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.