadvantage funding, uplifts for T-levels and an inclusive mainstream fund to help those settings meet more special educational and disability needs.
Many noble Lords have rightly emphasised the need to raise the status of technical and vocational education. For too long, public debate has treated academic and technical routes as though one were superior to the other. We want technical excellence to command the same respect as academic achievement, and technical education to be seen not as a second choice but as an excellent choice. I also support the argument made by my noble friends, my noble friend Lady Morgan in particular, that high-quality technical and vocational education is not only about engaging students and is not only for those who would otherwise be disengaged; it should be for everybody who wants to achieve excellence, but via a technical and vocational route. It is important that we keep that at the heart of our ambition and the changes we are making.
That is why the Prime Minister has announced new prestigious technical education routes, giving 14 year-olds earlier access to technical skills, work experience and local employers. I hope that the noble Lord, Lord Baker, has noted the emphasis from 14 that the new Prime Minister has brought in. I note the noble Lord’s strong emphasis, once again, on the opportunities that UTC sleeves may well provide in delivering this. But rather than relying on a one-size-fits-all model for delivering this new approach designed by Whitehall, regional mayors, local leaders, schools, colleges and employers will shape pathways around local industries and growth sectors, from advanced manufacturing, AI and digital technology to clean energy, life sciences, construction, health and care, and the creative industries. These changes build on our existing reforms, which demonstrate both the urgency and the ambition.
With respect to the point about English and maths, I strongly agree that the literacy and numeracy skills that you need throughout life, often represented by a grade 4 at GCSE, are fundamentally important. That is why we are determined, with all the reforms that we are making pre 16, to strengthen the ability of children to get those qualifications and, post 16, to make sure that the system is focused not on a churn of resits but on the quality of teaching, professional development and the evidence of what works to enable young people to succeed if they have not up to that point. It is why we will also introduce a new level 1 stepping-stone qualification to enable young people to build the foundations they need in English and maths if they have not been successful in doing that previously.
Equally, it is important that we emphasise the specialism and the contribution of FE colleges, which is why we have developed 29 new technical excellence colleges, including the 19 announced this year that are backed by £175 million, giving around 65,000 learners access to training for high-demand jobs in advanced manufacturing, clean energy, defence, digital and technologies. That builds on the first wave of construction technical excellence colleges, supported by £120 million of investment, which will train 40,000 construction learners by 2029. Together, that is a practical example of skills policy being tied directly to the industries and places where growth will come from, and it is an investment in the capacity and ability of further education colleges to work alongside those industries to provide opportunities for young people and the skills the country needs.
As I have already said, I strongly support the points made by my noble friends Lady Morris and Lady Morgan about the rigour and quality that we must maintain in technical and vocational education. It should not be seen as a second-rate or alternative route for those who do not want or are not able to take an academic route. It must of itself be a prestigious, high-quality and rigorous route, and access to that quality must be open as widely as possible. I take the points made about level 6 apprenticeships, for example, which are offering brilliant opportunities for students but are not currently widely accessible enough to those from disadvantaged backgrounds.
It is also the case that young people need a broader range of enrichment and experience, as several noble Lords have identified. The right reverend Prelate the Bishop of Leicester talked about the need for work experience, as I have said, and the role of volunteering in contributing to the sorts of experiences that are important for young people. The noble Lord, Lord Lingfield, rightly identified the benefits that cadets can bring. Others identified important ways in which we need to support young people to progress. I note as well the point, made by the right reverend Prelate the Bishop of Coventry, about young people who might arrive at 16 without having had the opportunity to achieve up to that point. That is one of the reasons we are changing the qualifications and the routes for young people—what we would call level 2 post-16—to provide new pathways through an occupational route into jobs and a further study route into the ability to study level 3 qualifications. We cannot let young people lose the opportunities that jobs or further study could offer them.
As she often does, my noble friend Lady Caine made a powerful case for creativity across the curriculum and throughout the age ranges. She challenged, as she often does. In a Question on Monday, we will have an opportunity to talk about support for higher education in creativity. We rightly heard from the noble Baroness, Lady Fraser, about the need to ensure routes into dance. This Government have continued to support the music and dance scheme, and I hear the calls for certainty around that. My noble friend Lady Hazarika spoke on the enthusiasm, the opportunities, the enrichment and joy that the study of music can bring, and the need to continue the work that we are doing on financial literacy was emphasised by the noble Baroness, Lady Sater.
Several noble Lords highlighted apprenticeships and their powerful role in supporting young people into work and on the path to successful careers. That is why we are investing in them and reversing the sharp decline in apprenticeship starts among young people which we have seen over the last decade. There is an additional £1 billion investment to support 50,000 more young people into apprenticeships over the next three years. My noble friend Lady Alexander noted the ambitious plans that the Government have and rightly identified our need to make it as simple, easy and straightforward as possible for employers to take on apprentices. We have made progress in that area already, and we will keep pushing to make sure that that is the case. To support employers, we will also develop brokerage opportunities locally—as was suggested by my noble friend Lady Morgan; we are piloting them already—to bring together employers and apprentices.
An important point was made about the role of higher education. I see—not just because of my job—the system as a tertiary system where opportunities need to work through further education and higher education. Of course, it is the case that very many of the skills that our economy needs will be provided through higher education, not just through an earlier route. That is why we need higher education to provide more opportunities for apprenticeships and to work effectively with further education to develop the level 4 and 5 qualifications that we need in this country. The Government have set out our target to increase the number of young people achieving level 4 and above qualifications.
My noble friend Lord Docherty raised adult education, and several noble Lords talked about the need for education to be lifelong. I strongly support that. My noble friend is right that the funding for adult skills has fallen since 2010. Within the constraints that we face, we will try at the very least to maintain the support that is there, because it is so important for reskilling people, getting people back close to the labour market, helping people who have no English and maths to take up their entitlements to that, and supporting speakers of other languages with English—which is one of the things that the adult skills fund supports. The adult skills fund is devolved to make sure that it will be as effective as possible. My noble friend Lord Nagaraju, quite rightly, talked about the need for reskilling and the emphasis on AI, and made the point that that needs to be open to encourage the widest possible participation.
In closing, I thank all noble Lords for their contributions. The points raised today will inform our work to build a skills system that is ambitious, inclusive and responsive; one that empowers local leaders, supports disadvantaged communities, strengthens regional growth and ensures that talent, determination and hard work are rewarded wherever they are found. I commend the Government’s approach to the House.
Baroness Morgan of Huyton (Lab)
Very briefly, I thank everybody who has taken part in the debate. I said at the beginning that I hoped we would not have a fuzzy conversation, and we very clearly did not have that. I think the Minister heard a lot of commitment and enthusiasm around the House. We heard that from her too, for which I thank her very much, as I do for the detail with which answered the points made. I was very struck by the noble Lord, Lord Baker, noting that it has been 16 years since we talked about this properly. I suspect that it will not take another 16 years until we do this again. Thank you very much.
Representation of the People Bill
Parcel Delivery Services
(1 day, 7 hours ago)
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Lord Pack
To ask His Majesty’s Government what plans they have to improve the quality and reliability of parcel delivery services, particularly in relation to their impact on small businesses and vulnerable consumers.
Lord Pack (LD)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I particularly welcome the noble Lord, Lord Sarwar, whose maiden speech I look forward to hearing in this debate. I hope that a short Lib Dem-initiated debate about parcels, if not perhaps the realisation of a long-standing dream item on the noble Lord’s bucket list, will at least provide a congenial forum for his debut. I am sure he will rise admirably to the challenge of the very rapid turnaround between his introduction and maiden speech.
Parcel deliveries are a central part of modern life. They can bring fun and joy to our lives, such as with a well-timed gift. But they are also essential for our economy, both for sales and for supply chains. They are essential for health too, with many being dependent on parcel deliveries to receive medicines and other health assistance. They give a vital lifeline to the wider world for those who are greatly restricted in their mobility. Yet, the state of the parcel delivery sector is, in some key respects, far from happy. Citizens Advice estimates that 15 million people suffered a problem with their most recent parcel delivery.
The 2025 Parcel Theft Report estimates that nearly five million homes were affected in a year by parcel theft, with over £650 million-worth of goods being stolen. I recently found one such stolen package dumped near my own home, presumably because the thieves had discovered that it contained a very large bottle of vinegar and nothing else. I was able to reunite the vinegar with its owner, but of course most victims of theft are not nearly so lucky. What is more, these problems have all the greater impact on those who are less mobile, who are therefore all the more dependent on parcels arriving on time and in the right place.
So up against all this, what is Ofcom, the regulator, doing? Not enough. What have the Government done in their recently signed-off statement of strategic priorities for Ofcom? Again, not enough. Unfortunately, prior to the summer, the Government did not find time to debate my regret Motion on that Ofcom strategy. I hope today’s debate will re-focus attention on it, particularly as Ofcom’s own data shows that, of those who contacted a delivery company about an issue, only 45%—less than half—were satisfied with the outcome. Of course, not everyone will be happy in such cases, but the Institute of Customer Service finds that, on average, 63% of people are satisfied with complaint-handling. So, with all due caution about definitions in each case not being exactly the same, it is fair to say that not only do you have less than a 50:50 chance of coming out satisfied if you raise an issue with a delivery firm, but the sector’s overall performance is well below that of other sectors.
Ofcom’s data does show that the 45% figure is up one percentage point on the previous year, but that pace of improvement means it would take 18 years for the sector merely to get to the average. Despite being 18 years off merely getting to average, Ofcom’s own commentary, published alongside this data, imparts no real sense of concern or urgency. The Government’s strategy statement merely gives a “welcome” to Ofcom’s approach, along with the suggestion that Ofcom
“should take enforcement action where it considers it appropriate”.
Given that we are never going to call for inappropriate enforcement, that is about as tepid a form of words as we can get.
There is a further reason why Ofcom’s approach is problematic: its requirements for complaints processes are poorly specified and, judging by people’s experiences, not properly followed by parcel delivery firms themselves. The specification problem is that Ofcom requires complaints processes for the sender and the addressee, yet you are neither if you have someone else’s parcel dumped on you. You are neither if you see bad driving or atrocious parking from one of the parcel delivery firms. In fact, these problems will get worse. The Government’s strategy for Ofcom rightly encourages experiments with drones and robot delivery of parcels. But what if a robot heading to someone else’s home crashes into you on the pavement? What if a drone, flying to deliver a parcel somewhere else, crashes into your garden? You are neither the sender nor the addressee, so Ofcom says that there is no need for an adequate complaints process that you can have recourse to.
Now, you might think that delivery firms are happy to accept complaints anyway in such circumstances, but outside of Royal Mail, which has its own regulatory structure, that is not my experience, nor that of many people I have spoken to. Worse, there is also the widespread experience that, even if you are the addressee, but you have, say, bought something from an online shop and are therefore not the parcel delivery firm’s customer—the online shop is the customer—the parcel delivery firms will say, “No, you can’t complain to us”, even though Ofcom’s rules say you should be able to.
Perhaps most strikingly, the website for InPost—one of the largest delivery firms—which I checked again last night, explicitly says:
“Where you have ordered our Services through a retailer or other third party, all queries and complaints should be raised with them directly. Their complaints process will apply.”
But that is not what Ofcom’s rules say it is allowed to do. So the complaints process is broken: the regulators’ rules are too narrow and do not appear to be being properly enforced. Moreover, when the Government signed off the strategy for Ofcom—admittedly, before the Minister took up his post—they did not say that things need to get better.
Nor are market forces the remedy here, unfortunately, because the operation of market forces is hindered by obscurity. You may have a delivery firm that you particularly wish to avoid—I certainly have my own shortlist. You may have one that you are particularly keen to reward with your business; perhaps you are a great fan of Royal Mail, for example. However, there are no transparency requirements—there is no transparency good practice—for the firm you order from to tell you who it will use to deliver your goods to you. The potential of consumer power is deliberately hindered by obscurity. Again, the reaction from both Ofcom and the Government in their strategy statement has been to say, in effect, “We are happy with the status quo”, rather than to push for transparency and change.
In conclusion, we have the problems for the victims of widespread crime; the problems for businesses having to shoulder the costs of those crimes; the problems of a complaints system 18 years away from even getting to average; and the problems of a complaints system that is flawed by design and implementation. It is fair to say that the Ofcom strategy statement was a missed opportunity for the Government to be tough on crime, to promote growth and to help people. Perhaps, however, the cavalry has arrived. A new Minister certainly has arrived, and a maiden speech is about to arrive. Of course, I acknowledge that some of the detail I have raised may best be addressed in a follow-up meeting or correspondence. I hope too, perhaps, that we will hear from the Minister a commitment to have a renewed look at these issues, because they certainly need looking at again.
Lord Mott (Con)
My Lords, I start by thanking the noble Lord, Lord Pack, for securing this debate. I also welcome the Minister, the noble Lord, Lord Sarwar, and congratulate him on being introduced to your Lordships’ House today and on making his maiden speech from the Dispatch Box. I know what that feels like. The Chief Whip gave me a week between my introduction and having to make my maiden speech from the Dispatch Box. I noticed that today, the Government Chief Whip has simply given the noble Lord a slightly longer lunch break to prepare. I look forward to hearing his speech and wish him a long career in government.
I was slightly unsure today what I would talk about in this debate, and I decided to do a little bit of research at home in preparation. I used my wife and my eldest daughter to get a sense of how effective parcel delivery services are in this country. I must say that, in west London, they are incredibly effective. Parcels regularly arrive on time, and there are very few problems. Later in my speech I will come on to digital tech and how that interacts with people. I also want to pay tribute to the Passport Office, which I recently had to use to renew my passport. All the way through that process, the tech, the parcel delivery and the communication between the office and me was really quite extraordinary.
I declare at this stage that I am a member of the Public Services Select Committee. Three years ago, the committee carried out an inquiry into homecare medicine. It was an extraordinary inquiry, which started quite small but began to uncover real differences across the whole of the United Kingdom in the delivery of medicines. That is why we need to focus on this and work incredibly hard.
Parcel delivery has become an essential part of how we live and how business operates. For many small businesses, the parcel is not simply the final step in a transaction; it is the transaction. Reliability matters enormously, and the evidence suggests that there is still considerable room for improvement. Ofcom found that, while 78% of consumers were genuinely satisfied with parcel services, 68% had experienced a delivery problem in the previous six months.
When something does go wrong, resolving it can be almost as frustrating. Some 47% of those who experienced a delivery problem then encountered further difficulties trying to resolve it. For small businesses, that can mean additional costs, lost time and potentially a lost customer. For vulnerable customers, it could mean a lost medicine that is essential to that individual’s health. The evidence shows that those with an impacting or limiting condition are more likely to experience problems with deliveries. Accessibility remains one of the weaker parts of the customer experience.
We should be careful about assuming that a more digital service is necessarily a more accessible one. Technology should make services easier to use, as in the example I gave at the beginning of my speech of the Passport Office. It should not create another barrier when something goes wrong. Therefore, when we assess whether the system is working, we should be looking not only at overall delivery performance but at whether it is working for those customers who have fewer alternatives when it fails.
I believe in a vibrant private sector, so the Government should not be dictating a business’s operations for it, but they do have a role in protecting consumers, setting standards and ensuring accountability. We already have substantial data, an independent regulator, enforcement powers and improvement plans, as the noble Lord, Lord Pack, highlighted in his opening remarks. I would like to see a clearer test of whether those interventions are working. I therefore ask the Government to set out a clear timetable for assessing the effectiveness of Ofcom’s current approach, including how it will compare performance and customer outcomes across all providers, and a commitment to review the regulatory framework if it is not delivering sustained improvement.
Royal Mail provides a particularly clear test, given its specific quality of service obligations and the improvement plan now in place. However, the principle should apply across the wider parcel market. That would not mean imposing identical obligations on every operator; it would mean making sure that we can identify where intervention is working, where it is not and changing course when the evidence demands it.
In responding to the debate, will the Minister set out how the Government intend to assess whether Ofcom’s current approach is delivering sustained improvement across the parcel market? Given the Business and Trade Committee’s recommendation for a regulatory reset, will he set out what would cause the Government to conclude that the existing regulatory approach is no longer delivering the improvement that consumers and businesses reasonably expect? Competition is valuable, but precisely because it should deliver better services, innovation and choice. For the small businesses waiting for their goods to arrive and for the vulnerable customer who needs to know that their needs will be understood, the test is ultimately very simple: can they trust the system to work?
Lord Redwood (Con)
My Lords, I am grateful for the opportunity to intervene in this debate, owing to the general lack of interest, but it is a pity because this is an important subject. I agree with the two former speakers that, when the service lets people down, it can be very damaging to their businesses or lives. If drugs do not arrive on time or a company needs an urgent supply for its production process and it does not arrive, these are very disruptive events.
I welcome the new Minister to his post. It is in all our interests that Ministers feel happy in their job and are positive about what they can do. He will be relieved to know that I will not blame him for anything today because he needs the opportunity to read his way in. However, I will raise one or two more general points in relation to postal services and other public services, as we on this side of the House try to get used to a Government under new leadership. We have read or listened to the Prime Minister’s speeches very carefully and we wonder whether there is going to be change for the good as a result of the new devices that the Prime Minister is introducing.
The postal services market is competitive, and I am pleased to say that my own personal experience has been extremely good. Deliveries have been swift, prompt and accurate, and I am very grateful to the variety of carriers that have made that possible.
I hear in the criticisms that there is a very serious worry about theft. This is of course a matter for criminal law enforcement, where the Government, through the Home Office, police forces, police commissioners and local government, can have a role. It would obviously be good if there was a way to ensure that fewer of those parcels were lifted from doorsteps.
However, it is also the case that all of us customers can do things to help ourselves. Obviously those of us who are busy may not be at home to receive the parcel when it arrives, although the safest thing is to be at home to receive the parcel yourself. It is probably a good idea to have an alternative safe place where you can ask them to put the parcel, and most online services now give you the right to specify some place out of sight, or even under lock and key, where you could receive the parcel to avoid theft. Those who do not have that kind of equipment or money may well have a friendly neighbour who would be in to take the parcel, so you can volunteer their address. In that way some self-help could supplement the competitive market, which is clearly driving prices down for quite a lot of carriage and, on the whole, for people like me and many others here, is delivering a pretty good service.
However, what fascinates me about the changes that the new leadership of the Government are introducing are matters of process—the theory that areas of service in a competitive market such as postal services may not be good enough and that a bigger government involvement would in some way be helpful to achieve those higher standards.
As we hear, the Prime Minister thinks he has at least two major options in his toolkit. There is full nationalisation, which he seems to favour, where he thinks a nationalised service would be better than a private competitive market. That is not my experience, and certainly there were lots of troubles when the postal side of the Post Office, as it was then, was fully nationalised, and of course it was only the Royal Mail services which were privatised. Therefore we can contrast the experience of the privatised mail services with the results of the nationalised industry, the Post Office.
Is that my time limit? Then I complete my remarks.
The Earl of Effingham (Con)
My Lords, I thank the noble Lord, Lord Pack, for securing this important debate and I look forward with great interest to hearing the maiden speech of the noble Lord, Lord Sarwar. It is right that we reflect on the mounting issues within this country’s national postal service and highlight the potential solutions. I will be brief, and I appreciate the opportunity to speak in the gap.
Royal Mail has been hit hard by the impact of the Government’s tax increases. Earlier this year, it warned that the increase in employer national insurance contributions announced in the Budget would cost the business some £120 million. For a company that is expected to balance the books while providing a complex, expensive and reliable weekly service, that is not a trivial sum. It is yet another burden placed upon a business whose quality of service was regrettably already in decline.
Royal Mail has missed its first-class and second-class delivery targets for the Government’s first two years in office. Additional national insurance tax could otherwise have gone towards these delivery targets but, instead, the public are feeling the effects of a worse service caused partly by taxes that they are having to subsidise.
Now the bill is being passed on again. From 5 October, Royal Mail wholesale prices—the mail that carries marketing communications, household bills and medical appointment notices—will rise by an average of 25%. To put that in context, the NHS alone spent over £100 million posting letters last year. A rise of this scale will land squarely on public services and ordinary households alike.
