Lords Chamber
Thursday 12th March 2026
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14:15
Lord Mountevans (Crossbench)
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Lord Mountevans (Crossbench)
Britain is an influential member of the IMO. We are also very fortunate to have it located here in London just a few hundred yards up the river. We should support fully the IMO efforts to decarbonise and on a global scale and not do anything to undermine them. Despite the setback last October, where the United States and Saudi Arabia torpedoed efforts for an early worldwide agreement, vigorous efforts continue in that direction, albeit more modest, with a lifetime in international shipping and world trade.
Can I implore the Minister not to do anything to undermine the efforts to retain, as far as possible, a universal, international set of requirements good for the planet and essential for the owners who already have tombs of maritime compliance requirements. Please do not regulate for international emissions until IMO negotiations are completed, but Lord Singh UK maritime competitiveness is already affected by the EU. ETS unilateral UK action risks a further deterioration. May I add my voice to those urging the Minister to delay expanding the UK ETS to international voyages until a complete impact analysis is completed? The government seeks implementation by 1st July this year, just three and a half months away, including.
May I urge the Minister to delay inclusion of maritime in the UK ETS until full evidence and guidance is published that maritime ETS revenues for decarbonisation are ring fenced, that the lifeline ferries to island communities of which we have heard much be exempted, and that the UK government pauses regulation for international emissions until IMO negotiations are completed. Can we have, as a noble Lady, lady who. He said a s I r. Example two as requested.
Can I implore the Minister not to do anything to undermine the efforts to retain, as far as possible, a universal, international set of requirements good for the planet and essential for the owners who already have tombs of maritime compliance requirements. Please do not regulate for international emissions until IMO negotiations are completed, but Lord Singh UK maritime competitiveness is already affected by the EU. ETS unilateral UK action risks a further deterioration. May I add my voice to those urging the Minister to delay expanding the UK ETS to international voyages until a complete impact analysis is completed? The government seeks implementation by 1st July this year, just three and a half months away, including.
May I urge the Minister to delay inclusion of maritime in the UK ETS until full evidence and guidance is published that maritime ETS revenues for decarbonisation are ring fenced, that the lifeline ferries to island communities of which we have heard much be exempted, and that the UK government pauses regulation for international emissions until IMO negotiations are completed. Can we have, as a noble Lady, lady who. He said a s I r. Example two as requested.
14:16
Baroness Butler-Sloss (Crossbench)
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Baroness Butler-Sloss (Crossbench)
By Lourdes I to share the >> By Lourdes I to share the disquiet of most noble Lords who have spoken so far without. I have have spoken so far without. I have to say any knowledge about the subject, but I, like others, will be voting. So there are three questions I need to ask the noble Lord, the Minister. The first is what was said to the other house. Apparently we are told the other house was told that Seaborn was irrelevant.
Today we're told that Seaborn is entirely relevant. Is it really appropriate for both houses to have a Statutory Instrument put to it on different bases? I find that very unattractive, I have to say. Secondly, we are told there has been misinformation or indeed false information given to other parts of the United Kingdom. That seems to me a serious allegation and one which the noble Lord, the Minister, needs to answer. And thirdly, I won't dwell on it because it's been dwelt on.
But there is an obvious element of discrimination between Scotland and Northern Ireland that really needs Northern Ireland that really needs
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a sensible, understandable answer. My Lords, I'm. This has been a characteristically impassioned characteristically impassioned debate, which is perhaps not surprising given the subject of EU surprising given the subject of EU alignment, devolution and greenhouse gas emissions. It's inevitable that people are going to feel very strongly about this subject. If Lord Empey expressed his his his his concern for the Minister. In trying to reply to this debate, I would add to that I
Today we're told that Seaborn is entirely relevant. Is it really appropriate for both houses to have a Statutory Instrument put to it on different bases? I find that very unattractive, I have to say. Secondly, we are told there has been misinformation or indeed false information given to other parts of the United Kingdom. That seems to me a serious allegation and one which the noble Lord, the Minister, needs to answer. And thirdly, I won't dwell on it because it's been dwelt on.
But there is an obvious element of discrimination between Scotland and Northern Ireland that really needs Northern Ireland that really needs
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a sensible, understandable answer. My Lords, I'm. This has been a characteristically impassioned characteristically impassioned debate, which is perhaps not surprising given the subject of EU surprising given the subject of EU alignment, devolution and greenhouse gas emissions. It's inevitable that people are going to feel very strongly about this subject. If Lord Empey expressed his his his his concern for the Minister. In trying to reply to this debate, I would add to that I
14:18
Baroness Suttie (Liberal Democrat)
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Baroness Suttie (Liberal Democrat)
think this is a very, very difficult debate for the noble Lord, the Minister, to reply to. I would the Minister, to reply to. I would add it's slightly difficult, as the only Scot that has spoken so far in only Scot that has spoken so far in this debate, and only I think in over two hours, well over two hours, the. I think I'm only the fourth the. I think I'm only the fourth person to vaguely talk in favour of. Of this Statutory Instrument. I Of this Statutory Instrument.
I would thank the noble Lord for both his time and his. When he gave us a briefing and also for his introduction to these regulations. I'd also like to thank Baroness Hoey, because I think it is incredibly important that we get the time to debate these matters. And so I thank her for tabling this fatal motion, even though we will not be supporting it. As Lord Dobbs says, it is incredibly important that this Parliament does have a chance to debate these issues, not least, my Lords, because we're going to see an increasing number of them as we approach dynamic alignment with the European Union on ETS, as well as potential agreements on SPS and the electricity market.
We have to find a way to allow this chamber and the other end of the building to debate these things properly, and I do hope that the government is giving some considerable thought to how effective parliamentary oversight on these matters can and will take place if and when these additional agreements are made later this year. These regulations, it should be recalled, stem from regulations introduced by the previous conservative government in 2021 and the creation of the UK ETS following our departure from the EU.
ETS after Brexit. As these issues are devolved, they have had to be decided by the four parts of the United Kingdom and in answer to Baroness Butler-Sloss. I am the only Scot here speaking today, but it was the Scottish Government that effectively has campaigned to have the Scottish exemption for the islands. They are effective. They are not my party, but they have obviously campaigned very successfully on this matter. I think Baroness Foster, who's no longer in her place as she.
She was right when she said that these regulations stem from regulations introduced by the previous. As introduced in the Scottish Parliament in 2018. It is important to note that these regulations have been agreed last month by both the Scottish Parliament and the Welsh Synod and this week by the Northern Ireland Assembly. Notwithstanding the comments from the other noble Lords about that process. But it was nonetheless voted for by the Northern Ireland Assembly by 44 votes to 23 this Tuesday.
As I said, Baroness Sater was quite right because my understanding is that the exemption for Scottish ferries is not a general maritime exemption. It stems from the Island Scotland Act of 2018, which was passed by the Scottish Parliament eight years ago to protect specific lifeline services for small, isolated island communities and clearly protection for small island communities is, I believe, very important. Can the Minister confirm whether or not this Scottish exemption for island ferries will nonetheless form part of the review in 2028? Because I feel it is important for us to know whether or not that will be part of the review in 2028.
I also thank the Minister for clarifying that ferries to small island communities in Northern Ireland are already exempt from these regulations, as they do not involve vessels of over 5000 cubic tons. As my noble friend Earl Russell and Baroness Bennett so clearly set out in their speeches, we on these benches are strong, strongly support measures to reduce the quantity of greenhouse gases produced by maritime activities, but we nonetheless believe that they must be accompanied by port upgrades or cleaner fuel infrastructure, as well as by encouraging innovation and economic development in a cleaner maritime sector.
I should note note in passing that those who constantly oppose measures to reduce climate change never nonetheless seem to factor in the cost of non-action. We also support the general principle of aligning as closely as possible with the EU ETS to minimise friction on trade. It is important to bear in mind, however, the impact, as other noble Lords have set out on the economy of Northern Ireland, on the cost of living in these increasingly challenging times for the global economy, not least in terms of energy.
Because of the war in the Gulf, it is also important to allow a full and transparent review of how the scheme works in practice, and to correct any unintended consequences once it's introduced later this year. Given that the government's own impact assessment states that Northern Ireland, and I quote, could face disproportionate administrative burdens, it is important that we continue to monitor the situation extremely closely. Can the Minister say whether they intend to give regular reports to this Parliament, as well as to the devolved parliaments, on how the regulations are working in practice once they are introduced? And can he confirm that they will continue to consult closely with the maritime sector, businesses and consumer organisations, as there are currently a distinct lack of viable low carbon alternatives for many maritime routes serving Northern Ireland.
Has the government carried out any analysis regarding the extent to which additional ETS related costs could be passed on to consumers by shipping operators and retailers? The EU ETS currently covers 50% of emissions from international voyages starting or ending in an EU member state, which, for example, currently includes container ships travelling from GB to the Republic of Ireland. It is therefore, I believe, welcome that there is a 50% deduction for GB NI routes as it provides for a level playing field with Irish ports.
However, I would like to ask the Minister if and when there is increasing or indeed eventually full alignment with the EU. ETS. Can he say whether he expects this 50% reduction for both the Republic of Ireland and GB NI routes to be removed? I appreciate that might be a rather complicated question, but I would very much appreciate his answer. Can he also say what measures they intend to put in place to avoid a cliff edge? Following the review of these regulations in 2028? In conclusion, my Lords, we do support these regulations as we welcome the move towards greater alignment with the EU ETS, and we do not support either the regret motion or the fatal motion, but we nonetheless recognise the need for proportionality as well as strong transitional and review measures.
I look forward to hearing the minister's reply.
I would thank the noble Lord for both his time and his. When he gave us a briefing and also for his introduction to these regulations. I'd also like to thank Baroness Hoey, because I think it is incredibly important that we get the time to debate these matters. And so I thank her for tabling this fatal motion, even though we will not be supporting it. As Lord Dobbs says, it is incredibly important that this Parliament does have a chance to debate these issues, not least, my Lords, because we're going to see an increasing number of them as we approach dynamic alignment with the European Union on ETS, as well as potential agreements on SPS and the electricity market.
We have to find a way to allow this chamber and the other end of the building to debate these things properly, and I do hope that the government is giving some considerable thought to how effective parliamentary oversight on these matters can and will take place if and when these additional agreements are made later this year. These regulations, it should be recalled, stem from regulations introduced by the previous conservative government in 2021 and the creation of the UK ETS following our departure from the EU.
ETS after Brexit. As these issues are devolved, they have had to be decided by the four parts of the United Kingdom and in answer to Baroness Butler-Sloss. I am the only Scot here speaking today, but it was the Scottish Government that effectively has campaigned to have the Scottish exemption for the islands. They are effective. They are not my party, but they have obviously campaigned very successfully on this matter. I think Baroness Foster, who's no longer in her place as she.
She was right when she said that these regulations stem from regulations introduced by the previous. As introduced in the Scottish Parliament in 2018. It is important to note that these regulations have been agreed last month by both the Scottish Parliament and the Welsh Synod and this week by the Northern Ireland Assembly. Notwithstanding the comments from the other noble Lords about that process. But it was nonetheless voted for by the Northern Ireland Assembly by 44 votes to 23 this Tuesday.
As I said, Baroness Sater was quite right because my understanding is that the exemption for Scottish ferries is not a general maritime exemption. It stems from the Island Scotland Act of 2018, which was passed by the Scottish Parliament eight years ago to protect specific lifeline services for small, isolated island communities and clearly protection for small island communities is, I believe, very important. Can the Minister confirm whether or not this Scottish exemption for island ferries will nonetheless form part of the review in 2028? Because I feel it is important for us to know whether or not that will be part of the review in 2028.
I also thank the Minister for clarifying that ferries to small island communities in Northern Ireland are already exempt from these regulations, as they do not involve vessels of over 5000 cubic tons. As my noble friend Earl Russell and Baroness Bennett so clearly set out in their speeches, we on these benches are strong, strongly support measures to reduce the quantity of greenhouse gases produced by maritime activities, but we nonetheless believe that they must be accompanied by port upgrades or cleaner fuel infrastructure, as well as by encouraging innovation and economic development in a cleaner maritime sector.
I should note note in passing that those who constantly oppose measures to reduce climate change never nonetheless seem to factor in the cost of non-action. We also support the general principle of aligning as closely as possible with the EU ETS to minimise friction on trade. It is important to bear in mind, however, the impact, as other noble Lords have set out on the economy of Northern Ireland, on the cost of living in these increasingly challenging times for the global economy, not least in terms of energy.
Because of the war in the Gulf, it is also important to allow a full and transparent review of how the scheme works in practice, and to correct any unintended consequences once it's introduced later this year. Given that the government's own impact assessment states that Northern Ireland, and I quote, could face disproportionate administrative burdens, it is important that we continue to monitor the situation extremely closely. Can the Minister say whether they intend to give regular reports to this Parliament, as well as to the devolved parliaments, on how the regulations are working in practice once they are introduced? And can he confirm that they will continue to consult closely with the maritime sector, businesses and consumer organisations, as there are currently a distinct lack of viable low carbon alternatives for many maritime routes serving Northern Ireland.
Has the government carried out any analysis regarding the extent to which additional ETS related costs could be passed on to consumers by shipping operators and retailers? The EU ETS currently covers 50% of emissions from international voyages starting or ending in an EU member state, which, for example, currently includes container ships travelling from GB to the Republic of Ireland. It is therefore, I believe, welcome that there is a 50% deduction for GB NI routes as it provides for a level playing field with Irish ports.
However, I would like to ask the Minister if and when there is increasing or indeed eventually full alignment with the EU. ETS. Can he say whether he expects this 50% reduction for both the Republic of Ireland and GB NI routes to be removed? I appreciate that might be a rather complicated question, but I would very much appreciate his answer. Can he also say what measures they intend to put in place to avoid a cliff edge? Following the review of these regulations in 2028? In conclusion, my Lords, we do support these regulations as we welcome the move towards greater alignment with the EU ETS, and we do not support either the regret motion or the fatal motion, but we nonetheless recognise the need for proportionality as well as strong transitional and review measures.
I look forward to hearing the minister's reply.
14:26
Lord Whitehead, Minister of State (Department for Energy Security and Net Zero) (Labour)
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Lord Whitehead, Minister of State (Department for Energy Security and Net Zero) (Labour)
Spoken.
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Well. First of all, let me thank noble Lords for their valued, valuable and I would say, very wide ranging contributions to this ranging contributions to this debate this afternoon. Now, I am, I think, a fairly plain and think, a fairly plain and straightforward person, and I have straightforward person, and I have at times in this debate, failed to get to grips with exactly what this debate is supposed to be about, which is it's about the decarbonisation of the UK economy.
It is about how the emissions trading scheme is probably the most efficient way of ensuring decarbonisation in our economy. And what should be in that emissions trading scheme and what shouldn't be. And indeed, as we have heard in discussion this afternoon, how that trading scheme might be more widely based, so that actually the decarbonisation effect it does have is better affected. And of course, a part of that is the entry into the ETS of the maritime sector.
Now, for those who say that this. This Statutory Instrument is very rushed, I might have a go down a brief historical byway and mention that indeed, this particular. This particular SI1 can actually trace back to a 2022 consultation on whether the maritime sector should be included in the ETS. I might add a consultation under the previous government, not this government. And the response to that consultation at that time was a strong indication that, yes, the maritime sector should be in the emissions trading scheme and since then there have been a series of consultations with the maritime industry and many other people about exactly how that should be done and what.
What part the maritime industry itself should play in its own decarbonisation, and how it can actually contribute very substantially to the the UK overall trading emissions picture. And I have to say, the UK maritime industry has done very well in terms of its contribution so far to making that that transition as effective as it can be. So taken into context with that as the background, I'm firstly, I'm a little surprised at the regret motion that has been put this afternoon because essentially that is.
A past government regretting its own actions. And yes, there is plenty to regret about the previous government, but to actually have the previous government itself regretting itself seems to me a little bit of a step further forward than was previously the case. Now, we've also heard about the various. Procedures that took place before the the the final one of the, the, all of the four governments within the UK acceding to this particular Statutory Instrument. And that, of course, is the Northern Ireland Assembly decision this week, which, as we have heard, was agreed by a substantial majority and we have heard about what happened immediately before that, what happened in various corridors leading up to that particular debate.
I must say, I, I don't recognise easily people actually attempting to inform various people within that assembly as to what this what this s I consists of as exactly the sort of arm twisting and threats that we have heard about this afternoon, and indeed, just thinking of my own. Participation in that I did as the. The noble Baroness Baroness Hoey indicated at the beginning of this debate, and I'm grateful for her acknowledgement of this actions.
I did indeed reach out to her to discuss this fatal motion, and we had a very pleasant discussion, a very friendly discussion. I don't think I arm twisted her or intimidated her in any way, and I think that was the the probable basis upon which this debate has has gone forward as far as the Northern Ireland Assembly is concerned. And indeed, I do think the Northern Ireland Assembly itself is grown up enough to take its own decisions without actually.
Worrying too much about who is giving it what information, in what place, in order to inform those decisions. And indeed, it took a decision to support this particular s I. So we have all four of the governments in the UK now behind this s I and the road is now clear. Therefore, for this s I to be agreed by this House, if it wishes to do so. So I have to say in terms of this overall debate and why this is a little difficult for me to respond easily to every one of the interventions that has been put forward this afternoon.
We have had a lot of canards in this debate this afternoon. Indeed, so many canards that I think that probably if we added them up between us, we'd have a very successful duck farm running across this house and elsewhere. So if there are particular points that have been made this afternoon by some noble Lords that I am not able to respond to directly this afternoon, I will attempt to write to those noble Lords to try and get as accurate as picture as possible across to them in response to their particular points that they have raised.
Now, as I said, the UK Emissions Trading Scheme plays a key part in the government's decarbonisation strategy in maritime decarbonisation strategy. Overall, it does set a cap on emissions in the sectors covered which, following the inclusion of the domestic maritime sector, will represent roughly 26% of the UK's total emissions and this guarantees that the covered sector sectors, which is set to include the domestic maritime sector, as I mentioned, will reduce their emissions in line with our world leading net zero target, and we expect the UK ETS to be an effective leader to help to reduce maritime emissions and along with a number of key policies, including £448 million of funding for Marine Carbonisation, which I will return to in a moment through the UK Shipping Office.
Reducing emissions. So, by setting a clear trajectory for emissions from the covered sectors and driving green investment as part of our industrial strategy and expanded UK, ETS will continue to help deliver a just transition, growing the UK's economy and securing good jobs for people across the country. And it's important, I think, to put this debate in that context because this s I is not an attack on Northern Ireland or an attack on particular communities. It is trying to to put the detail right of what is a policy, which I believe is very wide on on a very widespread basis.
It's supported in this chamber and elsewhere, which is to bring forward that UK emissions trading scheme into the maritime sector. And of course, we've got the problem right now that as soon as you actually try and put into place a scheme such as that, there will be issues, there will be problems, there will be exceptions, there will be concerns about how that particular policy is going to go forward. And I'm grateful to the noble Lords this afternoon who have underlined some of those particular problems in getting a policy exactly right, because that's what a number of them are.
And indeed, I think a noble Lords can see how this s I has attempted, for example, with a 50% reduction in in chargeable allowances with the. Annual year before allowances are surrendered, put into the into the process. The review in 2028, how a number of those particular concerns with implementation have been met. And of course, the same thing applies with particular noble Lords concerns about particular parts of the UK, should we say UK internal seaways? I mean, I am, as a resident of Southampton and a former MP for Southampton, obviously very concerned about the the whole issue of the Solent and the relationship between the.
So we say the mainland and the Isle of Wight. Although the residents of the Isle of Wight say the opposite. And it is true there are particular problems with how this particular policy can best be implemented. There are, for example. Indeed a couple of ships in the Isle of Wight, which are over the 5000 ton exemption mark, which, by the way, of course is within this s I precisely to deal with the number of those issues relating to smaller islands and smaller communities, such as the Scilly Isles, where we know that the.
The vessels travelling to the Scilly Isles are below 5000 tonnes and therefore completely exempted. But there are also a number of Isle of Wight ferries that are under the 5000 tonne mark. And there also is a process that generally there is the considerable progress being made towards the decarbonisation of the ferry fleet in general. And I say that not just concerning Wightlink, but also Red funnel and various other fleets that are plying their trade between the mainland and the Isle of Wight.
So the question is, how do you levy exemption points at particular levels? Are you net benefiting or net not benefiting the overall picture by how you set those particular exemption levels and what you do in order to implement them? And indeed, what you do subsequently to support the the trade, to actually decarbonise itself and make sure that it is working very effectively in that respect. There's also the question of whether the activities that are taking place in Scotland.
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to the hon. Member. I think we have a problem with the Isle of Wight because one of the vessels has done everything it can possibly do to decarbonise, and it has no options to go anywhere it has no options to go anywhere else because the power isn't there. else because the power isn't there. It is a fully hybrid boat and the noble Lord Lord Greenway very much pointed that out with great pointed that out with great technical ability than I have.
But they can't go anywhere else. So it's a straight tax which will end up on primarily the residents of
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the Isle of Wight. Well, the noble Lord makes a a strong point concerning the power strong point concerning the power supply to the Isle of Wight, and indeed that's the case with some indeed that's the case with some other ports and indeed, excuse me, other ports and indeed, excuse me, other. Other noble Lords in their other. Other noble Lords in their interventions, including noble Lord Lord Greenway, who. I have a great deal of respect and admiration for in terms of our long relationship with the Maritime and Ports Group over a long time.
In another place, who speaks with great authority and considerable knowledge and wisdom on this subject. And the question of shore power and electrical supply to ports to enable decarbonisation to take place is a very serious one. Now, as far as the Port of Portsmouth is concerned, and indeed I would make a parallel to the Port of Southampton. Both of those ports suffer from particular cable connections from the substations in their area, which could buy at a subnational grid level, provide sufficient power to provide both shore power and power for those electric or hybrid ships which may visit those ports, and that can be affected by what is called a reopener of the arrangements for distributed network operations to ensure that that power can come forward at an that power can come forward at an early date and.
That, indeed is what Southampton has done. And the power is likely to be forthcoming very in a very long period before the 2037 date that the noble Lord mentions. And if Portsmouth hasn't done that yet, I would suggest that is what they do. The power is there and readily available to to get to the ports. It's really a question of putting it in early rather than late to make sure that that transition can take place. And that's part of a wider problem about the question of grids and grid power in the in the country as a whole, which this government is addressing very urgently, to make sure that we do have the power to to get ourselves across the transition in the way that we want.
I think in terms of time, I will have to indeed address myself by writing to a number of peers. But what I would want to emphasise in this debate is. This is not a conspiracy to do anybody down. It is not a conspiracy to try and isolate particular communities, and it is not aimed at undermining economic prosperity of the country. It is a decarbonisation measure which has to happen in terms of our general decarbonisation route to net zero, and it would be anomalous if the maritime sector were to be excluded from that decarbonisation route, and it would be anomalous if we were not to take measures which I have known about for a long while, to make sure that that decarbonisation route is as effective as it can be in terms of how it aligns with the EU ETS and how it aligns eventually with the Cbam process, which is at present within some problem of alignment because of the fact that the EU cbam process is proceeding at an earlier process than the UK cbam process is, and how those need to be aligned in the longer term.
But the prize for that alignment, as has been mentioned in this debate, is a very substantial bonus for UK trade. £9 billion or so over the the longer period. So it would be remiss of this government if it didn't have that very largely in view in terms of what it is undertaking as far as this PSI is concerned, and indeed, the government does have that in view. So certainly I can say to to noble Lords that, yes, this s I will be the effect of this s I will be seriously reviewed in 2028.
It is. It is likely that should everything come in proper alignment in terms of Cbam and the EU, then some of those shorter term exemptions and changes will be aligned with each other. So will actually come into line jointly for the net benefit of everybody, including Northern Ireland and the Republic of Ireland and the UK. So it's a joint benefit all round. Overall, as far as alignment is concerned. So I hope I have been able to put this s I, my Lords into proper context.
That is what it is about and that is what we will be voting on this afternoon. If we decide either to support the fatal motion or indeed the motion of regret that has been put forward this afternoon, because I don't think either the fatal motion or the motion of regret are well founded in terms of the overall aims of the C, which I would emphasise are benign, in line with what we want to do on decarbonisation and to the benefit of British trade and industry in the long term, and that the s.
I has thought out those problems of how you deal with the practical measures of implementing the wider picture about the EU, ETS and the maritime sector, and although indeed it is something that I can, I can say will certainly be regularly reported on in terms of its progress ahead of the review in 2028 will be something we can best have a good look at in 19 in 2028, again, to see if we have done as well as we think we should.
We have done already in terms of making this work for the future.
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If I may say so. He didn't actually address the mid point that was made during the debate at all. And he also didn't address the fact that in his own document, it says that in his own document, it says here that the exact impact is difficult to quantify because of difficult to quantify because of the lack of data about the contents of trainers. Trailers travelling between Great Britain and Northern between Great Britain and Northern Ireland wasn't mentioned, and it's not benign because if you were if it was benign, there'd be 100%, there'd be 100% reductions and therefore everybody would then literally be in the same boat.
But this will have no practical impact on reducing pollution, because it's an impossibility for the next 15
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years. Well, it is not an impossibility
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Well, it is not an impossibility for the next 15 years. The the question of getting an accurate question of getting an accurate picture of trade, of course, he's always a picture of a range of calculations. You can't get it exactly right. But certainly what exactly right. But certainly what has happened so far is that the the the assessed impact of these particular regulations has been assessed at below 1% of those costs and the figure of 6%, which has been put out by some parts of the industry, is not a figure that the government recognises, but that is set against the gain that can come forward from those those those bodies being in the ETS, that being aligned with cbam in the future, and so on.
And I might add that although the product of this particular entry into ETS has not and won't be hypothecated, and indeed no British government has ever hypothecated anything that's come in to its coffers, what we perhaps need to judge it by is how much money has already gone out. Just £271 million just last week to to further support the maritime industry in its transition to a low carbon basis. So the Sure fund, which has several hundred million in it, including 18 million, has already gone to Northern Ireland.
And all of these are paying back the money that's going in to the fund in the future for the benefit of the maritime industry and its transition.
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Well. First of all, let me thank noble Lords for their valued, valuable and I would say, very wide ranging contributions to this ranging contributions to this debate this afternoon. Now, I am, I think, a fairly plain and think, a fairly plain and straightforward person, and I have straightforward person, and I have at times in this debate, failed to get to grips with exactly what this debate is supposed to be about, which is it's about the decarbonisation of the UK economy.
It is about how the emissions trading scheme is probably the most efficient way of ensuring decarbonisation in our economy. And what should be in that emissions trading scheme and what shouldn't be. And indeed, as we have heard in discussion this afternoon, how that trading scheme might be more widely based, so that actually the decarbonisation effect it does have is better affected. And of course, a part of that is the entry into the ETS of the maritime sector.
Now, for those who say that this. This Statutory Instrument is very rushed, I might have a go down a brief historical byway and mention that indeed, this particular. This particular SI1 can actually trace back to a 2022 consultation on whether the maritime sector should be included in the ETS. I might add a consultation under the previous government, not this government. And the response to that consultation at that time was a strong indication that, yes, the maritime sector should be in the emissions trading scheme and since then there have been a series of consultations with the maritime industry and many other people about exactly how that should be done and what.
What part the maritime industry itself should play in its own decarbonisation, and how it can actually contribute very substantially to the the UK overall trading emissions picture. And I have to say, the UK maritime industry has done very well in terms of its contribution so far to making that that transition as effective as it can be. So taken into context with that as the background, I'm firstly, I'm a little surprised at the regret motion that has been put this afternoon because essentially that is.
A past government regretting its own actions. And yes, there is plenty to regret about the previous government, but to actually have the previous government itself regretting itself seems to me a little bit of a step further forward than was previously the case. Now, we've also heard about the various. Procedures that took place before the the the final one of the, the, all of the four governments within the UK acceding to this particular Statutory Instrument. And that, of course, is the Northern Ireland Assembly decision this week, which, as we have heard, was agreed by a substantial majority and we have heard about what happened immediately before that, what happened in various corridors leading up to that particular debate.
I must say, I, I don't recognise easily people actually attempting to inform various people within that assembly as to what this what this s I consists of as exactly the sort of arm twisting and threats that we have heard about this afternoon, and indeed, just thinking of my own. Participation in that I did as the. The noble Baroness Baroness Hoey indicated at the beginning of this debate, and I'm grateful for her acknowledgement of this actions.
I did indeed reach out to her to discuss this fatal motion, and we had a very pleasant discussion, a very friendly discussion. I don't think I arm twisted her or intimidated her in any way, and I think that was the the probable basis upon which this debate has has gone forward as far as the Northern Ireland Assembly is concerned. And indeed, I do think the Northern Ireland Assembly itself is grown up enough to take its own decisions without actually.
Worrying too much about who is giving it what information, in what place, in order to inform those decisions. And indeed, it took a decision to support this particular s I. So we have all four of the governments in the UK now behind this s I and the road is now clear. Therefore, for this s I to be agreed by this House, if it wishes to do so. So I have to say in terms of this overall debate and why this is a little difficult for me to respond easily to every one of the interventions that has been put forward this afternoon.
We have had a lot of canards in this debate this afternoon. Indeed, so many canards that I think that probably if we added them up between us, we'd have a very successful duck farm running across this house and elsewhere. So if there are particular points that have been made this afternoon by some noble Lords that I am not able to respond to directly this afternoon, I will attempt to write to those noble Lords to try and get as accurate as picture as possible across to them in response to their particular points that they have raised.
Now, as I said, the UK Emissions Trading Scheme plays a key part in the government's decarbonisation strategy in maritime decarbonisation strategy. Overall, it does set a cap on emissions in the sectors covered which, following the inclusion of the domestic maritime sector, will represent roughly 26% of the UK's total emissions and this guarantees that the covered sector sectors, which is set to include the domestic maritime sector, as I mentioned, will reduce their emissions in line with our world leading net zero target, and we expect the UK ETS to be an effective leader to help to reduce maritime emissions and along with a number of key policies, including £448 million of funding for Marine Carbonisation, which I will return to in a moment through the UK Shipping Office.
Reducing emissions. So, by setting a clear trajectory for emissions from the covered sectors and driving green investment as part of our industrial strategy and expanded UK, ETS will continue to help deliver a just transition, growing the UK's economy and securing good jobs for people across the country. And it's important, I think, to put this debate in that context because this s I is not an attack on Northern Ireland or an attack on particular communities. It is trying to to put the detail right of what is a policy, which I believe is very wide on on a very widespread basis.
It's supported in this chamber and elsewhere, which is to bring forward that UK emissions trading scheme into the maritime sector. And of course, we've got the problem right now that as soon as you actually try and put into place a scheme such as that, there will be issues, there will be problems, there will be exceptions, there will be concerns about how that particular policy is going to go forward. And I'm grateful to the noble Lords this afternoon who have underlined some of those particular problems in getting a policy exactly right, because that's what a number of them are.
And indeed, I think a noble Lords can see how this s I has attempted, for example, with a 50% reduction in in chargeable allowances with the. Annual year before allowances are surrendered, put into the into the process. The review in 2028, how a number of those particular concerns with implementation have been met. And of course, the same thing applies with particular noble Lords concerns about particular parts of the UK, should we say UK internal seaways? I mean, I am, as a resident of Southampton and a former MP for Southampton, obviously very concerned about the the whole issue of the Solent and the relationship between the.