We should not impose new costs and taxes on essential providers with one hand, while expressing dismay at declining service and rising prices with the other. What assessment has the Treasury made of the impact of the national insurance rise on these universal service providers? What discussions has the department had with Ofcom about protecting consumers, particularly the elderly and vulnerable, from these compounding pressures?
Lord Hunt of Wirral (Con)
My Lords, I welcome the Minister. He has entered the House today. I cannot recall a moment when a noble Lord—particularly a Minister—has made a maiden speech on the very day of entry. We can hardly bear the wait. Who is going to pay tribute on this wonderful occasion? I hope the Chief Whip will find some way of ensuring that happens.
The noble Lord’s transition from the leadership role that he held in Scotland to the Front Bench here serves as a reminder of the great value of the union between Scotland and the rest of the United Kingdom. As a Liverpudlian, I welcome this one-way traffic down the M1. In many ways, the noble Lord shares a lot with our new Prime Minister. They were both Members of the House of Commons. They both held prominent positions as leaders of the north. They are both now back in Parliament. I wish the noble Lord well in his role.
I thank the noble Lord, Lord Pack, for this great opportunity to debate the question of a reliable postal and parcel service. As the noble Lord said, it is a vital lifeline. These services remain essential to households and businesses across the country. As several of my colleagues have just pointed out, since taking office the Government have placed substantial additional costs on Royal Mail, as they have on all businesses across the UK. As my noble friend Lord Effingham pointed out, Royal Mail has estimated that it will face an additional tax burden of approximately £120 million every year from 2025-26 as a result of the Government’s decision to increase employer national insurance contributions. Royal Mail warned that these increased costs impinge on its ability to deliver change. This £120 million has to be found from the same business that needs urgently to invest in its network, improve pay and conditions, recruit and retain its workforce, improve productivity and ultimately deliver a faster and more reliable service to its customers.
As my noble friend Lord Redwood pointed out, industrial relations is another part of the same picture. Royal Mail, sadly, has a long and difficult history of industrial disputes. Of course, the major national industrial action of recent years pre-dated this Government. Surely, the lesson from that experience should have been that we needed a sensible balance between the rights of trade unions and the ability of employers to continue operating and restructuring their businesses. Instead, through the Employment Rights Act 2025, the Government have moved substantially in the opposite direction. They have legislated to abolish the 50% turnout requirement for industrial action ballots. They have reduced the notice that unions must give employers before industrial action from 14 days to 10 and doubled the duration of an industrial action mandate from six to 12 months.
Taken together, these measures all serve to constrain employers precisely when the Royal Mail needs flexibility to transform its operations—which brings me to the universal service obligation. In July 2025, Ofcom gave Royal Mail greater flexibility, including allowing second-class letters to be delivered on alternate weekdays. However, those changes could simply not be put into practice because implementation of Royal Mail’s new operational model became caught up in its industrial dispute with the CWU. Ofcom itself subsequently said that progress had been constrained by the ongoing industrial dispute, and agreement was not reached until April this year. Against that background, I question whether the Government’s decision to remove still more safeguards around industrial action will make future transformation easier or harder.
Then there is the approach taken by Ofcom, which the noble Lord referred to. Royal Mail was fined £10.5 million in December 2024 for its previous performance. It was then fined a further £21 million in October 2025. Together, that is £31.5 million in penalties imposed since this Government took office, and more than £37 million in recent years. These fines do not go towards recruiting more postmen and women; they do not finance better sorting equipment; they do not fund new vehicles, technology or improved delivery offices—they are paid into the Consolidated Fund. At some point, surely, we must question whether the crude act of simply imposing larger and larger fines on a business already struggling with mounting costs is creating the right incentives and improving matters in any way at all.
What evidence do the Government have that this repeated cycle of financial penalties is actually producing better outcomes for customers? What discussions are the Government having with Ofcom about whether its regulatory approach is actually working? Also, what assessment have Ministers and Ofcom made of the underlying productivity problem within Royal Mail?
The measure of successful regulation should not be how much money Ofcom can extract from Royal Mail. My noble friend Lord Mott pointed out the advantages of new technology. Let us make sure we take every opportunity to take advantage of this new technology. It should all be about whether letters and parcels arrive reliably, whether productivity improves and whether we retain a financially sustainable universal postal service for the future, a system of which we can rightly be proud.
The Minister of State, Department for Business, Innovation, Science and Trade (Lord Sarwar) (Lab) (Maiden Speech)
My Lords, thank you first of all for the very kind comments. I am pleased to respond to this Question for Short Debate as part of my maiden speech. I thank the noble Lord for bringing forward this important debate. I also start with an apology that it will not get the full and detailed response it deserves, given that it is a maiden speech. But I make both a firm commitment to meet the noble Lord and the commitment he asked for to look at all the issues so that we give the people of this country the postal service they need and deserve.
With noble Lords’ permission, I want to share some reflections before responding directly to the issues raised. I cannot help but think about the journey that got me to this place and the many, many people who have supported me along the way. It feels pretty surreal standing to make my third career maiden speech in a third Chamber. My first was in the House of Commons 16 years ago, my second in the Scottish Parliament 10 years ago, and today in the House of Lords. At 43 years old, it feels like I am living my life in fast forward.
There is nothing I could have done in my life if it was not for the great people of Glasgow. It is a city that raised me, that shaped me, that taught me my values and gave me my passion for social justice. But it is also a city that taught me not to be afraid to do difficult things: as a teenager, campaigning to save the Govan shipyard; as a young adult, being an NHS dentist in the area with the poorest dental health record in western Europe; as a relatively new Member of Parliament, becoming the deputy leader of the Scottish Labour Party and helping lead the campaign for Scotland to remain in the United Kingdom; throughout my time in the Commons, campaigning for the recognition of a Palestinian state, a proud achievement of this Labour Government; and as shadow Health Secretary in Scotland, working with whistleblowers and grieving families to expose the Queen Elizabeth University Hospital scandal. I repeat a promise that I made to all those families: I may have moved to a different Chamber, but I will continue to stand with them until they get the truth and the justice they deserve.
In 2021, I had the honour of being elected to lead my party in Scotland with just 10 weeks to go before an election. Hollowed out, divided, skint—a Scottish term, for those who do not know it—and with just one MP, we were viewed as the drag on the UK Labour Party’s chances of winning an election. I will be for ever proud that three years later Scotland led the way in changing the Government and electing a UK Labour Government, going from one MP to 37 MPs.
There have no doubt been many achievements in the first two years of this Labour Government, but we must be honest that, for many, we did not live up to their early expectations, and they were keen to deliver that message in May. I remain heartsore at the outcome of the Scottish elections, not because of what it meant for me—you learn to develop a thick skin in the Scottish Labour Party—but because of what it means for my fellow Scots. Scotland needs a new Government and new politicians who are willing to confront the big challenges. It needs an NHS that is there when you need it, an education and skills system that guarantees opportunities for every young person, an economy that backs innovation and entrepreneurship and a politics that puts place before parties so that every part of our great country can flourish. To my colleagues and friends in the Scottish Labour Party, note that I will always be cheering you on and working for your success. To whoever my successor is, know that you will always have my unequivocal support in public and, as a former leader, my advice in private.
I have been fortunate to have so many political friends and supporters over the years—they are too many to name individually, but they know who they are and I thank them dearly. But every politician also knows that you can do nothing without your staff team. Over the years, I have been supported by so many hard-working, committed and incredible people, not least the brilliant Kate Watson. She, and they, will always be family.
Speaking of family, I could not do it without mine. I thank them for their love, patience and understanding and, most of all, for making sure that my feet are, and always will be, firmly on the ground. I hope that I have done you a little proud. I am certainly proud of each and every single one of you.
I am joined in the Gallery today by my mother and father, faces that I know are well known to many noble Lords, because, yes, I may have been the first person of Muslim heritage to lead a major political party in the UK, but I was certainly not its first Muslim MP. That achievement belongs to my father. Almost 30 years after his election as the Labour MP for Glasgow Govan, it is truly humbling for me to be standing here addressing what he would call the other place. I imagine that in some ways this will feel like a bit of a homecoming for him. Many noble Lords served with him and so have known me from a very young age, but let me reassure them that, while I have aged, they have not.
I look around the Chamber and see many who have supported, encouraged, advised, consoled and even, on rare occasions, rebuked me over the years. I am sure that will continue. I hope noble Lords will forgive me for remembering one person in particular, Baroness Meta Ramsey, who remains in our hearts today.
That brings me to the here and now and why I answered the call to serve. I played my part in helping the Labour Party succeed at the last general election, but our new Prime Minister must succeed, this Government must succeed and, most importantly of all, our country must succeed. I am determined to play my part in making that happen. As the late, great John Smith once said:
“The opportunity to serve … is all we ask”.
I could not turn that opportunity down.
But there is also, in my view, a bigger fight that cannot I walk away from and which I am determined to play my part in. That is the fight for the heart and soul of our nation. It is about who we are as a people and as a country. For me, that goes beyond the usual mainstream political divide. Who are we as a country? Do we continue to look out for and love our neighbour or do we treat them with suspicion? Are we a country that succumbs to the politics of division and hate or are we going to make sure that we have a country and a politics that believes in unity and hope? That is the generational challenge for all of us and one that I hope we overcome.
It is no secret that I have expressed public views on this place before. I, alongside a certain former Mayor of Greater Manchester, now the Prime Minister, advocated for reform of this institution. I reassure noble Lords that I did so questioning the principle, not the purpose or the people. I continue to support a more democratic and representative upper Chamber, a senate of the nations and regions.
I am deeply honoured to have been asked by the Prime Minister to serve as the UK’s Minister of State for Trade, with a clear mission and objective to make the UK the most connected economy in the world. That will be measured in maximising exports going out of the UK and investments coming into the UK and in making sure that good growth is felt in every postcode, every region and every nation.
In the closing moments, let me make sure that I also address some of the challenges raised in the Question. We have greater economic insecurity than perhaps ever before, and I think this country has to demonstrate trade and economic leadership. That means building more partnerships and embracing a more interconnected world rather than having over-protectionism in this country or, indeed, across the globe. We can see many of the challenges of the new economy in our postal delivery service. Our economy is changing, and habits are changing. We are now sending fewer letters than ever before, but we are sending and receiving more parcels than ever before, with 4.2 billion items sent in the last year alone. We have the rise of new online giants such as Amazon, eBay and AO, to name a few. That is putting more pressure on our SMEs and businesses, and how do they compete?
People have a lot more demands of what they expect from a quality service in postal deliveries. Yes, satisfaction is relatively high, but noble Lords are right to say that the consistency of that service and its handling of complaints is nowhere near good enough. The Minister in the other place has met Ofcom and businesses to make known to them that she is not content with that performance so far. I say again that I am happy to meet individually any noble Lord who has a care about this issue and I am happy to robustly challenge Ofcom and the businesses related to postal delivery services to make sure that they live up to people’s expectation.
In closing, it is an honour to be here. I thank the Whips for making sure I get to work here straightaway, and I look forward to working with all noble Lords to deliver for all the great people of this great country.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
My Lords, I congratulate my noble friend Lord Sarwar on a truly excellent maiden speech. Delivering your first speech from the Government Dispatch Box is not easy. That was an outstanding, articulate, fantastic speech. We are so lucky to have my noble friend in our House. We look forward to hearing him many more times. My noble friend brings many years of experience, having served in the other place and the Scottish Parliament. He has a distinguished record of public service. We all look forward to having him here with us and to hearing more contributions from him. I believe he is on his feet in this House again tomorrow, so we are keeping him busy right from the start. We have had a fantastic speech, and we are so lucky to have him here.
Lord True (Con)
My Lords, the Captain of the Gentleman-at-Arms has made a rather irregular intervention, which I thoroughly approve of. Since, by accident, I happen to be here as Leader of the Opposition, on behalf of these Benches I also congratulate the noble Lord, as I know any of our colleagues who might have spoken after him would have done, on a most distinguished maiden speech. We greatly enjoyed it. It was delivered with fluency and charm, and he already demonstrates the civility that is the great thing about this House. We do not shout at each other, at least not inside the Chamber. I recognised what the noble Lord said about sometimes needing a thick skin in Scottish Labour politics. I have to tell him that sometimes you have needed a thick skin in English Conservative politics. I congratulate the noble Lord, and we look forward to hearing him on many future occasions.
Government Political Priorities and Legislative Agenda
(1 day, 7 hours ago)
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Lord Hunt of Kings Heath
That this House takes note of the Government’s political priorities and legislative agenda.
Captain of the King’s Bodyguard of the Yeomen of the Guard and Deputy Chief Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, as set out on Today’s List, Back-Bench speeches in this debate should be limited to four minutes. I am sure I speak on behalf of Members across the House when I say that I would be grateful if Members could stick to this advisory time to ensure that the Minister has adequate time to respond to the points raised.
Lord Hunt of Kings Heath (Lab)
My Lords, I want to start this debate by paying tribute to Sir Keir Starmer for his immense services to the country. He took Labour to a landslide general election victory. He inherited a country reeling from 14 years of Conservative rule resulting in a weak economy, failing public services and shockingly run-down defences. Under his stewardship the economy grew, public services improved, violent crime reduced and our international reputation has been enhanced, not least because of his stalwart support for Ukraine.
No one can be in doubt that this country faces considerable challenges. As the Prime Minister told the Commons on Tuesday:
“Things are not working as they should. Life is too expensive and too hard for too many”.—[Official Report, Commons, 1/9/26; col. 26.]
The Prime Minister believes that much of this malaise has been caused by a series of damaging wrong turns that centralised political power and surrendered public control over vital utilities, leaving citizens vulnerable to inflated cost, which was then compounded by Brexit.
The noble Lord, Lord True, said in his eloquent tribute to the noble Lord, Lord Sarwar, that we do not shout at each other in this Chamber. That is right, but I want to comment on a remark he made yesterday on the Statement when he accused this Government of going back to the 1970s. I gently point out to him that this country was much more equal in the 1970s. The last 40 or so years have seen us lose that equality, with 10% prospering but 90% falling behind or stagnating. Many of the places and people most affected have not recovered from deindustrialisation.
The Government are ambitious to improve the standard of living, sort out social care and housing, boost vocational education, meet our NATO defence commitments and make the UK’s voice count. The Prime Minister is clear that devolution is the key to progress and prosperity, with the setting up of No. 10 North at the heart of the growth agenda. As a Brummie, I say that we have now redefined ourselves as being part of the north.
The immediate measures taken by the Government are important both in themselves and as a visible sign of intent for the longer term. They include: capping bus fares at £2 in England, which has been a huge boost to many, many people; cutting VAT on electricity bills; reducing tax on pubs; investing to get rough sleepers off the street; funding to support the delivery in the first instance of more than 70,000 social homes; and action on the mountains of illegally dumped waste. The Prime Minister is using government to make a difference for people who feel hard pressed, solving problems that have been long neglected or where public authorities have been too slow, unwilling or seemingly powerless to act.
The economy is clearly critical to this. Despite doom-laden predictions, the UK economy had GDP growth of 0.6% in the first quarter, followed by 0.4% in the second quarter. In fact, the UK is currently the fastest-growing G7 economy. Borrowing this fiscal year is running £6 billion below last year and, as the ONS has noted, it was the 12th lowest April to July period since 1993.
The noble Lord, Lord True, mentioned borrowing yesterday. We hear a lot from the Conservatives about borrowing, and they certainly know a thing or two about it: the last Conservative Government borrowed more than the G7 average in every single one of their 14 years in Government. This year, this Government are borrowing less. I have to say that the appointment of Andrew Griffith, the co-author of Liz Truss’s mini-Budget, as shadow Chancellor makes one question the seriousness of the claim that the party opposite has to economic competence.
In relation to debt, recent analysis by Morgan Stanley compared its estimate of the UK’s 96% general debt-to-GDP ratio at the end of this year with that of 120% for China, 120% for France and 125% for the US, with Japan and Italy higher still. Morgan Stanley commented two weeks ago that the UK stands out among the major economies in trying to do something about rising debt.
Clearly, growing the economy becomes crucial to the future. There are three points that I will put to my noble friend that I think are important to growing the economy. The first is tackling the high costs of and long timescale for building essential infrastructure in this country. The Centre for British Progress has reported that British public investment is on a par with OECD averages but we get less back from it. The government response to the Fingleton review on nuclear regulation put it very well:
“Our regulatory, environmental and planning processes have become too fragmented, too cautious and too slow, driving up costs”.
The recently enacted Planning and Infrastructure Act will deal with some of the blockages, and I am delighted that elected mayors are going to be given powers to take over large-scale planning applications. I urge the Government to go further and extend that to energy infrastructure projects, and to speedily legislate for Fingleton’s recommendations.
A second key factor in growing the economy is sticking to our commitment to net zero in the face of ever-worsening climate change. The Conservatives’ retreat from their commitments on net zero—this was the party that actually legislated for net zero—is no reason why we as a Government should resile from those targets; nor will obsessing about marginal increases in output from the rapidly declining North Sea oil and gas reserves have any impact whatever on energy prices. I readily acknowledge that energy prices are too high both for industry and domestically, but I hope the Government will be brave on this and fundamentally reform our flawed energy pricing system, in which volatile gas prices can set the cost of homegrown renewable energy. So, no retreat on net zero—it has huge potential for growth. CBI analysis recently estimated it to be a £105 billion sector, generating highly skilled jobs across every part of the UK.
A third factor in growth, for me, is getting young people into work. Alan Milburn’s seminal review identified nearly 1 million 16 to 24 year-olds who are not in education, employment or training, and of course behind those statistics lie stagnated aspirations and hopelessness. Over the past decade, the proportion who say they are NEET due to a work-limiting health condition has increased by 70%. Once health-related inactivity takes hold, moving those people into employment becomes incredibly challenging.
In contrast to the Conservatives’ brutal approach to welfare, I believe we need a welfare system to protect those who cannot work and provide proper financial security for people with severe or enduring disabilities. But for young people who could participate with the right support, our welfare system should be a springboard to employment. That is why the Government’s emphasis on vocational education, with links into local industry, is so important, and that was a subject of an excellent debate earlier today led by my noble friend Lady Morgan.
I am convinced that negative attitudes towards vocational education have bedevilled this country over decades, leading to an FE sector deprived of resources, where staff are underpaid compared with schoolteachers, and where a VAT burden is unfairly placed upon them—I hope my noble friend may have some good news in relation to that. There is no question in my mind that technical excellence needs to be recognised as being as valid as academic excellence. Encouraging and allowing young people to follow a skills route at 14 opens the gateway to huge opportunities. The noble Lord, Lord Baker, spoke eloquently in the earlier debate about the importance of technical education.
Of all the social issues we face, for me the provision of adult social care is the most pressing. Its current shortcomings impact badly on the NHS, as can be seen from the spectacle of corridor care, delayed discharges and too many people admitted into hospital. I also echo what the noble Baroness, Lady Casey, said in her July speech to the LGA when she argued that previous attempts at reform have failed because they have either tinkered with parts of the system or tried to push through changes without securing public consent for the tough choices involved, and there will be tough choices.
The NHS needs to change as well. One reason—this comes from my personal experience with in-laws and my mother—that so many people are inappropriately in hospital is that, in too many cases, the NHS itself puts up barriers to treatment at home or in care homes, which forces people into A&E. We need the NHS to really start to shift that proposition.
On the global stage, the Prime Minister is making the UK’s voice count. His decision to help Ukraine build long-range missiles is both encouraging and a sign of the UK’s unwavering support for that country.
The global picture is one of increasing instability, as Mark Carney, the Canadian Premier, pointed out in his Davos speech last year. He said that
“there is a rupture in the world order … we live in an era of great power rivalry”,
with the rules-based order fading. In calling for co-operation among middle powers, Carney said that middle powers are not powerless:
“They have the capacity to build a new order that encompasses our values, such as respect for human rights, sustainable development, solidarity, sovereignty and territorial integrity of … states”.