So we say the mainland and the Isle of Wight. Although the residents of the Isle of Wight say the opposite. And it is true there are particular problems with how this particular policy can best be implemented. There are, for example. Indeed a couple of ships in the Isle of Wight, which are over the 5000 ton exemption mark, which, by the way, of course is within this s I precisely to deal with the number of those issues relating to smaller islands and smaller communities, such as the Scilly Isles, where we know that the.
The vessels travelling to the Scilly Isles are below 5000 tonnes and therefore completely exempted. But there are also a number of Isle of Wight ferries that are under the 5000 tonne mark. And there also is a process that generally there is the considerable progress being made towards the decarbonisation of the ferry fleet in general. And I say that not just concerning Wightlink, but also Red funnel and various other fleets that are plying their trade between the mainland and the Isle of Wight.
So the question is, how do you levy exemption points at particular levels? Are you net benefiting or net not benefiting the overall picture by how you set those particular exemption levels and what you do in order to implement them? And indeed, what you do subsequently to support the the trade, to actually decarbonise itself and make sure that it is working very effectively in that respect. There's also the question of whether the activities that are taking place in Scotland.
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to the hon. Member. I think we have a problem with the Isle of Wight because one of the vessels has done everything it can possibly do to decarbonise, and it has no options to go anywhere it has no options to go anywhere else because the power isn't there. else because the power isn't there. It is a fully hybrid boat and the noble Lord Lord Greenway very much pointed that out with great pointed that out with great technical ability than I have.
But they can't go anywhere else. So it's a straight tax which will end up on primarily the residents of
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the Isle of Wight. Well, the noble Lord makes a a strong point concerning the power strong point concerning the power supply to the Isle of Wight, and indeed that's the case with some indeed that's the case with some other ports and indeed, excuse me, other ports and indeed, excuse me, other. Other noble Lords in their other. Other noble Lords in their interventions, including noble Lord Lord Greenway, who. I have a great deal of respect and admiration for in terms of our long relationship with the Maritime and Ports Group over a long time.
In another place, who speaks with great authority and considerable knowledge and wisdom on this subject. And the question of shore power and electrical supply to ports to enable decarbonisation to take place is a very serious one. Now, as far as the Port of Portsmouth is concerned, and indeed I would make a parallel to the Port of Southampton. Both of those ports suffer from particular cable connections from the substations in their area, which could buy at a subnational grid level, provide sufficient power to provide both shore power and power for those electric or hybrid ships which may visit those ports, and that can be affected by what is called a reopener of the arrangements for distributed network operations to ensure that that power can come forward at an that power can come forward at an early date and.
That, indeed is what Southampton has done. And the power is likely to be forthcoming very in a very long period before the 2037 date that the noble Lord mentions. And if Portsmouth hasn't done that yet, I would suggest that is what they do. The power is there and readily available to to get to the ports. It's really a question of putting it in early rather than late to make sure that that transition can take place. And that's part of a wider problem about the question of grids and grid power in the in the country as a whole, which this government is addressing very urgently, to make sure that we do have the power to to get ourselves across the transition in the way that we want.
I think in terms of time, I will have to indeed address myself by writing to a number of peers. But what I would want to emphasise in this debate is. This is not a conspiracy to do anybody down. It is not a conspiracy to try and isolate particular communities, and it is not aimed at undermining economic prosperity of the country. It is a decarbonisation measure which has to happen in terms of our general decarbonisation route to net zero, and it would be anomalous if the maritime sector were to be excluded from that decarbonisation route, and it would be anomalous if we were not to take measures which I have known about for a long while, to make sure that that decarbonisation route is as effective as it can be in terms of how it aligns with the EU ETS and how it aligns eventually with the Cbam process, which is at present within some problem of alignment because of the fact that the EU cbam process is proceeding at an earlier process than the UK cbam process is, and how those need to be aligned in the longer term.
But the prize for that alignment, as has been mentioned in this debate, is a very substantial bonus for UK trade. £9 billion or so over the the longer period. So it would be remiss of this government if it didn't have that very largely in view in terms of what it is undertaking as far as this PSI is concerned, and indeed, the government does have that in view. So certainly I can say to to noble Lords that, yes, this s I will be the effect of this s I will be seriously reviewed in 2028.
It is. It is likely that should everything come in proper alignment in terms of Cbam and the EU, then some of those shorter term exemptions and changes will be aligned with each other. So will actually come into line jointly for the net benefit of everybody, including Northern Ireland and the Republic of Ireland and the UK. So it's a joint benefit all round. Overall, as far as alignment is concerned. So I hope I have been able to put this s I, my Lords into proper context.
That is what it is about and that is what we will be voting on this afternoon. If we decide either to support the fatal motion or indeed the motion of regret that has been put forward this afternoon, because I don't think either the fatal motion or the motion of regret are well founded in terms of the overall aims of the C, which I would emphasise are benign, in line with what we want to do on decarbonisation and to the benefit of British trade and industry in the long term, and that the s.
I has thought out those problems of how you deal with the practical measures of implementing the wider picture about the EU, ETS and the maritime sector, and although indeed it is something that I can, I can say will certainly be regularly reported on in terms of its progress ahead of the review in 2028 will be something we can best have a good look at in 19 in 2028, again, to see if we have done as well as we think we should.
We have done already in terms of making this work for the future.
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If I may say so. He didn't actually address the mid point that was made during the debate at all. And he also didn't address the fact that in his own document, it says that in his own document, it says here that the exact impact is difficult to quantify because of difficult to quantify because of the lack of data about the contents of trainers. Trailers travelling between Great Britain and Northern between Great Britain and Northern Ireland wasn't mentioned, and it's not benign because if you were if it was benign, there'd be 100%, there'd be 100% reductions and therefore everybody would then literally be in the same boat.
But this will have no practical impact on reducing pollution, because it's an impossibility for the next 15
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years. Well, it is not an impossibility
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Well, it is not an impossibility for the next 15 years. The the question of getting an accurate question of getting an accurate picture of trade, of course, he's always a picture of a range of calculations. You can't get it exactly right. But certainly what exactly right. But certainly what has happened so far is that the the the assessed impact of these particular regulations has been assessed at below 1% of those costs and the figure of 6%, which has been put out by some parts of the industry, is not a figure that the government recognises, but that is set against the gain that can come forward from those those those bodies being in the ETS, that being aligned with cbam in the future, and so on.
And I might add that although the product of this particular entry into ETS has not and won't be hypothecated, and indeed no British government has ever hypothecated anything that's come in to its coffers, what we perhaps need to judge it by is how much money has already gone out. Just £271 million just last week to to further support the maritime industry in its transition to a low carbon basis. So the Sure fund, which has several hundred million in it, including 18 million, has already gone to Northern Ireland.
And all of these are paying back the money that's going in to the fund in the future for the benefit of the maritime industry and its transition.
14:50
Baroness Hoey (Non-affiliated)
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Baroness Hoey (Non-affiliated)
My Lords, I said at the beginning of this motion, when I was being nice to the Minister that thanked him for the meeting and asking for a meeting with me, I said that he. I didn't want to spoil his career prospects, but I did think that if he'd been his decision, he might have withdrawn. This s I at the beginning. I think now, by the end of this debate, perhaps he's even more would have been more keen to actually withdraw the C because this has been an extremely good, I think, a very, very good debate, a very wide ranging debate as as as the noble Lord, the Minister said, but one that has actually almost brought together 2 or 3 key issues, and I'm not going to go over those again.
But I would say it's also very, very good. The first time I've had a C that's dealing with, in some ways, Northern Ireland, but also other parts of the United Kingdom, to see so many of the government benches full. And if one benefit of putting down a fatal motion is to actually get a lot of labour, and Labour appears to be here and listening, then that's that's really probably worth it. I just would, would say I want to thank particularly those peers who don't normally speak on issues related to Northern Ireland.
Now, my my motion is very much geared to the inequality of Northern Ireland and the way they're being treated as distinct to the Scottish as to Scotland. But it was particularly good to hear from the noble Lord Berkeley and noble Lord Ashcombe about the Isle of Wight and about the Scilly Isles, and the wider aspects of this sea, and also to hear from Baroness Baron Mountevans and Baron Greenway, who. I'm very sorry if this might well have been his last.
His last speech to. To the House, but bringing the experience of genuine experience about shipping from both those laws, I very much welcome that if, if if there's any lesson, I think from anything today in terms of speeches, it's that we should all, perhaps including myself, follow the example of the noble Baroness Butler-Sloss who in her two very short interventions, hit the nail right on the head about this whole issue and the way it's been handled, the way despite the meetings at this this side, what was happening in the last few days in Northern Ireland was a very, very bad way for government to be working.
And the way in which the Northern Ireland Office has completely ignored the wishes of Northern Ireland and the needs of Northern Ireland in terms of business opportunities and what's going to happen on this in this carbon tax has been quite deplorable, and most of all has been said by a number of of of peers, the way in which the Statutory Instrument being dealt with in the other place. Absolutely different information was given right up to the very last minute when that was used to using the word of MLAs.
The MLAs were cajoled and blackmailed and treated by the government as if they were pretty stupid, and they wouldn't understand when they were being told things that were different from what had been told in, in, in the house of, in the other place. So I would thank all members who who have spoken, of course, all the Northern Ireland members know this. The issue, know how strongly people will feel the effects of this and the unfairness, the unfairness to part of the United Kingdom, which comes up over and over again in this place, is really getting to be ridiculous and quite unsustainable.
If we care about the union and equality between all parts of the union. So having said all that, I really don't want to waste people's time having sat through and listened, and I would like to test the opinion of the House, and I therefore would move my amendment.
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The question is that the amendment in the name of Baroness Hoey be agreed to. As many as have Hoey be agreed to. As many as have that many will say content country not content, not content. I think not content, not content. I think the not content have it content. I think the not contents have it content. I'll ask once more. Do the content. I'll ask once more. Do the not contents have it. Not not content. The question will.
In that case.
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For this kind of situation.
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For this kind of situation. I think the House is not decided on this point, and therefore the question will be decided by a division I will advise. The House, when voting is over, is open.
But I would say it's also very, very good. The first time I've had a C that's dealing with, in some ways, Northern Ireland, but also other parts of the United Kingdom, to see so many of the government benches full. And if one benefit of putting down a fatal motion is to actually get a lot of labour, and Labour appears to be here and listening, then that's that's really probably worth it. I just would, would say I want to thank particularly those peers who don't normally speak on issues related to Northern Ireland.
Now, my my motion is very much geared to the inequality of Northern Ireland and the way they're being treated as distinct to the Scottish as to Scotland. But it was particularly good to hear from the noble Lord Berkeley and noble Lord Ashcombe about the Isle of Wight and about the Scilly Isles, and the wider aspects of this sea, and also to hear from Baroness Baron Mountevans and Baron Greenway, who. I'm very sorry if this might well have been his last.
His last speech to. To the House, but bringing the experience of genuine experience about shipping from both those laws, I very much welcome that if, if if there's any lesson, I think from anything today in terms of speeches, it's that we should all, perhaps including myself, follow the example of the noble Baroness Butler-Sloss who in her two very short interventions, hit the nail right on the head about this whole issue and the way it's been handled, the way despite the meetings at this this side, what was happening in the last few days in Northern Ireland was a very, very bad way for government to be working.
And the way in which the Northern Ireland Office has completely ignored the wishes of Northern Ireland and the needs of Northern Ireland in terms of business opportunities and what's going to happen on this in this carbon tax has been quite deplorable, and most of all has been said by a number of of of peers, the way in which the Statutory Instrument being dealt with in the other place. Absolutely different information was given right up to the very last minute when that was used to using the word of MLAs.
The MLAs were cajoled and blackmailed and treated by the government as if they were pretty stupid, and they wouldn't understand when they were being told things that were different from what had been told in, in, in the house of, in the other place. So I would thank all members who who have spoken, of course, all the Northern Ireland members know this. The issue, know how strongly people will feel the effects of this and the unfairness, the unfairness to part of the United Kingdom, which comes up over and over again in this place, is really getting to be ridiculous and quite unsustainable.
If we care about the union and equality between all parts of the union. So having said all that, I really don't want to waste people's time having sat through and listened, and I would like to test the opinion of the House, and I therefore would move my amendment.
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The question is that the amendment in the name of Baroness Hoey be agreed to. As many as have Hoey be agreed to. As many as have that many will say content country not content, not content. I think not content, not content. I think the not content have it content. I think the not contents have it content. I'll ask once more. Do the content. I'll ask once more. Do the not contents have it. Not not content. The question will.
In that case.
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For this kind of situation.
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For this kind of situation. I think the House is not decided on this point, and therefore the question will be decided by a division I will advise. The House, when voting is over, is open.
14:55
Division
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The The question
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The question is The question is that The question is that this The question is that this motion be agreed to. As many as that opinion will say content to
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opinion will say content to contrary, not content. Not content. The contents will go to the right by the throne. The not My Lords, the question is that this
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77.
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Education Education Secretary.
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My My Lords, My Lords, there My Lords, there have My Lords, there have voted
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My Lords, there have voted content 26 not content 134. So the content 26 not content 134. So the not contents have it. My Lords, we'll just have a few moments for So sorry, my Lords. I think I should have said something else. Oh I'm sorry. Lord Moynihan amendment. I'm so glad we got that sorted. So the question is that the original motion be agreed to. As many as that opinion will say content the contrary, not content.
The contents have it. I think at that stage we Leave Leave quickly Leave quickly and Leave quickly and quietly. That would be helpful. OK. People have sat down. That's lovely.
Division
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The The question
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The question is The question is that The question is that this The question is that this motion be agreed to. As many as that opinion will say content to
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opinion will say content to contrary, not content. Not content. The contents will go to the right by the throne. The not My Lords, the question is that this
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77.
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Education Education Secretary.
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My My Lords, My Lords, there My Lords, there have My Lords, there have voted
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My Lords, there have voted content 26 not content 134. So the content 26 not content 134. So the not contents have it. My Lords, we'll just have a few moments for So sorry, my Lords. I think I should have said something else. Oh I'm sorry. Lord Moynihan amendment. I'm so glad we got that sorted. So the question is that the original motion be agreed to. As many as that opinion will say content the contrary, not content.
The contents have it. I think at that stage we Leave Leave quickly Leave quickly and Leave quickly and quietly. That would be helpful. OK. People have sat down. That's lovely.
15:07
15:07
Baroness Sherlock (Labour)
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Baroness Sherlock (Labour)
Hey, my Lords, I beg to move that this bill be read a second time. This government believes that the UK should be a country where every person has the opportunity to fulfil their potential. That is why we are so committed to removing the barriers that stop people from thriving, from becoming all that they can be. Doing this will benefit not just the individuals. It will benefit our country. So I am delighted to be here to move the Universal Credit removal of Two-child limit bill today, because, my Lords, it makes a major contribution to tackling poverty, which limits children's chances in life and often for life.
There are now 4.5 million children in poverty, 900,000 more than there were in 2010. To put that in context, if we picture a classroom of 30 children at the moment, around ten of them will be living in poverty and 2 million of our children are in deep material poverty, lacking the basic essentials such as a warm home or healthy food, things without which no child should be growing up. Now, it's shocking enough that so many of our children have to live through a childhood like that, but it's even more shocking when we consider the hugely detrimental consequences the growing up in poverty has on children's health, on their education, and on their future employment prospects.
Just 1 in 4 children in families with the lowest incomes get good GCSEs, and as adults, those who grew up in poverty are more likely to be unemployed or to find themselves in low skilled and lower paid jobs. Now clearly, those who grow up poor don't lack talent. What they lack is opportunity. As a result, our country is missing out on their gifts and their contributions. We are determined to break this link between children's backgrounds and their future success.
That's why since coming into office, we've taken significant steps to help families tackle poverty and give every child the best start in life increasing the minimum wage, expanding free school meals for over half a million children, investing in social and affordable housing and funding more best Start family hubs. And now, my Lords, we're pulling the single most cost effective lever available and removing the two child limit in Universal Credit, which will lift 450,000 children out of poverty. This is the right move to extend opportunity.
And it's right because our system shouldn't be penalising so many of our children for the circumstances of their birth circumstances. Their parents may not have chosen or expected because life is unpredictable. Crisis can hit anyone, regardless of the choices they've made or the size of their family. Marriages break up, parents lose their jobs, or get sick or injured or die. That unpredictability is reflected in the fact that around half of the families who will benefit from the lifting of the two child limit were not on universal Credit when they had any of their children.
These are people who found themselves in need of help after decisions about family size had been taken. So, my Lords, it simply isn't right to draw dividing lines in the way the Two-child limit sought to do, especially when over half of the families affected by the Two-child limit are already in work. And of those who aren't working, a significant number are affected by serious health conditions or caring responsibilities. Because my Lord's illness, disability, bereavement, unemployment, becoming a carer these things can hit any one of us and they've probably hit many of us in this chamber already.
And my Lords, our welfare state exists to pool risk so as to give all of us some protection from the impact of life's slings and arrows. Now, some will look only at the cost without looking at the cost of failing to offer support. We simply can't afford to sit on our hands and wait for the costs of poverty to spiral without intervention. 150,000 more children will be pulled into poverty by 2030. That's 150,000 stories of missed opportunity, of deeper inequality, of lost productivity.
Because tackling poverty isn't just vital for the lives and opportunities of children, it is vital for our economy. Every pound we spend lifting children out of poverty saves so much more in future health, education and social security costs. There are few investments that will reap rewards as great as investing in the next generation in our future workforce. Failing to act on child poverty will cost Britain far more than investing now. That is why removing the two child limit is part of our wider child poverty strategy.
We committed in our manifesto, to making good work the foundation of our approach to tackling poverty. Parents are doing all they can to support their children. Parental employment rates are already high, but with almost three quarters of children in poverty being in a working family, the fact is too many parents find themselves in jobs where they are still struggling to support their families. Meanwhile, too many of those not in work face barriers on entering the labour market, whether that's due to health or disability or down to a lack of childcare or poor skills or public transport not working in their area or all kinds of other barriers.
We want every parent who can work to feel the benefits of secure, rewarding jobs that enable them to get on in life, to support their families, and to set an example to the next generation. That's why we'll deliver a step change in employment and skills support for parents, helping them to balance work and caring responsibilities through high quality, flexible jobs and improving access to affordable childcare. The expansion of childcare comes alongside other measures and our child poverty strategy to drive down working poverty, including raising the minimum wage and creating more secure jobs by strengthening rights at work.
The measures in the strategy will lift 550,000 children out of poverty by Lord Stevens. Interventions will lead to the largest expected reduction in child poverty over a parliament since comparable records began. Together, all of this represents a strong start. It kickstarts action and ambition over the next ten years. Responding to the immediate pressures families face now while delivering change to fix the structural drivers of child poverty. But we do not underestimate the scale of the challenge to build a society where every child grows up safe, warm and well fed, not held back by poverty, but helped forward by government.
So we will monitor our progress using two main metrics. First, we will use the internationally recognised and well-established relative low income after housing costs measure to monitor overall child poverty. Secondly, a new measure of deep material poverty, which we have developed to assess family's ability to afford the essentials. This takes account not just of their income but the cost of essentials, their overall financial situation and the support they receive locally. Because it is not just the number of children in poverty that matters, it's the depth of that poverty too.
We are committed to ensuring that removing the Two-child limit, along with other measures in the child poverty strategy, delivers the results children need and deserve. To support this, we published a monitoring and evaluation framework alongside the strategy that sets out how we'll track our progress further intervention. We'll publish a baseline report in the summer, which will set out the latest statistics and evidence, with annual reports thereafter to monitor and evaluate progress. So, my Lords, this government will not stand by while millions of children face the long term harm that poverty brings.
Families in poverty cannot afford to give their children what they need to grow and achieve their potential. We will boost family incomes through employment and Social Security. Drive down the cost of essentials and strengthen local support services. We're investing in the future of our children and will hold ourselves to account on delivering the impact we promised through this Parliament and beyond. And we will remove this cruel policy that has pushed 300,000 children into poverty. I look forward very much to this debate, and especially to the maiden speeches from our noble friends, Baroness Antrobus and Lord Walker of Broxton, and the noble Lady Baroness Teather, my Lord.
Between them they bring an amazing wealth and breadth of experience and knowledge to our house, and I'm delighted they've chosen this extremely important bill to make their first contribution to our proceedings. My Lords, I beg to move.
There are now 4.5 million children in poverty, 900,000 more than there were in 2010. To put that in context, if we picture a classroom of 30 children at the moment, around ten of them will be living in poverty and 2 million of our children are in deep material poverty, lacking the basic essentials such as a warm home or healthy food, things without which no child should be growing up. Now, it's shocking enough that so many of our children have to live through a childhood like that, but it's even more shocking when we consider the hugely detrimental consequences the growing up in poverty has on children's health, on their education, and on their future employment prospects.
Just 1 in 4 children in families with the lowest incomes get good GCSEs, and as adults, those who grew up in poverty are more likely to be unemployed or to find themselves in low skilled and lower paid jobs. Now clearly, those who grow up poor don't lack talent. What they lack is opportunity. As a result, our country is missing out on their gifts and their contributions. We are determined to break this link between children's backgrounds and their future success.
That's why since coming into office, we've taken significant steps to help families tackle poverty and give every child the best start in life increasing the minimum wage, expanding free school meals for over half a million children, investing in social and affordable housing and funding more best Start family hubs. And now, my Lords, we're pulling the single most cost effective lever available and removing the two child limit in Universal Credit, which will lift 450,000 children out of poverty. This is the right move to extend opportunity.
And it's right because our system shouldn't be penalising so many of our children for the circumstances of their birth circumstances. Their parents may not have chosen or expected because life is unpredictable. Crisis can hit anyone, regardless of the choices they've made or the size of their family. Marriages break up, parents lose their jobs, or get sick or injured or die. That unpredictability is reflected in the fact that around half of the families who will benefit from the lifting of the two child limit were not on universal Credit when they had any of their children.
These are people who found themselves in need of help after decisions about family size had been taken. So, my Lords, it simply isn't right to draw dividing lines in the way the Two-child limit sought to do, especially when over half of the families affected by the Two-child limit are already in work. And of those who aren't working, a significant number are affected by serious health conditions or caring responsibilities. Because my Lord's illness, disability, bereavement, unemployment, becoming a carer these things can hit any one of us and they've probably hit many of us in this chamber already.
And my Lords, our welfare state exists to pool risk so as to give all of us some protection from the impact of life's slings and arrows. Now, some will look only at the cost without looking at the cost of failing to offer support. We simply can't afford to sit on our hands and wait for the costs of poverty to spiral without intervention. 150,000 more children will be pulled into poverty by 2030. That's 150,000 stories of missed opportunity, of deeper inequality, of lost productivity.
Because tackling poverty isn't just vital for the lives and opportunities of children, it is vital for our economy. Every pound we spend lifting children out of poverty saves so much more in future health, education and social security costs. There are few investments that will reap rewards as great as investing in the next generation in our future workforce. Failing to act on child poverty will cost Britain far more than investing now. That is why removing the two child limit is part of our wider child poverty strategy.
We committed in our manifesto, to making good work the foundation of our approach to tackling poverty. Parents are doing all they can to support their children. Parental employment rates are already high, but with almost three quarters of children in poverty being in a working family, the fact is too many parents find themselves in jobs where they are still struggling to support their families. Meanwhile, too many of those not in work face barriers on entering the labour market, whether that's due to health or disability or down to a lack of childcare or poor skills or public transport not working in their area or all kinds of other barriers.
We want every parent who can work to feel the benefits of secure, rewarding jobs that enable them to get on in life, to support their families, and to set an example to the next generation. That's why we'll deliver a step change in employment and skills support for parents, helping them to balance work and caring responsibilities through high quality, flexible jobs and improving access to affordable childcare. The expansion of childcare comes alongside other measures and our child poverty strategy to drive down working poverty, including raising the minimum wage and creating more secure jobs by strengthening rights at work.
The measures in the strategy will lift 550,000 children out of poverty by Lord Stevens. Interventions will lead to the largest expected reduction in child poverty over a parliament since comparable records began. Together, all of this represents a strong start. It kickstarts action and ambition over the next ten years. Responding to the immediate pressures families face now while delivering change to fix the structural drivers of child poverty. But we do not underestimate the scale of the challenge to build a society where every child grows up safe, warm and well fed, not held back by poverty, but helped forward by government.
So we will monitor our progress using two main metrics. First, we will use the internationally recognised and well-established relative low income after housing costs measure to monitor overall child poverty. Secondly, a new measure of deep material poverty, which we have developed to assess family's ability to afford the essentials. This takes account not just of their income but the cost of essentials, their overall financial situation and the support they receive locally. Because it is not just the number of children in poverty that matters, it's the depth of that poverty too.
We are committed to ensuring that removing the Two-child limit, along with other measures in the child poverty strategy, delivers the results children need and deserve. To support this, we published a monitoring and evaluation framework alongside the strategy that sets out how we'll track our progress further intervention. We'll publish a baseline report in the summer, which will set out the latest statistics and evidence, with annual reports thereafter to monitor and evaluate progress. So, my Lords, this government will not stand by while millions of children face the long term harm that poverty brings.
Families in poverty cannot afford to give their children what they need to grow and achieve their potential. We will boost family incomes through employment and Social Security. Drive down the cost of essentials and strengthen local support services. We're investing in the future of our children and will hold ourselves to account on delivering the impact we promised through this Parliament and beyond. And we will remove this cruel policy that has pushed 300,000 children into poverty. I look forward very much to this debate, and especially to the maiden speeches from our noble friends, Baroness Antrobus and Lord Walker of Broxton, and the noble Lady Baroness Teather, my Lord.
Between them they bring an amazing wealth and breadth of experience and knowledge to our house, and I'm delighted they've chosen this extremely important bill to make their first contribution to our proceedings. My Lords, I beg to move.
15:15
Baroness Stedman-Scott (Conservative)
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Baroness Stedman-Scott (Conservative)
The question is that this bill >> The question is that this bill be now read a second time.
**** Possible New Speaker ****
My Lords, I'm too pleased to contribute to this important debate. I, too look forward to the maiden speeches of the noble Baroness Antrobus Baroness Teather and to the noble Lord Walker of Broxton. We welcome these wonderful people to our house and look forward to their contributions in the future. Now I feel I must set the scene and set it out very clearly. Can I say from the outset that we on the opposition benches do not support this bill? In fact, we oppose it.
That does not mean in any way that we don't care about children and families. Quite the contrary. We believe there are other ways to support them that mean money can be used differently to achieve the objective of improving their lives. I also recognise and state publicly that I respect the consistency and the tenacity of the noble Baroness, the Minister, and indeed to the noble Baroness Lister for their campaigning in this area. We respect it. We may not agree with it, but credit where it's due.
Now we are far from alone in opposing this bill. On this question, we stand with a clear majority of the British public. Polling consistently shows that more than 60% of people in this country support retaining the two child benefit cap. With that support stretching across voters of all major political parties. Yet what this debate increasingly appears to be about is not responsible public policy, but political party management. As events over the past year have made clear, this measure is not being brought forward because the public have demanded it.
Indeed, they are clearly opposed to it. My Lords, we should all pause and consider why hard working taxpayers are being asked to shoulder the financial consequences of the government's inability to manage its own parliamentary party. That is not responsible government. It is a deeply troubling response from from the government to unrest. Let me give an example. My Lords, many across this chamber will have their own principles. Reasons for opposing this policy. But let me begin with a simple illustration of what this policy and this debate means in practice.
Take the London borough of Hackney. Their 29% of all children live in households affected by the two child limit without an exemption. The highest proportion anywhere in the country. As of August last year, there were 92 households in Hackney on Universal Credit, with five or more children, where the youngest child was born. After the 2017 cut off date, unless they qualify for one of the limited exemptions. Those households fall within the scope of the two child limit.
In other words, they are already receiving less than the maximum universal credit they would otherwise be entitled to. Yet, even with the cap in place, these households receive on average £5,152 per month in Universal Credit, and that is more. That is more than the take home pay of someone earning around £88,000 a year across the country. The welfare bill for five child households within the scope of the cap is already around to 720 million per year, and that is with the two child limit still in place now.
Set that against the reality faced by many working families in Hackney and in communities across the country. There are parents in work earning far less than that level of take home pay who would love nothing more than to have a third child. But they sit down at the kitchen table, look at the household finances and make the heartbreaking decision that they simply cannot afford it. At the very same time, their taxes are funding households down the road, receiving an income from universal credit that in effect, exceeds their own.
If this cap is removed, those households will not face the same choices about how many children they can afford. So I ask the noble Baroness, the Minister, a simple question how can that possibly be fair? How can it be right that working people supporting our economy and paying the taxes that fund the system must carefully limit the size of their own families, while being asked to fund a system in which those not in work face no such constraint. That is the fundamental question of fairness at the heart of this debate, and is why I believe a clear majority of the public vehemently support the cap.
There is a wider point about economic development more than this. My Lords, I think what separates us on these benches and the noble Baroness, the Minister and her backbenchers, is our view that a handout is not the same as a hand up, and the evidence is clear that the most effective way to tackle poverty is to provide people with the means and the incentives to provide for themselves. The single biggest factor in a child's life chances is whether parents work, and removing the cap reduces the incentives to work altogether.
That is clearly not a route out of poverty. Support should be targeted at those who need it. Of course, we have no argument with this, but it shouldn't create a model where households on benefits are rewarded in a way no working family ever would be. That undermines both fairness and the incentive to work and work. As I have said, is the only meaningful way that we will solve the problem of child poverty in the medium and long term.
I have to ask why, when the incentive in place is to get more on benefit than working, why would you go to work? I'm concerned by the view expressed by Labour backbenchers and the government that increasing the generosity of welfare offer is in some way solving the issue of poverty. This approach, I'm afraid to say, does not do anything but provide a sticking plaster to mask the fact that a dramatically increasing number of people are relying solely on the state for their subsistence.
This comes at a major and increasing cost to those who do work, and those who do contribute. As the spring statement disturbingly underscored, revealing what welfare spending will rise to 5.8% this year to an absolutely staggering 330 billion, around 11% of GDP. My Lords, my party has been clear we would reinstate the Two-child cap only last week. My right hon. Friend Kemi Badenoch, the leader of our party, set out why the savings from this policy could be redirected toward one of the more fundamental responsibilities of any government the protection and defence of the realm.
Again, I stress it does not mean that we do not care about children and families, but those savings would allow the recruitment of 20,000 additional soldiers. Fund the accommodation, equipment and support they need to do their jobs properly. At a time when the demands on our armed forces are growing and the world is becoming more uncertain, that is a central priority. My Lords, after the extraordinary spectacle of recent weeks when the world has seen the government unable and unwilling to defend British sovereign territory, the case for properly funding our armed forces has become more urgent than ever.
Our defence should not be an afterthought. It should be the first duty of the state, and that is why it is so troubling that money, which could be strengthening our national defence, is instead being spent to managers in the government's internal policies and politics. The country is being asked to foot the bill not because the policy case has been won, but because the government and the Chancellor have chosen not to pursue the welfare reforms they themselves once supported because they're too weak to get it past their own MPs.
Does His Majesty's Government have any plans to review the welfare state, to change it, to assist them? That incentivise people to work rather than to live permanently on benefits? My Lords, the defence of the nation should always come before the management of a governing party. But unfortunately the policy we are discussing today is a manifestation of just that. My Lords, ultimately, this debate comes down to three simple principles fairness, responsibility and the government's priorities. Fairness. Because it cannot be right that working families who get up every day pay their taxes and carefully weigh what they can and can't afford for their own children, are asked to fund a system in which those same choices do not apply, a welfare system that loses sight of that basic sense of fairness will quickly lose the confidence of the people who sustain it.