We have huge potential in the UK to co-operate with like-minded countries, and that of course must include the EU. On that, the Prime Minister emphasised the benefits of a closer UK-EU relationship, forging links on trade, security and economic growth. This of course very much links to defence.
The 2025 strategic defence review was clear. It said:
“For the first time since the end of the Cold War, the UK faces multiple, direct threats to its security, prosperity, and democratic values”.
The UK is committed to reaching NATO’s target of 3.5% of GDP on defence by 2035. The defence investment plan has brought an additional £15 billion for defence over the period to 2029-30, on top of what was allocated in the 2025 spending review. Despite media comment over the last few days, the Chancellor has been consistent over the last few months that he would set a clear path to meeting our 3.5% NATO commitment at the next spending review and a target date for 3%.
I just repeat the words of the Prime Minister and Chancellor when they said:
“The determination that we share is to do what’s necessary to keep the country safe, and a recognition, quite simply, of that truism, that for any government the first duty is to keep citizens safe”.
What else is there to say? I believe that our new Prime Minister offers us hope through strong intent and hard actions, actions to deliver economic growth, improve security, and provide better public services and relief from the cost of living increase. For all our problems and challenges, we as a country have very much to be proud of. We have so much going for us and it is that and the hope that the Prime Minister brings that underpin this Government’s programmes and priorities. I beg to move.
Baroness Coffey (Con)
My Lords, there is a street in Liverpool called Hope Street. It is very special. At each end there is a cathedral and in between are cultural wonders: not only the grade 1 listed toilets in the Philharmonic drinking house—the pub—but the Philharmonic Hall, the Everyman Theatre and, indeed, places of education. Hope has been the big vibe of our new Prime Minister, but we need to make sure that hope translates into delivery. I, too, am a person of faith, but having heard what the Prime Minister has been saying in various speeches, it may take a leap of faith to know how we will get that growth and hope for young people.
The Prime Minister should take the advice of the noble Lord, Lord O’Neill of Gatley, who, just after hearing the Prime Minister the other day, said that what he said would worry investors. I appreciate that the Prime Minister wants to succeed—I am not disputing that in any way—but to try to destroy the past, including the very successful years of the Blair Government, would be a mistake, as would thinking that the 1970s were all rosy. We had huge mortgage rates and inflation and you needed candles to do your homework. I do not know whether the House of Lords was even able to keep the lights on while legislating.
However, I welcome the commitment made by the Prime Minister yesterday to get defence spending to 3% of GNI by 2030. I am sure that, if the Prime Minister needs to go back to the House of Commons to correct the record, he will but, actually, I do not think he wants to lose another Chancellor. I am confident that they will find a way together. They might want to take the advice of the leader of the Opposition, who set out a path to achieve that.
The First Secretary of State made an interesting Statement yesterday about rewiring the state. I welcome a lot of it, including more power going back to Ministers, who should be accountable. We will have to consider how we will legislate for quite a lot of it, because it is through legislation that many powers are being taken away from Ministers and given to non-ministerial departments and other bodies. We will also need to look into what is happening with the delays and consultations referred to. To give an example, we know that Labour Back-Benchers are nervous about changes to the welfare system. They are very quick to vote for legislation that rapidly increases benefits, but not so quick to look into necessary reforms. Indeed, the Timms review has apparently been delayed again. These are the sorts of challenges that vibes and hope will not get through; it will take detailed work to genuinely get the country on to a better path in terms of prosperity for all.
The noble Lord, Lord Hunt of Kings Heath, seemed to spend half his speech talking about the Opposition instead of the future of the Government, although he did mention the Fingleton review and the like. I gently remind noble Lords that, although there were, undoubtedly, difficulties in our time in office—part of which we shared with the Liberal Democrats during the coalition—we inherited an 11% deficit in 2010 and went through Covid when, frankly, the whole economy juddered to a halt. We undertook unprecedented borrowing to protect people’s health and to be ready to spring back, but difficult decisions were made which will take time to recover from. Therefore, hope is not enough. Let us all work together to make sure that we get the growth that we all desire.
Lord Storey (LD)
My Lords, I am sure we all wish Andy Burnham well in his new job as our Prime Minister. He is able to connect with people, is a good communicator and he listens. He has certainly said the right things and spoken honestly and with sincerity about the major issues that we face. But speaking about issues is the easy part; carrying out the actions and holding his and his Government’s nerve when the going gets tough is a very different matter.
He was right to say that Brexit has had a devastating effect on our economy. It may be a bit of an understatement. I would also remind him, supportively, that if Labour at the time of Brexit had fully engaged with the remain campaign, rather than its then leader’s pipsqueak response, we would still be in and at the heart of Europe. As a result, GDP in the UK is 6% to 8% smaller than it should have been, and we have lost £90 billion a year in tax revenues. I look forward to the Government moving much closer to Europe on so many fronts and laying firm foundations to our eventually reapplying to join the EU.
The Prime Minister is committed to properly funded social care provision and has reached out to other parties to work with him. How refreshing is this? My party, which has also championed this issue, will certainly do so. I remember when local authorities had the financial resources to open care homes for the elderly. We have seen how private equity companies have moved in on children’s homes. I do not want to see care homes being run by multinational companies; my hope instead is that they be run by LAs, charities and not-for-profit providers, which are part of the community. The duty of any Government is to protect its people and ensure that the economy is on a firm footing. Paying debt charges—borrowing charges—of between £300 million and £337 million every single day is mad. Just think what that money could be spent on.
In financial education we teach children the dangers of interest charges. A “live now, pay later” economy is not what we should be having. To get the economy on an even keel will require nerves of steel, and tough decisions and tough choices will have to be made. Welfare spending is forecast to exceed £400 billion a year by the early 2030s. UK borrowing costs have risen sharply, with the 10-year gilt yield reaching 5.23% and the 30-year yield reaching 5.87%. We are being warned that we have halved the roughly £24 billion of fiscal headroom, while public spending is forecast to reach 44.9%.
The world is a very dangerous place, and who would have thought there would be a war on our own doorstep. Putin’s Russia is pushing the boundaries all the time, whether through proxy agents or misinformation. As a nation we need to make sure that if, God forbid, there is armed conflict, we can protect ourselves and support others. In recent years our military has been hollowed out, leaving the Army and the Navy the smallest since the Napoleonic wars. We need to be able to commit to our contribution of 3.5% not by promises but by having identified the money upfront. My party suggested war bonds as a means of raising finance. I hope the Government will explore that option.
Finally, I want to say how disgraceful it is that we are heading towards 1 million people not in school, training or a job. I agree with the noble Lord, Lord Hunt, on this. We cannot wait for Alan Milburn’s report: we must do something now.
The Lord Bishop of Manchester
My Lords, the economist Keynes, upbraided for changing his view on some matters, allegedly responded with the phrase:
“When the facts change, I change my mind. What do you do?”
In the 26 months since the general election, the facts have changed. We have seen the US assault on Iran, the explosive growth of AI, the devastating impact of climate change—alluded to by the noble Lord, Lord Hunt of Kings Heath—threatening harvests here while killing hundreds in Nepal and Tibet. Meanwhile, we stand closer to global war than at any time since my childhood. The facts have changed.
Keynes changed his mind. He did not resign and reapply for his post; rather, he sought to win others to his revised opinions. I have heard it said that our new Prime Minister must stick to the 2024 Labour manifesto or go to the country, but that is not how I believe Parliament should work. We are a well-informed and reasonable House. Many of us—not least on my own Bench, and the Cross-Benchers—owe no allegiance to any party master. We swear our oath, as do all noble Lords, to the Crown. We will scrutinise whatever matters are brought before us with our usual diligence. I would, however, be surprised and alarmed if we withheld consent simply because a proposal reflected the context of 2026, not 2024.
I turn to two specific points. I welcome what we heard from our Prime Minister about renewed efforts to tackle homelessness. My churches and other places of worship have been at the forefront of work on this, alongside the Greater Manchester Combined Authority. The scandals of rough sleeping, of children trying to access education while living in temporary accommodation, cannot be allowed to continue. Having recently chaired the Manchester social housing commission, I welcome a determination to build more social homes.
Along with the noble Lord, Lord Hunt of Kings Heath, I warm to the speeding up of the Casey review into social care. I pray that this time, we will end up with action, not just another report. I remember the Dilnot report, which I thought was a good thing at the time. But if we have to consider again in this House, as I suspect we will, matters such as assisted dying, at least we can do so in the context of a proper offer of palliative care to all, as the Prime Minister has said.
Three years ago, I was privileged to stand alongside Mr Burnham when he and the faith leaders of Greater Manchester met Pope Francis. We did not just give Pope Francis a signed Manchester United football shirt; we also committed ourselves to our net-zero target. The climate emergency is not some woke middle-class distraction; it is destroying the lives and livelihoods of the poorest across the globe—those in the communities I meet when I visit my Anglican sisters and brothers in the global South—and it is an increasing drag on well-being and the household economy in Britain.
This is, by its nature, a short debate, so I urge the Government to consider whether the best way to present fresh proposals to your Lordships’ House would be through a fresh Session of Parliament before the end of this year, so that His Majesty can set out a full programme before us and we can have a more substantial discussion at an early stage.
I began with an economist and segued via a pope, so let me end with a Protestant theologian. Martin Luther, challenged by the inertia of so much of the church of his day, urged his followers on with the words:
“If you must sin, sin boldly”.
I urge our new Prime Minister and his Government to show similar boldness, and then let us here in this Chamber weed out any of it we judge to be a sin.
Lord Eatwell (Lab)
My Lords, economic growth is the Government’s prime objective. Growth provides the resources to fund all our national goals, from health to the police; from defence to a fair distribution of income. Central to the growth objective is investment. Rachel Reeves laid the foundations for a growing economy with a 12% increase in public investment this year, but on that foundation must be built a programme of increasing investment in science and technology—the inventive core of a competitive economy.
Reflecting on the underlying strengths of Britain, politicians invariably cite our outstanding research universities, yet we now have daily reports of the financial difficulties being experienced by the university sector. We can debate the origins of those difficulties, but that is to look backwards. Looking forwards, we must ensure that the research universities thrive. They are Britain’s number one strength. That is why it was particularly distressing to learn on 9 July of the substantial cuts that are to be made to scientific research. By 2030, spending by the Science and Technology Facilities Council is to be cut by 15% in money terms, not even allowing for inflation. Research potentially impacted includes work on new cancer treatments and battery design.
The national research laboratories face the tightest squeeze: their funding is to fall by over half. Those are the national labs that developed radar, the computer and high-strength carbon fibre. The touch screen of your mobile phone was invented at a British national research lab—the Royal Radar Establishment. The national labs undertake research that would never be done in the private sector because the risks and uncertainties are too great, and the initial market often non-existent. Yet discoveries in those labs, often by serendipity, have changed the world.
Some research may, at first sight, appear irrelevant in the light of our economic problems—research in theoretical physics, for example—but that is a serious misconception. Consider, for example, the caesium atomic clock. Experimental physics developed at one of our national labs is now the basis of the timing of the internet and global navigation systems. Consider X-ray crystallography, a highly specialised branch of physics concerned with the arrangement of atoms. This technique now underpins genetic engineering, biotechnology and modern pharmaceuticals. More generally, consider the fact that, for years, this country’s finest mathematicians have worked on number theory, proving that the series of prime numbers is infinite, worrying about the minimum distance between primes, and so on. Totally abstract—yet, with the advent of digital computing, number theory is fundamental to all secure programming, including the programming of your mobile phone.
If Britain is to rediscover its competitive strength, we must not reduce our commitment to science. We must not lose our lead in research areas. The 9 July cuts are a signal of the nation’s faltering commitment to industrial strength. I trust that in his speech scheduled for Monday, the Chancellor will be able to assure the country that the new Government will reverse the cuts of 9 July.
Baroness Benjamin (LD)
My Lords, a new report by Justice, a law reform charity, and King’s College London has found that survivors of the Home Office Windrush scandal who seek compensation should receive the same free legal support given to victims of the Post Office and infected blood scandals. The report points out that the Government have set up a series of compensation schemes in response to all three state injustices, yet Windrush victims have been denied free legal help with their claims. The Home Office, which runs the Windrush compensation scheme, has argued that the process is more straightforward than others and says it was designed to be accessible without free legal support. But the report found that the Windrush scheme is just as complicated as the others, involving assessments of historic laws, facts and evidence that are complex even for lawyers and judges. Recalling precise dates and sequences of events in the distant past can also prove challenging, particularly for very elderly claimants. Also, victims suffering from severe trauma may find it all too painful to engage with the scheme.
Lawyers for Windrush claimants have described the process as torturous, blaming a culture of disbelief among Home Office staff for delays and unreasonable refusals. Post Office claimants have the option of taking a fixed compensation payment between £75,000 and £600,000 at the start of the process, allowing them to avoid the stress of providing detailed evidence to demonstrate their losses. But there is no equivalent option available to Windrush victims, who have to demonstrate their losses through a lengthy and complex claims process, with no funding provided for any expert evidence that may be needed.
Windrush victims also find themselves at a disadvantage if they wish to challenge the compensation order, as the scheme lacks an independent appeals process, unlike the infected blood and Post Office schemes. There is no justification for treating Windrush claimants differently from other scandal victims. If the Prime Minister is serious about righting this historic injustice, he must level the playing field and give them the legal support they need and deserve. Yes, a Windrush commissioner has been appointed. But to improve fairness and accountability, the report calls for the provision of funded legal advice and the creation of an independent expert appeals body with the power to make binding compensation awards for the Windrush scheme.
Given this new evidence for change, will the Government act on the findings of the Justice and King’s College London report to deliver a fairer and more accessible compensation scheme for the Windrush victims and survivors? The Windrush generation answered the call to come and rebuild Britain after the war. Surely the Government should now answer their call for justice and to restore trust. I look forward to the Minister’s response.
Baroness Royall of Blaisdon (Lab)
My Lords, the values that drive the Government’s political priorities are Labour values, shared by the new Prime Minister and the former Prime Minister, to whom I also pay tribute. There has, however, been a very welcome change of tone and direction, building on the work of the last two years. I celebrate the hope, the optimism, the positivity and the determination to do politics differently. Our citizens want and deserve problem-solving rather than point-scoring, because that alienates people rather than encouraging them to engage.
The cross-party talks over social care are a fine example of doing things differently—understanding that achieving consensus is a strength, not a weakness. The Prime Minister shows great courage in his resolve to address the desperately needed reform of social care. He has a very long-term interest in this, which is well known. There is a huge lack of workers in social care, with a vacancy rate of more than 8%. Will consideration be given to enabling more workers to come from overseas so that we can provide a better service in social care while it is being reformed?
I agree with the Prime Minister’s analysis of the current situation in this country and the damage done to the fabric of our country and the economy, including by Brexit, which, as he said in the Commons,
“compounded the damage, ushering in a decade of low growth and stalled regeneration”.—[Official Report, Commons, 1/9/26; col. 27.]
His words will, I hope, give impetus to the UK-EU reset.
The economic challenges are mighty. We are continually buffeted by global storms and people are suffering, but action is already being taken to address the lives of people, including the homeless. This is a moral but very practical mission. The right reverend Prelate spoke about homelessness. On the day that he became Prime Minister, before he went to the Palace, the Prime Minister went to the Passage, a homeless charity where he met people sleeping rough. In his speech outside No. 10, he pledged to end rough sleeping in England and, just last month, he announced immediate action to offer everyone who needs it a route off the streets by Christmas. Accommodation and support will be rolled out across England this winter, backed by £442 million of funding. Areas in the greatest need will receive the largest share of the money, with mayors working with councils to make decisions on delivering help where it is needed most. This, I believe, is devolution in action.
Homelessness damages the lives of individuals and their physical and mental health, and it affects their dignity. It impacts on many areas of policy, not least the health of our nation. One in six people recalled to prison in breach of their licence is homeless. They have not committed a further offence; they simply do not have the roof over their heads that everyone deserves. If a person is homeless, they cannot get or sustain employment. If a child is in temporary accommodation, they cannot do their homework. Safe, affordable homes are vital. I warmly welcome the £10 billion pledge to build 70,000 homes in the first tranche of the social and affordable homes programme in England. It would indeed be great if they could be built near railway stations.
This Government are radical and will act to ensure sustainable change for individuals and the country, galvanised by hope. To quote Bertrand Russell:
“Man needs … hope and enterprise and change”.
Baroness Sheehan (LD)
My Lords, I am pleased that we are having this very necessary debate, and I thank the noble Lord, Lord Hunt of Kings Heath, for moving it, not least because it gives me a chance to highlight my Private Member’s Bill targeting waste crime. It is a critical issue that I am delighted to say the Prime Minister himself has prioritised for action—not just words this time, we hope.
Last year, the report on waste crime by your Lordships’ Environment and Climate Change Committee, which I chair, drew attention to the appalling illegal dump at Hoads Wood, a protected SSSI site in Kent. Despite persistent warnings from local residents to the council, the Environment Agency and the police, nothing was done. The week after our report appeared, the notorious Kidlington dump was discovered, with over 20,000 tonnes of illegal waste. These are not one-off cases. Numerous other super-sites continue to blight communities for years without intervention, not least the dreadful site in Bickershaw, Wigan, in the Prime Minister’s own constituency—that may have had something to do with the prioritisation; I do hope so. Around 38 million tonnes of waste are illegally managed each year. The waste services representative body, the Environmental Services Association, estimates lost tax revenue at £2 billion each year, which is double the official estimates.
While criminals profit from this low-risk, high-reward enterprise, the financial burden of clean-up falls squarely on taxpayers and private landlords. Organised crime groups are comprehensively outmanoeuvring our enforcement bodies. To solve this crisis, we must trace the waste to its source and turn off the tap. Rather than continuously using public money to rectify environmental and community damage, my Private Member’s Bill—the Corporate Waste Responsibility Bill—addresses the problem at its roots.
The Bill is simple. It holds large corporations legally and financially accountable for the waste they produce or control by, first, requiring large companies to designate a named director to be responsible for enforcing statutory waste duty of care compliance. That means overseeing the journey of the waste from its production to its final resting place. Secondly, it imposes direct financial liability on these corporations for the clearance and remediation of their waste whenever it is mismanaged and the duty of care standards are breached. By establishing clear board-level accountability and ensuring that businesses bear the financial responsibility for their waste, this legislation aims to halt illegal waste sites and dismantle waste crime before it begins. I hope the new Secretary of State and the Prime Minister will give it their support.
Lord Whitty (Lab)
My Lords, my noble friend Lord Hunt gave an eloquent introduction to this debate as to why we should support the Government’s political aims. I am a well-known Labour Party hack and I tend to vote for the Government on most occasions, but I have to admit that, in the early months of this Government, I had my doubts from time to time as to whether I totally shared what I thought were the political aims of this Government; for example, when we had the winter fuel payment crisis, the national insurance increases, and the tax on farmers, which has been one of the Treasury’s favourite things to do for years, although previous Ministers had resisted.
However, I think the new Government under Andy Burnham have given us a new sense of purpose and direction. In general, I support the way in which they are going, but I would like some clear indication from my noble friend Lord Collins at the end of the debate that I am right so to do. I would like to have some commitments reaffirmed, in particular on net zero, because there has been some sniping, not just from the Opposition, various business interests, the petrostates and the United States, but from some within the Labour movement and others who would normally be supporting the Government. We must reiterate those objectives and our path to net zero must continue. That does not mean that there are not some compromises on the way, but the sense of direction and momentum need to continue and, if anything, be substantially enhanced. I think compromises along the lines that were advocated in the FT yesterday, on North Sea gas, might be sensible. But they should not stop the pace of switch to clean energy for the rest of this country.
There are other priorities I would like to see emphasised more, and the way in which we are going to do them to be clearer, in particular on housing. The numbers involved in housing have been reiterated recently by Angela Rayner and I welcome that recommitment, but there are some serious problems in the delivery of those houses; I am interested particularly in the amount of social housing that will be produced. The industry suffers from a double problem of an oligopoly among the developers and housebuilders, which constrains the choices that local authorities and others have on housebuilding and the pace at which it can be delivered, and a lack of adequate skills in the construction sector. We need to have a clear commitment to address both those problems.
We have just had a debate on employment, in which I and others emphasised the need for employment to be a serious priority for this Government, and how the coming Budget in six weeks’ time needs to be clear that employment, the quality of employment and the pace at which we can deliver jobs to the majority of our people need to be part of our economic policy.
There is a lot of debate about the fiscal rules. Rules are constraints and standards; they are not objectives. Objectives of economic policy and economic growth need to increase and develop the employment of the people of this country and the quality of employment which is available to them and their successors. If the Government can reiterate their commitment on these fronts, I will continue in my support for as long as I am able.
Lord Redwood (Con)
My Lords, I agree with the noble Lord, Lord Whitty, that the national insurance increase and the farms tax were very bad ideas which did considerable damage. It is a pity that more noble Lords behind the Government did not make that clearer in time to avoid the disaster.
I hope that the new Prime Minister and new Chancellor will have learned from the bitter experience of the two Reeves Budgets, which allowed a large amount of adverse speculation, threatening everyone who is successful or enterprising or who has some savings with higher taxes, and then the Government were surprised when confidence was knocked; then they put taxes on in the Budget, which do considerable damage, and we then ended up with higher unemployment, fewer job vacancies, cancelled and deferred investment projects and a lack of confidence in the business community. We need the opposite of all those things, and I wish the new Prime Minister well if he can translate his TikTok optimism into a genuine set of policies which will promote enterprise, business, jobs and success, which are what is needed in this country.
As someone who has had conversations with and offered advice to a series of Prime Ministers and Chancellors on the Conservative side from Margaret Thatcher onwards, I have had the chance to observe at quite close quarters what has succeeded and quite often what does not succeed, and I have tried to learn from those experiences. I will share this piece of advice with the new Treasury team: take the bond market seriously. You may not like it and you may think it is wrong, but you are going to find it very difficult to argue with it.
Those very high costs of government borrowing now are a message. They are saying that the tax option is no longer there. Put taxes up more and you may even collect less revenue. They are saying that the spending is too high. You need to look at the benefits bill, as my noble friend the leader of the Conservatives in this House and our right honourable friend the leader of the Opposition have set out in considerable detail, describing how sensible, modest cuts and proposals would help—and by all means accelerate the work on how you can get more young people into work by positive means and get them off benefits, because that is crucial.
However, look at those interest rates. Labour made a lot of fuss when for one day under Liz Truss there was a spike to quite high levels in government borrowing costs, and some of them still carry on. I do not think they have understood that for the whole of 2025 and now for the whole of 2026 to date, government borrowing costs have been considerably higher than that one-day spike under Liz Truss. If the Truss spike was wrong, they are gratuitously wrong on an extended basis. There are two differences in the situation. The Truss Government did not borrow a penny at that very high rate on the spike day; this Government are borrowing, day after day and week after week, at these very elevated rates, which are at least 20% higher than the worst rate under Liz Truss.
The Government have not persuaded the Bank of England to stop selling bonds into a very depressed market, whereas the thing that got the rates back down again after the Truss Budget—which was spending too much—was of course the Bank of England stopping, for a period, selling the bonds at very depressed prices. The Government need to get a grip on that because they are doing themselves and us grave damage. I want this country to succeed, I want a strong, fast-growing economy, and I want those young people back into work. That takes lower interest rates, not higher interest rates, and it takes proper fiscal discipline. Spouting about fiscal rules does not work. You have to do the hard work and get the Budget into more balance.
Baroness Keeley (Lab)
My Lords, I want to focus on the Government’s priorities on creative education and the importance of making changes to improve the uptake of music education in state schools. I warmly welcome the Government’s acceptance of the curriculum and assessment review recommendations, including the removal of the Ebacc performance measure. This gives us the vital opportunity to rebalance education in our state schools and to support creative subjects and pathways, which have suffered a serious decline since 2010.
The Cultural Learning Alliance—CLA—has reported since 2024 on what it described as a “denuded Arts education landscape”. It has highlighted the erosion of arts provision in state schools and argued that the narrowing of subject choices through the EBacc led to a systematic devaluing of arts subjects and experiences.
In 2024, the CLA reported that the take-up of arts GCSEs had fallen by 42% since 2010. As the curriculum and assessment review highlighted, music has the highest disadvantage gap of any GCSE subject. It is deeply concerning that an “Arts entitlement gap” persists in state schools, with socio-economic background remaining a major determinant of arts participation at 14, 16 and 18. Schools in the most deprived fifth of local authorities are more likely to have no entries in some arts GCSEs. Fifty-four percent of state schools in those areas have no GCSE music entries, compared with only 21% in the least deprived authorities. Similarly, the most disadvantaged regions have the lowest A-level arts take-up. While welcoming the Government’s ambition to revitalise arts education, the CLA has warned us that
“the long tail of EBacc damage … will continue to impact subject choices at Key Stage 4”
and post-16.
Last night, I was at an event of the excellent Royal Philharmonic Society where they had convened the enormously talented trio of the cellist, Sheku Kannah-Mason, the horn player, Ben Goldscheider, and the saxophonist, Jess Gillam, for a discussion about music, in advance of their expected Prom on Sunday. These young musicians, who are among our most talented, were worried that music education is not in a great place and said, “It’s not what it was”. Like many musicians, they do what they can to support music in our schools, but they cannot, as individuals, solve the issues. It falls to us in this place to create a better future for both arts and music education in our state schools.
I am indebted to Professor Adam Whittaker and Dr Anthony Anderson for their research on disadvantaged-related attainment gaps in music education. From their work, I learned the disturbing fact that, in 18 local authorities, either only one school offers a music qualification—A-level or vocational—or, in the worst cases, no school does. These authorities include Knowsley, Hartlepool, South Tyneside, Rochdale, Salford and Tameside, as well as four London boroughs. This decline in music education must be reversed if we are serious about protecting the talent pipeline which we have in this country into our universities, conservatoires, orchestras and our successful music industry.
This Labour Government have rightly committed to removing the EBacc performance measure, but we now face the task of rebuilding music education, particularly in state schools serving our most deprived communities. In your Lordships’ House, we can continue to press DfE Ministers to reverse this decline—which happened of course under Conservative Governments—by rebuilding the music teacher workforce and restoring the bursary for music teacher training.
We have talked a lot in this debate about hope. My hope is that, under this Government and with this new PM, every young person, whatever their background, has the chance to choose music.
Lord Liddle (Lab)
My Lords, I congratulate my noble friend Lord Hunt on his excellent introduction to this debate.
I first met our new Prime Minister when he was a special adviser in the first term of the Blair Government. He was a great friend of the man with whom I shared an office in No. 10, James Purnell, who is now his chief of staff. It is a very nice thought that, 28 years later, they are working together to try to run the country.
I have always liked Andy Burnham. I have always thought he was a man with social Catholic values—if I wanted to describe it simply. I am not from that background, but I appreciate the people who are.
I want to make just one or two points—which no one else has mentioned, really—about the political reforms that Andy Burnham seems to have in mind. I am a passionate supporter of devolution. I think it will have a growth dividend, not in the immediate term but in 10 years or so. The Government should be bold on this subject. They should try to devolve real financial powers to mayoralties, and they should enable the big mayors to borrow money to finance financial projects they think are worth while.
As someone who in my political life has spent 20 years on local authorities, I would also like to see a great emphasis on reviving local government, probably with some reform of council tax—again, a long-term project, but Burnham has talked about land value taxation—and getting rid of capping, which restrains what local authorities can do and has basically destroyed the independence of local government.
I also believe that the Prime Minister is right to say that our politics needs reform. I believe in politicians working together. We cannot address long-term issues that we face, such as social care and climate change, unless we establish some degree of political consensus. Electoral reform is one way of doing this.
Thirdly, the Prime Minister is a strong pro-European. One thing I admired about him was that he came out and said that Brexit has been a disaster—and it has been a disaster. The starting point for putting that right is to be honest with the public about what the losses have been. That is the crucial thing that Burnham is doing in his approach to Europe, and while it is right that he sticks to Labour’s manifesto pledges that were made for this Parliament, at some point we should be bold about what the objective we are seeking on Europe is, and I hope he will have the courage to do that.
Lord Frost (Non-Afl)
My Lords, I am glad that the noble Lord, Lord Liddle, raised the question of Europe, because it probably will not surprise those listening to learn that I intend to say a word about that, too. I intend to say a word about it not just because I am deeply interested in it but because the new Government, the Prime Minister and his Ministers do not seem to have said a huge amount about this subject, either in the Prime Minister’s Statement earlier this week or in PMQs.
Policy has swung around a bit. We heard during the Makerfield by-election that the PM wants to rejoin, and perhaps the noble Lord, Lord Liddle, hopes that that will be the outcome of this rethink one day. Since then, the Government have retreated from it. The noble Baroness the Leader of the House yesterday said:
“We are not going to rerun the argument on Brexit in the near future”.—[Official Report, 2/9/26; col. 180.]
I suppose that leaves open the question of what “in the near future” actually means.
There seems a degree of uncertainty. On the one hand, the Government are claiming, as we just heard, that Brexit caused damage, and the Prime Minister said that too. Yet, at the same time, they are using and talking up the benefits of leaving the EU. As the noble Lord, Lord True, said yesterday, the Government are cutting VAT, which would not have been possible in the European Union, and the new Trade Minister, who gave an excellent maiden speech—I say that even though he is not in his place now—was out earlier this week celebrating accession to the CPTPP as a fantastic new opportunity for British business. Of course, none of that would be happening if we had not left the European Union. So, I am left a bit uncertain, I must admit, as to how the EU really fits into the hierarchy of priorities for the new Government. We have a new Minister in charge of the negotiations. What are we supposed to read into that?
All this uncertainty means it is sometimes a little unclear what is meant by comments on the reset. For example, the PM said this week that the country needs a good deal for farming. What does that mean? I thought there already was a deal for farming—it was announced in the summit last year. Does that mean he is doubtful about this deal? Is he uncertain that some of the protections—the carve-outs—that are needed will be secured in the negotiations? We simply do not know any of this, and that is the problem.
It is well beyond time for the Government to give a proper account of where things stand. The summit was over a year ago now, and each time there is an event or meeting in Brussels, it seems that the Government give away something, whether it is joining the ETS or the single electricity market. We learned this spring that concessions on student fees are in play, the nature of the youth mobility scheme, and so on.
It is not clear what we are getting back from any of this. I can tell you from my experience that the much-vaunted eGate access has not yet been delivered. Perhaps other noble Lords have had the same experience this summer. Arguably, the situation for British travellers is worse than it was a year ago.
The Government need to come clean about where things stand in this rather amateurish, Keystone Cops-style negotiation. We do not need a running commentary, but we do need a Statement on what the Government are trying to achieve. Will the Minister ask his ministerial colleagues to come to this House, or to the other place, and tell us what their approach to this negotiation is? What are they trying to do? Where are they trying to get to? Meanwhile, will the Government stop being pushed around and start standing up for the people and businesses of this country?
Baroness Gill (Lab)
My congratulations to my noble friend Lord Hunt of Kings Heath on securing this debate. This Government’s agenda marks a fundamental shift in how power and capital are distributed across the United Kingdom, positioning my old European constituency of the West Midlands and the second city of Birmingham as central drivers of national growth. By sweeping away decades of bureaucratic inertia and empowering the West Midlands to control its own wealth, transport and housing, the Government are unleashing the true potential of Britain’s industrial heartland.
I welcome that this Government are implementing a structural strategy to rewire the state through radical fiscal devolution and targeted regional investment through a multi-year £2.5 billion integrated settlement, and a committed 10-year retention of local business rates valued at £45 million annually. The Government are also granting the West Midlands Combined Authority and the mayor unprecedented financial autonomy. This will allow the region to manage its infrastructure independently, shifting funding away from rigid competitive bidding systems. This autonomy is already driving visible outcomes in local infrastructure, such as backing a rapid transition to bring the West Midlands bus network back under local public control, supported by a £35 million bus service improvement plan grant, which will work alongside the nationwide £2 single fare cap to lower commuting costs and link residents directly to employment plans, as my noble friend Lord Hunt outlined earlier.
I turn now to a subject closer to my heart: the regional housing crisis. The Government have injected a landmark £1.7 billion into West Midlands social housing. This funding scales up the region’s existing affordable housing framework, which has already surpassed targets by delivering 7,237 new homes in its first localised phase. However, to solve this housing crisis, we must look at the entire life cycle of a home, and I urge the Government and the Minister here today to help older homeowners, the empty nesters, to downsize and free 15 million surplus bedrooms. Therefore, I urge the Minister to consider a targeted exemption of stamp duty. On a household level, the abolition of the 5% VAT rate on domestic electricity bills offers immediate financial breathing room to families across the West Midlands.
Crucially, the economic strategy focuses on high-value industrial revival. The newly formed Midlands defence growth deal integrates local academic institutions, advanced manufacturing firms and regional government into a single ecosystem. This initiative aims to inject billions into local supply chains and create 38,000 highly skilled engineering and technology jobs across the region. To sustain this growth, the Government are introducing the West Midlands Works initiative, a comprehensive, 10-year employment plan designed to train and place 93,000 residents into stable, high-quality jobs. This is supported by an educational shift that grants 14 year-olds early access to technical qualification pipelines and direct employment needs. This agenda is a 10-year blueprint for economic resilience. It is a sharp break from the managed decline of the past, a definitive blueprint to ensure that the engine room of the UK economy is finally fired up, self-sustaining and built to win.
Lord Newby (LD)
My Lords, I wish to discuss two crucial components of the Prime Minister’s programme for growth: the devolution agenda in England and our relationship with the EU. For decades, I have advocated greater devolution of powers to Yorkshire, so I greatly welcome moves to shift decision-making out of Whitehall. I have, however, two principal concerns over what the Government are currently proposing.
First, while it is relatively clear how an existing large mayoral authority such as Birmingham or Manchester could be given and realistically manage greater powers, the position elsewhere is very much less clear-cut. The Prime Minister has said that devolution deals will be possible even without an elected mayor, as may happen in Cornwall, but if there are a plethora of types of devolved authority, as there inevitably will be, this has the potential for considerable muddle and confusion. While the PM has a pretty good idea how his new settlement will benefit Manchester, I simply do not believe that any such clarity exists for much of the rest of England. In North Yorkshire, for example, where I live, expectations have been raised, but it is as yet completely unclear under current proposals how they might be realised.
Secondly, the Prime Minister has said that, under the new “No. 10 North” arrangements, he will be the person in charge of driving the growth agenda. In the short term this may be good news, in that only prime ministerial authority is likely to be able to prise powers away from the Treasury; but in the longer term, it is worrying. What happens if the next Prime Minister has a constituency hundreds of miles from Manchester, and, unlike today—with no fewer than nine members of the Cabinet having constituencies within an hour’s travel from Manchester—both he and his senior colleagues have other priorities? The present institutional changes do not look robust enough to survive such a scenario, and the whole devolution agenda therefore appears to be built on pretty shaky foundations. Although the ill-fated Department of Economic Affairs of the 1960s has given the idea of a separate ministry for growth a bad name, it seems implausible that, without some such permanent body, a significant long-term focus on growth of the kind the Prime Minister is promoting will be maintained.
The other element of the growth agenda relates to our relations with Europe. The Prime Minister has said little about the EU. In his Statement, he said only that Brexit had economically been very damaging, which is hardly news, but the new Government do not appear to have any new substantive proposals for strengthening our economic relationship with the EU. The Prime Minister appears to recognise that, unless we move towards the single market and the customs union, hopes for strong growth in the EU are likely to be mere pipe dreams, yet there seems to be no real ambition to move in that direction.
I wish the new Prime Minister well and I support much of what he is trying to achieve, but I am afraid that as yet I am unconvinced that he has well thought-out plans for doing so.
Baroness Jones of Moulsecoomb (GP)
My Lords, I congratulate the noble Lord, Lord Hunt, on bringing this debate. I also want to apologise to him, because I am always surprised by how passionately he talks about climate change. That is on me. Sorry about that. It is wonderful to listen to.
I have met the new Prime Minister a few times and I have a lovely photograph on my phone of him and me at Glastonbury last year. I sort of thought we could work together, but the more I see what is happening and going through, the more I am beginning to think it will not be possible. It seems as if the slow-moving, stagnant mechanism of government has got its claws into him and he is not thinking very creatively any more. I hope I am wrong. We shall see over the next few weeks and months.
I want to mention three things that are crucial for the future of this Labour Government, which will all help society as well as the environment. We have to accept that climate chaos is the new normal. Thousands of people died this summer in the heat and that is going to keep happening if we are not very careful about adapting to it. People arriving at A&E with heat exhaustion and so on is also going to be the new normal. This Government must not make it worse by going ahead with the Jackdaw gas field and Rosebank oil field. That is folly. What they should be doing is what they have just scrapped—putting solar panels on every supermarket car park and every roof, everywhere they possibly can. That is the sort of thing they ought to be doing to be creative about combating climate change. We need to adapt to hot summers. A tiny measure would be to put shutters on all the windows, as in France. I have lots of ideas and I am quite happy to chat them through.
The second thing is to help save the NHS, not by privatising it but by remembering that prevention is better than cure. If you cut pollution, you cut the number of people going into hospital. You cut the number of children whose lungs are so stunted by pollution that they have lifelong problems with their breathing. Well done to Sadiq Khan here in London, where he has massively cut air pollution. We should have low emission zones across the whole country, as they do in mainland Europe.
Thirdly, one big way to reduce pollution would be to take the water companies into public ownership. The Prime Minister mentioned those words yesterday. I would like to think he means renationalisation, but I do not know any more, because he keeps changing his mind. I have stopped paying the sewage part of my bill. I asked Thames Water how much that part was. I was happy to pay for the water, obviously, but I was not prepared to pay for the sewage it was dumping in the Thames. It told me that it did not work out the bill like that, so at the moment I am not paying my bill. We will see if it takes me to court before it goes bankrupt. We stopped the poll tax with a campaign of non-payment. Civil disobedience is possibly the only way to fight companies such as the water companies which are operating in a way that is a disbenefit to the whole of society. I say to the Government that the Green Party always has loads of very practical ideas and I am very happy to share them.
Lord Davies of Brixton (Lab)
It is a treat to be able to take part in this debate. I will talk about the Government’s programme on pensions, where the scale of what is being undertaken and what is potentially in prospect is far greater than people appreciate. We have already had one pensions Bill. I did not agree with everything in it, but it is leading to major changes in the way that pensions are provided.
We have, in a sense, seen the end of a 30-year experiment in personal pensions. Pensions are becoming collective, and the emphasis on collective defined contribution schemes, the consolidation of existing arrangements, the removal of small pots and so on signifies a significant change in the way that pensions are being provided. We have also seen the Government introduce measures that could help members and employers with the release of so-called scheme surpluses. That is another debate, but the money is there and should be used productively to grow the economy and improve members’ benefits.
We have issues specifically in relation to personal pensions, where existing arrangements can now be consolidated and provide more effective investment arrangements for individuals. We are also getting what are called default pathways for retirement. The biggest and hardest problem in pensions is what to do, if you are in a defined contribution arrangement, with the money at retirement. The Government are taking good action there to ensure that people have straightforward arrangements to achieve a decent income in retirement.
That is all important, but we now have the Pensions Commission. Although the Government have made no formal commitment, we know that the commission’s timetable permits another pensions Bill, to which I look forward with some relish, not in the current Session but in the next one, and that will have to address the issue of adequacy. That is the missing part of the debate; it is what the commission has been set up to establish, and it is what we will have to confront. I think there will be big debates over that.
At the same time, we will have to take decisions about the state retirement age. Governments of both sides have, in practice, dodged the decision there. I have strong views that are maybe not in line with those held by many. The challenge is to provide incomes for people who can no longer work as ably as younger people, so the retirement age is clearly an issue.