Responsibility before tackling poverty cannot mean simply writing even larger checks from the state. Real and lasting progress comes from helping people into work, strengthening incentives and ensuring that welfare is a safety net, not a substitute for independence. A system that blurs that distinction ultimately fails the very people it claims to help and priorities. Because every pound spent by the state is a pound taken from taxpayers and other priorities. At a time of enormous pressure on the public finances and growing threats in the world around us, the government must be honest about where those resources should go.
My Lord, this bill fails on all three counts. It weakens fairness. It risks entrenching dependency rather than tackling its causes, and it diverts scarce resources away from the fundamental duties of government. For those reasons, and in the interests of both fairness and sound policy, these benches cannot support the bill, and we, of course, urge the government to keep the cap. It is both what the country wants and what the country needs. My Lords, I know the benches opposite will not agree with me one little bit.
I'm under no illusions about that. But I remind the whole House that you cannot make a poor man rich by making a rich man poor, and you cannot help the wage earner by punishing the wage payer.
**** Possible New Speaker ****
My Lords, I'm too pleased to contribute to this important debate. I, too look forward to the maiden speeches of the noble Baroness Antrobus Baroness Teather and to the noble Lord Walker of Broxton. We welcome these wonderful people to our house and look forward to their contributions in the future. Now I feel I must set the scene and set it out very clearly. Can I say from the outset that we on the opposition benches do not support this bill? In fact, we oppose it.
That does not mean in any way that we don't care about children and families. Quite the contrary. We believe there are other ways to support them that mean money can be used differently to achieve the objective of improving their lives. I also recognise and state publicly that I respect the consistency and the tenacity of the noble Baroness, the Minister, and indeed to the noble Baroness Lister for their campaigning in this area. We respect it. We may not agree with it, but credit where it's due.
Now we are far from alone in opposing this bill. On this question, we stand with a clear majority of the British public. Polling consistently shows that more than 60% of people in this country support retaining the two child benefit cap. With that support stretching across voters of all major political parties. Yet what this debate increasingly appears to be about is not responsible public policy, but political party management. As events over the past year have made clear, this measure is not being brought forward because the public have demanded it.
Indeed, they are clearly opposed to it. My Lords, we should all pause and consider why hard working taxpayers are being asked to shoulder the financial consequences of the government's inability to manage its own parliamentary party. That is not responsible government. It is a deeply troubling response from from the government to unrest. Let me give an example. My Lords, many across this chamber will have their own principles. Reasons for opposing this policy. But let me begin with a simple illustration of what this policy and this debate means in practice.
Take the London borough of Hackney. Their 29% of all children live in households affected by the two child limit without an exemption. The highest proportion anywhere in the country. As of August last year, there were 92 households in Hackney on Universal Credit, with five or more children, where the youngest child was born. After the 2017 cut off date, unless they qualify for one of the limited exemptions. Those households fall within the scope of the two child limit.
In other words, they are already receiving less than the maximum universal credit they would otherwise be entitled to. Yet, even with the cap in place, these households receive on average £5,152 per month in Universal Credit, and that is more. That is more than the take home pay of someone earning around £88,000 a year across the country. The welfare bill for five child households within the scope of the cap is already around to 720 million per year, and that is with the two child limit still in place now.
Set that against the reality faced by many working families in Hackney and in communities across the country. There are parents in work earning far less than that level of take home pay who would love nothing more than to have a third child. But they sit down at the kitchen table, look at the household finances and make the heartbreaking decision that they simply cannot afford it. At the very same time, their taxes are funding households down the road, receiving an income from universal credit that in effect, exceeds their own.
If this cap is removed, those households will not face the same choices about how many children they can afford. So I ask the noble Baroness, the Minister, a simple question how can that possibly be fair? How can it be right that working people supporting our economy and paying the taxes that fund the system must carefully limit the size of their own families, while being asked to fund a system in which those not in work face no such constraint. That is the fundamental question of fairness at the heart of this debate, and is why I believe a clear majority of the public vehemently support the cap.
There is a wider point about economic development more than this. My Lords, I think what separates us on these benches and the noble Baroness, the Minister and her backbenchers, is our view that a handout is not the same as a hand up, and the evidence is clear that the most effective way to tackle poverty is to provide people with the means and the incentives to provide for themselves. The single biggest factor in a child's life chances is whether parents work, and removing the cap reduces the incentives to work altogether.
That is clearly not a route out of poverty. Support should be targeted at those who need it. Of course, we have no argument with this, but it shouldn't create a model where households on benefits are rewarded in a way no working family ever would be. That undermines both fairness and the incentive to work and work. As I have said, is the only meaningful way that we will solve the problem of child poverty in the medium and long term.
I have to ask why, when the incentive in place is to get more on benefit than working, why would you go to work? I'm concerned by the view expressed by Labour backbenchers and the government that increasing the generosity of welfare offer is in some way solving the issue of poverty. This approach, I'm afraid to say, does not do anything but provide a sticking plaster to mask the fact that a dramatically increasing number of people are relying solely on the state for their subsistence.
This comes at a major and increasing cost to those who do work, and those who do contribute. As the spring statement disturbingly underscored, revealing what welfare spending will rise to 5.8% this year to an absolutely staggering 330 billion, around 11% of GDP. My Lords, my party has been clear we would reinstate the Two-child cap only last week. My right hon. Friend Kemi Badenoch, the leader of our party, set out why the savings from this policy could be redirected toward one of the more fundamental responsibilities of any government the protection and defence of the realm.
Again, I stress it does not mean that we do not care about children and families, but those savings would allow the recruitment of 20,000 additional soldiers. Fund the accommodation, equipment and support they need to do their jobs properly. At a time when the demands on our armed forces are growing and the world is becoming more uncertain, that is a central priority. My Lords, after the extraordinary spectacle of recent weeks when the world has seen the government unable and unwilling to defend British sovereign territory, the case for properly funding our armed forces has become more urgent than ever.
Our defence should not be an afterthought. It should be the first duty of the state, and that is why it is so troubling that money, which could be strengthening our national defence, is instead being spent to managers in the government's internal policies and politics. The country is being asked to foot the bill not because the policy case has been won, but because the government and the Chancellor have chosen not to pursue the welfare reforms they themselves once supported because they're too weak to get it past their own MPs.
Does His Majesty's Government have any plans to review the welfare state, to change it, to assist them? That incentivise people to work rather than to live permanently on benefits? My Lords, the defence of the nation should always come before the management of a governing party. But unfortunately the policy we are discussing today is a manifestation of just that. My Lords, ultimately, this debate comes down to three simple principles fairness, responsibility and the government's priorities. Fairness. Because it cannot be right that working families who get up every day pay their taxes and carefully weigh what they can and can't afford for their own children, are asked to fund a system in which those same choices do not apply, a welfare system that loses sight of that basic sense of fairness will quickly lose the confidence of the people who sustain it.
Responsibility before tackling poverty cannot mean simply writing even larger checks from the state. Real and lasting progress comes from helping people into work, strengthening incentives and ensuring that welfare is a safety net, not a substitute for independence. A system that blurs that distinction ultimately fails the very people it claims to help and priorities. Because every pound spent by the state is a pound taken from taxpayers and other priorities. At a time of enormous pressure on the public finances and growing threats in the world around us, the government must be honest about where those resources should go.
My Lord, this bill fails on all three counts. It weakens fairness. It risks entrenching dependency rather than tackling its causes, and it diverts scarce resources away from the fundamental duties of government. For those reasons, and in the interests of both fairness and sound policy, these benches cannot support the bill, and we, of course, urge the government to keep the cap. It is both what the country wants and what the country needs. My Lords, I know the benches opposite will not agree with me one little bit.
I'm under no illusions about that. But I remind the whole House that you cannot make a poor man rich by making a rich man poor, and you cannot help the wage earner by punishing the wage payer.
15:27
Baroness Teather (Liberal Democrat)
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Baroness Teather (Liberal Democrat)
Yeah. >> Very good. >> My Lords. I'm grateful for the opportunity to make my maiden speech here during this Second Reading debate, supporting children and tackling the impact of poverty and disadvantage have been core themes of my work, both in the other place and in charity and NHS board roles. Since. I'll turn to the substance of the bill in a moment and say some personal words about myself at the close. First, I hope noble Lords will indulge me in some heartfelt thank you's.
I'm indebted to the many people who have guided me so patiently in my first few weeks. Having done my apprenticeship at the other end, this place is at once both familiar and very different. I'm still navigating by reference to glimpses of green carpet that border red, meaning getting anywhere is taking me twice as long as it should. I'm particularly grateful to Black Rod's team and to the doorkeepers who made heroic efforts to support my husband, who is a wheelchair user, at my introduction, as they have today, as he is here to listen along with my parents, and I'm very grateful to them for being here.
Thank you too, to the clerks, the Lords speaker, the attendants, my supporters, my noble friends, Lord Dholakia and Baroness Kramer, and to the youthful staff team in the Lib Dem whips office who were a daily source of facts, sanity and humour. This bill is hugely welcome. While some might say not before time, I want instead to recognise the work done by the Minister, the noble Baroness Sherlock and the Secretary of State in the other place to bring this bill forward.
When I served as children of Families Minister, I recall the uphill task of coordinating child poverty strategy across departmental silos and coalition differences of opinion as somewhere between cat herding and global hostage negotiation skills. I guess that might yet come in handy if we end up in protracted ping pong here. My Lords, I am strongly of the view that the removal of the two child limit in Universal Credit is the right thing to do. I've always been a sceptic about arbitrary caps in welfare policy, which seem often to be performative rather than strategic.
People are made vulnerable when policy cannot flex for the complexity of real life. More than a million and a half children are currently affected by the two child limit, denied what they need to thrive. Growing up, where hunger, cold and uncertainty are daily realities, missing opportunities to join school trips and activities, leaving them more likely to be bullied at school. Something I know from my most recent role leading a children's charity dedicated to that cause. Poverty affects children in every community, which was the premise behind targeted support through the pupil premium.
But this two child limit falls on regions unevenly and disproportionately on families from black and ethnic minorities, baking in inequality and damaging life chances for decades. Removing the two child limit will make an impact to hundreds of thousands of children. But in the in the spirit of a maiden speech, I want to suggest gently that mitigation might also be needed on its forerunner, the benefit cap, which interacts with the high cost of rented housing by. For example, reviewing the cap annually and line of.
In line with the cost of living or disregarding child benefit from the total. I want also to say something about language and narrative. The Joseph Rowntree Foundation's UK Poverty Report this year describes the impacts of an increasingly toxic public debate on those living in poverty, saying values of compassion, justice and equity are too often missing. Stigma and scapegoating really matter. Money fills the electric metre, buys the school uniform and pays for breakfast. But it is language that limits expectations, hardens attitudes and severs relationships.
I spent most of my decade long civilian sabbatical away from politics, leading a UK charity in the refugee sector, the Jesuit Refugee Service. I learnt much at Jr's about the way destitution and homelessness eat away at dignity, but also about the transformative power of relationships and community. Towards the end of my time at the charity, we started a new project to train staff in mediation skills, encouraging them to listen and engage in conversations locally, to learn from people with different, even opposing perspectives about our work.
It was experimental in form, but the othering that we'd witnessed had been so devastating that we were convinced that we mustn't contribute to it further, our potential to create change and solve problems in this polarised age depends on how well we collaborate with people who do not always share our worldview. Resisting the urge to stereotype. Being open to the idea that working with people we don't agree with might yield new solutions. One of the great joys, my Lords, in my first few weeks here has been the warm and fascinating conversations with noble Lords from different parties.
This cross-party opportunity is a theme that I hope to mine. I want to finish my remarks by sharing with noble Lord something very personal. I have spent most of my adult life working with and for people who are sidelined, those who struggle to get their voices heard and their experiences understood. Then, four years ago, I suddenly lost my voice. A random neurological hit knocked out a nerve to my vocal cords, leaving me struggling to speak. It took two years of speech and language therapy at Guy's Hospital and specialist voice rehab to teach my body to adapt to this state and return as singing and useful voice help, for which I am deeply grateful.
The words of the letter patent letters. Patent read by the clerk. As our introduction to this House confers on each of us a voice in this place. I understand the privilege of this gift. It is something that my body knows to be true. So, noble Lords, I pledge to use my voice here to create space for all those whose voices continue to be silenced, whose experiences are missing from our deliberations. And I hope to use my voice to enjoy as many cross-party conversations and collaborations as T in The Long Room will sustain.
I'm indebted to the many people who have guided me so patiently in my first few weeks. Having done my apprenticeship at the other end, this place is at once both familiar and very different. I'm still navigating by reference to glimpses of green carpet that border red, meaning getting anywhere is taking me twice as long as it should. I'm particularly grateful to Black Rod's team and to the doorkeepers who made heroic efforts to support my husband, who is a wheelchair user, at my introduction, as they have today, as he is here to listen along with my parents, and I'm very grateful to them for being here.
Thank you too, to the clerks, the Lords speaker, the attendants, my supporters, my noble friends, Lord Dholakia and Baroness Kramer, and to the youthful staff team in the Lib Dem whips office who were a daily source of facts, sanity and humour. This bill is hugely welcome. While some might say not before time, I want instead to recognise the work done by the Minister, the noble Baroness Sherlock and the Secretary of State in the other place to bring this bill forward.
When I served as children of Families Minister, I recall the uphill task of coordinating child poverty strategy across departmental silos and coalition differences of opinion as somewhere between cat herding and global hostage negotiation skills. I guess that might yet come in handy if we end up in protracted ping pong here. My Lords, I am strongly of the view that the removal of the two child limit in Universal Credit is the right thing to do. I've always been a sceptic about arbitrary caps in welfare policy, which seem often to be performative rather than strategic.
People are made vulnerable when policy cannot flex for the complexity of real life. More than a million and a half children are currently affected by the two child limit, denied what they need to thrive. Growing up, where hunger, cold and uncertainty are daily realities, missing opportunities to join school trips and activities, leaving them more likely to be bullied at school. Something I know from my most recent role leading a children's charity dedicated to that cause. Poverty affects children in every community, which was the premise behind targeted support through the pupil premium.
But this two child limit falls on regions unevenly and disproportionately on families from black and ethnic minorities, baking in inequality and damaging life chances for decades. Removing the two child limit will make an impact to hundreds of thousands of children. But in the in the spirit of a maiden speech, I want to suggest gently that mitigation might also be needed on its forerunner, the benefit cap, which interacts with the high cost of rented housing by. For example, reviewing the cap annually and line of.
In line with the cost of living or disregarding child benefit from the total. I want also to say something about language and narrative. The Joseph Rowntree Foundation's UK Poverty Report this year describes the impacts of an increasingly toxic public debate on those living in poverty, saying values of compassion, justice and equity are too often missing. Stigma and scapegoating really matter. Money fills the electric metre, buys the school uniform and pays for breakfast. But it is language that limits expectations, hardens attitudes and severs relationships.
I spent most of my decade long civilian sabbatical away from politics, leading a UK charity in the refugee sector, the Jesuit Refugee Service. I learnt much at Jr's about the way destitution and homelessness eat away at dignity, but also about the transformative power of relationships and community. Towards the end of my time at the charity, we started a new project to train staff in mediation skills, encouraging them to listen and engage in conversations locally, to learn from people with different, even opposing perspectives about our work.
It was experimental in form, but the othering that we'd witnessed had been so devastating that we were convinced that we mustn't contribute to it further, our potential to create change and solve problems in this polarised age depends on how well we collaborate with people who do not always share our worldview. Resisting the urge to stereotype. Being open to the idea that working with people we don't agree with might yield new solutions. One of the great joys, my Lords, in my first few weeks here has been the warm and fascinating conversations with noble Lords from different parties.
This cross-party opportunity is a theme that I hope to mine. I want to finish my remarks by sharing with noble Lord something very personal. I have spent most of my adult life working with and for people who are sidelined, those who struggle to get their voices heard and their experiences understood. Then, four years ago, I suddenly lost my voice. A random neurological hit knocked out a nerve to my vocal cords, leaving me struggling to speak. It took two years of speech and language therapy at Guy's Hospital and specialist voice rehab to teach my body to adapt to this state and return as singing and useful voice help, for which I am deeply grateful.
The words of the letter patent letters. Patent read by the clerk. As our introduction to this House confers on each of us a voice in this place. I understand the privilege of this gift. It is something that my body knows to be true. So, noble Lords, I pledge to use my voice here to create space for all those whose voices continue to be silenced, whose experiences are missing from our deliberations. And I hope to use my voice to enjoy as many cross-party conversations and collaborations as T in The Long Room will sustain.
15:34
Baroness Janke (Liberal Democrat)
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Baroness Janke (Liberal Democrat)
Yes. >> Yes. >> My Lord, it's a great privilege to follow my noble friend Lady to follow my noble friend Lady Tethers very eloquent maiden speech, and I congratulate her on it and welcome her thoughtful remarks in her speech. Her expertise and experience as a former Minister for children and Families shine through, but also her long term commitment to work with charities and the NHS show her deep understanding of poverty in all its forms, particularly for refugees.
I'm sure we in this chamber will very much welcome her experience and insight to the work we do here, particularly at this very challenging time that we face. I also would like to pay tribute to her effective campaigning, having founded the APPG on Guantanamo Bay and chaired the APPG on refugees when she was an MP. I'm sure she's going to make valuable contributions to the work of this House. As an enthusiastic and energetic colleague. Her voice will certainly be heard here.
I'm confident of that. So so it's a great pleasure to welcome her to these benches and wish her further success in the future and her career in this house.
**** Possible New Speaker ****
Hey! My Lords, as we consider the bill before us today, it's important to recognise the deeply egregious effects it seeks to egregious effects it seeks to remedy. The two child limit is unjust and unfair and is a major unjust and unfair and is a major driver of child poverty. It is discriminatory and it hits hardest at those who have least and suffer at those who have least and suffer the most. Punishing children and setting siblings interests against each other within families.
25% of families affected are single parents with a child under three years old. Children of these families are doubly disadvantaged. Having only one parent is fully employed trying to make ends meet. 20% of all households affected by the two child limit have at least one disabled child, and 87,500 families affected lose around 3.5 thousand per year. Behind these figures, the reality of child poverty is about deprivation and misery. As a former teacher, I have seen it all too often.
Hungry children finding concentration in school impossible, teachers feeding the most desperate from their own pockets, parents missing meals so their children can eat. Children and parents who have never known a holiday. The grinding anxiety and stress of trying to make meagre funds stretch even further and just quite honestly, never actually having enough money. The humiliation and stigma of being poor compared to classmates and friends too often ends up in children being bullied in and out of school.
The old, cold and worn out clothes that single out the poor, not being able to go on school trips and visits, or join sports and leisure clubs because your family simply can't afford it. All this leading to a lack of confidence and feelings of inferiority and isolation and subsequent poor attainment. All this means that by the age of 30, those who grew up poor are likely to be earning about 25% less than their peers. They are four times more likely to experience mental health problems, with growing consequences for Worklessness and the benefits bill.
They are more likely to be in education, not to be in education, employment or training. I wonder whether the noble Baroness Stedman-Scott thinks this is a route out of poverty. I certainly don't. This pernicious policy has been justified by the previous government on the basis that it would make the parents claiming benefits, face the same financial choices as those who are supporting themselves through work. The argument is that this policy would achieve fairness. However, such evidence as there is points entirely to the contrary.
No evidence has been produced that this policy achieved its declared objectives. And if the previous government has not produced this evidence, I fail to see how they can stand up and defend it. Half the families who will benefit from the removal of the two child limit, as are noble Lady Sherlock has said, were not actually on benefits when they had children. But my Lords, catastrophes do happen to families. People lose their jobs, become ill, families break up. People die.
Family members need extra care. And this is why we have Social Security. As these misfortunes don't just happen to the poor, they happen to happen to the poor, they happen to us all. My Lords, based on the arguments that Baroness Stedman-Scott has put only a household wealthy enough to withstand all of life's disasters, could responsibly decide to have more than two children. It has been argued that the two child limit will encourage families to increase their income by finding more work.
But for many, especially lone parents, the difficulty of finding affordable childcare means that they cannot increase working hours but need to make their meagre income go even further. All too often, it's their children who suffer. Expert institutions have attributed the rising tide of child poverty to the two child limit policy. 59% of families affected by the two child limit are actually in work. So again, the false dichotomy between people having children on benefit and people at work does not stand up here.
59% at work, we are saying. So abolition of the two child limit has been a common cause between many members of this House and campaigners outside Parliament. So I would like to pay tribute. To those people who have worked to get this policy changed and I hope, very much hope that the Bishop of Durham is listening because he, too was a key campaigner on this. It's good to see that action is now being taken to remove this policy in this bill, but there is still some way to go to eliminate child poverty, including the removal of the punitive benefit cap, which we hope will soon follow.
A successful country invests in its children, the people who will deliver our nation's future. Our country has failed to do this so far, and there are a record 4.5 million children in poverty, in poverty. My Lord, this bill, though long overdue, is a welcome step forward for the nation's children. We look forward to the full implementation of the government's child poverty strategy. And in this spirit, we are pleased to support this bill.
I'm sure we in this chamber will very much welcome her experience and insight to the work we do here, particularly at this very challenging time that we face. I also would like to pay tribute to her effective campaigning, having founded the APPG on Guantanamo Bay and chaired the APPG on refugees when she was an MP. I'm sure she's going to make valuable contributions to the work of this House. As an enthusiastic and energetic colleague. Her voice will certainly be heard here.
I'm confident of that. So so it's a great pleasure to welcome her to these benches and wish her further success in the future and her career in this house.
**** Possible New Speaker ****
Hey! My Lords, as we consider the bill before us today, it's important to recognise the deeply egregious effects it seeks to egregious effects it seeks to remedy. The two child limit is unjust and unfair and is a major unjust and unfair and is a major driver of child poverty. It is discriminatory and it hits hardest at those who have least and suffer at those who have least and suffer the most. Punishing children and setting siblings interests against each other within families.
25% of families affected are single parents with a child under three years old. Children of these families are doubly disadvantaged. Having only one parent is fully employed trying to make ends meet. 20% of all households affected by the two child limit have at least one disabled child, and 87,500 families affected lose around 3.5 thousand per year. Behind these figures, the reality of child poverty is about deprivation and misery. As a former teacher, I have seen it all too often.
Hungry children finding concentration in school impossible, teachers feeding the most desperate from their own pockets, parents missing meals so their children can eat. Children and parents who have never known a holiday. The grinding anxiety and stress of trying to make meagre funds stretch even further and just quite honestly, never actually having enough money. The humiliation and stigma of being poor compared to classmates and friends too often ends up in children being bullied in and out of school.
The old, cold and worn out clothes that single out the poor, not being able to go on school trips and visits, or join sports and leisure clubs because your family simply can't afford it. All this leading to a lack of confidence and feelings of inferiority and isolation and subsequent poor attainment. All this means that by the age of 30, those who grew up poor are likely to be earning about 25% less than their peers. They are four times more likely to experience mental health problems, with growing consequences for Worklessness and the benefits bill.
They are more likely to be in education, not to be in education, employment or training. I wonder whether the noble Baroness Stedman-Scott thinks this is a route out of poverty. I certainly don't. This pernicious policy has been justified by the previous government on the basis that it would make the parents claiming benefits, face the same financial choices as those who are supporting themselves through work. The argument is that this policy would achieve fairness. However, such evidence as there is points entirely to the contrary.
No evidence has been produced that this policy achieved its declared objectives. And if the previous government has not produced this evidence, I fail to see how they can stand up and defend it. Half the families who will benefit from the removal of the two child limit, as are noble Lady Sherlock has said, were not actually on benefits when they had children. But my Lords, catastrophes do happen to families. People lose their jobs, become ill, families break up. People die.
Family members need extra care. And this is why we have Social Security. As these misfortunes don't just happen to the poor, they happen to happen to the poor, they happen to us all. My Lords, based on the arguments that Baroness Stedman-Scott has put only a household wealthy enough to withstand all of life's disasters, could responsibly decide to have more than two children. It has been argued that the two child limit will encourage families to increase their income by finding more work.
But for many, especially lone parents, the difficulty of finding affordable childcare means that they cannot increase working hours but need to make their meagre income go even further. All too often, it's their children who suffer. Expert institutions have attributed the rising tide of child poverty to the two child limit policy. 59% of families affected by the two child limit are actually in work. So again, the false dichotomy between people having children on benefit and people at work does not stand up here.
59% at work, we are saying. So abolition of the two child limit has been a common cause between many members of this House and campaigners outside Parliament. So I would like to pay tribute. To those people who have worked to get this policy changed and I hope, very much hope that the Bishop of Durham is listening because he, too was a key campaigner on this. It's good to see that action is now being taken to remove this policy in this bill, but there is still some way to go to eliminate child poverty, including the removal of the punitive benefit cap, which we hope will soon follow.
A successful country invests in its children, the people who will deliver our nation's future. Our country has failed to do this so far, and there are a record 4.5 million children in poverty, in poverty. My Lord, this bill, though long overdue, is a welcome step forward for the nation's children. We look forward to the full implementation of the government's child poverty strategy. And in this spirit, we are pleased to support this bill.
15:42
The Lord Bishop of Leicester (Bishops)
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The Lord Bishop of Leicester (Bishops)
Yeah. opportunity today to comment on it. I want to congratulate Baroness Teather on her truly excellent maiden speech, and I look forward to the maiden contributions of Baroness Antrobus and Lord Walker, as well as other noble Lords. I count myself very fortunate to have never experienced true poverty myself, but I have spent much of my working life living in communities where poverty was very real, both the absolute poverty of one of the poorest nations in Africa, where I worked for several years, and the relative poverty of inner city Sheffield, where I was vicar for a decade before becoming Bishop of Leicester.
I have seen firsthand, therefore, that poverty is not just about material resources, but it also has a much wider psychosocial impact. Amartya Sen argued that poverty should be understood not as low income but as capability deprivation, the lack of real freedom or opportunities to live a life one has reason to value. Martha Nussbaum expanded Sen's framework by proposing a list of central human capabilities such as life, bodily health, imagination, emotion, affiliation, play, control over one's environments. All societies, she said, should secure these for every citizen as a matter of justice.
Added to this is what some have called the poverty shame nexus. The mutually reinforcing relationship between material hardship and the emotional experience of shame. People in poverty can experience shame through various mechanisms. Social stigma being judged as lazy, undeserving or morally inferior. Institutional interactions for example, public servants that treat people disrespectfully or cultural norms that define success and worth in material terms. Research has found that people internalise stigmatising narratives about poverty and, as a result, have lower self-esteem, lower self-worth, and indeed, in void, avoid social interactions with others.
So universal credit as it's and its system of sanctions, arguably institutionalises the poverty shame nexus. While I accept that its introduction in 2013 brought a necessary simplification to welfare payments, I am nevertheless believing that the system of sanctions in particular, has an implicit moralising message. Claimants must continually prove that they deserve support because they are both poor enough and trying hard enough. I myself have spoken with people who described the feeling of being presumed guilty until you are innocent, as the assumption that every person looking for help might be cheating the system.
It's my belief that the two child limit to universal credit has only added to the poverty shame nexus. The assumption would be to be that if you are on Universal Credit and have more than two children, you are somehow not being responsible. Yet I myself have three wonderful children, and I'm sure that many other noble Lords also have more than two children. And I confess that I did not make a financial calculation ahead of deciding to have a third child.
I wonder how many of us did. Surely then, we have a duty to lift the sense of shame from others, not reinforce it. Bishops on this bench have consistently opposed the two child limit right from its introduction. Indeed, as has already been mentioned, the former Bishop of Durham introduced a private member's bill seeking to abolish it in 2022. For us, this is part of a much wider calling to combat poverty in all its forms, addressing both its causes and its wider effects.
I know that noble Lords on all sides of this House share that same concern. Our differences are more to do with how this is done, rather than whether or not it is done. Yet I dare to hope that once this particular policy is changed, we can then work together to find other areas whereby those who are caught in poverty are enabled to contribute society.
I have seen firsthand, therefore, that poverty is not just about material resources, but it also has a much wider psychosocial impact. Amartya Sen argued that poverty should be understood not as low income but as capability deprivation, the lack of real freedom or opportunities to live a life one has reason to value. Martha Nussbaum expanded Sen's framework by proposing a list of central human capabilities such as life, bodily health, imagination, emotion, affiliation, play, control over one's environments. All societies, she said, should secure these for every citizen as a matter of justice.
Added to this is what some have called the poverty shame nexus. The mutually reinforcing relationship between material hardship and the emotional experience of shame. People in poverty can experience shame through various mechanisms. Social stigma being judged as lazy, undeserving or morally inferior. Institutional interactions for example, public servants that treat people disrespectfully or cultural norms that define success and worth in material terms. Research has found that people internalise stigmatising narratives about poverty and, as a result, have lower self-esteem, lower self-worth, and indeed, in void, avoid social interactions with others.
So universal credit as it's and its system of sanctions, arguably institutionalises the poverty shame nexus. While I accept that its introduction in 2013 brought a necessary simplification to welfare payments, I am nevertheless believing that the system of sanctions in particular, has an implicit moralising message. Claimants must continually prove that they deserve support because they are both poor enough and trying hard enough. I myself have spoken with people who described the feeling of being presumed guilty until you are innocent, as the assumption that every person looking for help might be cheating the system.
It's my belief that the two child limit to universal credit has only added to the poverty shame nexus. The assumption would be to be that if you are on Universal Credit and have more than two children, you are somehow not being responsible. Yet I myself have three wonderful children, and I'm sure that many other noble Lords also have more than two children. And I confess that I did not make a financial calculation ahead of deciding to have a third child.
I wonder how many of us did. Surely then, we have a duty to lift the sense of shame from others, not reinforce it. Bishops on this bench have consistently opposed the two child limit right from its introduction. Indeed, as has already been mentioned, the former Bishop of Durham introduced a private member's bill seeking to abolish it in 2022. For us, this is part of a much wider calling to combat poverty in all its forms, addressing both its causes and its wider effects.
I know that noble Lords on all sides of this House share that same concern. Our differences are more to do with how this is done, rather than whether or not it is done. Yet I dare to hope that once this particular policy is changed, we can then work together to find other areas whereby those who are caught in poverty are enabled to contribute society.
15:47
Baroness Antrobus (Labour)
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Baroness Antrobus (Labour)
My Lords, I thank you for the opportunity to make my maiden speech in this important debate on the Universal Credit Bill and the removal of the two child benefit limit. This matter is personal to me. When I was 11 years old. State help in the form of child benefit became incredibly important to my single parent household. After my parents separated my weekly trek to the Post Office to collect it in cash. Of course, in those days helped us through a difficult period.
Quite simply, it put food on our table. Mine was a middle class family, and those who rely on support, such as Universal Credit, are not as static group as has been said. Circumstances change, people face bereavement, job loss or as in my case, family breakdown at moments of crisis. That support can be essential. In fact, both of my parents worked in this place as law reporters before the Law Lords moved to the Supreme Court. At no time did anybody imagine I would end up on these benches that I've joined.
The Labour benches is probably less of a surprise. I have a proud heritage of Labour councillors from my grandparents generation, including the chair of Willows District Council, then part of Lancashire. My great uncle, Joe Noone. He taught me to play dominoes and to respect my Labour heritage, and he succeeded in both. I also have heartfelt thanks to all the staff of the House, the clerks, officials, security and catering staff and especially the doorkeepers whose quiet professionalism sustains the dignity and daily functioning of this institution.
I also thank Black Rod for his warm welcome and garter for his guidance. I'm deeply grateful to my noble friend Baroness Royall of Blaisdon and Lord Coaker for introducing me and to Baroness Smith of Basildon and Lord Kennedy of Southwark, not only for their generosity in time and support, but also for the confidence they have placed in me. I come to this house with a background that spans practice and theory, service and scholarship. For 20 years I served in the Royal Air Force, including operational tours in the Middle East and Afghanistan and the Royal Navy.
Those experiences shaped how I understand conflict not as an abstract concept, but as something that has lifelong and often multi-generational impacts both on combatants and civilians. Those conflicts still haunt me in many ways, but they also strengthened my determination to engage with politics in relation to defence and security. I wanted to walk towards that fight, not away from it, including standing as a Labour candidate for the Labour Party in the 2015 general election. After I left the Air Force after 2015, I turned to academic research.
I completed a doctorate examining the politics of air power between the wars in Whitehall. Some of the men who shaped the early Royal Air Force sat on these benches. I studied their papers in the archives in Victoria Tower. I never imagined I might one day follow them into the chamber. Indeed, 100 years ago, just this Tuesday, Lord Thomas of Cardington, the first Labour Secretary of State for air and a subject of my research, spoke in an air policy debate in this House with striking prescience.
He warned that should another European war occur, Britain's ports and industrial centres would be exposed to devastating attack from the air and that the RAF would be central to national defence. Lord Thompson was tragically killed in the Ar101 airship disaster on its maiden flight in 1930. I hope that's not an omen for my maiden outing and however, the Oxford Dictionary of National Biography described him, and I quote, as a clear and vigorous speaker, and his cheerfulness and good temper gained him many friends in the House.
That seems an excellent example for me to at least aspire to follow. For my subsequent academic work has focussed on contemporary warfare. I'm co-director of the Freeman Air and Space Institute at King's College London. I've written on many subjects, including organisational culture, air power, missile defence and deterrence. In this increasingly dangerous and divided world. I also want to commend my noble friend Baroness Carberry for her speech in the International Women's Day debate, where she highlighted continuing toxic behaviours in the armed forces, an issue that I have not and will not shy away from raising myself.
I began by explaining why this bill has personal resonance for me. It matters so much more for the 450,000 children it will lift out of poverty. I saw the impact of financial hardship on children while volunteering in food banks for four years. Now to finish, some might wonder why a defence and security academic would choose this debate for her maiden speech. Yet the connection is clear. As we have seen time and again, global conflict and instability instability directly affect the cost of living, defence, security and economic well-being are deeply intertwined.
Britain's ability to contribute to a more stable world depends on the credibility of our armed forces and the deterrence they provide. We are all affected by defence and security. My Lords, you will have different perspectives and backgrounds from me. I know, and I'm looking forward to working with you and learning from you. Thank you.
Quite simply, it put food on our table. Mine was a middle class family, and those who rely on support, such as Universal Credit, are not as static group as has been said. Circumstances change, people face bereavement, job loss or as in my case, family breakdown at moments of crisis. That support can be essential. In fact, both of my parents worked in this place as law reporters before the Law Lords moved to the Supreme Court. At no time did anybody imagine I would end up on these benches that I've joined.
The Labour benches is probably less of a surprise. I have a proud heritage of Labour councillors from my grandparents generation, including the chair of Willows District Council, then part of Lancashire. My great uncle, Joe Noone. He taught me to play dominoes and to respect my Labour heritage, and he succeeded in both. I also have heartfelt thanks to all the staff of the House, the clerks, officials, security and catering staff and especially the doorkeepers whose quiet professionalism sustains the dignity and daily functioning of this institution.
I also thank Black Rod for his warm welcome and garter for his guidance. I'm deeply grateful to my noble friend Baroness Royall of Blaisdon and Lord Coaker for introducing me and to Baroness Smith of Basildon and Lord Kennedy of Southwark, not only for their generosity in time and support, but also for the confidence they have placed in me. I come to this house with a background that spans practice and theory, service and scholarship. For 20 years I served in the Royal Air Force, including operational tours in the Middle East and Afghanistan and the Royal Navy.
Those experiences shaped how I understand conflict not as an abstract concept, but as something that has lifelong and often multi-generational impacts both on combatants and civilians. Those conflicts still haunt me in many ways, but they also strengthened my determination to engage with politics in relation to defence and security. I wanted to walk towards that fight, not away from it, including standing as a Labour candidate for the Labour Party in the 2015 general election. After I left the Air Force after 2015, I turned to academic research.
I completed a doctorate examining the politics of air power between the wars in Whitehall. Some of the men who shaped the early Royal Air Force sat on these benches. I studied their papers in the archives in Victoria Tower. I never imagined I might one day follow them into the chamber. Indeed, 100 years ago, just this Tuesday, Lord Thomas of Cardington, the first Labour Secretary of State for air and a subject of my research, spoke in an air policy debate in this House with striking prescience.
He warned that should another European war occur, Britain's ports and industrial centres would be exposed to devastating attack from the air and that the RAF would be central to national defence. Lord Thompson was tragically killed in the Ar101 airship disaster on its maiden flight in 1930. I hope that's not an omen for my maiden outing and however, the Oxford Dictionary of National Biography described him, and I quote, as a clear and vigorous speaker, and his cheerfulness and good temper gained him many friends in the House.
That seems an excellent example for me to at least aspire to follow. For my subsequent academic work has focussed on contemporary warfare. I'm co-director of the Freeman Air and Space Institute at King's College London. I've written on many subjects, including organisational culture, air power, missile defence and deterrence. In this increasingly dangerous and divided world. I also want to commend my noble friend Baroness Carberry for her speech in the International Women's Day debate, where she highlighted continuing toxic behaviours in the armed forces, an issue that I have not and will not shy away from raising myself.
I began by explaining why this bill has personal resonance for me. It matters so much more for the 450,000 children it will lift out of poverty. I saw the impact of financial hardship on children while volunteering in food banks for four years. Now to finish, some might wonder why a defence and security academic would choose this debate for her maiden speech. Yet the connection is clear. As we have seen time and again, global conflict and instability instability directly affect the cost of living, defence, security and economic well-being are deeply intertwined.
Britain's ability to contribute to a more stable world depends on the credibility of our armed forces and the deterrence they provide. We are all affected by defence and security. My Lords, you will have different perspectives and backgrounds from me. I know, and I'm looking forward to working with you and learning from you. Thank you.
15:53
Baroness Lister of Burtersett (Labour)
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Baroness Lister of Burtersett (Labour)
Yes, here. follow the wonderful maiden speech of my noble friend Lady Antrobus, which came from both the heart and the head. No better combination, as she said, she comes to your Lordships House with a background that spans practice and theory, service and scholarship. What she is too modest to say is just how eminent her record has been in all these spheres, and her speech demonstrates how valuable her contribution will be to the work of this House. At a time when conflict is engulfing so much of the world.
I very much look forward to the wisdom that she will bring to debates on these matters. She was also able to bring to bear on the subject of today's debate, her personal experience of growing up in a single parent family. In doing so, she has demonstrated the value of the knowledge that comes from lived experience, something that has helped to shape the government's child poverty strategy. And she brought home very powerfully why it is wrong to suggest that the money spent on the abolition of the two child limit would be better spent on defence.
As the Leader of the Opposition said recently, my noble friend speech made clear how security of the realm and security of individuals in poverty are intertwined, which. Which brings me to the bill itself. My Lord, let us rejoice as we read the death rites on what one eminent social policy professor described as the worst social policy ever. As we have heard, what Unicef UK describes as a transformative measure will reduce both the numbers of children in poverty and the depths of poverty.
As one mother responded, finally all my children will be seen as equals. I pay tribute to those in government and in civil society who made sure it happened. The Council of Europe Human Rights Commissioner, recently observed that without this step, it would be difficult to imagine an effective overall approach to combating child poverty. It is an important investment in the rights and wellbeing of children, and he criticised the stigmatising preconceptions about people receiving Social Security that have marked some political and media reactions to the bill.
These reactions have suggested that somehow spending money on lifting children out of poverty is illegitimate. Part of what is dismissed by the opposition as the Ballooning Benefits Bill. This ignores an estimated £50 billion a year, hacked off that bill as a result of Tory cuts and restrictions, and that official figures show that spending on working age benefits as a percentage of GDP has not increased and is not projected to increase. Arguments about the cost of the bill also, as we've heard, ignore the cost of not acting in terms of the impact of poverty on public services, notably health, education and children's care, and on future employment prospects.
We are talking about preventative spending and investment in our children. It's all too easy for the opposition to hide their contribution to the worsening of child poverty. Behind the argument that the the answer lies in paid work, full stop. This is despite the fact that, as we've heard, 3/5 of those hurt by the Two-child limit have a parent in work and an estimated 70% of the additional funding will go to that group. But more fundamentally, there is a widespread consensus built on academic analysis that removal of the two child limit is the one most effective measure open to the government to reduce child poverty at a stroke.
To quote case at the LSE, changes in parent employment, whilst important, will never deliver change to touch the child poverty rates on the scale we need to see. We can only get significant and lasting reductions in child poverty by investing in our social security system. There really is no other way. And research by public first suggests that when provided with information about the cost effectiveness of abolition of the limit in reducing child poverty, voter support for the measure increases significantly and indeed is the same.
The same is true of the overall benefit cap, and here I'm afraid I have to introduce a note of dissent that I'm sure my noble friend won't surprise my noble friend, the Minister, and which echoes the one of the powerful maiden speech from the noble Baroness, Lady Tether. The bill's impact assessment estimates that in 2930, around 50,000 households will not gain and 10,000 will only partially gain because of the cap. I find it depressing that the same arguments are used about needing the cap to ensure work incentives, as under the previous government.
Yes, the cap may push some parents into paid work, but by driving parents into deep poverty, it creates stress and anxiety about making ends meet that actually makes them less effective job seekers. This is not, as Ministers assert, in the best interests of children. Indeed, I remind my noble friend that when the cap was introduced, the official opposition supported the removal of child benefit from the cap on the grounds that it's received by equivalent working families and therefore, in order to create more of a level playing field, should not be included in the cap.
Could this be looked at again, please, from the perspective of the best interests of children? I would also urge that when the threshold limits are reviewed next year, a decision is made to update them annually in line with the EU C standard allowance, so that we don't see more families pushed into poverty by the Cap each year. As it is, they've only been updated once since 2016 when they were cut. They're now worth £5,409 less in London and £4,702 elsewhere as a result.
Two other concerns have been raised about some families who won't benefit or fully benefit from the bill, one raised by Cpag, of which I'm honorary president and advised. Nae relates to some families who, having migrated to UC through the managed migration process, may lose some of their transitional protection. The other, raised by resolved poverty, are families who may lose as a result of the knock on effect on their council tax reduction. I don't think either is mentioned in the impact assessment, and I wonder whether my noble friend can throw any light on the numbers likely to be involved.
My Lords, to return to the good news. The Bill will, in the words of a mother of four quoted by Cpag, make a world of difference as a cornerstone of the first UK wide child poverty strategy since 2010. It symbolises what a Labour government can do to build a good society. Hey my Lords.
I very much look forward to the wisdom that she will bring to debates on these matters. She was also able to bring to bear on the subject of today's debate, her personal experience of growing up in a single parent family. In doing so, she has demonstrated the value of the knowledge that comes from lived experience, something that has helped to shape the government's child poverty strategy. And she brought home very powerfully why it is wrong to suggest that the money spent on the abolition of the two child limit would be better spent on defence.
As the Leader of the Opposition said recently, my noble friend speech made clear how security of the realm and security of individuals in poverty are intertwined, which. Which brings me to the bill itself. My Lord, let us rejoice as we read the death rites on what one eminent social policy professor described as the worst social policy ever. As we have heard, what Unicef UK describes as a transformative measure will reduce both the numbers of children in poverty and the depths of poverty.
As one mother responded, finally all my children will be seen as equals. I pay tribute to those in government and in civil society who made sure it happened. The Council of Europe Human Rights Commissioner, recently observed that without this step, it would be difficult to imagine an effective overall approach to combating child poverty. It is an important investment in the rights and wellbeing of children, and he criticised the stigmatising preconceptions about people receiving Social Security that have marked some political and media reactions to the bill.
These reactions have suggested that somehow spending money on lifting children out of poverty is illegitimate. Part of what is dismissed by the opposition as the Ballooning Benefits Bill. This ignores an estimated £50 billion a year, hacked off that bill as a result of Tory cuts and restrictions, and that official figures show that spending on working age benefits as a percentage of GDP has not increased and is not projected to increase. Arguments about the cost of the bill also, as we've heard, ignore the cost of not acting in terms of the impact of poverty on public services, notably health, education and children's care, and on future employment prospects.
We are talking about preventative spending and investment in our children. It's all too easy for the opposition to hide their contribution to the worsening of child poverty. Behind the argument that the the answer lies in paid work, full stop. This is despite the fact that, as we've heard, 3/5 of those hurt by the Two-child limit have a parent in work and an estimated 70% of the additional funding will go to that group. But more fundamentally, there is a widespread consensus built on academic analysis that removal of the two child limit is the one most effective measure open to the government to reduce child poverty at a stroke.
To quote case at the LSE, changes in parent employment, whilst important, will never deliver change to touch the child poverty rates on the scale we need to see. We can only get significant and lasting reductions in child poverty by investing in our social security system. There really is no other way. And research by public first suggests that when provided with information about the cost effectiveness of abolition of the limit in reducing child poverty, voter support for the measure increases significantly and indeed is the same.
The same is true of the overall benefit cap, and here I'm afraid I have to introduce a note of dissent that I'm sure my noble friend won't surprise my noble friend, the Minister, and which echoes the one of the powerful maiden speech from the noble Baroness, Lady Tether. The bill's impact assessment estimates that in 2930, around 50,000 households will not gain and 10,000 will only partially gain because of the cap. I find it depressing that the same arguments are used about needing the cap to ensure work incentives, as under the previous government.
Yes, the cap may push some parents into paid work, but by driving parents into deep poverty, it creates stress and anxiety about making ends meet that actually makes them less effective job seekers. This is not, as Ministers assert, in the best interests of children. Indeed, I remind my noble friend that when the cap was introduced, the official opposition supported the removal of child benefit from the cap on the grounds that it's received by equivalent working families and therefore, in order to create more of a level playing field, should not be included in the cap.
Could this be looked at again, please, from the perspective of the best interests of children? I would also urge that when the threshold limits are reviewed next year, a decision is made to update them annually in line with the EU C standard allowance, so that we don't see more families pushed into poverty by the Cap each year. As it is, they've only been updated once since 2016 when they were cut. They're now worth £5,409 less in London and £4,702 elsewhere as a result.
Two other concerns have been raised about some families who won't benefit or fully benefit from the bill, one raised by Cpag, of which I'm honorary president and advised. Nae relates to some families who, having migrated to UC through the managed migration process, may lose some of their transitional protection. The other, raised by resolved poverty, are families who may lose as a result of the knock on effect on their council tax reduction. I don't think either is mentioned in the impact assessment, and I wonder whether my noble friend can throw any light on the numbers likely to be involved.
My Lords, to return to the good news. The Bill will, in the words of a mother of four quoted by Cpag, make a world of difference as a cornerstone of the first UK wide child poverty strategy since 2010. It symbolises what a Labour government can do to build a good society. Hey my Lords.
16:00
Baroness Bennett of Manor Castle (Green Party)
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Baroness Bennett of Manor Castle (Green Party)
I thank the noble. >> I thank the noble. >> Lady Baroness Sherlock for introducing this bill. Her passion for this policy was evident, and for this policy was evident, and I'm sure she is very glad to finally be bringing it forward to us. 615 days after the current government took power. The Green Party called for the end to the two child benefit cap during the election of 2024, and has continued to do so subsequently. And as the noble Lady said, this policy was introduced by the Cameron Osborne Conservative government in 2017, deliberately choosing to put children into poverty, children who had done nothing to deserve that situation.
It was a cruel policy and it's very good news that it is finally going. And I offer congratulations to the many campaigners who've worked for this day, including Labour backbenchers in the other place. And also, it's a great pleasure to follow the noble Lady Baroness Lister, who I have no doubt has been working very hard on this and rightly identified where the government urgently needs to go further, which indeed is where I will particularly focus. This is a missed opportunity in failing to act on the household benefit cap.
At least 150,000 children are in. Larger families will see no benefit at all because they are subject to that separate household benefit cap. That's the calculation by Z2K. The charity that aims to fight poverty. The quality to just see what that actually means for the household benefit cap means many households that have larger families will be trapped in deep poverty. A case study cited by YZ2K Mariam is a lone parent of three who fled domestic abuse and now relies on universal credit.
She has been affected by the two child limit and the benefit cap, and she's been left with just £25 a week for the family to live on after rent. But even with today's bill, her income will not increase at all. But if the benefit cap was lifted alongside it, it would allow her to meet her basic living costs and escape severe destitution. There's also the families affected by this ability. The government's child poverty strategy highlights that fact. Children living in families where a household member is disabled are of particularly high risk of both poverty and deep material poverty.
Yet under the changes in the Universal Credit Act, financial support for for seriously disabled and seriously ill and disabled people under Universal Credit will be reduced by £215 a month for a disabled family, with three children affected by this change. That Universal Credit change will wipe out 62% of the benefits from the two child benefit limit abolition. Now those are some figures. Other figures also come from policy and practice, which did some very valuable work. Looking at 1 in 10 households currently held back by the two child limit won't gain at all when the policy is reversed.
1 in 10 families will only see a potential gain as the benefit is capped through the policy. Now I'm citing those different figures, and I'm sure others will come up with others because there are no official figures on this. In fact, I asked the noble Lady, the Minister, in a written question in December, what the government's own figures were, of which families who would have got money from end of the two child benefit cap would be hit by the household benefit cap. The answer I got on the 5th of January was the requested information is internal analysis that has been quality assured to official statistics level.
Plans to publish this in due course are ongoing. I wonder if the Labour lady can tell me how that's going. And I think to look at the overall situation of this. I go to the Institute for Fiscal Studies, which estimates that without further policy action, child poverty rates will have crept back close to the 20 2425 level by the end of the forecast period in 20 2930. Leaving a change of just 0.4% of those poverty levels. One of the other things other than the overall benefit cap is the local housing allowance, which is currently wildly inadequate.
So I come to two very final brief points. I welcome the three maiden speakers today. Look forward to those from whom we've not yet heard. They're obviously interested in child poverty, but I would urge them to think about branching out as they find their feet in this House into other areas that also impact child poverty. I was talking in the Moses room yesterday about financial regulation that is absolutely crucial to child poverty and is a threat to the security of all of us. Please think about engaging.
Don't just leave that to the banking insiders. Pick up issues like that as well. And finally, I want to directly respond to the noble Lady Baroness Stedman-Scott. And I'm kind of slightly surprised that conservatives are very into history. And I'm surprised that the conservative leader hasn't really looked into the history books. And going back to the Boer War, and when the British society, this place became very concerned about the fact that poverty, poor diets, poor housing means that young people were young men were not fit to fight for Britain because of child poverty.
So we're going to recruit 20,000 more soldiers. How are you going to recruit those soldiers from a society blighted by child poverty?
It was a cruel policy and it's very good news that it is finally going. And I offer congratulations to the many campaigners who've worked for this day, including Labour backbenchers in the other place. And also, it's a great pleasure to follow the noble Lady Baroness Lister, who I have no doubt has been working very hard on this and rightly identified where the government urgently needs to go further, which indeed is where I will particularly focus. This is a missed opportunity in failing to act on the household benefit cap.
At least 150,000 children are in. Larger families will see no benefit at all because they are subject to that separate household benefit cap. That's the calculation by Z2K. The charity that aims to fight poverty. The quality to just see what that actually means for the household benefit cap means many households that have larger families will be trapped in deep poverty. A case study cited by YZ2K Mariam is a lone parent of three who fled domestic abuse and now relies on universal credit.
She has been affected by the two child limit and the benefit cap, and she's been left with just £25 a week for the family to live on after rent. But even with today's bill, her income will not increase at all. But if the benefit cap was lifted alongside it, it would allow her to meet her basic living costs and escape severe destitution. There's also the families affected by this ability. The government's child poverty strategy highlights that fact. Children living in families where a household member is disabled are of particularly high risk of both poverty and deep material poverty.
Yet under the changes in the Universal Credit Act, financial support for for seriously disabled and seriously ill and disabled people under Universal Credit will be reduced by £215 a month for a disabled family, with three children affected by this change. That Universal Credit change will wipe out 62% of the benefits from the two child benefit limit abolition. Now those are some figures. Other figures also come from policy and practice, which did some very valuable work. Looking at 1 in 10 households currently held back by the two child limit won't gain at all when the policy is reversed.
1 in 10 families will only see a potential gain as the benefit is capped through the policy. Now I'm citing those different figures, and I'm sure others will come up with others because there are no official figures on this. In fact, I asked the noble Lady, the Minister, in a written question in December, what the government's own figures were, of which families who would have got money from end of the two child benefit cap would be hit by the household benefit cap. The answer I got on the 5th of January was the requested information is internal analysis that has been quality assured to official statistics level.
Plans to publish this in due course are ongoing. I wonder if the Labour lady can tell me how that's going. And I think to look at the overall situation of this. I go to the Institute for Fiscal Studies, which estimates that without further policy action, child poverty rates will have crept back close to the 20 2425 level by the end of the forecast period in 20 2930. Leaving a change of just 0.4% of those poverty levels. One of the other things other than the overall benefit cap is the local housing allowance, which is currently wildly inadequate.
So I come to two very final brief points. I welcome the three maiden speakers today. Look forward to those from whom we've not yet heard. They're obviously interested in child poverty, but I would urge them to think about branching out as they find their feet in this House into other areas that also impact child poverty. I was talking in the Moses room yesterday about financial regulation that is absolutely crucial to child poverty and is a threat to the security of all of us. Please think about engaging.
Don't just leave that to the banking insiders. Pick up issues like that as well. And finally, I want to directly respond to the noble Lady Baroness Stedman-Scott. And I'm kind of slightly surprised that conservatives are very into history. And I'm surprised that the conservative leader hasn't really looked into the history books. And going back to the Boer War, and when the British society, this place became very concerned about the fact that poverty, poor diets, poor housing means that young people were young men were not fit to fight for Britain because of child poverty.
So we're going to recruit 20,000 more soldiers. How are you going to recruit those soldiers from a society blighted by child poverty?
16:06
Lord Babudu (Labour)
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Lord Babudu (Labour)
My Lords, I look forward to hearing the remaining maiden speech from my fellow newcomer and noble friend, Lord Walker of Broxton, and congratulate the noble Lords who have delivered excellent maiden speeches already. Before I speak to the substance of my contribution, I want to declare an interest as the Executive Director of Impact on Urban Health, part of a endowed foundation that funds organisations that have contributed to the government's child poverty strategy, including Child Poverty Action Group and the organisation Changing Realities.
In preparing for this debate, I was heartened to read of the extent of cross-party consensus on the need to address the issue of child poverty, and given how child poverty has risen over the last 14 years, we must be clear that the current approach is not working. Building on contributions from other noble Lords. I want to speak briefly to how people come to be on Universal Credit and running up against the two child limit. Who ends up in that situation and what it costs.
Firstly, to how, as you've heard, around half of those affected by the two child limit were not on Universal Credit when they had their children. This is a circumstance that can befall so many of us a break up with a spouse, the loss of a job, a worsening of health. These are routes to universal credit for so many. And who ends up running against the two child limit women in large parts. Of the 450 households affected, more than half of those are headed by single mothers.
Only around 6000 single fathers. We see black and ethnic minority households up to three times more likely to be affected than white households, and 40% of affected households have a parent with a disability. My Lords, the approach we are taking disproportionately affects women, affects ethnic minorities and affects people with disabilities. And what does it cost? We know from other contributions that the proposed changes will have a cost to them, and it will be around 3 billion a year in the end.
That is by all means a lot of money. But stepping back, what is the broader cost of letting this limit stand? And extensive research by Child Poverty Action group, Joseph Rowntree Foundation, and indeed by the Department of Work and Pensions, has shown that those affected are more likely to experience poor physical and mental health, less likely to be in employment, education and training, and less likely to earn a decent wage in the long run. In several ways, this limit costs people the opportunity to live in good health, to earn well and to contribute to society.
We are losing tax contributions. We are losing well-being. My Lords, I am incredibly sympathetic to the need to control our welfare bill. I sat on the Commission for Healthier Working Lives because I do believe that work plays a hugely important part in enabling people to live well. But we must not forget the majority of those affected by the Two-child limit are already in working households. In due course, I'll speak to changes I believe we need in welfare more broadly. But today I want to be clear about one thing.
This is not the way to build a healthier society or to save money. It ultimately costs us money. We know that we do not want children to live in poverty. We know that it is scarring their lives. We have this opportunity. Removing the two child limit is simply the most effective way to achieve meaningful progress on reducing child poverty. The other approaches have not been working since the limit was introduced, and with the opportunity to achieve the biggest reduction in child poverty within any single Parliament, I urge your Lordships' House to signal your support for His Majesty's Government to take this hands.
In preparing for this debate, I was heartened to read of the extent of cross-party consensus on the need to address the issue of child poverty, and given how child poverty has risen over the last 14 years, we must be clear that the current approach is not working. Building on contributions from other noble Lords. I want to speak briefly to how people come to be on Universal Credit and running up against the two child limit. Who ends up in that situation and what it costs.
Firstly, to how, as you've heard, around half of those affected by the two child limit were not on Universal Credit when they had their children. This is a circumstance that can befall so many of us a break up with a spouse, the loss of a job, a worsening of health. These are routes to universal credit for so many. And who ends up running against the two child limit women in large parts. Of the 450 households affected, more than half of those are headed by single mothers.
Only around 6000 single fathers. We see black and ethnic minority households up to three times more likely to be affected than white households, and 40% of affected households have a parent with a disability. My Lords, the approach we are taking disproportionately affects women, affects ethnic minorities and affects people with disabilities. And what does it cost? We know from other contributions that the proposed changes will have a cost to them, and it will be around 3 billion a year in the end.
That is by all means a lot of money. But stepping back, what is the broader cost of letting this limit stand? And extensive research by Child Poverty Action group, Joseph Rowntree Foundation, and indeed by the Department of Work and Pensions, has shown that those affected are more likely to experience poor physical and mental health, less likely to be in employment, education and training, and less likely to earn a decent wage in the long run. In several ways, this limit costs people the opportunity to live in good health, to earn well and to contribute to society.
We are losing tax contributions. We are losing well-being. My Lords, I am incredibly sympathetic to the need to control our welfare bill. I sat on the Commission for Healthier Working Lives because I do believe that work plays a hugely important part in enabling people to live well. But we must not forget the majority of those affected by the Two-child limit are already in working households. In due course, I'll speak to changes I believe we need in welfare more broadly. But today I want to be clear about one thing.
This is not the way to build a healthier society or to save money. It ultimately costs us money. We know that we do not want children to live in poverty. We know that it is scarring their lives. We have this opportunity. Removing the two child limit is simply the most effective way to achieve meaningful progress on reducing child poverty. The other approaches have not been working since the limit was introduced, and with the opportunity to achieve the biggest reduction in child poverty within any single Parliament, I urge your Lordships' House to signal your support for His Majesty's Government to take this hands.
16:10
Lord Walker of Broxton (Labour)
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Lord Walker of Broxton (Labour)
Yeah. My Lords, it was once pointed out to me that this place pointed out to me that this place was designed to intimidate, and I am indeed right now terrified, especially given the fabulous maiden speeches before me. But that couldn't be more at odds with the kind and helpful welcome that I've received from every corner of this house. Black Rod, the Clarkson officials, the doorkeepers, the catering staff, the police, and my gracious friends, my gracious supporters, Baroness Smith and Lord Blunkett.
In fact, the cordiality of noble Lords that I've met on all sides of this chamber has been lovely. I hear the vibe in the other place is somewhat different, so thank goodness I failed to obtain a seat there. In fact, it has been quite an unexpected and circuitous route for me to be standing here today. But here I am, and I intend to contribute to the very best of my abilities. I never met either of my grandad's. They both worked hard down coal mines and died too young.
My mum and dad, they met at school in West Yorkshire and given their backgrounds, they knew all about graft. They tried no end of things to better themselves. From peddling strawberries on a Welsh roadside to running a late night fish and chip shop, to sending out chain letters all before landing on the idea in November 1970, of selling loose frozen food from a tiny shop in Oswestry. Dad worked the stock and mum the checkouts. He wanted to call the business Penguin.
Fortunately, mum won that debate and Iceland was born. And as a kid I had the privilege of being able to sit around the dinner table and listen to their conversations about what it takes to build something brick by brick, the highs and the lows. The need for persistence and resilience. And I promised myself that I'd make the very most of what good fortune I had been dealt. That resolve has carried me to the summit of Everest. It's helped raise large amounts for charity and driven me to campaign on many environmental and social issues, from palm oil to plastics, from infant formula to ethical credit.
When making my own way in the world, I was absolutely adamant about one thing I did not want to sell frozen peas for a living. Instead, I qualified as a chartered surveyor before moving to Poland, starting a property company, and becoming the entrepreneur I had always dreamed of. We made many mistakes, somehow survived the great financial crash, and today my firm, Biwater, is the leading low carbon mass timber developer in the UK. So joining the family firm, it was never really on the cards.
But when my dear mum was diagnosed with early onset Alzheimer's, I realised my own time might be limited and I wanted to protect the amazing legacy that she had created with dad. Let me tell you, high volume, low priced food retailing is a bit different to collecting rents. It's cutthroat. It's all about value, and I hope the value that I can bring to this place is some high street realism. Shining a light on what I've learnt as a retailer and an entrepreneur.
Amplifying the voices not just of business, but also of the millions of weekly customers that we serve across 1000 communities around the UK. In many ways, Iceland is a barometer of Britain. And right now, my Lords, those communities are struggling. The cost of living crisis means that basic affordability of everyday items is out of reach for many. And that's why in my new role as cost of Living champion to the Prime Minister, I will be relentless in pursuing outside ideas, fresh thinking and asking uncomfortable questions.
Recent events in the Middle East have made this both more important and more challenging than ever, but I like a challenge, so I'm pushing number ten to use its emergency powers to protect consumers from opportunistic rip offs by convening a weekly Cobra style committee of regulators to act in real time to protect consumers and to bring in the energy companies and petrol retailers and hold them to account, as well as affordability. Poverty also comes from a feeling that you can't access basic services, a sense of an unequal system creating financial injustice of Westminster, politicians not listening and to quote the economist Amartya Sen for the second time in this debate, a lack of the agency to develop all of one's potentialities.
The only way we can tackle this is through collaboration between business and government. Business needs to act with the utmost kindness, respect and obligation to all of its shareholders, all of its stakeholders, not just its shareholders. And on the flip side, government needs to well remember that it is only private enterprise which generates the wealth that our nation so desperately needs to fund public services and to spend that money wisely. Speaking of which, that little shop I mentioned in Oswestry, it was started with a £30 loan from my grandma.
It grew into what is today the biggest business in Wales, which in the last 20 years alone has proudly contributed more than £1.3 billion to the UK Treasury. I'd like to directly thank our team of 30,000 amazing Icelanders for making that possible, because Shopkeeping is tough, but it is noble. Turning to the topic of this debate, we see the impact of poverty in our stores every day as customers struggle to put food on the table to feed their families. We've taken up many initiatives of our own to try and help, from boosting Healthy Start vouchers to creating interest free microcredit schemes, which prevents the most vulnerable from falling into the hands of predatory loan sharks.