The third and final leg of that debate will be state pension increases. What is going to follow the triple lock? Just saying “keep the triple lock” does not satisfy the need to get a stable financial system. We have to have that debate. I am afraid that, so far, people have sought to dodge that debate rather than address it.
Baroness Hazarika (Lab)
My Lords, one thing that I felt incredibly encouraged by with our new Prime Minister was the fact that he seemed to come here with an outside lens, because he has been away from Westminster for 10 years. When he came into Westminster, he was able to voice a lot of the frustrations that we all share in our lives. We all hear it from our friends and our neighbours. I, as a radio presenter, hear it a lot from my listeners. Lots of people outside just cannot get their head around why we here in Westminster continually, decade after decade, fail to get things done for this country.
I think tribalism is holding back much of the success of this country. I really like one of the things that the Prime Minister said, to which the noble Baroness, Lady Royall, alluded, about problem-solving over point-scoring. I am very proud to be associated with these Benches, but I try to look at things with fairness and not be tribal.
In that spirit, I begin by saying that I profoundly disagree with people on my own side who dismiss the Russian threat as being nothing but NATO fiction. That is absolutely not the case. These threats are real and they are here. Look at Leipzig Airport just in the last few days. I really hope that we can work across politics to build a national conversation about the threats and about the psychology we might need to face if things escalate, and resilience. We need to think about bringing back the War Book to make sure local authorities are properly prepared. Defence has got to be a priority.
Of course, growth must be a priority as well. We can get captured in these torturous, polarised discussions around the economy, where the right say, “Just cut welfare”, and the left say, “Just raise taxes”. We all know that just doing both of those things is not going to give us the result we want. We have to have a more intelligent conversation. We need growth and to help small and medium-sized businesses. I really hope that this new Chancellor in particular will seek to make life a bit better. We have heard this phrase “breathing space”; let us give a bit of breathing space to some of our small businesses around the country.
Another reason why I think people feel dismayed with the country right now is that they look around and feel that the social contract is broken, because of what is happening in their communities. There is a lot of anti-social behaviour. It is called low-level crime, but it is not low-level because of the blight that it causes to the lives of so many people. Just look at what has been happening in Middlesbrough; that story is replicated all around the country. Shops have become a war zone for people: I am sure we will be hearing from the noble Lord, Lord Walker, about the excellent work that he does with Iceland; and the noble Lord, Lord Barber, has talked very eloquently about the pressures that shop workers face. A lot of people feel that the country does not work for them because they see it in their high streets and in their everyday world.
I want to end on this kind of tonal note. I think we all have a responsibility to try to fix this country. I could be very tribal, and we could all point-score and slag each other off, but we are not going to succeed until we find some common ground. We on the left often get accused of virtue signalling—sometimes that does have some merit and sometimes we do go over the top—but some on the other side can be accused of vice signalling. Be honest: making disabled people poorer is not going to make us a richer, happier society, but we have to get more people who can work into work, as well.
This is a very timely debate. I congratulate the noble Lord, Lord Hunt, and I look forward to the rest of the contributions.
Lord Oates (LD)
My Lords, I am delighted to follow the excellent, eloquent speech from the noble Baroness, Lady Hazarika, which I agree with entirely. Today, I want to focus on the justice system and, in particular, the contrast between the crisis in the adult justice system and the many successes achieved by creative policy-making in the youth justice system.
The prisons, as we read every day, are overflowing. The courts have huge backlogs, with cases currently being listed as far ahead as 2029 and 2030. Recalls to prison are at unprecedented levels. Some 51,000 prisoners were recalled in the 12 months to March—a 28% increase on the year before. In the January to March quarter, more prisoners were recalled than were released for the first time ever and, as the noble Baroness, Lady Royall, said, many of these cases are not because of people committing new offences; they are people who have chaotic lives after being released from prison and perhaps have not attended a probation hearing or whatever. We really need to get to grips with that. Prisoner releases have become the latest political football to be kicked to and fro. This is a problem we all own; all our parties own it.
Over the past decades, we have had a legacy of rhetoric driving up sentence length and prison numbers despite falling crime rates. This has been combined with a failure to build the prison places required to soak up the inevitable outcome of that sort of increase in sentencing levels. But that is not necessary at all. This is not normal. Our levels of incarceration are not normal. We do not have higher crime levels, on average, than most of our European counterparts, yet we are incarcerating people at double the rate of places such as Germany and at an even higher rate compared with the Scandinavian countries.
By contrast, the youth justice system is one of the greatest public policy successes of the past 30 years. It is the subject of my Private Member’s Bill, which will have its Second Reading next Friday so, like my noble friend Lady Sheehan, I am taking the opportunity to raise some of the points here, as some noble Lords might not be able to be there next week. When I worked at the Youth Justice Board shortly after it came into existence, the number of children in the juvenile secure estate peaked at over 3,500. In June this year, there were fewer than 350 in the secure estate—a reduction that has been achieved while youth crime has reduced.
That is a remarkable achievement by any standard, particularly when the adult system was going in the opposite direction. It was achieved by the creative, innovative policy-making of the 1997 Labour Government in establishing the Youth Justice Board and the youth offending teams. One might have expected the incoming Government to seek to apply some of the lessons of the youth justice system to the crisis of the adult system. Instead, they have chosen to abolish the Youth Justice Board in all but name. The noble Lord, Lord Whitty, referred to Treasury old favourites. This is an old favourite of the Ministry of Justice and the Treasury, and it should be resisted. I hope that the new Prime Minister will take a new approach to this.
Baroness Maclean of Redditch (Con)
My Lords, the Government have told us repeatedly that their number one priority is growth, and I am sure that every single one of us in this House would wholeheartedly back that aim. But I am afraid that there is a startling gap between those words and a real understanding of the people who create that growth. As we know on this side of the House, wealth is not created in Whitehall or No. 10 North; it is created when somebody takes a risk, when an entrepreneur decides to start a business, to put their own or their family’s capital at risk, to take on another member of staff, to buy a new plant or equipment or to make a new investment—or when an international investor chooses Britain rather than somewhere else. Increasingly, those people are looking around the world and making choices about where to invest.
That matters because our public finances are extraordinarily dependent on a relatively small number of taxpayers. In our country, the top 1% of income tax payers contribute around 28% of all income tax. This is not the usual scare story about millionaires leaving Britain; I am not talking about that. I am talking about the fact that, when a wealthy person leaves Britain, we potentially lose a disproportionately large taxpayer, as well as an investor, employer or entrepreneur.
The Office for Budget Responsibility itself has warned about this. It has warned of our increasing reliance upon this small and very mobile group of taxpayers. It has flagged it as a fiscal risk for the Government. The company BDO found that two-thirds of ultra-high-net-worth individuals surveyed had considered leaving the UK for tax reasons during the previous year. I know that many of us have seen that in our own personal lives. We all have friends and acquaintances and know young people who are thinking in that way, unfortunately.
To me, the most interesting finding was not just that those people said their priority was having lower tax, but that they prioritised certainty and stable government. That really should tell the Government something. Part of the problem, unfortunately, is the lack of business experience. Private sector and entrepreneurial experience are at the heart of government. If your experience is just of politics and the private sector or NGOs, it is so easy to think about business as a cash cow that can be milked, as though it will not change its behaviour and will continue filling the Treasury’s coffers. Anyone who has run a business knows that there comes a point when the numbers do not add up, the investment is not made, the extra person is not employed. You do not get 40% of a greater pot; you just get a smaller pot, and the business goes bust and ceases to exist.
We all agree that successful people should pay more tax, and they are. But there is a fundamental difference between taxing wealth once it has been created and creating the conditions for successful businesses to start in the first place, whereby people actually want to create that wealth. Capital is mobile; talented people do have choices. Every founder who chooses an overseas country is going to bring wealth and growth to that country, not ours. That is where we are losing out in revenues to our public sector.
There are only two ways of improving our public finances: we can keep asking those people to pay more, or we can make the economy bigger. There is nothing bad about wealth creation; we should be encouraging it. It is the only way we get better hospitals, schools, roads and everything else people want to see. The Government say they want growth: they must demonstrate that they understand the people who create it.
Lord Walker of Broxton (Lab)
My Lords, I declare an interest as executive chairman of Iceland Foods and of Bywater. As the former Prime Minister’s cost of living champion, I advocated targeted help for families who could not absorb soaring bills, and it is good to see some of those ideas come to fruition. But that is just applying a sticking plaster; we cannot cure the underlying disease with yet another subsidy or benefit. This Government’s top priority must be getting Britain back to work. One in every seven households has no one in work: not a single adult earning a wage. A million children live in long-term workless homes, more than a quarter of those in households where no one, not once, has ever worked.
Now is the time to turn things around by giving businesses the confidence to invest. Our new Prime Minister says he wants a pro-business Government. He needs the courage to deliver on that. Start with the October Budget, shift the tax burden away from jobs and productive investment, cut the cost of employing people and give more high street businesses relief on rates. A growing private sector will do more to relieve poverty than any support programme ever can. Now is the time to make brave decisions on welfare and, dare I say it, the triple lock.
I started my business career in Poland and have watched with admiration as it has grown almost as rich per capita as Britain. Indeed, it is soon likely to overtake us. We should follow its formula: encourage investment, build infrastructure, develop skills, attract businesses and pursue integration into global supply chains. As a father I am horrified that, as we have heard, we have almost 1 million 16 to 24 year-old NEETs. We are complicit in allowing them to enter adulthood without the structure, confidence, skills, friendships and sense of purpose that only work can provide.
Of course I believe that the state must support those who are ill, disabled or otherwise unable to work. But the welfare state should be a safety net and a springboard, not a system that leaves people who can work parked on benefits. We need to create a smoother pathway from school into work, meaning more apprenticeships, vocational training and work experience. The Prime Minister’s focus on creating more work placements is welcome, but businesses will deliver far more if the barriers that currently deter them from hiring are simply removed. This means lowering the cost of creating jobs, helping businesses invest in skills, cutting red tape and making sure that work always pays. Do that and Britain will get a triple dividend. People will move from welfare to wages, and the benefits bill will fall while tax revenues rise. Businesses will gain the people and skills they need to grow, and a generation currently being offered too little hope will get a stake in our country’s future. Britain cannot redistribute its way to prosperity. Like Poland, we must build our way there.
Earl Russell (LD)
My Lords, I thank the noble Lord, Lord Hunt, for securing this debate, and I welcome his contribution. I will focus on energy and climate. This Government have an opportunity for a reset. The British people support change, but this Government have to do more to enable it. Nowhere is that clearer than on energy. Labour deserves credit for delivering enough renewable energy, through two successful record-breaking auctions, to supply the equivalent of 23 million homes. However, our energy bills remain among the highest in Europe. There has been no fundamental energy market reform. The Climate Change Committee’s citizens’ panel shows that people support the transition to net zero, provided the Government play their part: grants for heat pumps, better public transport and EV charging, and clear phase-out dates. Yet heat pumps and electric vehicles remain well behind target and too expensive for far too many. The transition being offered is not yet affordable, equitable or fair.
Greenpeace UK’s Power Shift report, for example, shows that moving gas-fired power stations into a strategic reserve could save households and businesses £5.1 billion a year by 2028—a £65 saving off the average household bill. We need cheaper electricity by removing levies, and we need a social tariff. The new Energy Secretary, Miatta Fahnbulleh, is a trained economist and former chief of the New Economics Foundation. That gives me hope that she will grasp the urgent need for fundamental energy market reforms. Labour must do more to back community energy so that everyone can participate in and benefit from the energy transition.
Europe is the fastest-warming continent on earth, and we are not prepared. Summer 2026 was the UK’s hottest on record. It was made around 130 times more likely by human-induced climate change. England had its driest July ever. Across Europe, extreme heat was linked to at least 35,000 excess deaths. The UK Health Security Agency estimated that 2,877 deaths occurred in the May and June heatwaves alone. The London Ambulance Service recorded its busiest day in its history on 26 June. Nurses fainted in hospital wards where temperatures exceeded 30 degrees—conditions the Royal College of Nursing called “inhumane”. The UK is on track for its worst harvest since records began, threatening our food security and pushing up prices.
The Climate Change Committee’s 2025 adaption report found that not a single outcome is rated as good. Adaption has been forgotten by all Governments. The time when we can afford to forget is over. Nature remains the missing element in this Government’s agenda. Confused policies, compounded by poor communications, erode trust. Wildfires worsen every year. The National Fire Chiefs Council has called for an emergency summit and greater resources. A Written Answer to me confirmed that the UK is entirely dependent on commercial aviation to fight wildfires; that has to change urgently before the super El Niño arrives. Mega-fires are on our doorstep, and we are not prepared to contain them.
The UK cannot lead globally while cutting overseas aid. We need a road map back to 0.7%. Ed Miliband must show that this Government take global climate finance seriously. The British people overwhelmingly accept the reality of our warming planet and support change. The Government must enable that change. Labour must take people with them and work with them, not do things to them. The transition must work for everyone, or it will work for no one.
Baroness Nargund (Lab)
My Lords, I congratulate my noble friend Lord Hunt on securing this important debate, and on his excellent opening speech. On entering No. 10, our new Prime Minister said:
“Let’s make this the moment when Britain starts to believe again—the moment we bring back hope”.
That has been mentioned several times today. That spirit was clear in his commitment during the Recess to tackling social care through cross-party talks.
What is striking about this Government’s priorities is their willingness to confront Britain’s hardest problems head-on, placing the country first. Health now needs a similar approach. The manifesto commitment promising a fairer Britain where everyone lives well for longer, when we have the gap in healthy life expectancy between the richest and poorest regions in our country, has never been more urgent. A child born in Richmond upon Thames can now expect nearly 20 more years in good health than one born in Hartlepool or Blackpool. A recent campaign by Health Equals has revealed a gap between postcodes of 18 years between the longest and shortest life expectancy in the UK.
The DHSC alone cannot close these gaps, and we should stop treating it as if it is the sole responsibility of the National Health Service. There is now an irrefutable case for a cross-governmental health board or a Cabinet sub-committee reporting directly to the Prime Minister, chaired by a senior Cabinet Minister and, crucially, with strong regional representation. Devolution offers a brilliant opportunity to deliver this in every region. The Health Bill now in the other place offers a genuine opportunity to put that understanding to work.
Health does not start in the NHS; it starts where we are born, where we live and where we work, and depends on whether we can access decent housing. That is why the Prime Minister’s pledge to end homelessness is so significant. Homelessness is not simply a housing failure; it is one of the starkest health inequalities we have. The Social Housing Bill, giving the tools to build more social homes locally, is not just an answer to our housing and homelessness crisis; it is a preventive health intervention.
I will leave noble Lords with one further thought: if the health of people in the north of England matched that of those in the rest of England, it could generate an additional £18.4 billion a year to the UK economy. This is not just a moral case; it is an economic one. Health needs to be at the heart of the Government’s priorities and central to their legislative agenda, giving power back to local communities and tackling the health disparities that hold our country back. That is why I back all these priorities wholeheartedly.
Labour created the NHS to care for our health; it is now Labour that can strengthen the NHS by tackling what creates ill health in the first place. Will the Government consider setting up a cross-governmental health board or a Cabinet sub-committee to address the wider determinants of health and to create a more equal Britain?
Lord Purvis of Tweed (LD)
My Lords, it is a pleasure to follow the noble Baroness—
Baroness Rafferty (Lab)
My Lords, it is a pleasure to follow my noble friend Lady Nargund. The Prime Minister reiterated his commitment to social care in his response to questions on his Statement to the Commons on Tuesday. While we wait for the recommendations from the review by the noble Baroness, Lady Casey, there are opportunities to build on the important steps the Government have already taken to raise the profile of, and boost much-needed capacity in, social care nursing.
One of the signal achievements of the previous Administration was the passage of the Employment Rights Act and, within that, the establishment of the fair pay agreement. The potential impact of this development should not be underestimated. It seeks to elevate the status, as well as the terms and conditions, of those working in social care, shining a light on those on the margins of care with no representation or negotiating power to improve their lot. This is to be welcomed as the social care sector employs some 1.5 million people. It has a huge economic footprint, even though most workers earn just above the minimum wage—“poverty pay”, as the Prime Minister commented on Tuesday. I argue that the potential to boost the earning power and the career and professional development of social care workers, and therefore the attractiveness of one of the largest sectors of employment in the UK, is the adult equivalent of reducing child poverty by removing the two-child cap. Let us also not forget that most care workers are women, and any boost to wages can bolster household incomes.
The fair pay agreement could provide a much-needed stimulus for nursing reform. The most recent estimates from Skills for Health record some 37,000 nurse registrants in the sector. Concentrated mainly in care homes, registered nurses carry heavy responsibilities. Adult social care pay has lagged far behind that of the NHS. This fair pay agreement will hopefully link responsibility to reward and begin to align social care pay with that of the NHS.
The Earl of Effingham (Con)
My Lords, I have two minutes so I will be brief. First, on UK debt and financing it, as my noble friend Lady Coffey put so well, the noble Lord, Lord Hunt, spent half his speech talking about the Opposition and, for whatever reason, certain noble Lords opposite wish to attribute to them the current national debt pile. It is there, it is not going away and simply blaming others for its existence and looking backwards, not forwards, solves zero. It is critical that it is reduced by every Government. The noble Baronesses, Lady Hazarika and Lady Royall, were spot on when they said that this is about problem-solving together, not point-scoring.
My noble friend Lord Redwood knows what he is talking about. You need to respect the global bond markets. Bond yields and financing costs are at multidecade highs. The Prime Minister has spent the summer making welcome spending commitments but without explaining in any shape or form how they will be funded. We need clarification. If the markets have certainty, borrowing costs will be lowered and, ultimately, hard-working people will benefit.
Secondly, on taxes and spending, will the noble Lord, Lord Collins, listen to the Prime Minister’s friend and adviser, the noble Lord, Lord O’Neill of Gatley? The noble Lord is a globally recognised and respected economist who said only last week that if Ministers raise taxes, it will show that
“they’re not thinking about growth as sincerely as they claim”.
The noble Lord, Lord Walker of Broxton, was entirely correct when, in a previous debate, he agreed that he supports the Labour Party, not the “Benefits Party”. Will the Minister listen to the advice of the noble Lords, Lord Walker and Lord O’Neill, and cut the welfare bill?
Finally, we have heard about GDP from this Government and from the noble Lord, Lord Hunt, in his opening remarks. But as my noble friend Lord Hintze, one of the world’s most respected fund managers, often reminds the Government, we should be looking at GDP per capita. It is more important for measuring individual living standards than GDP. Please will the Government consider that? It is a benchmark universally agreed by economists as the measure of individual living standards.
Lord Purvis of Tweed (LD)
I remain happy to have followed the noble Baroness, Lady Nargund, who reminded us of the blight in our country: the extreme levels of difference in social deprivation from postcode to postcode. This is also an urban-rural issue. If the Prime Minister is to be successful, it will be about not just growth in every postcode but reducing the blight of inequality of opportunity that so many of our communities face. I am glad that the noble Baroness raised that in the debate.
I am also glad that the Labour Whips responded positively to a suggestion from these Benches that, when we came back after the Summer Recess, it would be an appropriate time to consider the statements by the new Prime Minister and some of the priorities that he has outlined. We congratulate the noble Lord, Lord Hunt, on opening this debate and giving a very good fist to the arguments of the new ministerial team. He is to be commended on doing that so clearly. I reflected yesterday in the Chamber, when we were asking questions to the Leader of the House on the Prime Minister’s Statement, that in the 13 years I have been in this House, there have been seven Prime Ministers with an average tenure of just 21 months. This is an underlying symptom of some of the challenges we have in our political system, which I will refer to in a moment.
I join the noble Lord, Lord Hunt, in thanking Sir Keir Starmer for his service. It is a curious aspect of our system in politics in Britain that someone is a terrible politician and a disaster shortly before they resign, then after that they are a great public servant with a very proud record of service. Nevertheless, we thank Keir Starmer for his work, and we wish him well with whatever new role he carries out.