We've also led many successful campaigns, such as making infant formula more affordable or becoming the biggest recruiter of ex-offenders in the UK, which is good for society, business and the economy. But ultimately, there is a limit to what any business can do, and so I am delighted to support this government's action to lift hundreds of thousands of children out of poverty by removing the two child cap socially, morally and fiscally. It is undoubtedly the right thing to do.
But alongside this targeted intervention, remembering that a government's responsibility is to spend wisely, we must also retain our fiscal prudence with our country's welfare spending. I support the Labour Party, not the Benefits Party, which should strive to provide a safety net for those in real need and not those making a lifestyle choice. In particular, we must prioritise getting many more of our young people out of the NEETs cul de sac and back to participating in society. Otherwise, we are complicit in destroying their life chances.
Acting on this is also a moral obligation. I'd like to conclude by paying special thanks to my own family, my irrepressible dad who has supported me at every turn, and my mum, who I know is looking down from the gallery in the sky today. And finally, my two daughters and my wife, Rebecca, the kindest, strongest, most beautiful person I know. Thank you for putting up with me and I hope, my noble Lords, you will enjoy putting up with me too. up with me too.
In fact, the cordiality of noble Lords that I've met on all sides of this chamber has been lovely. I hear the vibe in the other place is somewhat different, so thank goodness I failed to obtain a seat there. In fact, it has been quite an unexpected and circuitous route for me to be standing here today. But here I am, and I intend to contribute to the very best of my abilities. I never met either of my grandad's. They both worked hard down coal mines and died too young.
My mum and dad, they met at school in West Yorkshire and given their backgrounds, they knew all about graft. They tried no end of things to better themselves. From peddling strawberries on a Welsh roadside to running a late night fish and chip shop, to sending out chain letters all before landing on the idea in November 1970, of selling loose frozen food from a tiny shop in Oswestry. Dad worked the stock and mum the checkouts. He wanted to call the business Penguin.
Fortunately, mum won that debate and Iceland was born. And as a kid I had the privilege of being able to sit around the dinner table and listen to their conversations about what it takes to build something brick by brick, the highs and the lows. The need for persistence and resilience. And I promised myself that I'd make the very most of what good fortune I had been dealt. That resolve has carried me to the summit of Everest. It's helped raise large amounts for charity and driven me to campaign on many environmental and social issues, from palm oil to plastics, from infant formula to ethical credit.
When making my own way in the world, I was absolutely adamant about one thing I did not want to sell frozen peas for a living. Instead, I qualified as a chartered surveyor before moving to Poland, starting a property company, and becoming the entrepreneur I had always dreamed of. We made many mistakes, somehow survived the great financial crash, and today my firm, Biwater, is the leading low carbon mass timber developer in the UK. So joining the family firm, it was never really on the cards.
But when my dear mum was diagnosed with early onset Alzheimer's, I realised my own time might be limited and I wanted to protect the amazing legacy that she had created with dad. Let me tell you, high volume, low priced food retailing is a bit different to collecting rents. It's cutthroat. It's all about value, and I hope the value that I can bring to this place is some high street realism. Shining a light on what I've learnt as a retailer and an entrepreneur.
Amplifying the voices not just of business, but also of the millions of weekly customers that we serve across 1000 communities around the UK. In many ways, Iceland is a barometer of Britain. And right now, my Lords, those communities are struggling. The cost of living crisis means that basic affordability of everyday items is out of reach for many. And that's why in my new role as cost of Living champion to the Prime Minister, I will be relentless in pursuing outside ideas, fresh thinking and asking uncomfortable questions.
Recent events in the Middle East have made this both more important and more challenging than ever, but I like a challenge, so I'm pushing number ten to use its emergency powers to protect consumers from opportunistic rip offs by convening a weekly Cobra style committee of regulators to act in real time to protect consumers and to bring in the energy companies and petrol retailers and hold them to account, as well as affordability. Poverty also comes from a feeling that you can't access basic services, a sense of an unequal system creating financial injustice of Westminster, politicians not listening and to quote the economist Amartya Sen for the second time in this debate, a lack of the agency to develop all of one's potentialities.
The only way we can tackle this is through collaboration between business and government. Business needs to act with the utmost kindness, respect and obligation to all of its shareholders, all of its stakeholders, not just its shareholders. And on the flip side, government needs to well remember that it is only private enterprise which generates the wealth that our nation so desperately needs to fund public services and to spend that money wisely. Speaking of which, that little shop I mentioned in Oswestry, it was started with a £30 loan from my grandma.
It grew into what is today the biggest business in Wales, which in the last 20 years alone has proudly contributed more than £1.3 billion to the UK Treasury. I'd like to directly thank our team of 30,000 amazing Icelanders for making that possible, because Shopkeeping is tough, but it is noble. Turning to the topic of this debate, we see the impact of poverty in our stores every day as customers struggle to put food on the table to feed their families. We've taken up many initiatives of our own to try and help, from boosting Healthy Start vouchers to creating interest free microcredit schemes, which prevents the most vulnerable from falling into the hands of predatory loan sharks.
We've also led many successful campaigns, such as making infant formula more affordable or becoming the biggest recruiter of ex-offenders in the UK, which is good for society, business and the economy. But ultimately, there is a limit to what any business can do, and so I am delighted to support this government's action to lift hundreds of thousands of children out of poverty by removing the two child cap socially, morally and fiscally. It is undoubtedly the right thing to do.
But alongside this targeted intervention, remembering that a government's responsibility is to spend wisely, we must also retain our fiscal prudence with our country's welfare spending. I support the Labour Party, not the Benefits Party, which should strive to provide a safety net for those in real need and not those making a lifestyle choice. In particular, we must prioritise getting many more of our young people out of the NEETs cul de sac and back to participating in society. Otherwise, we are complicit in destroying their life chances.
Acting on this is also a moral obligation. I'd like to conclude by paying special thanks to my own family, my irrepressible dad who has supported me at every turn, and my mum, who I know is looking down from the gallery in the sky today. And finally, my two daughters and my wife, Rebecca, the kindest, strongest, most beautiful person I know. Thank you for putting up with me and I hope, my noble Lords, you will enjoy putting up with me too. up with me too.
16:18
Lord Bird (Crossbench)
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Lord Bird (Crossbench)
Yeah. Well. Well done. I was confused, I have to say, when I was asked to follow you, and in the tradition of the house, I have to praise you. And I thought to myself. I don't know anything about walkers crisps because I was thinking, that's the only walker I know. And then I thought, oh no, it's Johnnie Walker. So for a while I was confused, but I got there in the end. And what really excited me about what you're doing, as well as putting a lot of people into work, was the idea that you extended the hand to people who had been banged up, people who were in prison, and you gave them a job.
I'm glad you're in competition with Timpsons, and I think in a way you're a bit ahead of Timpson, and maybe Timpsons are going to have to catch up. It's a good bit of competition. The only problem I have with you, and I really do have a problem. Where were you when I needed you? I'm an ex-offender. I should remind you, the bill. What a wonderful bill to get rid of something where, whether we like it or not, whether we are with Baroness Stedman-Scott wanting to give handouts, no hand ups rather than handouts.
I have to say, you stole that from me. You know that I was the first person in the United Kingdom to use those terms. And I stole them from Bill Clinton. Who stole them from Jesse Jackson. Isn't that interesting? Isn't it wonderful that we can talk about a hand up, not a hand out? The whole of my working life. Since starting the Big Issue 34 years ago, is to give people a hand up, not a hand up.
I'll tell you that. My mother had six children every year. She had a baby, she got poorer and she got poorer, and she got poorer and she got poorer. So actually, big families are not good for the bottom line, the family line. They're not good for you. But the problem with this bill and where I fall out with our conservative friends, the problem with it is it may punish mum and dad or mum, but it really punishes the children.
And to me, if we need anything in life today, it is to be behind our children because our children are being undone before us. All the things around mobile phones and and social, what do you call it? Social media is undermining our children. Our children are really at the sharp end of things. The unfortunate thing is that Social Security and I have to say, I come from a pre-social security period. We were brought up with very little help from the state because in the 50s and the 60s, there was none of that.
We got five shillings of child. And I think that was about £1, ten shillings for a family of six boys. Unfortunately, what happened is that because Britain is a low wage economy, because it's also a low investment economy, British capitalism is really good at making slithers of money out of jobs that are low paid, and that are now in a situation where it's very, very difficult for a lot of people to nobly go out to work and earn enough money to feed themselves and their children, even though they're doing a 40 hour week.
We are a low wage economy because we are a low investment economy. Capitalism is quite happy with that. You know, it doesn't matter if you make millions of pounds out of slithers, of capitalism, slithers of profit, of profit, or whether you buy and sell things that are worth £50,000 each. It's the thing that I really have come into the House of Lords to try and sort out, because I came in to dismantle poverty, not to make the poor more comfortable, not to keep the poor outside as though they were a different species.
I've listened to the debate so far. I have to say I'm not sentimentally attached to the poor. I don't cry over them. I think there are too many people who cry over the poor and don't do anything. I want to get the poor out of poverty. I want to get the poor into a situation where they can make decisions about their own lives, where they can have the kind of life that they want, that they can get rich and socially mobile and get out of poverty.
There's only one cure for poverty. It's not the state. The only cure is social mobility. If you can get social mobility, you're out of it. The funny thing is that most people in Britain, even conservatives, most of them, will be a few generations away from the coalface. They will have morphed their way in better times. But the problem is, when we have the inheritance of poverty, when you have a situation where the people I work with and have worked with in prisons, in the streets, 90% of them come from poverty inherited from their parents.
And until we work on that one, we're not going anywhere. Thank you very much.
I'm glad you're in competition with Timpsons, and I think in a way you're a bit ahead of Timpson, and maybe Timpsons are going to have to catch up. It's a good bit of competition. The only problem I have with you, and I really do have a problem. Where were you when I needed you? I'm an ex-offender. I should remind you, the bill. What a wonderful bill to get rid of something where, whether we like it or not, whether we are with Baroness Stedman-Scott wanting to give handouts, no hand ups rather than handouts.
I have to say, you stole that from me. You know that I was the first person in the United Kingdom to use those terms. And I stole them from Bill Clinton. Who stole them from Jesse Jackson. Isn't that interesting? Isn't it wonderful that we can talk about a hand up, not a hand out? The whole of my working life. Since starting the Big Issue 34 years ago, is to give people a hand up, not a hand up.
I'll tell you that. My mother had six children every year. She had a baby, she got poorer and she got poorer, and she got poorer and she got poorer. So actually, big families are not good for the bottom line, the family line. They're not good for you. But the problem with this bill and where I fall out with our conservative friends, the problem with it is it may punish mum and dad or mum, but it really punishes the children.
And to me, if we need anything in life today, it is to be behind our children because our children are being undone before us. All the things around mobile phones and and social, what do you call it? Social media is undermining our children. Our children are really at the sharp end of things. The unfortunate thing is that Social Security and I have to say, I come from a pre-social security period. We were brought up with very little help from the state because in the 50s and the 60s, there was none of that.
We got five shillings of child. And I think that was about £1, ten shillings for a family of six boys. Unfortunately, what happened is that because Britain is a low wage economy, because it's also a low investment economy, British capitalism is really good at making slithers of money out of jobs that are low paid, and that are now in a situation where it's very, very difficult for a lot of people to nobly go out to work and earn enough money to feed themselves and their children, even though they're doing a 40 hour week.
We are a low wage economy because we are a low investment economy. Capitalism is quite happy with that. You know, it doesn't matter if you make millions of pounds out of slithers, of capitalism, slithers of profit, of profit, or whether you buy and sell things that are worth £50,000 each. It's the thing that I really have come into the House of Lords to try and sort out, because I came in to dismantle poverty, not to make the poor more comfortable, not to keep the poor outside as though they were a different species.
I've listened to the debate so far. I have to say I'm not sentimentally attached to the poor. I don't cry over them. I think there are too many people who cry over the poor and don't do anything. I want to get the poor out of poverty. I want to get the poor into a situation where they can make decisions about their own lives, where they can have the kind of life that they want, that they can get rich and socially mobile and get out of poverty.
There's only one cure for poverty. It's not the state. The only cure is social mobility. If you can get social mobility, you're out of it. The funny thing is that most people in Britain, even conservatives, most of them, will be a few generations away from the coalface. They will have morphed their way in better times. But the problem is, when we have the inheritance of poverty, when you have a situation where the people I work with and have worked with in prisons, in the streets, 90% of them come from poverty inherited from their parents.
And until we work on that one, we're not going anywhere. Thank you very much.
16:25
Lord Watson of Invergowrie (Labour)
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Lord Watson of Invergowrie (Labour)
My Lords. It's quite common for noble Lords to start with speeches by saying it's a pleasure to follow either a noble Lord or noble Baroness, and generally that is true. There are certain circumstances when it's not true. There are a number of speakers in this House who are just so impressive, often speaking without any notes, but it's a very daunting prospect to follow. And the noble Lord Lord Bird is undoubtedly one of those. I want to pay tribute to my new noble friends, Baroness Antrobus and and Lord Walker, and also noble Baroness Baroness Teather, all of whom made speeches of quality with passion, with fluidity, that show that they are going to make major contributions in your Lordships' House in the months and years to come.
As regards this bill, I'm very pleased that we've got to where we are today on the question of removal of the Two-child limit, but I can't disguise my regret at the fact that it took quite so long. But be that as it may, as of next month, the two child limit will no longer apply and there are typically powerful opening speech. My noble friend the Minister highlighted how many children will be taken out of poverty by the final year of this parliamentary term and adding the introduction of breakfast clubs and the extension of free school meals.
And that figure will rise beyond half a million. Even more impressive is that all of that is before the government's child poverty strategy is properly under way, and that is a ten year plan aimed at delivering a lasting reduction in child poverty by tackling its structural causes. The noble Baroness Baroness Stedman-Scott spoke about the value of work, but during her party's time in government, I have to say they completely failed to ensure that parents in work could keep up with the cost of living because in the Tories last year in office, 3.2 million children in a working family, a working family were in poverty and that was up from 2.1 million when they came to power in 2010.
And I have to say that more than any other policy, the Two-child limit introduced in 2016 was responsible for driving child poverty to its current record high. But to be honest, we shouldn't be too surprised because one of the last acts of the Labour government that Demitted office in 2010 was the Child Poverty Act, and part of that act was to establish a Child Poverty Commission to tackle issues of structural structural issues regarding child poverty. It took the incoming Tory and Tory Lib Dem government two years to introduce it, but they called it the Social Mobility and Child Poverty Commission.
Now, as the noble Lord Lord Bird said, social mobility is of course very important, but the main focus was meant to be on child poverty and it had that name for years later, child poverty was dropped and it became the Social Mobility Commission. And I have to say, I think that reflected the fact that child poverty simply was not a priority for that. And subsequent Tory governments, more than 60 children's charities and other campaigning groups have welcomed this bill. Tellingly, I think only right wing organisations such as the Institute for Public Policy Research and Social Justice are Commission and the self-styled Taxpayers Alliance.
I am a taxpayer. I certainly don't speak for me. I have questioned the repeal of the two child limit, often arguments in favour of retaining the two child limit are couched in language such as benefits, bonanza or welfare junkies. Appallingly pejorative terms which demean many people who are in receipt of state support while in employment, doing jobs where the pay is so low or unpredictable that they need extra help just to survive. And can I say to my noble friend, the Minister with whom I worked in the shadow education team and for whom I have a huge respect, how much I welcome her use of the term Social Security in her speech.
Can we please ditch the terms welfare and benefits and put Social Security in its place? Because the description we used to use. Because that's exactly what state support for families living with poverty is. Why? Why should we not use the proper term? We can find one which is not demeaning or in any way pejorative to people in need of help. At Second Reading. In another place, the Shadow Secretary of State for Work and Pensions questioned the affordability of the repeal of this legislation, something which has been repeated today.
And I would flip that coin and ask, what about the affordability of not ending the limit? What my noble friend Baroness Lister called preventative spending? Can the cost of lower educational attainment, poorer mental health and a much higher likelihood of being Neet ever be tolerated? Shamefully? I have to say that during the 14 years of Tory and Tory Lib Dem governments, too often it was. But we can say that it will not be tolerated any longer because this government has developed the Charter's developing the child poverty strategy, to which I referred earlier.
That will result in children receiving the Social Security and social solidarity that they deserve, and having better health and education outcomes, enabling more of them to build careers that will provide stable lives for families of their own. While that will be the hugely beneficial outcome of this bill, which is in itself hugely welcome.
As regards this bill, I'm very pleased that we've got to where we are today on the question of removal of the Two-child limit, but I can't disguise my regret at the fact that it took quite so long. But be that as it may, as of next month, the two child limit will no longer apply and there are typically powerful opening speech. My noble friend the Minister highlighted how many children will be taken out of poverty by the final year of this parliamentary term and adding the introduction of breakfast clubs and the extension of free school meals.
And that figure will rise beyond half a million. Even more impressive is that all of that is before the government's child poverty strategy is properly under way, and that is a ten year plan aimed at delivering a lasting reduction in child poverty by tackling its structural causes. The noble Baroness Baroness Stedman-Scott spoke about the value of work, but during her party's time in government, I have to say they completely failed to ensure that parents in work could keep up with the cost of living because in the Tories last year in office, 3.2 million children in a working family, a working family were in poverty and that was up from 2.1 million when they came to power in 2010.
And I have to say that more than any other policy, the Two-child limit introduced in 2016 was responsible for driving child poverty to its current record high. But to be honest, we shouldn't be too surprised because one of the last acts of the Labour government that Demitted office in 2010 was the Child Poverty Act, and part of that act was to establish a Child Poverty Commission to tackle issues of structural structural issues regarding child poverty. It took the incoming Tory and Tory Lib Dem government two years to introduce it, but they called it the Social Mobility and Child Poverty Commission.
Now, as the noble Lord Lord Bird said, social mobility is of course very important, but the main focus was meant to be on child poverty and it had that name for years later, child poverty was dropped and it became the Social Mobility Commission. And I have to say, I think that reflected the fact that child poverty simply was not a priority for that. And subsequent Tory governments, more than 60 children's charities and other campaigning groups have welcomed this bill. Tellingly, I think only right wing organisations such as the Institute for Public Policy Research and Social Justice are Commission and the self-styled Taxpayers Alliance.
I am a taxpayer. I certainly don't speak for me. I have questioned the repeal of the two child limit, often arguments in favour of retaining the two child limit are couched in language such as benefits, bonanza or welfare junkies. Appallingly pejorative terms which demean many people who are in receipt of state support while in employment, doing jobs where the pay is so low or unpredictable that they need extra help just to survive. And can I say to my noble friend, the Minister with whom I worked in the shadow education team and for whom I have a huge respect, how much I welcome her use of the term Social Security in her speech.
Can we please ditch the terms welfare and benefits and put Social Security in its place? Because the description we used to use. Because that's exactly what state support for families living with poverty is. Why? Why should we not use the proper term? We can find one which is not demeaning or in any way pejorative to people in need of help. At Second Reading. In another place, the Shadow Secretary of State for Work and Pensions questioned the affordability of the repeal of this legislation, something which has been repeated today.
And I would flip that coin and ask, what about the affordability of not ending the limit? What my noble friend Baroness Lister called preventative spending? Can the cost of lower educational attainment, poorer mental health and a much higher likelihood of being Neet ever be tolerated? Shamefully? I have to say that during the 14 years of Tory and Tory Lib Dem governments, too often it was. But we can say that it will not be tolerated any longer because this government has developed the Charter's developing the child poverty strategy, to which I referred earlier.
That will result in children receiving the Social Security and social solidarity that they deserve, and having better health and education outcomes, enabling more of them to build careers that will provide stable lives for families of their own. While that will be the hugely beneficial outcome of this bill, which is in itself hugely welcome.
16:31
Baroness Dacres of Lewisham (Labour)
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Baroness Dacres of Lewisham (Labour)
Here. substantive contribution to this debate, I would like to pay tribute to those who have made their maiden speeches this this afternoon, because it's been wonderful to learn so much more about you each. And I feel that it's been really inspiring to hear you all speak this afternoon. Now I move on to this bill. It's a bill that represents one of the clearest and most immediate steps we can take to reduce child poverty in this Parliament.
Few policies in recent years have had such a direct and concentrated impact on a larger family or larger families, as the two child limit. Its removal is therefore not just symbolic, it is practical, targeted and absolutely necessary. Around 470,000 households are affected by the two child limit in acting, approximately between 1.6 to 1.7 million children, and of those, 6 in 10 of those households include at least one adult in work. These are working families, as many have mentioned this afternoon, parents who rise early, commute long distances, juggle childcare and shifts, and contribute daily in our economy and to our communities.
Yet despite those efforts, many remain in poverty. That is a reality of the in-work poverty. Today, families lose around £3,400 for each third child and subsequent children not covered by this element of the policy. For households already balancing tight budgets, that loss is not abstract. It means difficult trade off between heating and eating, falling behind on rent or relying on food banks. Behind every statistic is a family trying to provide stability and reassurance to children, while quietly carrying the financial strain.
The Joseph Rowntree Foundation has consistently identified the two child limit as a key structural driver of rising poverty amongst larger families. Their research shows that children in families with three or more children now face poverty rates exceeding 40% after household costs. Poverty among larger families has risen markedly since the policy introduction, widening inequality between children based purely on their family size. The Joseph Rowntree Foundation modelling modelling demonstrates that removing the two child limit would significantly improve living standards for those on the lowest income in those households, scrapping the limit would more than half the projected real terms decline in income for the poorest thirds of those households, compared with retaining it.
Government analysis similarly indicates that hundreds and thousands of children would be lifted out of relative poverty. This bill also sits within a broader effort to support families, strengthen living standards. It complements the expansion of free breakfast clubs, saving parents up to £450 a year, and the extension of free school meals to all children of households on Universal Credit benefit, benefiting half a million more pupils. That broader approach matters because poverty is really the result of one single factor.
It is shaped by wages, house costs, food prices, childcare pressures and access to opportunity. Addressing it therefore requires both income support and practical support. Nutritious food at the start of the school day. Predictable childcare that enables parents to work, and social security system that reflects the real cost of living. At the heart of this legislation, it affirms a simple but vital principle that no child's opportunity should be limited by the number of siblings they have, and that working families deserve stability, dignity and fairness.
The measures before us today will not only will not solve every challenge faced by families, but it will make a real difference to the lives of many children across this country, a responsibility worthy of this House. And for those reasons, I support this bill.
Few policies in recent years have had such a direct and concentrated impact on a larger family or larger families, as the two child limit. Its removal is therefore not just symbolic, it is practical, targeted and absolutely necessary. Around 470,000 households are affected by the two child limit in acting, approximately between 1.6 to 1.7 million children, and of those, 6 in 10 of those households include at least one adult in work. These are working families, as many have mentioned this afternoon, parents who rise early, commute long distances, juggle childcare and shifts, and contribute daily in our economy and to our communities.
Yet despite those efforts, many remain in poverty. That is a reality of the in-work poverty. Today, families lose around £3,400 for each third child and subsequent children not covered by this element of the policy. For households already balancing tight budgets, that loss is not abstract. It means difficult trade off between heating and eating, falling behind on rent or relying on food banks. Behind every statistic is a family trying to provide stability and reassurance to children, while quietly carrying the financial strain.
The Joseph Rowntree Foundation has consistently identified the two child limit as a key structural driver of rising poverty amongst larger families. Their research shows that children in families with three or more children now face poverty rates exceeding 40% after household costs. Poverty among larger families has risen markedly since the policy introduction, widening inequality between children based purely on their family size. The Joseph Rowntree Foundation modelling modelling demonstrates that removing the two child limit would significantly improve living standards for those on the lowest income in those households, scrapping the limit would more than half the projected real terms decline in income for the poorest thirds of those households, compared with retaining it.
Government analysis similarly indicates that hundreds and thousands of children would be lifted out of relative poverty. This bill also sits within a broader effort to support families, strengthen living standards. It complements the expansion of free breakfast clubs, saving parents up to £450 a year, and the extension of free school meals to all children of households on Universal Credit benefit, benefiting half a million more pupils. That broader approach matters because poverty is really the result of one single factor.
It is shaped by wages, house costs, food prices, childcare pressures and access to opportunity. Addressing it therefore requires both income support and practical support. Nutritious food at the start of the school day. Predictable childcare that enables parents to work, and social security system that reflects the real cost of living. At the heart of this legislation, it affirms a simple but vital principle that no child's opportunity should be limited by the number of siblings they have, and that working families deserve stability, dignity and fairness.
The measures before us today will not only will not solve every challenge faced by families, but it will make a real difference to the lives of many children across this country, a responsibility worthy of this House. And for those reasons, I support this bill.
16:36
Baroness Shah (Labour)
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Baroness Shah (Labour)
Yeah. >> My Lord, I start by congratulating the brilliant maiden speeches today of my noble friends, speeches today of my noble friends, Baroness Antrobus and Lord Walker of Broxton, as well as the noble Lady Baroness Teather. It's always great to see a member of the Brent great to see a member of the Brent family on these benches. My Lords, I'm grateful for the opportunity to speak at the Second Reading of the Bill. The two child limit was introduced by the conservative government in 2017, and its consequences for child poverty were felt immediately.
The Labour government, on taking office, inherited an economy in a fragile state and has worked deliberately and responsibly to create the conditions in which bold action on child poverty could be taken. This bill is the result of a government who has prioritised why it's coming to power. My Lords, let us be clear about what this policy has done to families across our country. The Child Poverty Action Group has described it plainly. This is a tax on siblings. It serves as a fundamental link on what children need and the support they receive.
Government data in July 2025 shows households are shows in households affected by the limit live more than 1.6 million children. That is, 1 in 9 children in England, Scotland and Wales, and that number grows every year. The Joseph Rowntree Foundation's UK Poverty report of 2026 is sobering. 20 2324 showed 4.5 million children living in poverty in the United Kingdom. That is a scandal. This bill is a vital first step, not the last. My Lords, the case of this bill is not just economical, it's educational.
Children growing up in poverty start already behind their peers, and the gap widens every year that passes. The Education Endowment Foundation has found that pupils eligible for free school meals are on average, 18 months behind their classmates by the time they sit their GCSEs. The the Social Mobility Commission has shown that children from the poorest households are significantly less likely to achieve the grades needed to access higher education or skilled employment. Poverty does not merely limit what children can afford, it limits what they about what they could become.
When we remove the two child limit, we are not simply putting money into households. We are unlocking potential that this country cannot afford to waste. For children growing up in households affected by the two child limit, the barriers begin long before the school gates. Families unable to afford school uniforms, school trips and even basic stationery. The small things that determine whether a child feels they belong. Teachers report children arriving hungry, unable to concentrate, and the Fiscal Institute. Sorry, the Institute for Fiscal Studies has found that ten.
That's a 10% rise in family income during childhood leads to measurable improvements in educational attainment and earnings in later life. Poverty, in other words, is not a temporary inconvenience. It is a force that shapes a child's trajectory for decades. The bill is an investment in the education of future generations. The IFS, the Resolution Foundation, the Joseph Rowntree Foundation and Cpag alike all say lifting the limit is the single most cost effective lever the government can pull to reduce child poverty. Then there is also the so-called rape clause, which requires women to prove nonconsensual, non-consensual conception, to secure exemption for a third or subsequent child.
It is degrading, traumatising and utterly incompatible with a just society, and I am proud that this bill will consign it to history. The bill before us is not a merely a policy change, it is a moral statement. It says that we will not hold children responsible for the circumstances of their birth. The Resolution Foundation puts a figure as high as half a million children lifted out of poverty. When the two child limits removal is combined with expansion of free school meals, the Cpag has estimated that the long term cost to society of entrenched child poverty stands at £39 billion a year in lost tax revenues and increased demand on public services.
We spend more managing the consequences of child poverty than it would to cost to prevent it. My Lords, the Bill does not stand alone. It is a centrepiece of the most ambitious child poverty strategy in a generation. Taken together with measures in the government's child poverty strategy, these are not tinkering at the edges. This is structural change, addressing the root causes of poverty that has been allowed to deepen over the last 14 years of austerity. My Lords, this is a rare moment of consensus across major research and advocacy organisations across this country.
Ending the Two-child limit is the most cost effective single action this government can take. The moral case is unanswerable and the time has come. I end by quoting Cicero what society does to its children, so will its children do to society.
The Labour government, on taking office, inherited an economy in a fragile state and has worked deliberately and responsibly to create the conditions in which bold action on child poverty could be taken. This bill is the result of a government who has prioritised why it's coming to power. My Lords, let us be clear about what this policy has done to families across our country. The Child Poverty Action Group has described it plainly. This is a tax on siblings. It serves as a fundamental link on what children need and the support they receive.
Government data in July 2025 shows households are shows in households affected by the limit live more than 1.6 million children. That is, 1 in 9 children in England, Scotland and Wales, and that number grows every year. The Joseph Rowntree Foundation's UK Poverty report of 2026 is sobering. 20 2324 showed 4.5 million children living in poverty in the United Kingdom. That is a scandal. This bill is a vital first step, not the last. My Lords, the case of this bill is not just economical, it's educational.
Children growing up in poverty start already behind their peers, and the gap widens every year that passes. The Education Endowment Foundation has found that pupils eligible for free school meals are on average, 18 months behind their classmates by the time they sit their GCSEs. The the Social Mobility Commission has shown that children from the poorest households are significantly less likely to achieve the grades needed to access higher education or skilled employment. Poverty does not merely limit what children can afford, it limits what they about what they could become.
When we remove the two child limit, we are not simply putting money into households. We are unlocking potential that this country cannot afford to waste. For children growing up in households affected by the two child limit, the barriers begin long before the school gates. Families unable to afford school uniforms, school trips and even basic stationery. The small things that determine whether a child feels they belong. Teachers report children arriving hungry, unable to concentrate, and the Fiscal Institute. Sorry, the Institute for Fiscal Studies has found that ten.
That's a 10% rise in family income during childhood leads to measurable improvements in educational attainment and earnings in later life. Poverty, in other words, is not a temporary inconvenience. It is a force that shapes a child's trajectory for decades. The bill is an investment in the education of future generations. The IFS, the Resolution Foundation, the Joseph Rowntree Foundation and Cpag alike all say lifting the limit is the single most cost effective lever the government can pull to reduce child poverty. Then there is also the so-called rape clause, which requires women to prove nonconsensual, non-consensual conception, to secure exemption for a third or subsequent child.
It is degrading, traumatising and utterly incompatible with a just society, and I am proud that this bill will consign it to history. The bill before us is not a merely a policy change, it is a moral statement. It says that we will not hold children responsible for the circumstances of their birth. The Resolution Foundation puts a figure as high as half a million children lifted out of poverty. When the two child limits removal is combined with expansion of free school meals, the Cpag has estimated that the long term cost to society of entrenched child poverty stands at £39 billion a year in lost tax revenues and increased demand on public services.
We spend more managing the consequences of child poverty than it would to cost to prevent it. My Lords, the Bill does not stand alone. It is a centrepiece of the most ambitious child poverty strategy in a generation. Taken together with measures in the government's child poverty strategy, these are not tinkering at the edges. This is structural change, addressing the root causes of poverty that has been allowed to deepen over the last 14 years of austerity. My Lords, this is a rare moment of consensus across major research and advocacy organisations across this country.
Ending the Two-child limit is the most cost effective single action this government can take. The moral case is unanswerable and the time has come. I end by quoting Cicero what society does to its children, so will its children do to society.
16:41
Lord Redwood (Conservative)
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Lord Redwood (Conservative)
Yeah. >> Yeah. >> My Lords, I congratulate our. >> Maiden speeches, our maiden
**** Possible New Speaker ****
Maiden speeches, our maiden speech makers today and join the general. Welcome to them. And I general. Welcome to them. And I draw from Lord Walker a very wise remark when he reminded our governing party that it is indeed the Labour Party and not the Benefits Party. And whilst I think we all here share the the passion and the ambition to lift families out of poverty and to make sure that children can have fulfilling lives. In the strong words of the Minister, I think it is more difficult than just making a modest extension in benefit provision for certain families that we have in our society.
If only that were it were that easy, I'm sure parties would have done it a long time ago. But what we are embarking on surely is a very ambitious programme which is trying to help without interfering unnecessarily all those families where the children don't get that right opportunity. Now, some children in poor families are let down because there is simply a lack of money. They have loving parents and if they're a bit more money, then they wouldn't have to make such invidious choices about meals and support for the children at schools and trips and outings.
But others are let down by adults in their lives who control them, abusing them, or spending the money on too much alcohol and drugs, and not concentrating on providing them with the stable financial background they need. And some children are born into into families where there may be plenty of money or there may be too little money, but it lacks those other important things. It lacks love, it lacks support, lacks ambition for the children. It doesn't provide the guidance which good parents and good grandparents try and provide.
Now the state cannot be everybody's parent and nor do we want it to be. And the state wisely says that the government or a local authority will only intervene in extreme cases and pre-empt the parents. We are talking about influencing, encouraging and supporting the parents, and that can be done by many of us. And everyone here has been on a remarkable journey in their lives to date, and many of them have overcome considerable difficulties from background or resistance or opposition and have achieved great things already.
And so the more we can get out and talk and engage and encourage, the more it is possible that we can turn on a light in young minds and that they can see that something is possible, that the adults around them have not told them about. Or maybe we can infuse their teachers who need to put ambition into their lives. There's nothing wrong with ambition, and it can be a force for the good. And it is releasing children from poor backgrounds.
If we can communicate to them that maybe they can achieve great things too. Lord Bird got it very well in his remarks on social mobility. But of course, we're only interested in one way mobility. We want people to be able to move up. We're not so keen on people moving down, and we try to cushion or help if they move down too quickly. The more people we promote, the more people fall below the average. That's the way arithmetic works. But we want to live in a more prosperous society.
There will always be people who are relatively worse off, but if it is around a much higher average living standard, then there will be so much more happiness in the world around us. Now, I would say to the government, given our shared ambitions, that we get more people out of poverty and that we give more encouragement to young people. There are many other things than this bill they could or should be doing. The first thing you need is it has to be much easier to get a job.
And unfortunately, over the last 18 months, there has been a big rise in unemployment and the combination of high taxes on jobs and the high taxes on those businesses that need premises in our high streets, on the shops, on the entertainment and leisure businesses, has contracted the number of job opportunities. And this is going to make it much more difficult for the government to fulfil its ambitions, because it cannot be done without the goodwill and the success of the entrepreneurs as represented here today by Lord Walker.
Now, that strand in Labour, which is definitely about the promotion of work and the promotion of better working conditions, is a wholly admirable strand. And whenever I've been fortunate enough to run larger enterprises or be involved in their management, I've always been very encouraging with that strand in labour that I've wanted people to be better paid, but it has to be through bonuses or through working smarter so that the the company can serve the public well without going bust.
And I've always wanted people to see that there is the chance of promotion. Most of us started with jobs we didn't really want to do, and we had to work our way up. And that is what ambition is all about. So I would say to the government, think of a much bigger, bolder strategy because paying extra benefits is not going to do it.
**** Possible New Speaker ****
Maiden speeches, our maiden speech makers today and join the general. Welcome to them. And I general. Welcome to them. And I draw from Lord Walker a very wise remark when he reminded our governing party that it is indeed the Labour Party and not the Benefits Party. And whilst I think we all here share the the passion and the ambition to lift families out of poverty and to make sure that children can have fulfilling lives. In the strong words of the Minister, I think it is more difficult than just making a modest extension in benefit provision for certain families that we have in our society.
If only that were it were that easy, I'm sure parties would have done it a long time ago. But what we are embarking on surely is a very ambitious programme which is trying to help without interfering unnecessarily all those families where the children don't get that right opportunity. Now, some children in poor families are let down because there is simply a lack of money. They have loving parents and if they're a bit more money, then they wouldn't have to make such invidious choices about meals and support for the children at schools and trips and outings.
But others are let down by adults in their lives who control them, abusing them, or spending the money on too much alcohol and drugs, and not concentrating on providing them with the stable financial background they need. And some children are born into into families where there may be plenty of money or there may be too little money, but it lacks those other important things. It lacks love, it lacks support, lacks ambition for the children. It doesn't provide the guidance which good parents and good grandparents try and provide.
Now the state cannot be everybody's parent and nor do we want it to be. And the state wisely says that the government or a local authority will only intervene in extreme cases and pre-empt the parents. We are talking about influencing, encouraging and supporting the parents, and that can be done by many of us. And everyone here has been on a remarkable journey in their lives to date, and many of them have overcome considerable difficulties from background or resistance or opposition and have achieved great things already.
And so the more we can get out and talk and engage and encourage, the more it is possible that we can turn on a light in young minds and that they can see that something is possible, that the adults around them have not told them about. Or maybe we can infuse their teachers who need to put ambition into their lives. There's nothing wrong with ambition, and it can be a force for the good. And it is releasing children from poor backgrounds.
If we can communicate to them that maybe they can achieve great things too. Lord Bird got it very well in his remarks on social mobility. But of course, we're only interested in one way mobility. We want people to be able to move up. We're not so keen on people moving down, and we try to cushion or help if they move down too quickly. The more people we promote, the more people fall below the average. That's the way arithmetic works. But we want to live in a more prosperous society.
There will always be people who are relatively worse off, but if it is around a much higher average living standard, then there will be so much more happiness in the world around us. Now, I would say to the government, given our shared ambitions, that we get more people out of poverty and that we give more encouragement to young people. There are many other things than this bill they could or should be doing. The first thing you need is it has to be much easier to get a job.
And unfortunately, over the last 18 months, there has been a big rise in unemployment and the combination of high taxes on jobs and the high taxes on those businesses that need premises in our high streets, on the shops, on the entertainment and leisure businesses, has contracted the number of job opportunities. And this is going to make it much more difficult for the government to fulfil its ambitions, because it cannot be done without the goodwill and the success of the entrepreneurs as represented here today by Lord Walker.
Now, that strand in Labour, which is definitely about the promotion of work and the promotion of better working conditions, is a wholly admirable strand. And whenever I've been fortunate enough to run larger enterprises or be involved in their management, I've always been very encouraging with that strand in labour that I've wanted people to be better paid, but it has to be through bonuses or through working smarter so that the the company can serve the public well without going bust.
And I've always wanted people to see that there is the chance of promotion. Most of us started with jobs we didn't really want to do, and we had to work our way up. And that is what ambition is all about. So I would say to the government, think of a much bigger, bolder strategy because paying extra benefits is not going to do it.
16:46
Lord Davies of Brixton (Labour)
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Lord Davies of Brixton (Labour)
I welcome strongly the government's decision to abolish the two child limit. Scrapping the two child limit remains the single most effective step we are taking to reduce child poverty in this country. As we've heard, abolishing the policy will lift about 450,000 children out of poverty by 2030. When combined with the other measures in the government's child poverty strategy, more than half a million children could be lifted out of poverty by the end of the decade, half a million.
This is something that we should be celebrating, shouting from the rooftops. It is an incredible achievement and one which of which the government can be proud. Because this isn't just an abstract statistic. It was represents hundreds of thousands of individual children who will grow up with better security, better health and improved opportunities. Now, some have asked, in fact, one person has asked, how can the government justify the expense to 3 billion figure or whatever? But this quoting the 3 billion figure, ignores the costs of child poverty.
The poorer health outcomes, the lower educational attainment, the greater pressure on public services and the lost economic potential put together. That's 39 billion. It has been estimated. So the 3 billion save the country as a whole, 39 billion. How can we not wish to pursue that policy? It's not reckless spending. It's highly targeted and cost effective with serious, substantial long term benefits. Now, others have argued that taxpayers should not be expected to support larger families.
Much of the comments of of the noble Baroness latest was about large families. But of course, the reality is that now only a limited proportion of families have four or more children, and of those families, the great majority are working hard to provide for them. And in fact, those who are unable to get jobs are still not to be dismissed as the feckless poor. That's the narrative which is always produced to try and prevent decent human services.
The two child limit has no measurable impact on family planning or the fertility rate. Every child, in any event, in every child, is to be celebrated and cherished, regardless of their birth order. They deserve enough food, a safe home, and a fair start in life. When children are supported to thrive, they do better in school, remain healthier, and contribute more fully as adults. That benefits not only those families, but all of us, society as a whole.
And it's important, and I think the point needs to be made to noble Baroness Lady Stedman-scott that this isn't just about families out of work. As other speakers have explained, the majority of. Recipient of those who are caught by the. This current policy and will benefit in future are families who are in work. Unfortunately, I'm going to join my noble friend Baroness Lister of Burtersett and raise the issue of the benefit cap.
I don't think this policy will achieve all its objectives unless and until we remove the benefit cap. It was introduced by the coalition government, and it continues to place immense pressure on many families. I should have started by paying testimony and welcome the excellent maiden speeches by the that we've heard today. But it's worth mentioning Baroness Teather, who in fact can claim credit for opposing the introduction of the benefit cap when she was in government.
And I'm sorry she's not here, but I acknowledge her important contribution to this debate. If just to conclude, if we are serious about tackling structural poverty, we cannot remove one barrier, the two-child cap, while leading another firmly in place. Lifting the benefit cap will complement the abolition of two child limit and ensure that the gains we make today are not undermined by other restrictions that fail to reflect the rise in the cost of living.
This is something that we should be celebrating, shouting from the rooftops. It is an incredible achievement and one which of which the government can be proud. Because this isn't just an abstract statistic. It was represents hundreds of thousands of individual children who will grow up with better security, better health and improved opportunities. Now, some have asked, in fact, one person has asked, how can the government justify the expense to 3 billion figure or whatever? But this quoting the 3 billion figure, ignores the costs of child poverty.
The poorer health outcomes, the lower educational attainment, the greater pressure on public services and the lost economic potential put together. That's 39 billion. It has been estimated. So the 3 billion save the country as a whole, 39 billion. How can we not wish to pursue that policy? It's not reckless spending. It's highly targeted and cost effective with serious, substantial long term benefits. Now, others have argued that taxpayers should not be expected to support larger families.
Much of the comments of of the noble Baroness latest was about large families. But of course, the reality is that now only a limited proportion of families have four or more children, and of those families, the great majority are working hard to provide for them. And in fact, those who are unable to get jobs are still not to be dismissed as the feckless poor. That's the narrative which is always produced to try and prevent decent human services.
The two child limit has no measurable impact on family planning or the fertility rate. Every child, in any event, in every child, is to be celebrated and cherished, regardless of their birth order. They deserve enough food, a safe home, and a fair start in life. When children are supported to thrive, they do better in school, remain healthier, and contribute more fully as adults. That benefits not only those families, but all of us, society as a whole.
And it's important, and I think the point needs to be made to noble Baroness Lady Stedman-scott that this isn't just about families out of work. As other speakers have explained, the majority of. Recipient of those who are caught by the. This current policy and will benefit in future are families who are in work. Unfortunately, I'm going to join my noble friend Baroness Lister of Burtersett and raise the issue of the benefit cap.
I don't think this policy will achieve all its objectives unless and until we remove the benefit cap. It was introduced by the coalition government, and it continues to place immense pressure on many families. I should have started by paying testimony and welcome the excellent maiden speeches by the that we've heard today. But it's worth mentioning Baroness Teather, who in fact can claim credit for opposing the introduction of the benefit cap when she was in government.
And I'm sorry she's not here, but I acknowledge her important contribution to this debate. If just to conclude, if we are serious about tackling structural poverty, we cannot remove one barrier, the two-child cap, while leading another firmly in place. Lifting the benefit cap will complement the abolition of two child limit and ensure that the gains we make today are not undermined by other restrictions that fail to reflect the rise in the cost of living.
16:52
Lord Sikka (Labour)
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Lord Sikka (Labour)
My Lords, I support this bill, though I'm disappointed that some oppose lifting people out of poverty whilst constantly supporting greater spending on welfare of corporations and the super rich. Eradication of child poverty can boost the UK economy by around £40 billion a year. Children in poverty struggle to realise their full education and employment potential, which leads to lower earnings and contributions to the public purse. They are more likely to have health care problems and make greater demands on public services throughout their life, and also have shorter life expectancy.
Lifting children out of poverty makes perfect economic and moral sense. The £3 billion expenditure will boost spending power of the poorest families and stimulate the local economies. The real cost to the public purse would be much less, because a large part would return to the government in the form of VAT, other indirect taxes and lower demands on public services. The opposition can support redistribution of income and wealth by, for example, calling for alignment of the taxation of capital gains with wages that would raise 14 billions.
There would be plenty there to cover the cost of this particular measure, but they don't actually call for redistribution. I am concerned that thousands of children will not receive a any improvement from this bill because of the overall benefit limit limit, which is set at around £22,020 a year for most families and at £14,753 for single adult households. Some 119,000 households have their Universal Credit, capped 82% of benefit of benefit cap households include children. So can the Minister explain the impact of the overall benefit cap on child poverty and its relationship with the government's strategy for reducing or eradicating child poverty? Child poverty is linked with parental poverty, so we need strategy for that.
The median gross of a UK employee, gross wage of a of a UK employee, gross wage of a UK employee is £31,056, or £25,880, after income tax and National Insurance graduates take home even less. Inevitably, 14.2 million people live in poverty, 25.3 million people live below minimum income standards. In other words, they lack the incomes to meet material needs and to enable participation in society. This comprises 48.6% of children and 35% of working age adults, 81.6% of children in lone parent families are growing up in households with inadequate incomes, so those who oppose this bill should be reminded of the horror of the horrific consequences.
For example, the UK has a high rate of infant mortality compared with peer countries because many women can't afford good nourishment not only before, but also during pregnancy due to poor food and living conditions. British five year olds are up to seven centimetres shorter than children of the same age in Europe, 1 in 4 young people in England have mental health conditions. Illnesses like rickets and scurvy have returned all together. Some 7 million children are growing up in households, lacking the income needed for a dignified standard of living, so clearly there is a need for an for an effective strategy for parental poverty eradication.
Trickle down economics has long failed. Average real wage has hardly moved since 2008. Workers have no say in how well the. Generated with their brain and bones is to be shared. There are no kerbs on profit on profiteering. Some 3 million people are malnourished or at risk of malnutrition. The poorest paid 20% of their income in taxes, compared to the richest 20% due to the visible hand of successive governments. Bottom 50% of population has less than 5% of wealth, and the bottom 20% has only 0.5%.
Such an environment can't banish child poverty. So can the Minister say something about how the government is going to develop a comprehensive strategy for eradication of parental poverty?
Lifting children out of poverty makes perfect economic and moral sense. The £3 billion expenditure will boost spending power of the poorest families and stimulate the local economies. The real cost to the public purse would be much less, because a large part would return to the government in the form of VAT, other indirect taxes and lower demands on public services. The opposition can support redistribution of income and wealth by, for example, calling for alignment of the taxation of capital gains with wages that would raise 14 billions.
There would be plenty there to cover the cost of this particular measure, but they don't actually call for redistribution. I am concerned that thousands of children will not receive a any improvement from this bill because of the overall benefit limit limit, which is set at around £22,020 a year for most families and at £14,753 for single adult households. Some 119,000 households have their Universal Credit, capped 82% of benefit of benefit cap households include children. So can the Minister explain the impact of the overall benefit cap on child poverty and its relationship with the government's strategy for reducing or eradicating child poverty? Child poverty is linked with parental poverty, so we need strategy for that.
The median gross of a UK employee, gross wage of a of a UK employee, gross wage of a UK employee is £31,056, or £25,880, after income tax and National Insurance graduates take home even less. Inevitably, 14.2 million people live in poverty, 25.3 million people live below minimum income standards. In other words, they lack the incomes to meet material needs and to enable participation in society. This comprises 48.6% of children and 35% of working age adults, 81.6% of children in lone parent families are growing up in households with inadequate incomes, so those who oppose this bill should be reminded of the horror of the horrific consequences.
For example, the UK has a high rate of infant mortality compared with peer countries because many women can't afford good nourishment not only before, but also during pregnancy due to poor food and living conditions. British five year olds are up to seven centimetres shorter than children of the same age in Europe, 1 in 4 young people in England have mental health conditions. Illnesses like rickets and scurvy have returned all together. Some 7 million children are growing up in households, lacking the income needed for a dignified standard of living, so clearly there is a need for an for an effective strategy for parental poverty eradication.
Trickle down economics has long failed. Average real wage has hardly moved since 2008. Workers have no say in how well the. Generated with their brain and bones is to be shared. There are no kerbs on profit on profiteering. Some 3 million people are malnourished or at risk of malnutrition. The poorest paid 20% of their income in taxes, compared to the richest 20% due to the visible hand of successive governments. Bottom 50% of population has less than 5% of wealth, and the bottom 20% has only 0.5%.
Such an environment can't banish child poverty. So can the Minister say something about how the government is going to develop a comprehensive strategy for eradication of parental poverty?
16:57
Lord John of Southwark (Labour)
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Lord John of Southwark (Labour)
Oh. Yet. >> Oh. Yet. place. >> Can I.
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Can I. Congratulate my noble friends, Baroness Antrobus and Lord Walker Baroness Antrobus and Lord Walker and the noble Baroness tether on their brilliant, inspiring and moving maiden speeches? My Lords, a Labour government is about nothing if it is not about reducing poverty and inequality in our society, breaking down the barriers that separate rich and poor, and opening opportunities to all, whatever our background. That's why I'm so pleased to be speaking in this debate and in support of this bill.
She's the Labour government removing the two child limit in Universal Credit, and I'm pleased that it's just one part of the government's comprehensive child poverty strategy, which aims to lift 550,000 children out of poverty by the end of this Parliament. Baroness Stedman-Scott said there was a fundamental question in this debate. I say the
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fundamental question is why we have so many children living in poverty in this country. Yes.
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Yes. It's shocking that in 2026, the world's sixth largest economy, world's sixth largest economy, around 4.5 million children live in relative poverty. It's even more relative poverty. It's even more shocking to consider that in 2010, at the time of the last Labour at the time of the last Labour government, that number was 2.3 million, having fallen from 4,000,000 in 1997. Figures. And I took from a a paper prepared by Baroness Teather. So our own national history shows us that child poverty can be tackled in a meaningful way.
If the government of the day is willing to act. And, my Lords, I say those who oppose this bill today are on the wrong side of history. But even if the government's objective by this bill and other measures are achieved, we must acknowledge that we will still have a long way to go. The scale of the challenge now makes the task of acting all the more urgent and necessary. A family of four, two adults and two children living in relative poverty, according to statistics I've read, is getting by on no more than about £400 per week, £400 to pay for heating, electricity, travel, food, clothing and all of the costs which any family incurs.
Before you consider anything that might be considered a treat. And I need hardly remind noble Lords that that is a figure which is little more than the daily allowance which each one of us is entitled to receive for one day in this House. Now, as others have said, we know that the cost of child poverty do not end. When a child reaches the age of 18, they can blight an entire life with a child growing up like to earn less, work less and suffer greater ill health.
If their life started in poverty. When I was a local authority leader, I introduced two measures in particular, which were aimed at tackling child poverty and the barriers to health for young people through free, healthy school meals for all primary school children and free swim and gym use for all residents. But as well as giving that hand up to young people in my borough, we sought to grow our economy to lift even more people out of poverty. And that is the mission of this Labour government.
Today, though, we are talking about that all important task that government at all levels faces of putting a supportive arm around those most in need, the people this bill will help are those who need that supportive arm. They are not the feckless or work shy as some might claim. As we've heard, 60% of those families who will be supported are already in work but just struggling to get by. My Lords is the third child in my family. I'm not sure how I would have felt if I had known that the state and the government didn't value me in the same way as my siblings, but this is the position we put too many children in over the last decade.
We live in challenging and uncertain times, particularly for children and young people who see a future marked by increased costs for educational opportunities and a significantly changing work environment. With the revolution of AI. Before we get to thinking about their security at home and in this country, my Lords, the mark of any society must be the way in which it looks after its most vulnerable. We rightly protect our older residents at the moment. We protect some children.
But my Lords, now is the time for us to show that we care about every child who lives in poverty here.
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Can I. Congratulate my noble friends, Baroness Antrobus and Lord Walker Baroness Antrobus and Lord Walker and the noble Baroness tether on their brilliant, inspiring and moving maiden speeches? My Lords, a Labour government is about nothing if it is not about reducing poverty and inequality in our society, breaking down the barriers that separate rich and poor, and opening opportunities to all, whatever our background. That's why I'm so pleased to be speaking in this debate and in support of this bill.
She's the Labour government removing the two child limit in Universal Credit, and I'm pleased that it's just one part of the government's comprehensive child poverty strategy, which aims to lift 550,000 children out of poverty by the end of this Parliament. Baroness Stedman-Scott said there was a fundamental question in this debate. I say the
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fundamental question is why we have so many children living in poverty in this country. Yes.
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Yes. It's shocking that in 2026, the world's sixth largest economy, world's sixth largest economy, around 4.5 million children live in relative poverty. It's even more relative poverty. It's even more shocking to consider that in 2010, at the time of the last Labour at the time of the last Labour government, that number was 2.3 million, having fallen from 4,000,000 in 1997. Figures. And I took from a a paper prepared by Baroness Teather. So our own national history shows us that child poverty can be tackled in a meaningful way.
If the government of the day is willing to act. And, my Lords, I say those who oppose this bill today are on the wrong side of history. But even if the government's objective by this bill and other measures are achieved, we must acknowledge that we will still have a long way to go. The scale of the challenge now makes the task of acting all the more urgent and necessary. A family of four, two adults and two children living in relative poverty, according to statistics I've read, is getting by on no more than about £400 per week, £400 to pay for heating, electricity, travel, food, clothing and all of the costs which any family incurs.
Before you consider anything that might be considered a treat. And I need hardly remind noble Lords that that is a figure which is little more than the daily allowance which each one of us is entitled to receive for one day in this House. Now, as others have said, we know that the cost of child poverty do not end. When a child reaches the age of 18, they can blight an entire life with a child growing up like to earn less, work less and suffer greater ill health.
If their life started in poverty. When I was a local authority leader, I introduced two measures in particular, which were aimed at tackling child poverty and the barriers to health for young people through free, healthy school meals for all primary school children and free swim and gym use for all residents. But as well as giving that hand up to young people in my borough, we sought to grow our economy to lift even more people out of poverty. And that is the mission of this Labour government.
Today, though, we are talking about that all important task that government at all levels faces of putting a supportive arm around those most in need, the people this bill will help are those who need that supportive arm. They are not the feckless or work shy as some might claim. As we've heard, 60% of those families who will be supported are already in work but just struggling to get by. My Lords is the third child in my family. I'm not sure how I would have felt if I had known that the state and the government didn't value me in the same way as my siblings, but this is the position we put too many children in over the last decade.
We live in challenging and uncertain times, particularly for children and young people who see a future marked by increased costs for educational opportunities and a significantly changing work environment. With the revolution of AI. Before we get to thinking about their security at home and in this country, my Lords, the mark of any society must be the way in which it looks after its most vulnerable. We rightly protect our older residents at the moment. We protect some children.
But my Lords, now is the time for us to show that we care about every child who lives in poverty here.
17:02
Baroness Jenkin of Kennington (Conservative)
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Baroness Jenkin of Kennington (Conservative)
I'm grateful for the opportunity to speak in the gap and for which also gives me the opportunity to congratulate the maiden speeches and to look forward to the speaker's participation in our work here. I would like to associate myself with my noble friend Baroness Stedman-Scott remarks. As the noble Lady, the Minister will be aware, but possibly not all noble Lords. My noble friend's life before she came here, working for three decades for the charity Tomorrow's People, was dedicated to helping people furthest from the labour market to get and keep a job in order to live an independent life.
She knows better than many and from long experience that this approach is the best route out of poverty. At the heart of this debate lies the principle of fairness. Across the country, millions of working families make difficult financial decisions every day about the size of their family and what they can afford to provide for their children. It's reasonable that the welfare system reflects the same considerations. The Two-child limit ensures that the system remains sustainable and focussed on supporting those who need it most, whilst also maintaining fairness between households who rely on benefits and those who support themselves entirely through work.
We must also consider the broader responsibility of government to manage public finances carefully. Welfare spending is the largest category of UK public spending, and policies such as the Two-child cap helps ensure that support remains available for the most vulnerable, both now and in the future. In difficult economic times, choices about public spending are never easy, but responsible government requires that we strike a balance. The government's first duty is to security of this country and the British people. We know that defence spending has to increase to fulfil that duty.
The OBR calculates that lifting the cap will cost the taxpayer £2.3 billion this year, rising to about 3 billion by 20 2930, which is unsustainable in the current economic climate. With an estimated 2 million households, the cost of per household per year is projected to be 80 to £100, which would be an additional challenge at a time when so many are struggling with costs. My. Our duty is not only to provide support, but to ensure that the system remains fair, sustainable and credible for the taxpayers who fund it.
She knows better than many and from long experience that this approach is the best route out of poverty. At the heart of this debate lies the principle of fairness. Across the country, millions of working families make difficult financial decisions every day about the size of their family and what they can afford to provide for their children. It's reasonable that the welfare system reflects the same considerations. The Two-child limit ensures that the system remains sustainable and focussed on supporting those who need it most, whilst also maintaining fairness between households who rely on benefits and those who support themselves entirely through work.
We must also consider the broader responsibility of government to manage public finances carefully. Welfare spending is the largest category of UK public spending, and policies such as the Two-child cap helps ensure that support remains available for the most vulnerable, both now and in the future. In difficult economic times, choices about public spending are never easy, but responsible government requires that we strike a balance. The government's first duty is to security of this country and the British people. We know that defence spending has to increase to fulfil that duty.
The OBR calculates that lifting the cap will cost the taxpayer £2.3 billion this year, rising to about 3 billion by 20 2930, which is unsustainable in the current economic climate. With an estimated 2 million households, the cost of per household per year is projected to be 80 to £100, which would be an additional challenge at a time when so many are struggling with costs. My. Our duty is not only to provide support, but to ensure that the system remains fair, sustainable and credible for the taxpayers who fund it.
17:05
Lord Palmer of Childs Hill (Liberal Democrat)
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Lord Palmer of Childs Hill (Liberal Democrat)
My Lords. the maiden speeches of my noble friend Baroness Teather, the noble Lord Walker, and the noble Baroness Antrobus. They were accredited this House and we look forward to further contributions, which I'm sure will come from all three noble peers. I would like to first of all, thank the noble Lady, the Minister, for her excellent and summing up of what is happening and what we hope to happen in the future, I rise on these benches to support this bill, and I'm disappointed with the conservative benches opposing it very much so.
This bill is an improvement on an overdue measure, which I've long spoken in favour of. It removes one of the ugliest features of the Social security system, the two child limit on a universal credit. My noble friend, the noble Lady Baroness Teather, spoke eloquently on this when she said more than a million and a half children are affected and denied the essentials they need to to thrive. For my party, this change goes very much to the heart of who we are.
We exist to build and safeguard a society that is free, open and fair. We want a society in which no one is enslaved by poverty, ignorance or conformity. That is why opposition to the two child limit is not a new or convenient position for us. And I say this as a chartered accountant who would love to balance all these books. A fair society does not balance the
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books on the backs of the children. Yeah. My Lords, there is a moral case
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My Lords, there is a moral case for this change. The two child limit has always rested on a deeply limit has always rested on a deeply flawed premise. It effectively says that a third child or a fourth child is somehow less deserving of child is somehow less deserving of support than older siblings. But children do not choose the children do not choose the circumstances of their birth. I think we should know that they do not choose whether their parents face illness, bereavement, separation, disability, insecure work or rising living costs.
They don't actually have much say in it being born either. And yet this policy has punished children for circumstances entirely beyond their control. My Lords, the scale of the problem and why it matters. We are debating this against the background of childhood child poverty. About 4.5 million children in the UK are living in poverty. Nearly 1 in 3. Child poverty is not an abstract statistic. It is hunger. It is cold homes, anxiety, mixed missed opportunities and diminished life chances.
It is. It is also increasingly deep poverty. Millions of children are now living well below the poverty line, and the burden falls disproportionately on larger families, on lone parent households, on households with disabled people and many minority ethnic families. So this bill matters because it begins to begins to unwind, only begins to unwind. A policy that is one of the major drivers of rising deep child poverty. What this bill actually does and why the Liberal Democrats support it, is this bill removes the two child limit in in Universal Credit, so that support is available for all eligible children in a household, not only the first two, it applies across Great Britain and Northern Ireland with commencement from assessment period starting in a few weeks time on the 6th of April 2026.
We on these benches support it because it is the right thing to do for children and families. It is targeted and effective. It is good value in public policy terms. The government's own assessment and the evidence cited in various briefings made clear that removing the limit is among the quickest and most cost effective ways of reducing child poverty. My Lords, there is a practical case. This is not only social policy, it is also economic policy. Children who grow up in poverty are more likely to experience worse educational outcomes, to experience poorer physical and mental health, and fewer opportunities in adulthood.
That means child poverty stores up pressure for the NHS, for schools, for local services and the welfare system itself. It also means lost productivity, lost skills and lost tax revenues in the future. In other words, my Lords, child poverty is not only a moral failure, it is an act of economic self-harm. If the policy is removed, there will be gains in household income and significant reductions in relative poverty and deep material poverty. So, my Lords, this bill is a down payment, a down payment on healthier families, better outcomes and a stronger, stronger country to close.
And I would like to quote, because of some comments on the conservative benches that between 2010 and 2015, the proportion of children in absolute poverty before housing costs dropped from 18% to 17% under the Conservatives of 2015 to 2023, this proportion had increased back to 18%. That is their policy. And they're they're putting that for for for, for forward again. There is a practical case there. The the bill asks a basic question do we value each child equally? The Liberal Democrats believe the answer must be yes.
Children are not an afterthought to public policy. They're not a line in a spreadsheet. I'm all for spreadsheets, but they're not a line of the spreadsheet. They are, as has been said, 20% of our population, but 100%, 100% of our future. By removing the two child limit, we take a meaningful step towards a country that is fairer, healthier, and more hopeful. We on these benches support this bill, and we will work constructively to build upon it. And for those reasons, these benches support the Bill Second Reading and are disappointed with the Conservatives refusal to support it.
This bill is an improvement on an overdue measure, which I've long spoken in favour of. It removes one of the ugliest features of the Social security system, the two child limit on a universal credit. My noble friend, the noble Lady Baroness Teather, spoke eloquently on this when she said more than a million and a half children are affected and denied the essentials they need to to thrive. For my party, this change goes very much to the heart of who we are.
We exist to build and safeguard a society that is free, open and fair. We want a society in which no one is enslaved by poverty, ignorance or conformity. That is why opposition to the two child limit is not a new or convenient position for us. And I say this as a chartered accountant who would love to balance all these books. A fair society does not balance the
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books on the backs of the children. Yeah. My Lords, there is a moral case
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My Lords, there is a moral case for this change. The two child limit has always rested on a deeply limit has always rested on a deeply flawed premise. It effectively says that a third child or a fourth child is somehow less deserving of child is somehow less deserving of support than older siblings. But children do not choose the children do not choose the circumstances of their birth. I think we should know that they do not choose whether their parents face illness, bereavement, separation, disability, insecure work or rising living costs.