Yesterday, I went through the areas in which the first speech of the new Prime Minister was essentially the same as the first speech by Sir Keir Starmer as Prime Minister, but with a little more emotion and heart. I do not disregard emotion and heart in our politics; they are important parts of our government. But both Keir Starmer and Andy Burnham said in their first speeches that “words are not actions”. As my noble friend Lord Storey said, the tests are ahead for this new ministerial team, and we will all judge actions. In many of those areas, we are willing to work with the Government and the new ministerial team, and we are eager to see some actions. One of the early things that the new Prime Minister could do is to respond positively to the very clear appeal by my noble friend Lady Benjamin to finally restore justice to the community of victims whom I had the privilege of meeting with her. It is a scar on our country that the new Prime Minister can erase.
We have now had an opportunity to look at the first areas on which Mr Burnham said he wants to be judged: political reform and economic growth, with fewer costs in doing business. We share those priorities. These Benches are hungry for considerable political and constitutional reform—not for its own sake, but because, as I said, our system is failing. I suggest the great dividing lines in politics of our age, and the future, are less the rather sterile one of whether the economic policies of the 1970s were better or worse than 40 years later, as the Prime Minister has said. Instead, they are about tolerance and social cohesion, defence of institutions and the rule of law, protecting diversity and gender equality, and about those other forces, which are incredibly well funded and well organised, which are seeking to restrict, separate and blame communities for failings. These Benches and our Liberal International sister parties know that this division is global, not just here at home in the UK. It is why we work so closely with our sister parties, who are the Governments of Canada, Ukraine and Taiwan and are in the front line of these dividing lines in politics.
Our system of politics in this country is simply not resilient enough. Reform UK, for example, believes it is appropriate for a political system to receive influxes of untraceable crypto money but not appropriate for leaders of parties to be accountable for donations they receive. This is cancerous in our system. Elon Musk supporting Restore and the dark area of social media in which it is all too easy for foreign interference to corrupt our system need to be closed down. We will work with the Government to ensure that reforms to strengthen our system are in place. But, as my noble friend Lord Pack said yesterday and today, we have not yet seen that the Government want to go far enough and we look forward to the legislative proposals. We want to work constructively to ensure that all those loopholes are closed.
Another area in which, regrettably, there seems to be a dividing line is on the climate crisis. There should be no dividing line on this because, as my noble friend Lord Russell so soberingly outlined, and the noble Lord, Lord Hunt, indicated so eloquently, there needs to be consensus that this is a crisis of our age that needs to be tackled. We have a mainstream political party that seems to prevent anyone standing for it who believes that net zero needs to be tackled. These are statutory targets. The noble Lord, Lord Hunt, spoke eloquently on climate; we share his views. But one element that was disappointing in the first announcement by the new Prime Minister was that the cap on bus fares—unquestionably popular and, indeed, needed—was paid for by a cut in international climate finance. We therefore have a situation in which the first decision by the new Prime Minister was to cap bus fares in Britain and cut support for the poorest countries to replace filthy, polluting diesel buses in their cities. We will not be a trusted global partner if we make decisions such as this.
Yesterday, I asked the Leader what the new Prime Minister’s proposals were for electoral reform, and she responded that there was no mandate for that. There was very clearly not a mandate for the Labour Government cutting official development assistance to the lowest ever levels. That, I hope, can be restored by the new Prime Minister. I also make an appeal that on the international stage, where we are of course supporting Ukraine and are a trusted partner around the world, the new Prime Minister will be a leader on the worst humanitarian crisis on the planet, for which the UK is the United Nations penholder: Sudan.
The second area the Prime Minister said in his recent Financial Times interview he wanted was growth, and we support that. He said he wanted percentage points growth. The latest OECD growth forecast puts the UK equal third in the G7, at 0.9%. That is not a sufficient sustainable level of growth to balance our spending and debt pressures, which we have heard about in the debate. The noble Lord, Lord Pitt-Watson, referred on Tuesday to trade deals being part of the Government’s growth strategy, but post-Brexit trade deals barely reach more than a third of 1% growth after 15 years, and the Government’s recent reset approach on SPS and other areas, welcome though it is, also represents, on the Government’s own estimate, a third of 1%. My noble friend Lord Newby appealed to the Government to think more ambitiously about our relationship with Europe. It is very disappointing that the new Prime Minister did not take that opportunity to ditch the red lines, which are a straitjacket on our growth with our European partners.
Finally, we will work with the Government on other areas. We have already seen, as my noble friend Lady Sheehan said, some welcome moves on tackling the blight of waste and on supporting the hospitality sector. We will want to see the Government working on water industry accountability but we need clarity on what their intentions are for Thames Water. I hope that the Minister will be able to just circumvent all this and say that he will support my noble friend Lady Sheehan’s Private Member’s Bill, which will go a long way towards that—and, while we are at it, he can support my noble friend Lord Oates’s Private Member’s Bill on youth justice too. That would be a very good signal of the new Government’s intent.
Over the summer we welcomed very much the Prime Minister reaching out to Ed Davey on care—that was mentioned yesterday. If there are signs that there is a new type of politics for the remainder of this Parliament, as the noble Baroness, Lady Hazarika, indicated, working on a cross-party basis to move towards some degree of consensus on social care is necessary. We know that decisions which may be difficult will have to be made, and they will be sustainable only if they are built on consensus. Ed Davey and these Benches want to play our part.
We welcome the approach of the new Prime Minister in these areas. We will be pushing for further, faster reforms to our political system and our European relationship for growth. We want to improve lives and make the reforms sustainable—and we hope that the Prime Minister will last longer than the average tenure of 21 months to deliver that.
Lord True (Con)
My Lords, it has been an excellent debate—there I agree with the noble Lord, Lord Purvis, who I always attempt to agree with but sometimes fall short, for which I apologise. I may do so later in these brief remarks.
Like so many others, I am very grateful to the noble Lord, Lord Hunt of Kings Heath, for introducing the debate. He is a good and brave parliamentarian and a good Labour man, and was a fine Minister, and I thank him for doing this today. As he knows, I wanted to have effective scrutiny of the Government’s political priorities and legislative agenda before the summer. We did not get that. I am glad that is happening today but I say, with the greatest respect, that it should have been a government Motion. The Government are so proud of their agenda—they should bring that Motion and make the time here. I apologise for referring to it but, frankly, the Cabinet member in this House, the Leader of the House, should be present to address these questions. The noble Lord, Lord Collins, is an outstanding Member—we came along to this gin joint at about the same time—and he will give a good account, but this House must be taken seriously at the highest level and it should not be left to a Back-Bencher to initiate this.
When Ministers avoid scrutiny, the whole country is left in limbo. The longer we are in the dark on policies, the longer markets remain frozen and fearful. This is a problem for our country, as we are seeing.
The noble Lord, Lord Hunt, picked out several themes, the first of which was planning. I think we all agree that planning is far too sclerotic. I am not certain that mayors are necessarily the answer. The most major planning application in my borough, which went in more than 10 years ago and has only just been determined, was held up for about five years by the Mayor of London faffing around, intervening and changing his mind all the time. It is not a panacea. Devolution is now a good buzzword but, as a local government person, I am concerned that we must never lose sight that local government should be local. Instinctively, I understand that our new Prime Minister, with his role in Manchester, in the sense that Manchester is a real place or group of places, may feel that the whole country can be run in this way. The noble Lord, Lord Newby, had some wise things to say about the patchwork of communities. In this drive for devolution, we must be careful that we do not lose local accountability and local feeling.
Of course, we all agree on getting people back to work. Many noble Lords have spoken about the tragedy of young people who do not have a job. The same is true of social care. We on this side did co-operate on and respond to the suggestion that there should be cross-party discussions. I hope it happens. I regretted that, when the noble Baroness, Lady May, was Prime Minister and put forward proposals on social care, before the morning had passed they had been condemned by other parties as a dementia tax and the whole thing was mobilised against the Conservative Party for electoral benefit. A bit of repentance all round and a new resolve to work together would be something we could all join in on.
I thought the noble Lord was remarkably optimistic in his analysis of the present economic situation. I will come back to that at the end. It is not shared by many observers, nor by everybody who has spoken in the debate.
There have been some very interesting speeches on particular subjects. The noble Lord, Lord Purvis, was quite right to say that the noble Baroness, Lady Benjamin, deserves an answer to her question on Windrush. I thought that what the noble Baroness, Lady Hazarika, said about low-level crime was very important. I am hearing encouraging things, not only from the Government but in my own party. It amazes me that we see what is going on in California—the crazy decisions they take and the social consequences—but we do the same here. Why should we be surprised? We have seen what happens. If you avert your eyes to low-level crime, you get more of it.
The noble Lord, Lord Eatwell, made a powerful intervention on science, as did the noble Baroness, Lady Keeley, on music. I had a useless liberal education in classics, but I think we sometimes overlook that a liberal, or non-specific, education is very important. I agreed with those speeches.
The important issue of defence was mentioned by several noble Lords—the noble Lord, Lord Hunt, and the noble Baronesses, Lady Coffey and Lady Hazarika. We wait to hear how the Government’s commitments will be put into effect. The Prime Minister has said that this will be made clear at the time of the Budget. There must be a clear path to real targets because there is a threat from Russia. There is an international danger, and we have to work together on this as we have on Ukraine. I very much welcome that the Prime Minister has reiterated our joint commitment to Ukraine. I hope very much that he will scrap the shameful pursuit of veterans for past offences. I would like to hear from the noble Lord opposite that there will be a review of that planned programme of legislation that is putting the trust between the state and our Armed Forces at risk.
Europe was mentioned with varying degrees of rapture—predictably high from the noble Lord, Lord Liddle, and the Liberal Democrat Benches, and with more scepticism elsewhere. The noble Lord, Lord Frost, said something really important which we should all share. We need clarity. What is the path? What is the negotiating mandate? What are the objectives and what are we going to give away? The Government, in this and many other things, are leaving the world unclear, and that needs to be clarified.
On constitutional reform, there was of course great enthusiasm about the idea of electoral reform. The Prime Minister has said there needs to be a mandate for that. That mandate, if ever those ridiculous proposals are again put before the British people, must be backed by a referendum of the British people. That is essential.
Housing and homelessness came up on many occasions, led by the right reverend Prelate the Bishop of Manchester. That is fundamental; we need more homes. We promised a million more homes in 2019, and we delivered on that objective. The Government are falling short on their objective, and I hope they will be able to improve that. Almost 100,000 fewer than were needed according to that target were actually delivered last year.
The fundamental issue is, “It’s the economy, stupid”. The noble Baroness, Lady Jones, was brave enough to say that said she disagreed with the idea of growth. I am surprised she is here, actually. I thought she would be in Holborn and St Pancras, campaigning. I suggest she needs a better candidate than—who is that chap?—Mr Polanski. I do not think he is going to appeal to many voters.
We must get growth. The noble Lord, Lord Walker, absolutely hit it on the nail: to get growth, we have to support business, restrain tax and reduce the burden on jobs. More state spending cannot create growth. State activity too often stunts growth. He made a speech that I would have been very happy to have heard from behind me, and I hope his colleagues read it carefully.
These are moments of difficulty. My noble friend Lord Redwood is absolutely right that the borrowing costs now, month after month and day after day, are higher than they were in the spike under Liz Truss. This is a serious burden for a deeply indebted country, and I strongly disagree with the noble Lord, Lord Liddle, that we want to add to the excessive borrowing we already have with a whole spate of local government borrowing.
We need to manage the economy with great care. We need to restrain spending, restrain borrowing, restrain taxation and release enterprise to incentivise family hopes and aspirations. If not, there is a danger we will get to a bad place. To send one Mr Healey to the IMF, as Labour did in 1976, was a misfortune, but to send another Mr Healey would look like carelessness. We know the dangers.
We wish the Prime Minister well, but as I said yesterday—and I do not need to repeat it—we are hearing too much of this 1970s language of more state, more tax, more nationalisation, more control and more intervention. That is not the way to a future. Let him be a bold, reforming Labour Prime Minister and have the courage to say something like Jim Callaghan said realistically to the Labour Party back in the 1970s: you cannot go on with state intervention, state spending, taxation and borrowing. We have to set the people free.
The Deputy Leader of the House of Lords (Lord Collins of Highbury) (Lab)
My Lords, we have had a great debate and I am looking forward to responding to all the wide-ranging points that have been made. I just say to the noble Lord, Lord True, that not only did the Prime Minister break a world record on Tuesday with a three-and-a-half-hour Statement setting out his priorities and being subject to questions, which he also did at PMQs, but we also had the repeat of the Statement yesterday, as the noble Lord said, which, again, the Leader answered questions on.
I was very pleased that the Labour Party, backed by the Chief Whip, focused on this subject in today’s debates. I am grateful to my noble friend Lord Hunt for bringing forward this debate. In effect, we have had five hours of debate today on the new programme of the new Prime Minister and the new Government. It is a great opportunity.
As the Prime Minister has set out, the Government’s agenda rests on four core areas: making Britain better off; putting power back into the hands of communities; giving people room to breathe; and tackling the most intractable problems so that Britain can believe in itself again.
First, we will permanently shift decision-making out of Westminster. I say to the noble Lord, Lord True, that that is not a return to the 1970s. We established No. 10 North in Manchester as an engine room for devolution and local growth. Decisions affecting local areas will be taken by local leaders who know their communities best, underpinned by fiscal devolution and rebalanced public investment.
I pay tribute to the comments made in this debate by the noble Baroness, Lady Coffey. She is absolutely right—we do have to empower local leaders and Ministers. Generally, this debate has been about how we bring people together to address the problems of the United Kingdom. That is a tribute to this House.
Secondly, the Government will drive reindustrialisation and good growth in every postcode. We will back British business and industry at every opportunity. We are the party of enterprise. We are the party of aspiration. Those are the sorts of missions that this Government are absolutely committed to.
Every pound of taxpayer spending will back British jobs, address skill shortages and support communities. We will support all parts of the country to take more public control over investment strategy, as my noble friend pointed out so well.
Thirdly, we will give communities room to breathe, with a 20% business rate discount for pubs, clubs and live music venues from April 2027, bus fares capped at £2 and VAT removed from electricity bills this winter.
Fourthly, the Government will tackle the systematic issues that, as the right reverend Prelate the Bishop of Manchester mentioned, have been ignored for too long: ending rough sleeping, decades of political drift on social care and the youth unemployment crisis, and building our way out of the housing crisis. I will come back to those issues later. We will continue to pass legislation underpinning our political priorities to deliver this change.
On spending, we are committed to fiscal discipline. I know the noble Lord, Lord True, wants details, but it is not my place to pre-empt the Chancellor. As my noble friend highlighted, the Government are on track to reduce borrowing more than any G7 country and will reprioritise existing spending and budgets where necessary.
I turn to some of the specific points made in the debate. My noble friend is absolutely right: planning has been a critical barrier to the necessary investments in our infrastructure. He asked me a specific question about the Fingleton recommendations. I reassure him that we committed in the King’s Speech to legislate in due course and that absolutely remains our position.
We do not want to continue with this period of speculation. That is why the Budget will be on 28 October and will be built on very strong fiscal discipline. We are not borrowing for day-to-day spending. We want to get debt falling as a percentage of GDP by the end of the forecast. As I said, we are on track to reduce borrowing more than any other country.
My noble friend Lord Davies is right. There has been very strong progress on pensions and on how pension funds can be used to drive that sort of growth to which we are committed. My noble friend Lord Eatwell raised a specific point about investment in science and technology. He is right. We have to address this. The problems that the STFC’s core budget has been affected by are energy costs, staff costs and unfavourable foreign exchange situations, but I reassure him that major international subscriptions, such as CERN, are being fully protected. The STFC will also generate more external income through supporting industrial partnerships, commercialisation and better use of its assets. The outcome published in July is a long-term, sustainable plan for the STFC with UKRI providing an additional £135 million, enabling programmes to realise the benefits of current investments as the STFC transitions to a long-term stable financial position.
I acknowledge my noble friend Lady Hazarika’s position, and I think it is reflected across the House. We are all committed to recognising the threats that we now face, and certainly our commitment to Ukraine has been on a cross-party basis. This House remains united. We know that that threat is serious, and I agree with my noble friend that the idea that Russia is not a threat is complete nonsense. We are committed to 3.5% of GDP on defence spending by 2035. The defence investment plan will be fully funded, and defence will be an engine for good jobs across the country. We have signed more than 1,400 major defence contracts, and 94% are with UK firms. We are ensuring that the need to spend on defence benefits communities across the United Kingdom. As my noble friend Lord Coaker reminded the House recently, we have had the biggest investment in military housing for half a century and the biggest pay rise for our Armed Forces.
I say to my noble friend Lord Hunt and other noble Lords, particularly my noble friend Lord Whitty, that we are committed to our climate change commitments and are investing £100 million in fire and rescue, with record levels of flood defences to ensure that we are adapting to the effects of climate change. This summer has shown the clear impact that climate change has had on our country.
On the point raised by the noble Baroness, Lady Sheenan, I recognise waste dumping as an unmitigated disaster and a crime. The PM will set out a plan to shut down those criminal gangs. He has given a commitment to that plan. We have also given additional funding to tackle the three major illegal waste sites in the country.
I pay tribute to the noble Baroness, Lady Benjamin, for consistently raising the Windrush scandal. My noble friend Lord Hanson has answered Questions from her on this issue. I understand the impact of the compensation scheme, but I am afraid I will have to write to her with a detailed response on that report. I cannot go further than that at this stage.
To pick up the point about health and social care, the Prime Minister has a clear ambition to work on a cross-party basis to end decades of political drift and reform of adult social care. Part of his mission is to tackle this issue that has been ignored for too long. As part of this, the noble Baroness, Lady Casey, is, as we know, chairing an independent commission into adult social care. In July, the Prime Minister announced that the publication of the Casey review will be brought forward by a year, to 2027, as well as work to go further on reform of the social care workforce, building on the fair pay agreement—a point raised by my noble friend Lady Rafferty. These two issues are linked. My noble friend Lady Royall raised the issue of the need for staffing, and my noble friend Lady Rafferty is right that we need to ensure that there is fair pay in social care, because that is how we retain people. It is an important step, alongside wider workforce reforms like the care workforce pathway, towards our longer-term ambition for a national care service.
That is why we are taking a deliberate and phased approach. It is important that reforms are implemented in a way that is affordable, deliverable and sustainable for the sector. The first fair pay agreement, backed by £500 million in funding, will lay the foundation for future agreements, so I welcome that contribution.
The right reverend Prelate the Bishop of Manchester raised the issue of homelessness. We have been very clear about the impact of that, and the Prime Minister has understood the urgent social priority to end rough sleeping, backed by a dedicated £442 million funding package—targeted funding established to offer everyone needing it a route off the streets by Christmas, as part of the core mission to tackle infrastructure.
Housing is a big issue, and we need to tackle the housing crisis and boost economic growth. There is £39 billion for social and affordable housing, with the first £10 billion having been allocated. I am glad that my noble friend Lady Taylor is here, because she has highlighted the importance of this to this House on numerous occasions. We have allocated £9.5 billion to deliver 70,000 homes, with 60% for social rent—the highest number of social rent completions since 2012. We have a very clear pathway on that.
In relation to the economy, our commitment to business and how we are focused on driving growth, particularly through devolution and giving local leaders that responsibility, we also understand the impact of unemployment, particularly youth unemployment. Our goal is getting people up for success, not paying for failure, so there is £3.5 billion for tailored employment support. Major changes will be made to technical education to give 14 year-olds access to skills and experience. We have just had a 2.5-hour debate on a number of those issues. Employment is at a near record high, having risen by 1 million since the election—the third highest employment rate in the G7. Economic inactivity is down, but the issue of those young people who are not in education, employment or training needs to be addressed. Some of the schemes are working. The £3,000 bonus for firms hiring long-term youth unemployed is just one example. It is important that we understand that.