They don't actually have much say in it being born either. And yet this policy has punished children for circumstances entirely beyond their control. My Lords, the scale of the problem and why it matters. We are debating this against the background of childhood child poverty. About 4.5 million children in the UK are living in poverty. Nearly 1 in 3. Child poverty is not an abstract statistic. It is hunger. It is cold homes, anxiety, mixed missed opportunities and diminished life chances.
It is. It is also increasingly deep poverty. Millions of children are now living well below the poverty line, and the burden falls disproportionately on larger families, on lone parent households, on households with disabled people and many minority ethnic families. So this bill matters because it begins to begins to unwind, only begins to unwind. A policy that is one of the major drivers of rising deep child poverty. What this bill actually does and why the Liberal Democrats support it, is this bill removes the two child limit in in Universal Credit, so that support is available for all eligible children in a household, not only the first two, it applies across Great Britain and Northern Ireland with commencement from assessment period starting in a few weeks time on the 6th of April 2026.
We on these benches support it because it is the right thing to do for children and families. It is targeted and effective. It is good value in public policy terms. The government's own assessment and the evidence cited in various briefings made clear that removing the limit is among the quickest and most cost effective ways of reducing child poverty. My Lords, there is a practical case. This is not only social policy, it is also economic policy. Children who grow up in poverty are more likely to experience worse educational outcomes, to experience poorer physical and mental health, and fewer opportunities in adulthood.
That means child poverty stores up pressure for the NHS, for schools, for local services and the welfare system itself. It also means lost productivity, lost skills and lost tax revenues in the future. In other words, my Lords, child poverty is not only a moral failure, it is an act of economic self-harm. If the policy is removed, there will be gains in household income and significant reductions in relative poverty and deep material poverty. So, my Lords, this bill is a down payment, a down payment on healthier families, better outcomes and a stronger, stronger country to close.
And I would like to quote, because of some comments on the conservative benches that between 2010 and 2015, the proportion of children in absolute poverty before housing costs dropped from 18% to 17% under the Conservatives of 2015 to 2023, this proportion had increased back to 18%. That is their policy. And they're they're putting that for for for, for forward again. There is a practical case there. The the bill asks a basic question do we value each child equally? The Liberal Democrats believe the answer must be yes.
Children are not an afterthought to public policy. They're not a line in a spreadsheet. I'm all for spreadsheets, but they're not a line of the spreadsheet. They are, as has been said, 20% of our population, but 100%, 100% of our future. By removing the two child limit, we take a meaningful step towards a country that is fairer, healthier, and more hopeful. We on these benches support this bill, and we will work constructively to build upon it. And for those reasons, these benches support the Bill Second Reading and are disappointed with the Conservatives refusal to support it.
17:12
Viscount Younger of Leckie (Conservative)
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Viscount Younger of Leckie (Conservative)
My. opposition, I do think that we've had three remarkable maiden speeches this afternoon, and I would just like to make a few comments about each. So for the noble Baroness Lady Tether, I am so pleased that she has recovered and has regained her voice, and I've no doubt that we'll be hearing much from it. And I also hope that she will be joining or rejoining the
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Parliament choir, and I declare my interest as a tenor in the choir. Yes.
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Yes. And to the noble Lord Walker of Broxton. I applaud his clear energy, his entrepreneurship and his his entrepreneurship and his communication skills, and I acknowledge that he provides employment to many in the retail sector, and I have no doubt that he sector, and I have no doubt that he will have much to offer from his high street experiences. And as he high street experiences. And as he said himself, hopefully a fresh way of thinking, however that can be defined. And then to the noble Baroness Lady Antrobus, an excellent maiden speech as well.
She will be invaluable in my view, in using her experience and knowledge both in the air and terrestrially, in the armed forces, in contributing to the house and the future. So I think we've been very lucky this afternoon. My Lords, I want to begin by thanking all other noble Lords who have contributed to this debate and who have set out their views with such conviction and what is in my view and in our view on this side, a deeply mistaken policy.
I say this as someone who is proud of the compassion that defines his country. The British people are generous. They're fair minded and instinctively willing to help those in genuine need. That spirit of neighbourliness, of looking out for one another, is something we should always cherish and protect. And the noble Baroness, Lady Tether is right. Handling language and collaboration and getting these matters right are important factors in communities where matters can be extremely sensitive. But compassion must also be balanced with fairness.
As my noble friend Lady Jenkin alluded to, and this policy, I'm afraid, tips that balance too far the other way. It asks those who work hard, pay their taxes and support the system to shoulder ever greater burdens while expanding reliance on the state in a way that risks undermining the very foundations that sustain it. Now, it would be easy for me to say that raising the cap would be the right thing to do, but I was very pleased to note that the right reverend Prelate, the Bishop of Leicester, and indeed my noble friend Lord Redwood, acknowledged that we we all want to reduce child poverty.
I personally want to. We all want to, my Lords. But it is indeed. The problem is how we do it that continues to divide opinion, and that much I think we can. We can agree upon. And I was struck by the remarks made by the noble Lord Lord Bird, who made such a powerful speech, and his clarion call for greater social mobility. I believe in this debate is a key point. A hand up, perhaps to a better future, or indeed to any future.
For those that are really wallowing in poverty, particularly children. And the noble Lord Lord Pitt-Watson alluded to this as well, echoed this sentiment. As my noble friend Baroness Stedman-Scott set out at the beginning of this debate, it cannot be right that parents who do the responsible thing, who go out to work, contribute to our economy and carefully manage what they can afford for their families are expected to fund a system in which others face fewer of those same constraints. At its heart.
That is the problem with this bill, my Lords. It seeks to address a serious issue, but it does so in the wrong way. In trying to demonstrate compassion, it risks undermining fairness and without fairness, public confidence, surely, in the welfare system itself will begin to erode. And is it no wonder that an overwhelming majority of the country oppose this policy? As my noble friend Baroness Stedman-Scott said, my Lords, this policy comes at a time when our welfare system is facing what can only be described as a mounting crisis.
At the spring statement, the OBR confirmed that welfare spending is set to rise by £74 billion over the next five years. Forecasts also show that spending on health and disability benefits alone will be £1.3 billion higher than previously expected. At the same time, the economic outlook is deteriorating. The OBR now forecasts unemployment reaching 5.3%, higher than the 4.9% peak predicted only at the time of the budget. So despite the Chancellor's repeated claims of responsible fiscal management and careful stewardship of the public finances, the reality, My Lords, is that welfare spending continues to surge.
The total welfare Bill will rise by £18 billion this year alone, then by roughly £15 billion every year across the forecast period. And in total, the OBR expects the government to spend £333 billion on welfare this year, 10.9% of our entire economy by 2030 to 31. That figure is projected to reach £407 billion, or 11.7% of GDP, the think tank onward has warned that on this trajectory, welfare payments will effectively cost individual taxpayers around £3,000 a year by the end of the decade, as Britain's benefits system edges towards becoming unsustainable.
Now, the noble Baroness Sherlock stated in her opening remarks that some think it is all about cost. Cost is a big factor, but it is not the only factor. And I make the point that there are other benefits that are there to help with essential household needs, such as the Household Support Fund directed through local authorities, and this includes for larger families. And I do understand the points that the noble Lord Lord Babudu made and also the noble Baroness, Lady Sherlock, about those being in work, making decisions at that time about family size and then finding themselves out of work.
Of course, that's an obvious and important point. And also the need, which I feel strongly about, is that to support single parent families. And my noble friend Lord Redwood eloquently iterated that there are other reasons why children wallow in poverty with his links, with the links that he made to dysfunctional family life. And as he said, which is very important, a lack of love. And the noble Lord Lord Sikka mentioned that very important point about the need for better personal and pastoral help for parents.
So handouts are not just the key. In short, my Lords, the system is lurching in the wrong direction. Costs are already enormous and they continue to climb at the same time as unemployment is expected to rise. And this is simply not a sustainable position. And we must remember who ultimately bears that cost. An additional £3,000 a year does not fall on some abstract entity called the taxpayer. It falls on ordinary working people. It falls on teachers, on nurses, on those who work in the retail sector, on families who rise early, work long hours and try to balance their own household budgets without the benefit of generous state support.
And my Lords, these are not the super rich. They are the people who make up the backbone of our country. And before we expand the welfare state still further, we should at least ask ourselves, my Lords, what burden we are asking them to carry. However, I am just not convinced that the government has asked a question more searching, I'm afraid, than how they can placate their backbenchers for another few weeks. And my noble friend Baroness Stedman-Scott was absolutely right to point that out.
And it has to be said, I know I can see the noble Baroness shaking her head. My Lords, my noble friend Baroness Stedman-Scott set out clearly earlier in this debate the fundamental flaw in the government's logic ever increasing welfare spending does not solve poverty. It helps to conceal it. I might only add that a welfare offer of this scale risks doing something else far more damaging. It begins to erode the very foundations on which the welfare system itself depends. The system ultimately relies on a balance, and we've heard that word this afternoon in this debate.
Those who can work do so, and through their work, they support a safety net for those who genuinely cannot. But that balance is now under real strain. Welfare spending is forecast to rise by around a fifth over the next five years, at the same time as 1 in 5 working age adults are not in work, and I think we're well aware of those statistics. That trajectory should therefore concern all of us. The welfare state was never intended to become an alternative to work.
If too many people come to rely on benefits rather than the rewards of employment, the model simply ceases to function. And I have a strong. I was certainly struck by the strong points made by the noble Lord, Lord Walker, on. In this area the system depends on contribution as well as support. Yet instead of confronting that challenge, the government's response has been to step away from reform and move in the opposite direction, expanding spending commitments that the public finances can scarcely sustain.
My Lords, a welfare system that discourages work does not reduce poverty in the long term. It risks entrenching it. And if we are serious about giving people the best chance of a secure and independent life, that is a reality. We cannot afford to ignore. This policy tips that balance even further in the wrong direction, and the government should be really concerned about the long term effects that it risks having on our public finances and the welfare system as a whole. And Labour backbenchers, I fear, are too wedded to the idea of the welfare state.
It is akin, my Lord, to somebody inching their way along the branch of a tree further and further and further, until it snaps. So to conclude, my Lords, when we step back from the detail of this debate, the question before us is actually very simple what kind of welfare system do we want for this country? Do we want a system that is fair to those who fund it, sustainable for the long term, and focussed above all on helping people into work and independence? Or do we want a system that grows ever larger, ever more expensive, and ever more detached from the principle that work should always pay? The British people instinctively understand that balance, and my noble friend Lady Stedman-scott pointed out the statistics there and the polling.
They are compassionate, but they're also fair. They believe in helping those who genuinely need support, but they also believe that those who can work should do so, and that the system should never place the greatest burden on those who are already doing the right thing. By Lewis. I'm just going to conclude quickly to say that for that reason and the interests of fairness, sustainability and the long term health of our welfare state, I cannot support this bill, and I firmly believe that the cap should be reintroduced as soon as possible.
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My Lords, I am so grateful to all noble Lords who have contributed to this debate. For a start, I love listening to maiden start, I love listening to maiden speeches. It's the time we just get an insight into just the range and depth of experience that's coming depth of experience that's coming into this house. And today we had three magnificent examples of that. And if anyone outside is listening, this is what this House can bring to debates. It's just a richness of experience and debate that I think is something exceptional.
And is something exceptional. And listen to what we've heard today. We've heard about defence and air power. We've heard about conflict and resolving conflict. We've heard about climbing mountains, both literal and metaphorical. We've
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Parliament choir, and I declare my interest as a tenor in the choir. Yes.
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Yes. And to the noble Lord Walker of Broxton. I applaud his clear energy, his entrepreneurship and his his entrepreneurship and his communication skills, and I acknowledge that he provides employment to many in the retail sector, and I have no doubt that he sector, and I have no doubt that he will have much to offer from his high street experiences. And as he high street experiences. And as he said himself, hopefully a fresh way of thinking, however that can be defined. And then to the noble Baroness Lady Antrobus, an excellent maiden speech as well.
She will be invaluable in my view, in using her experience and knowledge both in the air and terrestrially, in the armed forces, in contributing to the house and the future. So I think we've been very lucky this afternoon. My Lords, I want to begin by thanking all other noble Lords who have contributed to this debate and who have set out their views with such conviction and what is in my view and in our view on this side, a deeply mistaken policy.
I say this as someone who is proud of the compassion that defines his country. The British people are generous. They're fair minded and instinctively willing to help those in genuine need. That spirit of neighbourliness, of looking out for one another, is something we should always cherish and protect. And the noble Baroness, Lady Tether is right. Handling language and collaboration and getting these matters right are important factors in communities where matters can be extremely sensitive. But compassion must also be balanced with fairness.
As my noble friend Lady Jenkin alluded to, and this policy, I'm afraid, tips that balance too far the other way. It asks those who work hard, pay their taxes and support the system to shoulder ever greater burdens while expanding reliance on the state in a way that risks undermining the very foundations that sustain it. Now, it would be easy for me to say that raising the cap would be the right thing to do, but I was very pleased to note that the right reverend Prelate, the Bishop of Leicester, and indeed my noble friend Lord Redwood, acknowledged that we we all want to reduce child poverty.
I personally want to. We all want to, my Lords. But it is indeed. The problem is how we do it that continues to divide opinion, and that much I think we can. We can agree upon. And I was struck by the remarks made by the noble Lord Lord Bird, who made such a powerful speech, and his clarion call for greater social mobility. I believe in this debate is a key point. A hand up, perhaps to a better future, or indeed to any future.
For those that are really wallowing in poverty, particularly children. And the noble Lord Lord Pitt-Watson alluded to this as well, echoed this sentiment. As my noble friend Baroness Stedman-Scott set out at the beginning of this debate, it cannot be right that parents who do the responsible thing, who go out to work, contribute to our economy and carefully manage what they can afford for their families are expected to fund a system in which others face fewer of those same constraints. At its heart.
That is the problem with this bill, my Lords. It seeks to address a serious issue, but it does so in the wrong way. In trying to demonstrate compassion, it risks undermining fairness and without fairness, public confidence, surely, in the welfare system itself will begin to erode. And is it no wonder that an overwhelming majority of the country oppose this policy? As my noble friend Baroness Stedman-Scott said, my Lords, this policy comes at a time when our welfare system is facing what can only be described as a mounting crisis.
At the spring statement, the OBR confirmed that welfare spending is set to rise by £74 billion over the next five years. Forecasts also show that spending on health and disability benefits alone will be £1.3 billion higher than previously expected. At the same time, the economic outlook is deteriorating. The OBR now forecasts unemployment reaching 5.3%, higher than the 4.9% peak predicted only at the time of the budget. So despite the Chancellor's repeated claims of responsible fiscal management and careful stewardship of the public finances, the reality, My Lords, is that welfare spending continues to surge.
The total welfare Bill will rise by £18 billion this year alone, then by roughly £15 billion every year across the forecast period. And in total, the OBR expects the government to spend £333 billion on welfare this year, 10.9% of our entire economy by 2030 to 31. That figure is projected to reach £407 billion, or 11.7% of GDP, the think tank onward has warned that on this trajectory, welfare payments will effectively cost individual taxpayers around £3,000 a year by the end of the decade, as Britain's benefits system edges towards becoming unsustainable.
Now, the noble Baroness Sherlock stated in her opening remarks that some think it is all about cost. Cost is a big factor, but it is not the only factor. And I make the point that there are other benefits that are there to help with essential household needs, such as the Household Support Fund directed through local authorities, and this includes for larger families. And I do understand the points that the noble Lord Lord Babudu made and also the noble Baroness, Lady Sherlock, about those being in work, making decisions at that time about family size and then finding themselves out of work.
Of course, that's an obvious and important point. And also the need, which I feel strongly about, is that to support single parent families. And my noble friend Lord Redwood eloquently iterated that there are other reasons why children wallow in poverty with his links, with the links that he made to dysfunctional family life. And as he said, which is very important, a lack of love. And the noble Lord Lord Sikka mentioned that very important point about the need for better personal and pastoral help for parents.
So handouts are not just the key. In short, my Lords, the system is lurching in the wrong direction. Costs are already enormous and they continue to climb at the same time as unemployment is expected to rise. And this is simply not a sustainable position. And we must remember who ultimately bears that cost. An additional £3,000 a year does not fall on some abstract entity called the taxpayer. It falls on ordinary working people. It falls on teachers, on nurses, on those who work in the retail sector, on families who rise early, work long hours and try to balance their own household budgets without the benefit of generous state support.
And my Lords, these are not the super rich. They are the people who make up the backbone of our country. And before we expand the welfare state still further, we should at least ask ourselves, my Lords, what burden we are asking them to carry. However, I am just not convinced that the government has asked a question more searching, I'm afraid, than how they can placate their backbenchers for another few weeks. And my noble friend Baroness Stedman-Scott was absolutely right to point that out.
And it has to be said, I know I can see the noble Baroness shaking her head. My Lords, my noble friend Baroness Stedman-Scott set out clearly earlier in this debate the fundamental flaw in the government's logic ever increasing welfare spending does not solve poverty. It helps to conceal it. I might only add that a welfare offer of this scale risks doing something else far more damaging. It begins to erode the very foundations on which the welfare system itself depends. The system ultimately relies on a balance, and we've heard that word this afternoon in this debate.
Those who can work do so, and through their work, they support a safety net for those who genuinely cannot. But that balance is now under real strain. Welfare spending is forecast to rise by around a fifth over the next five years, at the same time as 1 in 5 working age adults are not in work, and I think we're well aware of those statistics. That trajectory should therefore concern all of us. The welfare state was never intended to become an alternative to work.
If too many people come to rely on benefits rather than the rewards of employment, the model simply ceases to function. And I have a strong. I was certainly struck by the strong points made by the noble Lord, Lord Walker, on. In this area the system depends on contribution as well as support. Yet instead of confronting that challenge, the government's response has been to step away from reform and move in the opposite direction, expanding spending commitments that the public finances can scarcely sustain.
My Lords, a welfare system that discourages work does not reduce poverty in the long term. It risks entrenching it. And if we are serious about giving people the best chance of a secure and independent life, that is a reality. We cannot afford to ignore. This policy tips that balance even further in the wrong direction, and the government should be really concerned about the long term effects that it risks having on our public finances and the welfare system as a whole. And Labour backbenchers, I fear, are too wedded to the idea of the welfare state.
It is akin, my Lord, to somebody inching their way along the branch of a tree further and further and further, until it snaps. So to conclude, my Lords, when we step back from the detail of this debate, the question before us is actually very simple what kind of welfare system do we want for this country? Do we want a system that is fair to those who fund it, sustainable for the long term, and focussed above all on helping people into work and independence? Or do we want a system that grows ever larger, ever more expensive, and ever more detached from the principle that work should always pay? The British people instinctively understand that balance, and my noble friend Lady Stedman-scott pointed out the statistics there and the polling.
They are compassionate, but they're also fair. They believe in helping those who genuinely need support, but they also believe that those who can work should do so, and that the system should never place the greatest burden on those who are already doing the right thing. By Lewis. I'm just going to conclude quickly to say that for that reason and the interests of fairness, sustainability and the long term health of our welfare state, I cannot support this bill, and I firmly believe that the cap should be reintroduced as soon as possible.
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My Lords, I am so grateful to all noble Lords who have contributed to this debate. For a start, I love listening to maiden start, I love listening to maiden speeches. It's the time we just get an insight into just the range and depth of experience that's coming depth of experience that's coming into this house. And today we had three magnificent examples of that. And if anyone outside is listening, this is what this House can bring to debates. It's just a richness of experience and debate that I think is something exceptional.
And is something exceptional. And listen to what we've heard today. We've heard about defence and air power. We've heard about conflict and resolving conflict. We've heard about climbing mountains, both literal and metaphorical. We've
17:24
Baroness Sherlock, The Minister of State, Department for Work and Pensions (Labour)
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Baroness Sherlock, The Minister of State, Department for Work and Pensions (Labour)
heard about the importance of business. We've heard about the compelling and relational power of compelling and relational power of T in the long room, and learning to play dominoes, and maybe better at one of those than the other. But maybe time will tell. But can I maybe time will tell. But can I just thank all those noble Lords so much for coming in and contributing this? In developing our child poverty strategy, we engaged extensively with all kinds of people, including with families, with campaigners and with experts, with campaigners and with experts, and the aim was to try to work out what would have the greatest impact on the day to day lives of children living in poverty.
And the message was really clear remove the two child limit. So my Lords, and I'm very grateful to my noble friend, my friend Baroness Shah for pointing out the challenges we inherited and why it takes time for governments to work through dealing with everything that comes out. But this bill is supported by over 60 organisations representing anti-poverty charities. Perhaps not surprising, but also the children's doctors and teachers and health visitors, the people who know only too well the damaging effects of poverty and see its consequences every day.
And I remain very grateful for the work both of the campaigning organisations and of those professionals who support our children. And for all those who pushed for this change, including the bishops bench, and I share the remembrance of the right reverend Prelate, the former Bishop of Durham who pushed for this in his time in this House. This bill is an investment in to deliver a better future for children and for our country and many noble Lords, including the noble Lady Baroness Teather and the right reverend Prelate.
The Bishop of Leicester have set out the devastating impact that poverty has on children and many, including my noble friend Lord Babudu, have pointed out that poverty is not evenly distributed. My Lords, poverty holds imposes really significant costs on individuals and the country. But let me start with, I think with the official opposition, because they have set out clearly why they oppose it. But my Lords, it's my experience in many years in and around politics, if you want to defend the indefensible, the first thing you do is set up some clearly false dichotomies.
So let's start and say, what have we listened to today? It's children versus defence. Of course it isn't, my Lords. Now, if I were going to play politics, I would point out that if the government felt that passionately about it, the Conservatives, when they were in government, felt that passionately, maybe they shouldn't have cut £12 billion from defence spending in their first term alone. Maybe what they shouldn't have done is cut spending from the 2.5% the last Labour government left, pushing us to have to raise it up to 2.6% by next year.
Maybe they shouldn't have slashed child poverty. They weren't choosing between the two things. They actually attacked both of them. Now we can have that kind of conversation or we can have a different kind of conversation. So let's take a step back and look at what actually happens in the policies. So what's the other false dichotomy? I think we fall into a mistake if we try to set up Social Security versus work. I'm not repeating the figures that 59% of families hit by the Two-child limit are in work.
To make a political point, I am pointing out that our Social Security system is there to help people in and out of work, and to help them from out of work into work. And if the barriers get in the way of people being able to move into work, then the system is not doing its job. And every time we start trying to pretend this is contrasting people lying in bed all day with the blinds shut, with those who go out to work, we do everyone a disservice.
So please, let's not have that conversation. What we do want to do is to recognise we have to enable work. We have to encourage work, we have to take away the barriers to work. That's really important. And we have to recognise that those in and out of work, neither of those are static populations. People move between those states for a whole range of reasons, and our job is to make those who can work in work as much of the time to stay in work as much as they can, for as long as they can, and if they come out to help them back into it when they can.
But if they can't, to support them, because that's what we do by pooling risk. I thought the noble Lord Lord Redwood made some very interesting points. I parted company with him when he got on to a certain point in the speech, but it was a really interesting point that this policy clearly isn't a panacea, and we clearly the state can't and shouldn't pretend. It can solve all the problems families have. And the state doesn't raise children, families raise children. So I think the starting point, however, is that if we want to tackle child poverty, as the noble Viscount Viscount Younger said, he does, the first thing we have to do is stop making it worse.
And so the first thing we do is stop making it worse, stop tipping more children into poverty every year. The second step is to work out what are the barriers to people moving into work and developing in their lives that the noble Lord Lord Redwood mentioned some of those that are nothing to do with money, and the state can only do what it can. Try to make it as easy as possible for families to do the right thing. Invest in relationship education, invest in supporting families, invest in all kinds of education in communities and relationships.
But what it can do is to tackle the things it can do something about. And it's definitely not all about money, but it's not not about money. And the statistics show really clearly, for example, the impact of poverty on family Break-Up, the impact on poverty, on parents struggling to be able to do the right thing by their kids. So we need to do both. And the next thing we need to do is create opportunities. And this is where I always hate disagreeing with the noble Lord Lord Bird, because I know that he will come back at me rightly, but I think we have to start to move, not away from, but beyond the handout versus hand up.
I absolutely agree with him that our job is to give people a hand up, and he has done that in his time, as indeed has the noble Baroness Stedman-Scott. But I would not contrast that with any support the state gives to those who are struggling when they need it, because of course, a lot of what we do is both of those things, like, like my noble friend Lord Walker, I have a real interest in how do we use my department to help those who are struggling to get into work.
Just this week, I was offered a conference talking to businesses who were helping ex-offenders into
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work, and also the Minister responsible for helping. Working mentioned. It, but isn't it wonderful that
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It, but isn't it wonderful that Social Security can be used as a hand up? That's the point I'm trying to make. I'm not trying to trying to make. I'm not trying to make the point of work versus Social Security. I'm saying a hand Social Security. I'm saying a hand up is absolutely marvellous. The greatest hand up I got was a
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probation officer. Indeed. And his probation officer did a very good job because look where he's ended up. So with all that successful, it's quite a high bar to set them to, but I commend it. I think that's a really great point. And in that case, I'm now violently agreeing with the noble Lord and I will move on. I want the Social Security system to do its job, and for most people, its job is to support them into work and on work and to develop in work.
And that's very much what this government is seeking to do. So, my Lords, one of the challenges I think about universal Credit is the assumption it was designed to move people in and out of work, to work in and out of work. And where it works well, it does that really well. All we're doing is making sure the system works even better than it can do. But I think the, the assumption that the, the, that this government is doing the wrong thing by spending money on tackling child poverty, I think is just fundamentally mistaken.
I mean, my noble, my noble friend, Lord Walker talked about the need to make sure we tackle, for example, NEETs. But we have 1 in 8 of our young people not in employment, education or training. But my Lords, they didn't start at 16. OK. It's going to be a long day. Yeah.
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I just want to make the point. We're not saying you shouldn't spend money. It's what you spend it
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spend money. It's what you spend it on and how you spend it to get the best outcome for what you're trying to do. Understand that, my Lords, but
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Understand that, my Lords, but also I've looked at what the last government spent the money on and I've looked at the results and I I've looked at the results and I don't like it. And therefore we're going to do something different. And if I think my simple view is if we want, we will. The end of tackling child poverty. We have to will the means. We believe that removing this barrier is fundamental. We can't expect people, those young people who are needs.
At 16, they didn't start at 16. They started somewhere. They started without the opportunities. They started without the education. They started without the the start in life they should have. And the evidence shows quite clearly that people who children who grew up in poverty are likely to have poor mental health, fewer opportunities, less chance to do all of those things we want them to do. So what we're doing is enabling those people to have opportunities, giving them the start they need. And if we can get that in place, then the whole country benefits we.
Then, instead of supporting people not to work, we're giving them the chance to flourish as individuals and to make the contribution to our society that they won't get the chance to make. Otherwise. Before I get myself into any more flights of rhetoric, I should actually answer some of the questions that have been asked. Let me look. There was some specifics. My noble friend Lady Lister asked me a specific question about council tax reduction. And and I think just she knows this. But just for the record, of course, local councils are responsible for designing and reviewing their own council tax reduction schemes.
My department's been working with Mhclg to communicate the change to local authorities, and they have been encouraged to consider the impact of their schemes in the light of the removal of the two child limit. But just to say, in 20 2930, an estimated 560,000 families will see an increase in their Universal Credit Award, with these families gaining on average a £440 a month. The impact of transitional protection, I think she asked about the impact assessment is included in the impact assessment, but not on the numbers of households.
The benefit cap was raised by my friend Eddie Lister, but also by the Baroness Brady tether. My noble friend Lord Davis and the noble Lady Bennett and a few other colleagues. I think I simply have to say this government believes that we want to preserve the fundamental principle that work is the best route out of poverty, and the government believes that leaving the overall benefit cap in place encourages personal responsibility while maintaining the incentive to work that, where possible, it is in the best interests of children to be in working households.
Being in work substantially reduces the chance of poverty. The poverty rate of children living in households where all adults are in work is 17%, compared to 65% for children who live in households where no adults work. We will continue to protect the most vulnerable as those who are unable to work because of a disability or a caring responsibility are protected and exempted from that. I think the noble Baroness Brady Bennett asked about numbers. Yes. When I answered the written question from her, I think it was I think I answered it.
The impact assessment hadn't been published at that point. So I can say that among households in scope to gain from the removal of the two child limit in 20 2930, approximately 50,000 households are estimated to be capped before the policy change, and a further 10,000 households will be capped after. But in contrast, I should say, my Lord, 550,000 households in Great Britain will gain in full from the removal of the two child limit in 20 2930 and an estimated 2 million children in the United Kingdom.
The Baroness Brady Jank and I think my noble friend Lady Shar raised the impact of poverty on children and schools.
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My noble friend. But could you perhaps just comment on. Because a number of us have made the point about the thresholds for the benefit cap and the fact that child benefit is taken into account? And benefit is taken into account? And when when we were in opposition, we said child benefit should not be taken into account in the cap. So
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taken into account in the cap. So you could just comment on that. OK. In terms of the levels, I've given the same answer a number of times. The the cap has to be reviewed by 2027. The Secretary of State will review it at the appropriate time and certainly within the statutory deadline, and we will make the judgements he makes at the time. I'm very happy to convey the comments that have been made on this. Back to my colleagues in the Department, but the government has taken the view it has on the cap and it's and that's I think we will simply have to leave it at that, I'm afraid, on the question of schools and education.
I mean, it's really striking that schools are using their stretch resources on services such as food banks and providing essentials to children. And research has been mentioned by the Joseph Rowntree Foundation shows that now a third of primary schools run food banks and a quarter are providing essentials, and 38% say the staff provide for pupils and families out of their own pockets. We commissioned research, we got the Children's Commissioner's Office to do some research to support the development of the child poverty strategy, and children and young people spoke about how low income impacts their education and at times limits their career aspirations, including by restricting their access to extracurricular activities.
And I think this is an incredibly important point that was made, I think, by my friend Lord John on Lord Low Walker. I'm sorry, I'm getting that at names, but we listen very carefully to families. When we did that, and they the consistent message was that there was a whole range of benefits that came from lifting the Two-child limit. So it is it's not just about money, it's about all the things that enables. And I think this goes also to the points made by the noble Lord Lord Redwood.
In terms of paying for this. Again, just to be clear, the government has always made clear how it will pay for things when it's announced them, and the removal of the two child limit was made clear at the budget. It was fully funded by policies in the budget, including reforming Motability tax reliefs, clamping down on fraud and error in tax and social Security, and reforming the assessment process. Together, those measures will save £4.9 billion in 2030 31 versus the £3.2 billion cost of removing the two child limit.
The Liberal Viscount Younger raised the question of the OBR and the welfare cap. The government is committed to ensuring that Social Security spending remains on a sustainable path. We set a new welfare cap at Autumn budget 2024 to make sure that it remains under control over the course of this Parliament. Overall forecast Social Security spending is virtually unchanged from the last OBR assessment, increasing by only 0.1% in 20 2930 in the forecast. Indeed, overall welfare spending is forecast to rise by less than half the amount it did under the previous Parliament, just under or just over 0.3 percentage points of GDP by 2030 31, compared with 0.7 previously, and health and disability spending is only expected to rise by 0.3 percentage points, compared by 0.5 compared with 0.5 under the previous government.