A number of Lords, including the noble Lord, Lord Frost, have raised the issue of Europe. The Prime Minister has been very clear that we must be bolder in securing a closer relationship. The UK-EU summit this year is the right way to boost GDP and growth and to improve trade, defence and security. These things are not in isolation. That partnership with Europe is vital also to improving our security. As my noble friend the Leader said yesterday, this is not opening the door to a single market or customs union, but there is a way that we can improve our partnership to deliver the things that we need to ensure our economic growth and security.
The noble Lord, Lord True, mentioned some of the legislative changes in the programmes that we have had. There will be some changes in the details of Bills, as noble Lords would expect when there is a change in ministerial leadership, and ministerial colleagues will be keeping noble Lords updated in the usual way, including by tabling amendments.
On the point raised by the noble Lord, Lord Purvis, about our democracy, as my noble friend Lady Taylor made clear yesterday, we are committed to making our democracy fairer, more secure and more resilient. We have accepted all the recommendations in Philip Rycroft’s review of foreign interference in our democracy earlier this year, and, as my noble friend made clear yesterday, our legislation is progressing through Parliament and will protect our elections and open up our democracy. A cap of £100,000 on political donations from overseas, protecting democracy from the surge of dirty money, and the ban on cryptocurrencies make this absolutely clear.
I reassure the noble Lord that our priority is a democracy that works for everyone everywhere, not just people in some places. The Prime Minister still supports electoral reform as part of that mission, but he understands that it is a big constitutional question and it is premature to legislate now. There needs to be a mandate, I reassure the noble Lord, Lord True. We have made clear that mandates are governed by manifestos, not by some spurious other form that can be invented at any other time.
I am running out of time, so if there are areas that have been raised but that I have not specifically addressed then I reassure noble Lords that I will write to them. This has been an incredibly useful debate, and I reassure the noble Lord, Lord True, that we are committed to working together to address the big issues that this country faces, particularly social care. However, the Prime Minister has set out his priorities for the country: making Britain better off, putting power back into the hands of community, giving people room to breathe and tackling the most intractable problems so that Britain can believe in itself again. I have outlined those issues.
I want to reassure noble Lords. I think it was the noble Lord, Lord Purvis, who said that 21 months has been the average term served by a Prime Minister. Let us be clear about this: there is an expectation out there that our big problems can be solved immediately. That is not the case. As politicians, we can do more to get people to understand that these challenges cannot be resolved overnight. That is why, later this year, the Prime Minister will bring forward a new plan for Britain—a 10-year plan laying out a path from where we are now to where we believe we all want Britain to be, combining immediate and direct action today with lasting national renewal and change that will be felt across the whole country.
Lord Hunt of Kings Heath (Lab)
My Lords, I think I have about one and a half minutes to respond. I thank all noble Lords who have taken part in this debate. It has been good-natured, and I am grateful for that.
I say to the noble Lord, Lord True, that I always enjoy his contributions, but we have had a good run in the House this week on the Government’s future priorities. We had the Statement yesterday with the extra 20 minutes for Back-Benchers, while my noble friend Lady Morgan’s debate earlier went to the core purpose of the Government, particularly in relation to young people and vocational training. I defend the right of Back-Benchers to lead debates on critical issues.
There is very little time left. I want to come back to the issue my noble friend left on, about seeking some consensus on some of the hardest issues we face. He mentioned social care. We have had two false starts—in 2010 and then later with the pronouncement from the now noble Baroness, Lady May, and the response to it. Let us make sure we do not do that again.
On climate, surely, we should work hard to try to recreate a consensus. Then there are issues such as the triple lock. We all know we have to face up to this. Again, I urge some form of debate between the different parties to see if we can reach a sensible outcome. Having said that, I am very grateful to all noble Lords who have taken part.
Nature Restoration Levy Regulations 2026
(1 day, 7 hours ago)
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18:26 - Division on Lord Roborough’s amendment - Ayes: 41 / Noes: 29 - Amendment agreed.
Baroness Taylor of Stevenage
That the draft Regulations laid before the House on 18 June be approved.
Relevant document: 8th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, as Members will recall, the Government have been consistently clear in our commitment to get Britain building and to deliver the homes and infrastructure this country needs, but we have been equally clear that this must go hand in hand with improving outcomes for nature.
To honour that commitment, we legislated to introduce the nature restoration fund through the Planning and Infrastructure Act. The Government are incredibly grateful to Members of this House, not just for the late nights on the then Planning and Infrastructure Bill but for the very constructive engagement throughout the Bill’s passage which has ensured that the NRF provides a robust framework to support development and secure a lasting legacy of environmental improvement. The Nature Restoration Levy Regulations provide the statutory framework for the operation of the nature restoration levy which sits at the core of the NRF.
Before I get into the detail of the regulations, I want to respond to the amendment before us. I want to be clear that the nature restoration levy has not been designed to undermine development viability. On the contrary, the levy is intended to provide developers with a clearer, more certain and more streamlined route to meeting specific environmental obligations. The legislation includes a number of safeguards to ensure that levy rates are set appropriately and are based on the cost of delivering the conservation measures needed to materially outweigh the impacts of development on a protected site or species.
Natural England will be required to consult on proposed charging schedules as part of the environmental delivery plan process and levy rates will be carefully considered by the Secretary of State before an EDP is made. Through this approach, we are ensuring that development contributes fairly to environmental improvement while providing the certainty needed to support the delivery of essential homes and infrastructure.
As noble Lords will be aware, the purpose of the NRF is simple—to ensure that vital development is delivered while taking more effective action at strategic scale to deliver better outcomes for the environment. This approach will move us away from piecemeal interventions on a site-by-site basis and will secure the delivery of conservation measures that go further than maintaining the status quo to drive genuine environmental improvement.
Before we consider this instrument in detail, it is important to note that we are not today debating the fundamental principles that underpin the nature restoration fund. The enabling powers for these regulations are contained in the Planning and Infrastructure Act, which was subject to extensive scrutiny by both Houses and approved by them. Shifting to a strategic approach requires proper planning, which is why the creation of environmental delivery plans sits at the heart of this new approach. EDPs will be developed by Natural England, the Government’s adviser on the natural environment, and will demonstrate how the proposed package of conservation measures delivered by the EDP will materially outweigh one or more impacts of development on a protected site or species.
Each EDP will be subject to public consultation, providing an opportunity for stakeholders to scrutinise the evidence presented by Natural England. At the conclusion of that consultation process, the Secretary of State will consider whether the EDP meets the overall improvement test established through the Act before they formally make the EDP. Where an EDP is in place, developers will have the option to pay the nature restoration levy to discharge the relevant environmental obligations that the EDP covers.
That brings us to the subject of our discussions today, as the Government have been clear that the action delivered through the EDP will be funded through proportionate contributions from development. This ensures that developers continue to address the environmental impacts of development. The Nature Restoration Levy Regulations set out how the levy mechanism will work in practice. They provide the statutory framework for key elements of the levy’s operation, including how liability to pay the levy may be assumed, imposed or transferred. They also explain how the amount of the levy will be calculated, when the payment will be due and the enforcement mechanisms available to Natural England where obligations are not met.
The purpose of the nature restoration levy is to enable the delivery, management, maintenance and monitoring of the conservation measures identified in the relevant EDP. These regulations therefore provide clear safeguards to support the effective delivery of EDPs. They ensure that payments from developers are sufficient to meet the costs of the relevant conservation measures, are properly recovered in a timely manner and are aligned with the commercial realities of development. Levy rates will be set through individual EDP charging schedules which will form part of the EDP consulted on. These charging schedules will be based primarily on the cost of delivering the conservation measures that are needed to materially outweigh development impacts.
At times during passage of the Planning and Infrastructure Act, concerns were raised that funds collected through the nature restoration fund might be diverted to pay for other, unrelated priorities. However, I can reassure noble Lords that these regulations ensure that levy funds can be used only for the delivery of conservation measures set out in the relevant EDP and administrative expenses connected with that EDP. Clear reporting requirements around how levy receipts are spent will further enable the NRF to operate transparently and with appropriate scrutiny.
While the levy regulations are a key part of the new system, we recognise that users will need proper support to navigate the NRF. Initial guidance has now been published by MHCLG, Defra and Natural England to support the implementation of the first EDPs. This guidance sets out the key steps for NRF users and explains the core operational processes that will underpin the NRF system. The Government will continue to work with stakeholders to identify further areas where guidance might assist in the delivery of the nature restoration fund.
I trust that the House will agree that these regulations will support the effective implementation of the NRF and the rollout of EDPs. I beg to move.
Lord Roborough
At end insert “but that this House regrets that the draft Regulations will not require Natural England to take into consideration the financial viability of development and in particular other requirements for affordable housing, education, health and infrastructure contributions placed on the developer.”
Lord Roborough (Con)
My Lords, I thank the Minister for introducing these regulations. Although I am pleased to see her in her place, I wonder why they are being introduced by the Minister of State for MHCLG, when we were assured during debate that the responsible department and Secretary of State for administering EDPs and Part 3 of the Act would be Defra. I draw the House’s attention to my entry in the register of interests as a landowner with land that has planning consent for residential development, although I believe it is not captured by the regulations being debated today.
These regulations follow the Planning and Infrastructure Act 2025 and form part of this Government’s new approach to mitigating and compensating for environmental impacts caused by developments. Under this new regime, it will be for Natural England to determine the environmental impact of developments and the conservation measures required through new environmental delivery plans. Natural England will determine the levy as well as how the funds will then be spent.
Natural England’s recent performance has undermined confidence. The High Court found that the quango had acted irrationally and beyond its powers in the licensing of game bird releases. Its approach to reduce livestock grazing on Dartmoor caused controversy, as the unintended consequence would have been a sharp reduction in pony numbers, which apparently caught it by surprise. The quango then tried to shift the blame on to the Government. Its track record in planning is also poor, with the infamous bat tunnel on HS2 and the fish disco at Hinkley Point both being designed to meet its onerous demands, as well as the unnecessary Ebbsfleet SSSI jumping spider decision.
My main concern with these regulations is that they make no mention of considering the financial viability of developments. This puts Natural England’s demands over and above education, health, transport infrastructure, affordable housing and other things. We on these Benches care deeply about the importance of protecting and improving our natural world. However, putting the demands of nature over and above our health, our housing and our children’s education is dangerous as, for many of our countrymen, it will make nature a threat to their direct needs. How can we trust Natural England to assess environmental impact accurately when the greater that assessment, the greater the funds it receives? When creating EDPs, how can we trust Natural England to deliver value for money without any market competition? Is Natural England really the right body to be making balanced judgments about how much should be contributed under the NRL? This is simply extending the size and power of the state, always with good intentions but always with the same negative results.
This cost, without any accountability, risks making even more developments unviable. Many housing schemes are already stalled due to financial viability issues, as developments have been treated as a Christmas tree that can solve all of society’s demands. Developers may still opt for site-specific mitigation measures, but this means carrying out assessments separately from the EDP. Even then, Natural England can choose to make the NRL mandatory. Can the Minister clarify in what circumstances the levy payments could be made mandatory? Can this apply when a developer is willing and able to comply with the existing mitigation hierarchy? Will developers still be allowed to opt for existing compensation measures through the nutrient neutrality and biodiversity net gain markets within that hierarchy? This is an important element of nature restoration and financial underpinning for many land managers.
Not only does Natural England compete unsuccessfully with private sector BNG and NN developers but it can also now eliminate that competition, apparently at will. It looks as though the charging rates may be set very differently for each environmental delivery plan, and the Secretary of State will also have the power to change the payment rate of an EDP without consulting Natural England or developers. How will the Government ensure consistency for developers? What happens when a development happens to cross two or more EDP areas?
These regulations are disappointing. They put nature in opposition to core societal needs by ignoring the financial viability of the levy. They put the bureaucrats of Natural England in charge of nature restoration, undercutting private markets without any apparent limitations on what it can extract from developers. There is no acknowledgement of the mitigation hierarchy, nor recognition of the importance of nutrient neutrality and biodiversity net gain markets. In fact, in many regards they seem to have been drawn up as though the debates and commitments that we heard in Committee and on Report on the Planning and Infrastructure Act never happened.
I look forward to hearing the contributions of other noble Lords and the Minister’s response. Perhaps the Minister could at least commit to restricting these EDPs to nutrient neutrality, where they will do the least harm. Following the Government’s bizarre determination to impose habitats regulations on Ramsar sites, limiting the development of at least 100,000 houses, there is clear demand for nutrient neutrality units. The Minister was very generous with her time in discussing this when we brought the Bill through the House. If she is unable to give consideration to that, perhaps she could commit to withdrawing these regulations and thinking again. If neither of those things is possible, I would be minded to test the opinion of the House. I beg to move.
Baroness Coffey (Con)
My Lords, I am conscious that we spent a lot of time on the primary legislation trying to understand this, and I am not overly convinced that these regulations help. I have been carefully reading Commons Hansard, with Minister Matthew Pennycook explaining. Some things in there surprised me. It should be a matter of concern for the Government that, for example, the tech needed to undertake this whole process is still not ready, and it is unclear how this will move forward. I also share my noble friend Lord Roborough’s concerns. I had a response from the Defra Minister saying that the Secretary of State for Defra would be issuing the guidance on all these matters. It is accurate to say that Defra issued guidance, but it did so in conjunction with MHCLG. This comes back to some of the ongoing nervousness about who is really driving this. Is Defra just an add-on?
The reason I say that, in a different way, is that yesterday Minister Matthew Pennycook talked about wanting to make clear that the Government would protect developers who choose to use the NRL from unjustified costs. It is unclear to me who will determine which costs are unjustified. We know we are proceeding in a novel way in trying many years ahead to forecast how much the costs of these different EDPs are going to be, and there will be scrutiny of that.
I understand that the first EDP addresses nutrient neutrality in Norfolk. I would like to understand from the Minister why the consultation on the EDP is expected to last for only 28 days. That feels a very short time for the first ever of these models, and a considerable amount of effort will need to be put in to assess them. The other surprise is that that part of the country is one of the better areas for having got a green finance market going. This is undermining a lot of the issues that we face in trying to make these a success, so it would be useful to understand from the Minister why we are starting there. There are plenty of other places dealing with nutrient neutrality issues— I think of the Solent, parts of Somerset and the like—where there is not the same level of green finance market already under way.
I do not know whether it is the regulations or the primary legislation that allows the Secretary of State to change the levy rate at any time without notice, but I am trying to understand when that would be the case under these regulations and why that would not require any consultation. I was pleased to see Minister Matthew Pennycook say:
“In the case of the first EDP that we bring forward, it will be the DEFRA Secretary of State who makes the judgment on whether the EDP is to be made following consultation”.—[Official Report, Commons, Fifth Delegated Legislation Committee, 2/9/26; col. 9.]
Based on what was said in this Chamber, my hope and expectation was that the Secretary of State for Defra would make all the decisions on every EDP, not just on the first. As we embark on these novel ways of trying to improve nature—I respect that the Government are trying to do that—I would be grateful if the Minister could try to answer those questions.
There is another surprising element that is also surprising developers. I know that a developer can ask for several quotations—I think the word used is “quotes”—to understand what it might be getting into, but, in effect, once it has made its planning application and the commitment to pay, it is locked in. That is an interesting challenge. I know that Natural England, in trying to develop the EDP, will need some certainty on financing, but, bearing in mind what my noble friend has just referred to, confidence is not high.
The other issue, which I hope does not come through, is that in the primary legislation Natural England was able to delegate EDPs to anybody. Again, it is not clear how that bit is monitored and managed through these regulations, especially considering the 28-day consultation period.
There are many issues to raise, and I am sure that others will bring up various points. All I can say is that this does not feel as though it has made the whole process clearer; in fact, it has genuinely muddied the waters, particularly those around nutrient neutrality.
Lord Randall of Uxbridge (Con)
My Lords, these regulations have been drawn to the special attention of the House by the Secondary Legislation Scrutiny Committee on the basis that they are politically or legally important or are a public policy likely to be of interest. I have some points to raise. I am not necessarily coming from the point where my noble friends are, or from the point of developers, but I recognise the importance of getting developments properly done.
The new impact assessment has not been conducted, despite the prior impact assessment not assessing impacts beyond those relating to nutrient pollution. This also means that we still have not seen sufficient evidence to justify the need for these new provisions. The draft regulations are not strong enough to safeguard against abuse of the system. The details set out in the draft regulations will not protect local protected species and sites from the Planning and Infrastructure Act 2025.
Natural England will be expected to pick up the bill for developer obligations in several scenarios, despite being under massive, sustained budget pressures itself. These include not being able to apply surcharges for failure to pay sums under £1,000, not being able to enforce local land charges with less than £2,000 outstanding, and having to absorb some degree of cost where material changes occur that will cost more money. Under draft Regulation 23(2), Natural England could reduce levy fees if it is expecting other sources of funding, which I understand means that public money could be used to offset the harm done by private development. It is unclear to me whether Natural England can include the cost of designing the conservation measures in the levy amounts. Failure to do so will heavily incentivise generic copy-and-paste measures over more ecologically appropriate measures. The Secondary Legislation Scrutiny Committee has highlighted several issues, including the lack of clarity over what the fund levy would look like in practice.
Environmental organisations strongly oppose the environment delivery plan model. Nonetheless, if it is going to go ahead—and I believe it will do—some measures must be taken to limit the damage done by this model. Natural England should be driven by environmental outcomes, not financial viability for developers. Public funding should not be used to reduce the rates in a charging schedule for private developers, as would be possible under Regulation 23(2) of the draft text. Natural England should be explicitly permitted to include the cost of designing conservation measures within the charging schedules. Appeals should be dealt with by independent, non-political actors and not a Secretary of State.
A full assessment must be conducted on the impacts of the environment delivery plan system before the first plans are enacted. These impacts should be considered during the design of the plans to avoid avoidable harms to protected species, protected sites and other environmental features, and the stakeholders involved.
I urge the Government to make meaningful changes to tackle the issues that are raised here as I suspect that, despite the endeavours of many, these regulations will go ahead. But as my noble friend has said, there is a good case for taking these away and thinking again.
Lord Fuller (Con)
My Lords, environmentalists are up in arms on the nature restoration fund and EDPs because they break the link between a development and its nature mitigations. Developers are saying that the cost, risks and delay are making development unviable, while everybody argues that nothing is getting built in those areas of the country with the greatest housing potential.
Taken together with all the environmental fees, charges and other levies, it has put the price of a new home up by about £30,000 to £40,000 in the last five years. The hard truth is that well-meaning but counterproductive nature levies and other levies are damaging our economy, with brickies, ground workers, sparkies and chippies all sitting idle. Of course, the simple truth is that not building new homes—especially social homes, which are the first to get the chop when viability is in question—is not going to clean up the rivers. The organisation that is meant to grip this has singularly failed in the five years since it misdirected Ministers that families trying to get their feet on the housing ladder should bear the brunt of upgrading the sewage treatment works, rather than the water companies whose job it really is.
The situation we find ourselves in today is a direct result of Natural England misdirecting itself as to the science and arithmetic of nutrient mobility. It confused absorption with adsorption and has misrepresented scientific papers that it purports support its position when the reverse is true. By way of a declaration of interest, I am involved in the fertiliser industry, so understanding nutrient mobility in soils is one of my specialist subjects.
About four years ago, when it became obvious that Natural England had stymied housebuilding in my area and was incapable of addressing river pollution, I established the Norfolk Environmental Credits company, which is owned by all the councils of Norfolk, to do the job that Natural England has the staffing, powers, software and responsibility to do, but does not. I was the person who set up that green financial market referred to by my noble friend Lady Coffey. Five years on, if it were not for people like me rolling up my sleeves to get this problem addressed—and franchising it to other council areas in other catchments—no new homes would have been built in the entirety of this Parliament. I would like to take credit for this, but I am anxious that all this hard work will have been for nothing if Natural England takes our homework, runs away with it and leaves us high and dry.
The problem is that Natural England has been allowed to get away with being simultaneously the regulator, adviser, enforcer, operator, pricer, procurer and competitor in a market in the grossest case of multiple conflicts of interest that, in any other walk of life, would be closed down for being contrary to the public interest. Its advice has caused us to sleepwalk into an Alice in Wonderland situation where a fertiliser colleague could sell a farmer a kilo of phosphate for 85p, but a developer must spend £50,000 to remove it from the treatment works at the other end.
If that was not crazy enough, the Government have made the river problem even worse by subsidising the production of over 20 million tonnes of biogas digestate—applied to the land at the wrong time of year—which does more than anything else to turn the rivers green. Yet these polluters do not pay a penny into the fund. It is wrong.
All these levies have brought developers to their knees. All they wanted to know was how much, when, where and how these charges would be applied, as well as the scope, extent, cost and regulation that the EDPs require in an evidence-based and transparent manner, with a degree of consistency from one place to another. But it was too much to hope for. When the regulations were laid in June, the first were all about how Natural England could charge and enforce its fees. We are still none the wiser on the important things. The credibility of the nature restoration fund ultimately rests on a simple question: will levy income be sufficient to fund conservation measures for as long as they are required to deliver the promised environmental outcomes?
When we went through the then Planning and Infrastructure Bill, we warned of the consequences of allowing Natural England to lead on this when it could not even get their stories straight on the jumping spiders or the ponies or the advice on bird flu, which was used as a bogus pretext to license shooting in the land use framework. It has ceased to be trusted. Through its indolence, we still have no idea whether the EDPs would issue some sort of permit or a licence for the resident to flush his lavatory in his new home. That distinction is important. A permit is an asset that is tradable on the secondary market—repeating the milk quota disaster of the 1980s—whereas a licence, if no longer needed, perhaps because a sewage treatment works has been upgraded, can be surrendered so that the mitigation can be applied again for the benefit of the taxpayer for the remainder of the 80-year term. Is it a licence or a permit? We do not know. It is an important matter.
Now we get to the pricing. The market for phosphate credits has settled at around £5,000 per dwelling. That fee covers not just the immediate costs of introducing a mitigation but those tail liabilities of management for at least 80 years together with inspection and regulatory costs along the way. As I explained during the passage of the Planning and Infrastructure Bill, this is an actuarial evaluation problem. The problem is that Natural England exhibits little understanding of this simple economic reality. All indications are that it will just pick a number out of the air that is wholly unrelated and untethered to those liabilities, and, in so doing, chop off at the knees people—like me, through our councils—who rolled up their sleeves to fix the problem when Natural England would not.
If it does that, it will at a stroke further damage our economic reputation, because there is one area in which the UK has developed some quite interesting and valuable intellectual property: the running of nature markets. All the indications are that Natural England’s cack-handed ignorance would completely destroy the accumulated value of these nature markets. Our company has already had to take an impairment.
When are the Government going to get a grip and rein in this organisation that has so wilfully misunderstood the science, made our economy smaller and homes more expensive, left social homes unbuilt and workers and professionals sitting at home, delayed mitigations and imperilled our global leadership in the nature market—all when Natural England’s first priority, through its regulations, was simply to featherbed their own bureaucracy?
Baroness Parminter (LD)
My Lords, this discussion is the first chance that this House has had to really try to understand exactly how the Government intend to implement the new EDP process, which we debated at such considerable length during the Planning and Infrastructure Bill. As certain noble Lords have already said, these regulations give us very little clarity about the process. It was these Benches which secured at Third Reading of the Planning and Infrastructure Bill that there would be greater clarity from Natural England as to how it would prepare EDPs and prioritise actions to minimise the potential environmental damage by the developments resulting from these EDPs.
The negative statutory instrument laid in June talked about how Natural England had to take account of the mitigation hierarchy. However, there was the rider that it could do that only when it thought it was appropriate to do so, so it was almost a “get out of jail free” card. The issues which the noble Lord, Lord Krebs, and the noble Baroness, Lady Willis, focused on, on getting clarity upfront about the scientific evidence to provide the baseline environmental assessments, were not mentioned at all in those regulations and are not covered in the regulations before us today. Therefore, it seems that we will have to wait for the consultations on each individual EDP, as they come forward, to try to assess those critical environmental issues.
The noble Baroness, Lady Coffey, made a very important point: it has become clear that we are going to get only 28 days for each of those consultations—for that very complex job of understanding those environmental factors. That is something that we regret. We ask the Government to think again about limiting the public consultation on those EDPs to 28 days. Given that there has been so little detail in the regulations, it is necessary that we get greater clarity during the public consultation.
I have three substantive points of concern on the regulations before us. Like the noble Lord, Lord Roborough, but for different reasons in the main, I regret these regulations. The first point is that the levy can be paid in instalments by developers, whereas in the present system for developers that are bringing forward a development that will cause environmental damage, the payment and the environmental mitigation have to be upfront. In these regulations, the only tied-down part of the funding that the developer will have to produce is the first instalment. This was an issue that the Secondary Legislation Scrutiny Committee picked up and, as we have heard, it got a response that that was clearly around the issue of cash flow and the viability of buildouts and development. In a sense, that is understandable. However, we have seen in other areas, in which developers have argued about viability at later dates, that protracted arguments about funding constraints can lead to the environmental improvements that we want not coming forward. It is a concern for us that only the first instalment is fixed.
Secondly, as the noble Lord, Lord Randall, raised, there can be a reduced fee for developers if other sources of funding can be found. From my point of view, it seems that if charities or the public purse are funding environmental improvements in an EDP area, that means that somehow developers can get out of paying the amount that they should be paying. That does not seem right, and I would like the Minister to clarify exactly what funding they think this is referring to. Could it be funding coming from charities or the public purse, either through Natural England or through other schemes that the public purse is funding? In the end, it does not seem right that there can be reduced levies for developers if other actors are funding environmental developments in that area.
The third issue, which the noble Lord, Lord Roborough, raised and which I feel particularly strongly about, is that the Explanatory Memorandum to these regulations says that for some EDPs the levy will be mandatory. We have 16 EDPs that the Government have said they are producing, and it would be good to know how many of those they think the levy will be mandatory for, because it effectively kills dead the private market green schemes that are out there. I think none of us would wish to see that. Indeed, the Government have said they want to see a plurality of solutions to address the development and environmental challenges that we face.
During the Recess, I went down to the Solent and saw the very impressive nutrient management market down there which has been developed by a combination of the Wildlife Trusts and local authorities. The Wildlife Trusts bought up an intensively managed piece of land, stopped using fertiliser and sold credits to developers. That scheme has resulted in 2,500 homes being built in the Solent in an area where there are big nutrient problems. As soon as the EDP scheme was announced, that was put on hold and now has effectively stopped, and this is equally so—this will be of concern to the noble Baroness, Lady Coffey, and the noble Lord, Lord Fuller—for a scheme in Norfolk. Therefore, we are really concerned about the mandatory nature of this scheme. We need to encourage a plurality of systems, and these regulations do not do that.
Lord Jamieson (Con)
My Lords, I thank the noble Baroness, Lady Taylor of Stevenage, for her introduction to these regulations and my noble friend Lord Roborough for his amendment and thoughtful words. I also thank other noble Lords who participated in this debate for their thoughtful words. I think there is universal agreement that these regulations do not work.
We all want to see our natural environment preserved, but people also need somewhere to live. There are 1.34 million people on council waiting lists. Homes in many parts of England are simply unaffordable, with the average home costing 10 times average London wages. For private renters, rent is taking an increasing proportion of household income, about 40% in England and nearly two-thirds for some of the lower-income households. The situation is worsening, with Pepper Money estimating that there are 220,000 fewer rental properties as landlords exit the market following the Government’s Renters’ Rights Act.
We have a housing crisis, but the Government continue to make the situation worse. Despite their commitment to build 1.5 million new homes, only 200,000 were delivered last year, down 4% on the previous year. By contrast, the Conservatives delivered 1 million homes, as promised, over the last Parliament, and that included the impact of Covid. The Government continue to increase the burdens on housebuilding, which ultimately increases the cost to home buyers and renters. It is not just any one regulation or levy but the continual layering of additional burdens: the building levy, landfill tax, high-rise building safety, Section 106 and the future homes standard, among others. The Home Builders Federation estimates that the cost of building a low-rise home has increased by 76,000 since 2020.
It is easy to say that this should be reflected in the price of land, but often the value is simply not there, particularly for brownfield land. With the poor economic outlook and increasing interest rates, people cannot afford higher house prices or rents. If the cost of building is greater than the sales price, homes will not be built, and I fear that in many areas of the country we are approaching that point.
We do not dispute that harm to nature must be managed, mitigated and compensated for. It is a crucial consideration for any planning application, but people also need somewhere to live. During debates on the Planning and Infrastructure Bill, mitigation hierarchy, viability and mandation were discussed and assurances sought by this House. We need developments to provide infrastructure, whether it is schools, roads or health facilities, as well as affordable homes, but these regulations risk cuts to these in order to make sites viable.
My noble friends Lord Fuller, Lord Roborough and Lady Coffey all raised the effectiveness and efficiency of Natural England. Do we really want it to be judge, jury and executioner, setting the policy, determining whether it has been met and then setting up its own schemes and levies with no accountability? Do we want it to be able to create its own monopoly and eliminate competition, as in the Solent, mentioned by the noble Baroness, Lady Parminter?
The Minister has said that Natural England will be accountable to the Secretary of State, but is it realistic that the Secretary of State will be able to evaluate fully the financial effectiveness of every EDP and all the potential competing schemes that are being eliminated for it, not to mention the needs of every single site that might be affected by it? I am not sure that this is realistic. The Minister has said that this will not be an obligation on developers. However, the regulations are littered with words such as “obligation”, “imposed”, “mandatory” and “enforcement”.
We must also reduce our reliance on major housing developers, yet it is the smaller developers which will be most exposed to the individual costs and levies of these regulations. What assurances can the Minister give that viability will be a core part of these regulations; that schools, infrastructure and affordable homes will not lose out; that Natural England will not be able to impose a mandate; and that consideration will be given to SME builders, with recognition of the need to prioritise brownfield? As my noble friend Lord Randall of Uxbridge pointed out, when will we see the impact assessment of these regulations?
We need a balance between the need to preserve our environment and the need for housing. Regulators need to be accountable.
Baroness Taylor of Stevenage (Lab)
My Lords, I am grateful to all noble Lords for their considered contributions. It has been a useful debate, but some of it has reflected some of the issues that we rehearsed in the Planning and Infrastructure Bill and has not focused as much on the regulations. I will try to touch on as many points as I can, but I am sure noble Lords will appreciate that, in a short debate such as this, if I do not get to them, I may have to respond in writing.
The noble Lord, Lord Roborough, raised the key issue of the balance between MHCLG and Defra, both specifically around EDPs but also more widely about the nature restoration fund. We are going to have to get used to working across more than one department on some of these issues. Defra clearly has a key role, but MHCLG is the ministry responsible for planning, so we have to make sure that we get that balance right. As far as I know, Defra will continue to be responsible for EDPs. We had long discussions on the Bill about the Secretary of State for Defra signing off EDPs. If that is not the case, I will come back to the noble Lord, but my memory is that it is.
A number of noble Lords raised issues that were discussed during the passage of the Bill around the capacity and capability of Natural England. The noble Lords, Lord Roborough and Lord Jamieson, and the noble Baroness, Lady Coffey, mentioned this. Natural England is the appropriate delivery body for the NRF. It has internal expertise and is able to operate effectively across the whole of England.
By providing an alternative to the existing approach of the fragmented, site-by-site mitigation that we saw, through the introduction of a strategic, plan-led system, the NRF enables Natural England to deploy more expertise more efficiently across regional geographies. It will be supported to take strategic action and to deliver the conservation measures set out within individual EDPs using income from the nature restoration levy.
The regulations also enable targeted use of levy funding to cover the administrative costs, which there were a number of questions about. It can be used for the administrative costs associated with the delivery of individual EDPs, not spread across the country. This will enable Natural England to build and maintain the capacity and capability to design, implement and monitor EDPs effectively.
The noble Lord, Lord Roborough, focused a lot of his comments on viability, as did the noble Lord, Lord Fuller, and I understand the reasons for that. I point out initially that the NRF is not the only consideration in planning in relation to infrastructure. The whole planning system—we have just republished the NPPF—makes it very clear that all issues around infrastructure must be taken into account.
On the NRF, Natural England will have the flexibility to set rates that reflect local circumstances and capture specific environmental and delivery considerations across the EDP. Where levy rates need to be higher, this will reflect the genuine cost of securing required conservation measures to address the impact of development. The vast majority of EDPs will be voluntary—I will come on to the mandatory issue in a moment—so developers will be able to choose between using the EDP or meeting environmental obligations through existing means.
Rates will be set out in the individual EDP charging schedules, alongside information regarding how they have been set. It will therefore be a requirement on Natural England to set out how it has set its rates. Levy rates will vary between EDPs and can be calculated for specific development by reference to factors including the type of development, the location and environmental impact.
On the mandatory EDPs, which the noble Lord, Lord Roborough, and the noble Baroness, Lady Parminter, both mentioned, we would expect EDPs to be made mandatory only in very limited circumstances—for example, where Natural England has worked directly with a developer on a specific EDP to cover its project alone. All EDPs will be subject to a full public consultation before they can be made by the Secretary of State. Given that the vast majority of them will be voluntary, if an EDP is not a viable, competitive or attractive option, developers can continue to use existing routes to meet their obligations, limiting the ability of Natural England to deliver the wider environmental benefits that the NRF is designed to achieve. So, in all but exceptional circumstances, EDPs will be voluntary.
The noble Lord, Lord Roborough, raised the issue of the mitigation hierarchy and whether this is being weakened by this process, leaving Natural England with too much discretion. Throughout the passage of the Bill, we were clear that the mitigation hierarchy lives on in this model, but that Natural England is not required to apply it in the inflexible way that has often constrained strategic nature recovery. To make sure the Government were as transparent as possible on this point, a specific duty was introduced in the House requiring regulations to be made setting out the appropriate prioritisation, by Natural England, of the different ways of addressing any negative effect of development.
The Environmental Delivery Plan (Appropriate Prioritisation) Regulations, laid alongside the regulations before us, deliver on that commitment. They make clear that Natural England must consider the mitigation hierarchy when developing an EDP, while they preserve the discretion of Natural England to determine the appropriate conservation measures in the circumstances. The noble Lord, Lord Krebs, and the noble Baroness, Lady Willis, have been working very effectively with Defra on these issues, and I am very grateful to them for their input.
Issues were raised around gold-plating of conservation measures, notably by the noble Lords, Lord Roborough and Lord Fuller. While Natural England must prepare EDPs based on the best available scientific evidence and explain why the proposed conservation measures are appropriate, it is also required to set levy rates that will enable the recovery of the costs of delivering the EDP, rather than generate surplus funds. All EDPs, as I said, are subject to public consultation and approval by the Secretary of State.
Finally, Natural England will be incentivised to ensure that the levy remains competitive and attractive to developers, as EDPs will be voluntary in almost all circumstances. So, if it gold plates them, developers will not accept them. It is as simple as that.
The noble Baroness, Lady Coffey, and the noble Lord, Lord Roborough, raised issues around consultation. There are government consultation guidelines which I am assuming have been recognised in the consultation on this but, if the noble Baroness will allow me, I will go back and check that this type of consultation follows those guidelines and respond in writing on that point.
On the issue of setting the levy, raised by the noble Lords, Lord Randall and Lord Fuller, and the noble Baroness, Lady Coffey, the levy regulations establish clear parameters that Natural England must follow when setting the levy rates. They also recognise that the costs underpinning EDPs will vary according to the environmental impacts being addressed and the conservation measures required. This framework provides Natural England with the flexibility to set levy rates that reflect local needs and delivery requirements. The levy is designed to enable full cost recovery, so there should not be a cost to Natural England for that, and rates are required to reflect the costs of delivering the necessary conservation measures as well as administration, monitoring and maintenance activities.
The governing test remains the overall improvement test, whereby an EDP will materially outweigh the negative effects of development. Although I understand some of the concerns, particularly around viability, we cannot carry on with a situation where developers were doing development that was polluting our rivers in a way that has caused inordinate damage to them. We had to take some action on this. Levy rates will also take account of relevant administrative costs necessary to the delivery of the EDP under which the levy is charged.
There were questions on funding from other sources—the noble Baroness, Lady Parminter, raised this and the noble Lord, Lord Randall, had some concerns about this issue as well—and about whether the ability to reduce levy payments where there is funding from other sources will result in developers not paying their fair share. That is not the case. The provision is intended to allow a targeted flexibility in very limited circumstances, enabling the Government or other sources to contribute to the costs of delivering an EDP where appropriate to support viability for certain types of priority development. That is what that provision in the regulations is for.
The noble Baroness, Lady Parminter, asked about the timing of levy payments, which is a very important point. I know she is concerned about the payments by instalment. The regulations enable payments to be made in instalments to better align with the realities of build-out phases, but this will be possible only where expressly provided for by Natural England through instalment plans. Instalment plan options may vary between EDPs. Where an instalment plan is used, payments will typically be spread across the development period rather than being required in full up front. However, even where an instalment plan applies, the first instalment must be paid before development can commence. I will not go into the detail because I do not have time, but there are clear provisions to help Natural England with enforcement and the follow-up if payments are not made. We have looked very closely at that.
In conclusion, the instrument sets out a framework for the nature restoration levy and provides Natural England with the tools it needs to implement the NRF. In response to the noble Lord, Lord Jamieson, whose points were mainly about the housing crisis—a housing crisis that his Government caused and we are now trying to fix—I make no apologies for wanting to build these homes, for the £39 billion we are investing in housing, for wanting people’s homes to be safe and secure and for wanting their environments to be sustainable.
I trust that the House agrees that these regulations will support the delivery of the nature restoration fund and our shared ambition more widely to grow both nature and the economy. I hope that these regulations will be welcomed.
Lord Jamieson (Con)
Before the Minister sits down, can I just clarify a couple of comments that she made? She was very clear that there would be an option as to whether one went with the Natural England EDP. Can we be absolutely clear that that will always be the case, particularly when Natural England is marking its own homework and deciding whether the mitigation put in place by a developer, whatever that is, is sufficient or not? Secondly, she said that it would be mandatory only in very specific situations and gave the example of an EDP that was specifically brought forward for a particular large development. Can she be clear that that is the only instance in which it would be mandatory? Thirdly, I think she said that developers cause pollution. I believe additional housing results in additional burdens on nutrient neutrality; it is not necessarily that the developer itself is polluting. The Minister might want to clarify that one.
Baroness Taylor of Stevenage (Lab)
I will clarify that, in all but exceptional circumstances, EDPs are voluntary for developers. The Planning and Infrastructure Act establishes that Natural England can recommend that use of an EDP be mandatory only where it deems it to be necessary. This is a high legal bar, and it would ultimately be for the Secretary of State to consider whether an EDP is made. Given that the vast majority of EDPs will be voluntary, if an EDP is not a viable, competitive or attractive option, developers will continue to use existing routes to meet their obligations, limiting the ability of Natural England to deliver the wider environmental benefits that the NRF is designed to achieve.
We want to make this process work better for nature while continuing to allow the growth we all want to see take place, particularly housing growth. There is no doubt in my mind that we could not carry on as we were. We have had to make some changes to make sure that we protect our natural environment and get the growth we want to see.
Lord Roborough (Con)
My Lords, I am very grateful to all noble Lords who have spoken in this short debate. I will clarify one point made by my noble friend Lord Randall. I hope no one thinks I am speaking on behalf of developers; I am speaking on behalf of nature. My concern is that if we give nature too much power in this debate, it will be seen as a blocker of development, and that is not necessary. That is why I am concerned about this viability test.
I am very grateful to the Minister, who made a lot of helpful comments at the Dispatch Box. People will read Hansard avidly, I am sure, for guidance from what she has said and, in particular, for the clarification about the role of the mitigation hierarchy. However, I remain concerned about the viability impact of these regulations on housebuilding and other development. I also remain very concerned about the impact on private nature markets, where we currently lead the world, and therefore I would like to test the opinion of the House.