So, my Lords, can I just point out that this government inherited a system which did not do all of the things that the opposition say they wanted it to do? In fact, we saw growing numbers of people in economically inactive as a result of health and disability that that graph went up. We have been working hard to bend that graph, and we've been taking the steps that are needed to do it. On the question of employment, parental employment rates are already high. But my Lords, it's really important if we want to get more parents into work, that we remove the barriers that are getting them there.
And one of the key barriers is childcare. That's why we've expanded 30 hours of funded childcare for working parents, saving eligible families, using all 30 hours up to 7500 pounds per eligible child per year. And when we want to talk about larger families having the parents in work, one of the challenges, again, was childcare. We're extending eligibility for universal credit upfront childcare costs, firstly to parents returning from parental leave to ease that transition back to work. And we're providing UC childcare support to help with childcare costs of all children instead of limiting it to two children, so that parents who have larger families can afford to go back to work.
So, my Lords, it clearly isn't about work or Social Security. It's about Social Security enabling work and supporting it. As the noble Lord Lord Boyd Lord Bird has said so clearly. But we know there's more to do. So which is why we are committing to a review led by the Department for Education across Government about access to early education and childcare support, and delivering a simpler system. My Lords, one of the other questions about who would gain answered that and what's coming next.
One of the things we've been very clear about is that this is the child poverty strategy is something that will not solve problems overnight. This is this is this is one step in a journey. And the child poverty strategy is looking forward ten years. And we've already made a number of significant steps, investing heavily in expanding free school meals, lifting, introducing a fair repayment rate into universal credit, investing in support to help people with their energy bills, investing in support across across the piece, raising the minimum wage, looking at what's happening with affordable housing and investing in helping people to get into secure jobs.
But the most important thing will be to monitor that and to make sure that we do it. And so we will will be a comprehensive programme of analysis, making sure that we will know exactly the impact of the changes we're making. And so if the opposition is worried, we'll be monitoring the impacts of what we do. But also this will enable us to work with government departments and the devolved government to consider what we do in future, and to capture the data as we go. Lord Sewell this government is determined to break down barriers to opportunity, to deliver economic growth and to raise living standards.
But removing the two child limit in Universal Credit remains the single fastest and most cost effective lever we have to reduce the number of children growing up in poverty, but it is at the heart of a wider strategy to drive down child poverty and set the next generation up for success. And far from being something that's anti-work, this is. This strategy includes our plan to make work pay, to improve job security, to improve living standards, and to enable people to get on into work.
We do not simply want to move people from out of work into jobs from which they can never progress. If we want social mobility, we need to enable people to develop skills so we can become a high skill, high wage, high investment economy as we've been challenged to do. We've also announced increased UK Universal Credit support, getting people into work, getting them more out into more hours because above all, we believe in the value of every person and the contribution we can make. My Lords, I thought there were some very interesting points made by the noble Lady Baroness Teather and the right reverend Prelate, the Bishop of Leicester, that part of what we have to do is to invest in communities and relationships, that what we can do with money is to remove barriers.
But we need to do as a country is to look at how we engage with our neighbours, how we engage with our communities, how we can support all those in our communities to develop and to fulfil their potential. My noble friend Lord John said that a Labour government is nothing if it doesn't do something to tackle poverty and inequality. Well, my Lords, that's exactly what we're doing here today. This bill, along with the wider actions in the child poverty strategy, will help to deliver the biggest reduction in child poverty over a parliament since comparable records began in the 1990s.
But Lords, it is time to put this counterproductive and cruel policy into the dustbin of history, and to focus instead on building a system that gives children and their families the security and opportunities to build a better life, no matter their background. My Lords, I beg to move.
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The question is this will be now read a second time, as many as are read a second time, as many as are content to of the contrary, not content. the contents have it.
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content. the contents have it. My Lords, I beg to move that this bill be not committed. It isn't this bill be not
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It isn't this bill be not committed. As many as are of that opinion will say content the contrary, not content. The contents have it. My Lords, I beg to move that
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My Lords, I beg to move that this bill be. Now read a third time. This bill be. Now read a third time. As many as that opinion will say content of the contrary, not content. the contents have it.
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The Lords. I beg to move that this bill do now pass. Is that this bill do now pass as
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Is that this bill do now pass as many as of that opinion will say content of the contrary, not content. the contents have it. My content. the contents have it. My Lords will just have a moment's break, so that the children and people can leave unless they want to stay, of course.
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So I.
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My My Lords, My Lords, we My Lords, we now
And the message was really clear remove the two child limit. So my Lords, and I'm very grateful to my noble friend, my friend Baroness Shah for pointing out the challenges we inherited and why it takes time for governments to work through dealing with everything that comes out. But this bill is supported by over 60 organisations representing anti-poverty charities. Perhaps not surprising, but also the children's doctors and teachers and health visitors, the people who know only too well the damaging effects of poverty and see its consequences every day.
And I remain very grateful for the work both of the campaigning organisations and of those professionals who support our children. And for all those who pushed for this change, including the bishops bench, and I share the remembrance of the right reverend Prelate, the former Bishop of Durham who pushed for this in his time in this House. This bill is an investment in to deliver a better future for children and for our country and many noble Lords, including the noble Lady Baroness Teather and the right reverend Prelate.
The Bishop of Leicester have set out the devastating impact that poverty has on children and many, including my noble friend Lord Babudu, have pointed out that poverty is not evenly distributed. My Lords, poverty holds imposes really significant costs on individuals and the country. But let me start with, I think with the official opposition, because they have set out clearly why they oppose it. But my Lords, it's my experience in many years in and around politics, if you want to defend the indefensible, the first thing you do is set up some clearly false dichotomies.
So let's start and say, what have we listened to today? It's children versus defence. Of course it isn't, my Lords. Now, if I were going to play politics, I would point out that if the government felt that passionately about it, the Conservatives, when they were in government, felt that passionately, maybe they shouldn't have cut £12 billion from defence spending in their first term alone. Maybe what they shouldn't have done is cut spending from the 2.5% the last Labour government left, pushing us to have to raise it up to 2.6% by next year.
Maybe they shouldn't have slashed child poverty. They weren't choosing between the two things. They actually attacked both of them. Now we can have that kind of conversation or we can have a different kind of conversation. So let's take a step back and look at what actually happens in the policies. So what's the other false dichotomy? I think we fall into a mistake if we try to set up Social Security versus work. I'm not repeating the figures that 59% of families hit by the Two-child limit are in work.
To make a political point, I am pointing out that our Social Security system is there to help people in and out of work, and to help them from out of work into work. And if the barriers get in the way of people being able to move into work, then the system is not doing its job. And every time we start trying to pretend this is contrasting people lying in bed all day with the blinds shut, with those who go out to work, we do everyone a disservice.
So please, let's not have that conversation. What we do want to do is to recognise we have to enable work. We have to encourage work, we have to take away the barriers to work. That's really important. And we have to recognise that those in and out of work, neither of those are static populations. People move between those states for a whole range of reasons, and our job is to make those who can work in work as much of the time to stay in work as much as they can, for as long as they can, and if they come out to help them back into it when they can.
But if they can't, to support them, because that's what we do by pooling risk. I thought the noble Lord Lord Redwood made some very interesting points. I parted company with him when he got on to a certain point in the speech, but it was a really interesting point that this policy clearly isn't a panacea, and we clearly the state can't and shouldn't pretend. It can solve all the problems families have. And the state doesn't raise children, families raise children. So I think the starting point, however, is that if we want to tackle child poverty, as the noble Viscount Viscount Younger said, he does, the first thing we have to do is stop making it worse.
And so the first thing we do is stop making it worse, stop tipping more children into poverty every year. The second step is to work out what are the barriers to people moving into work and developing in their lives that the noble Lord Lord Redwood mentioned some of those that are nothing to do with money, and the state can only do what it can. Try to make it as easy as possible for families to do the right thing. Invest in relationship education, invest in supporting families, invest in all kinds of education in communities and relationships.
But what it can do is to tackle the things it can do something about. And it's definitely not all about money, but it's not not about money. And the statistics show really clearly, for example, the impact of poverty on family Break-Up, the impact on poverty, on parents struggling to be able to do the right thing by their kids. So we need to do both. And the next thing we need to do is create opportunities. And this is where I always hate disagreeing with the noble Lord Lord Bird, because I know that he will come back at me rightly, but I think we have to start to move, not away from, but beyond the handout versus hand up.
I absolutely agree with him that our job is to give people a hand up, and he has done that in his time, as indeed has the noble Baroness Stedman-Scott. But I would not contrast that with any support the state gives to those who are struggling when they need it, because of course, a lot of what we do is both of those things, like, like my noble friend Lord Walker, I have a real interest in how do we use my department to help those who are struggling to get into work.
Just this week, I was offered a conference talking to businesses who were helping ex-offenders into
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work, and also the Minister responsible for helping. Working mentioned. It, but isn't it wonderful that
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It, but isn't it wonderful that Social Security can be used as a hand up? That's the point I'm trying to make. I'm not trying to trying to make. I'm not trying to make the point of work versus Social Security. I'm saying a hand Social Security. I'm saying a hand up is absolutely marvellous. The greatest hand up I got was a
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probation officer. Indeed. And his probation officer did a very good job because look where he's ended up. So with all that successful, it's quite a high bar to set them to, but I commend it. I think that's a really great point. And in that case, I'm now violently agreeing with the noble Lord and I will move on. I want the Social Security system to do its job, and for most people, its job is to support them into work and on work and to develop in work.
And that's very much what this government is seeking to do. So, my Lords, one of the challenges I think about universal Credit is the assumption it was designed to move people in and out of work, to work in and out of work. And where it works well, it does that really well. All we're doing is making sure the system works even better than it can do. But I think the, the assumption that the, the, that this government is doing the wrong thing by spending money on tackling child poverty, I think is just fundamentally mistaken.
I mean, my noble, my noble friend, Lord Walker talked about the need to make sure we tackle, for example, NEETs. But we have 1 in 8 of our young people not in employment, education or training. But my Lords, they didn't start at 16. OK. It's going to be a long day. Yeah.
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I just want to make the point. We're not saying you shouldn't spend money. It's what you spend it
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spend money. It's what you spend it on and how you spend it to get the best outcome for what you're trying to do. Understand that, my Lords, but
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Understand that, my Lords, but also I've looked at what the last government spent the money on and I've looked at the results and I I've looked at the results and I don't like it. And therefore we're going to do something different. And if I think my simple view is if we want, we will. The end of tackling child poverty. We have to will the means. We believe that removing this barrier is fundamental. We can't expect people, those young people who are needs.
At 16, they didn't start at 16. They started somewhere. They started without the opportunities. They started without the education. They started without the the start in life they should have. And the evidence shows quite clearly that people who children who grew up in poverty are likely to have poor mental health, fewer opportunities, less chance to do all of those things we want them to do. So what we're doing is enabling those people to have opportunities, giving them the start they need. And if we can get that in place, then the whole country benefits we.
Then, instead of supporting people not to work, we're giving them the chance to flourish as individuals and to make the contribution to our society that they won't get the chance to make. Otherwise. Before I get myself into any more flights of rhetoric, I should actually answer some of the questions that have been asked. Let me look. There was some specifics. My noble friend Lady Lister asked me a specific question about council tax reduction. And and I think just she knows this. But just for the record, of course, local councils are responsible for designing and reviewing their own council tax reduction schemes.
My department's been working with Mhclg to communicate the change to local authorities, and they have been encouraged to consider the impact of their schemes in the light of the removal of the two child limit. But just to say, in 20 2930, an estimated 560,000 families will see an increase in their Universal Credit Award, with these families gaining on average a £440 a month. The impact of transitional protection, I think she asked about the impact assessment is included in the impact assessment, but not on the numbers of households.
The benefit cap was raised by my friend Eddie Lister, but also by the Baroness Brady tether. My noble friend Lord Davis and the noble Lady Bennett and a few other colleagues. I think I simply have to say this government believes that we want to preserve the fundamental principle that work is the best route out of poverty, and the government believes that leaving the overall benefit cap in place encourages personal responsibility while maintaining the incentive to work that, where possible, it is in the best interests of children to be in working households.
Being in work substantially reduces the chance of poverty. The poverty rate of children living in households where all adults are in work is 17%, compared to 65% for children who live in households where no adults work. We will continue to protect the most vulnerable as those who are unable to work because of a disability or a caring responsibility are protected and exempted from that. I think the noble Baroness Brady Bennett asked about numbers. Yes. When I answered the written question from her, I think it was I think I answered it.
The impact assessment hadn't been published at that point. So I can say that among households in scope to gain from the removal of the two child limit in 20 2930, approximately 50,000 households are estimated to be capped before the policy change, and a further 10,000 households will be capped after. But in contrast, I should say, my Lord, 550,000 households in Great Britain will gain in full from the removal of the two child limit in 20 2930 and an estimated 2 million children in the United Kingdom.
The Baroness Brady Jank and I think my noble friend Lady Shar raised the impact of poverty on children and schools.
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My noble friend. But could you perhaps just comment on. Because a number of us have made the point about the thresholds for the benefit cap and the fact that child benefit is taken into account? And benefit is taken into account? And when when we were in opposition, we said child benefit should not be taken into account in the cap. So
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taken into account in the cap. So you could just comment on that. OK. In terms of the levels, I've given the same answer a number of times. The the cap has to be reviewed by 2027. The Secretary of State will review it at the appropriate time and certainly within the statutory deadline, and we will make the judgements he makes at the time. I'm very happy to convey the comments that have been made on this. Back to my colleagues in the Department, but the government has taken the view it has on the cap and it's and that's I think we will simply have to leave it at that, I'm afraid, on the question of schools and education.
I mean, it's really striking that schools are using their stretch resources on services such as food banks and providing essentials to children. And research has been mentioned by the Joseph Rowntree Foundation shows that now a third of primary schools run food banks and a quarter are providing essentials, and 38% say the staff provide for pupils and families out of their own pockets. We commissioned research, we got the Children's Commissioner's Office to do some research to support the development of the child poverty strategy, and children and young people spoke about how low income impacts their education and at times limits their career aspirations, including by restricting their access to extracurricular activities.
And I think this is an incredibly important point that was made, I think, by my friend Lord John on Lord Low Walker. I'm sorry, I'm getting that at names, but we listen very carefully to families. When we did that, and they the consistent message was that there was a whole range of benefits that came from lifting the Two-child limit. So it is it's not just about money, it's about all the things that enables. And I think this goes also to the points made by the noble Lord Lord Redwood.
In terms of paying for this. Again, just to be clear, the government has always made clear how it will pay for things when it's announced them, and the removal of the two child limit was made clear at the budget. It was fully funded by policies in the budget, including reforming Motability tax reliefs, clamping down on fraud and error in tax and social Security, and reforming the assessment process. Together, those measures will save £4.9 billion in 2030 31 versus the £3.2 billion cost of removing the two child limit.
The Liberal Viscount Younger raised the question of the OBR and the welfare cap. The government is committed to ensuring that Social Security spending remains on a sustainable path. We set a new welfare cap at Autumn budget 2024 to make sure that it remains under control over the course of this Parliament. Overall forecast Social Security spending is virtually unchanged from the last OBR assessment, increasing by only 0.1% in 20 2930 in the forecast. Indeed, overall welfare spending is forecast to rise by less than half the amount it did under the previous Parliament, just under or just over 0.3 percentage points of GDP by 2030 31, compared with 0.7 previously, and health and disability spending is only expected to rise by 0.3 percentage points, compared by 0.5 compared with 0.5 under the previous government.
So, my Lords, can I just point out that this government inherited a system which did not do all of the things that the opposition say they wanted it to do? In fact, we saw growing numbers of people in economically inactive as a result of health and disability that that graph went up. We have been working hard to bend that graph, and we've been taking the steps that are needed to do it. On the question of employment, parental employment rates are already high. But my Lords, it's really important if we want to get more parents into work, that we remove the barriers that are getting them there.
And one of the key barriers is childcare. That's why we've expanded 30 hours of funded childcare for working parents, saving eligible families, using all 30 hours up to 7500 pounds per eligible child per year. And when we want to talk about larger families having the parents in work, one of the challenges, again, was childcare. We're extending eligibility for universal credit upfront childcare costs, firstly to parents returning from parental leave to ease that transition back to work. And we're providing UC childcare support to help with childcare costs of all children instead of limiting it to two children, so that parents who have larger families can afford to go back to work.
So, my Lords, it clearly isn't about work or Social Security. It's about Social Security enabling work and supporting it. As the noble Lord Lord Boyd Lord Bird has said so clearly. But we know there's more to do. So which is why we are committing to a review led by the Department for Education across Government about access to early education and childcare support, and delivering a simpler system. My Lords, one of the other questions about who would gain answered that and what's coming next.
One of the things we've been very clear about is that this is the child poverty strategy is something that will not solve problems overnight. This is this is this is one step in a journey. And the child poverty strategy is looking forward ten years. And we've already made a number of significant steps, investing heavily in expanding free school meals, lifting, introducing a fair repayment rate into universal credit, investing in support to help people with their energy bills, investing in support across across the piece, raising the minimum wage, looking at what's happening with affordable housing and investing in helping people to get into secure jobs.
But the most important thing will be to monitor that and to make sure that we do it. And so we will will be a comprehensive programme of analysis, making sure that we will know exactly the impact of the changes we're making. And so if the opposition is worried, we'll be monitoring the impacts of what we do. But also this will enable us to work with government departments and the devolved government to consider what we do in future, and to capture the data as we go. Lord Sewell this government is determined to break down barriers to opportunity, to deliver economic growth and to raise living standards.
But removing the two child limit in Universal Credit remains the single fastest and most cost effective lever we have to reduce the number of children growing up in poverty, but it is at the heart of a wider strategy to drive down child poverty and set the next generation up for success. And far from being something that's anti-work, this is. This strategy includes our plan to make work pay, to improve job security, to improve living standards, and to enable people to get on into work.
We do not simply want to move people from out of work into jobs from which they can never progress. If we want social mobility, we need to enable people to develop skills so we can become a high skill, high wage, high investment economy as we've been challenged to do. We've also announced increased UK Universal Credit support, getting people into work, getting them more out into more hours because above all, we believe in the value of every person and the contribution we can make. My Lords, I thought there were some very interesting points made by the noble Lady Baroness Teather and the right reverend Prelate, the Bishop of Leicester, that part of what we have to do is to invest in communities and relationships, that what we can do with money is to remove barriers.
But we need to do as a country is to look at how we engage with our neighbours, how we engage with our communities, how we can support all those in our communities to develop and to fulfil their potential. My noble friend Lord John said that a Labour government is nothing if it doesn't do something to tackle poverty and inequality. Well, my Lords, that's exactly what we're doing here today. This bill, along with the wider actions in the child poverty strategy, will help to deliver the biggest reduction in child poverty over a parliament since comparable records began in the 1990s.
But Lords, it is time to put this counterproductive and cruel policy into the dustbin of history, and to focus instead on building a system that gives children and their families the security and opportunities to build a better life, no matter their background. My Lords, I beg to move.
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The question is this will be now read a second time, as many as are read a second time, as many as are content to of the contrary, not content. the contents have it.
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content. the contents have it. My Lords, I beg to move that this bill be not committed. It isn't this bill be not
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It isn't this bill be not committed. As many as are of that opinion will say content the contrary, not content. The contents have it. My Lords, I beg to move that
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My Lords, I beg to move that this bill be. Now read a third time. This bill be. Now read a third time. As many as that opinion will say content of the contrary, not content. the contents have it.
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The Lords. I beg to move that this bill do now pass. Is that this bill do now pass as
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Is that this bill do now pass as many as of that opinion will say content of the contrary, not content. the contents have it. My content. the contents have it. My Lords will just have a moment's break, so that the children and people can leave unless they want to stay, of course.
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So I.
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My My Lords, My Lords, we My Lords, we now
17:43
17:43
Lord Stockwood, Minister of State (HM Treasury) (Labour)
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Lord Stockwood, Minister of State (HM Treasury) (Labour)
I beg. be read a second time. My Lords, this is a simple bill that I'm honoured to bring to the House today. The bill has two main provisions. It raises the statutory limits in the Industrial Development Act of 1982 and the Export and Investment Guarantees Act of 1991. These provisions ensure that the government can continue to support British industry and British exporters with financial assistance. This matters because we know that exporting firms grow faster, they are more productive, they offer better jobs and higher wages than businesses that only sell domestically.
And yet we know that access to finance can be a major headache for those same businesses, and it's particularly tough for those that want to export millions of pounds worth of goods. Getting the necessary financial guarantees can be the biggest hurdle to exporting abroad, but my noble Lords will know that these exports hold the key to a company's growth. Just a single deal can be the thing that makes or breaks a company. Export finance is having a tremendous impact on our economy. £14.5 billion of UK export finance support last year is supporting over 70,000 jobs, including across key industrial sectors like clean energy, advanced manufacturing, life sciences and the automotive sector, and the existing provisions in the Industrial Development Act, the British Business Bank's Northern Powerhouse Investment Fund two has directly invested £115 million worth of capital into over 300 small businesses.
Similarly, in the Midlands, the Midlands Engine Investment Fund two has also launched a £400 million fund to drive sustainable economic growth by supporting innovation and creating local opportunity for new and growing businesses. But we want to take this further so that we can drive even more growth across even greater regions. With this bill, we will ensure that transformational levels of government support will be there for industry tomorrow. The bill also contains some technical provisions, like changing the currency from special drawing rights to pound sterling, and allows for the delegation of future increases to export finance to secondary legislation.
I'm sure my Lords will champion this assistance provided through the Industrial Development Act and UK Export Finance that has helped businesses to grow through trade, creating jobs and fostering economic growth. It ensures we can go faster, further supporting more businesses to be pioneers in the sectors that are front and centre of the UK's economy. In tandem with the new trade strategy, more businesses than ever will be empowered to export with the financial firepower of the government behind them. This bill can only mean better prospects for those businesses, for our economy and for the UK, and boost economic growth in the coming years.
I'm thankful to the colleagues in the other place for their scrutiny of the bill so far, and look forward to the wisdom and expertise of my Lords will bring to this move.
And yet we know that access to finance can be a major headache for those same businesses, and it's particularly tough for those that want to export millions of pounds worth of goods. Getting the necessary financial guarantees can be the biggest hurdle to exporting abroad, but my noble Lords will know that these exports hold the key to a company's growth. Just a single deal can be the thing that makes or breaks a company. Export finance is having a tremendous impact on our economy. £14.5 billion of UK export finance support last year is supporting over 70,000 jobs, including across key industrial sectors like clean energy, advanced manufacturing, life sciences and the automotive sector, and the existing provisions in the Industrial Development Act, the British Business Bank's Northern Powerhouse Investment Fund two has directly invested £115 million worth of capital into over 300 small businesses.
Similarly, in the Midlands, the Midlands Engine Investment Fund two has also launched a £400 million fund to drive sustainable economic growth by supporting innovation and creating local opportunity for new and growing businesses. But we want to take this further so that we can drive even more growth across even greater regions. With this bill, we will ensure that transformational levels of government support will be there for industry tomorrow. The bill also contains some technical provisions, like changing the currency from special drawing rights to pound sterling, and allows for the delegation of future increases to export finance to secondary legislation.
I'm sure my Lords will champion this assistance provided through the Industrial Development Act and UK Export Finance that has helped businesses to grow through trade, creating jobs and fostering economic growth. It ensures we can go faster, further supporting more businesses to be pioneers in the sectors that are front and centre of the UK's economy. In tandem with the new trade strategy, more businesses than ever will be empowered to export with the financial firepower of the government behind them. This bill can only mean better prospects for those businesses, for our economy and for the UK, and boost economic growth in the coming years.
I'm thankful to the colleagues in the other place for their scrutiny of the bill so far, and look forward to the wisdom and expertise of my Lords will bring to this move.
17:46
Lord Sharpe of Epsom (Conservative)
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Lord Sharpe of Epsom (Conservative)
The question is that this bill be. Now read a second time. >> My Lords, it's a pleasure to follow the noble Lord, and I look forward to sharing some wisdom and expertise. At least I hope so. I'm very grateful to the noble Lord Lord Stockwood for his introduction, and I'm very grateful for the opportunity to respond on behalf of these benches. And I should say at the outset that we do not oppose this bill. Updating financial limits that have sat unchanged for decades is both sensible and necessary as a piece of housekeeping.
And we recognise, of course, the importance of ensuring that government retains the tools to support British industry and exporters where that support is genuinely warranted. And I thought the noble Lord gave some very good examples, but I do want to use this occasion to raise some broader concerns, not about the bill in isolation, but about what it may mean for the direction of this government's industrial policy more widely. I think the question we have to ask is not merely whether the government can provide financial assistance to industry, but whether the cumulative effect of doing so repeatedly, expansively and as a matter of instinct, risks becoming a substitute for the structural reforms that our economy needs.
Subsidisation has a seductive logic. It's visible. It feels like action. And I think the noble Lord just called it transformational. But we on these benches believe that when the state steps in to cushion at risk, it does not eliminate that risk, it merely transfers it to the taxpayer, while similarly simultaneously distorting the market signals upon which businesses depend to allocate capital efficiently. Now, the government should recognise that the misallocation of resources that follows is not always immediately apparent, but its effects do compound over time.
The most powerful industrial policy this government could pursue is not one measured in billions of pounds of guarantees and grants, it's one measured in the burdens lifted from the shoulders of British businesses. So we would urge the government to focus their energies, their energy costs and in particular, the weight of environmental levies on businesses in energy bills. Electricity bills remain a very serious competitive disadvantage for British industry. Unnecessary reporting requirements consume the time and attention of managers who ought to be focussed on growth.
And I have to mention, I'm afraid the Employment Rights Act, which the government's own figures suggest will impose over £1 billion in administrative costs on business, which is a figure that, as businesses have warned, is widely regarded as a considerable underestimate. These are the frictions that erode competitiveness quietly and relentlessly, and no amount of export finance can compensate for those. Also, as we discussed in in a question earlier this week, they impact on the quantity of foreign direct investment. I'd like to also make a more fundamental point about risk.
There is a tendency in industrial policy debates to treat risk as an enemy that needs to be neutralised. But risk is not a problem, not merely a problem. It is also a signal and a productive one. It's the prospect of return that draws private capital toward genuinely promising ventures. When the state steps in to underwrite commercial risk too broadly or too readily, it does not simply help good projects that the market overlooked. It also sustained projects that the market had rationally declined to back.
We should be cautious about inadvertently engineering away the discipline that risk imposes, because that discipline is part of what makes markets work. I appreciate that this was all debated in another place, but could the Nobel Lords Minister explain the balance that he expects to see between private capital and UK export finance funding, and how he expects this to work in practice? That said, my Lords, we are not dogmatic. We recognise that there are strategic sectors of the economy and the noble Lord highlighted some where there is a case for targeted support and that in some cases, government has an instrumental role to play in getting exports over the line.
We recognise that we live in a world of intensifying geopolitical competition. So the rise of China as an industrial and technological power. The fragility of supply chains that were exposed so brutally during the pandemic, and the imperative of maintaining domestic capability in defence and critical technologies. All of these create a legitimate case for a limited role for government. We don't dispute that. What we dispute is the notion that broad, expansive subsidisation should always be the appropriate or default instrument, or that it can substitute for the competitive fundamentals that underpin long term industrial strength.
A strong industrial and domestic base is built on competitive energy, minimal regulations, a tax system that rewards investment, and a labour market that gives businesses the flexibility to grow. Financial assistance of the kind that. This bill enables you to sit atop those foundations and not be deployed in their absence. My Lords, this bill had a Second Reading in another place on the 23rd of February, during a debate on my hon. Friend Dame Harriet Baldwin's eminently sensible and reasonable amendment relating to reporting requirements for UK export finance in relation to the steel industry, the Minister, in another place, argued that it was unnecessary because the steel strategy would be published in due course.
I'm sure the Minister knows what's coming. My Lords, the steel strategy was originally promised last year without reopening the entire debate. But with costs mounting daily at British Steel up to £370 million already, according to a recent letter from the minister's colleague, the noble Lady Baroness Lloyd, which I think is almost certainly a dramatic understatement. By the way, can I ask the noble Minister to be more specific? When will we see the steel strategy? My Lords, to conclude, I think it's worth heeding the words, the very wise words of President Reagan, who once said that the nine most terrifying words in the English language are I'm from the government and I'm here to help.
So we will therefore continue to press the government on whether their industrial strategy is truly oriented towards building competitive strength, or whether it risks drifting toward toward a model of managed dependency where the taxpayer bears the risk, the market loses its discipline, and British businesses are, in the longer run, no stronger for it.
And we recognise, of course, the importance of ensuring that government retains the tools to support British industry and exporters where that support is genuinely warranted. And I thought the noble Lord gave some very good examples, but I do want to use this occasion to raise some broader concerns, not about the bill in isolation, but about what it may mean for the direction of this government's industrial policy more widely. I think the question we have to ask is not merely whether the government can provide financial assistance to industry, but whether the cumulative effect of doing so repeatedly, expansively and as a matter of instinct, risks becoming a substitute for the structural reforms that our economy needs.
Subsidisation has a seductive logic. It's visible. It feels like action. And I think the noble Lord just called it transformational. But we on these benches believe that when the state steps in to cushion at risk, it does not eliminate that risk, it merely transfers it to the taxpayer, while similarly simultaneously distorting the market signals upon which businesses depend to allocate capital efficiently. Now, the government should recognise that the misallocation of resources that follows is not always immediately apparent, but its effects do compound over time.
The most powerful industrial policy this government could pursue is not one measured in billions of pounds of guarantees and grants, it's one measured in the burdens lifted from the shoulders of British businesses. So we would urge the government to focus their energies, their energy costs and in particular, the weight of environmental levies on businesses in energy bills. Electricity bills remain a very serious competitive disadvantage for British industry. Unnecessary reporting requirements consume the time and attention of managers who ought to be focussed on growth.
And I have to mention, I'm afraid the Employment Rights Act, which the government's own figures suggest will impose over £1 billion in administrative costs on business, which is a figure that, as businesses have warned, is widely regarded as a considerable underestimate. These are the frictions that erode competitiveness quietly and relentlessly, and no amount of export finance can compensate for those. Also, as we discussed in in a question earlier this week, they impact on the quantity of foreign direct investment. I'd like to also make a more fundamental point about risk.
There is a tendency in industrial policy debates to treat risk as an enemy that needs to be neutralised. But risk is not a problem, not merely a problem. It is also a signal and a productive one. It's the prospect of return that draws private capital toward genuinely promising ventures. When the state steps in to underwrite commercial risk too broadly or too readily, it does not simply help good projects that the market overlooked. It also sustained projects that the market had rationally declined to back.
We should be cautious about inadvertently engineering away the discipline that risk imposes, because that discipline is part of what makes markets work. I appreciate that this was all debated in another place, but could the Nobel Lords Minister explain the balance that he expects to see between private capital and UK export finance funding, and how he expects this to work in practice? That said, my Lords, we are not dogmatic. We recognise that there are strategic sectors of the economy and the noble Lord highlighted some where there is a case for targeted support and that in some cases, government has an instrumental role to play in getting exports over the line.
We recognise that we live in a world of intensifying geopolitical competition. So the rise of China as an industrial and technological power. The fragility of supply chains that were exposed so brutally during the pandemic, and the imperative of maintaining domestic capability in defence and critical technologies. All of these create a legitimate case for a limited role for government. We don't dispute that. What we dispute is the notion that broad, expansive subsidisation should always be the appropriate or default instrument, or that it can substitute for the competitive fundamentals that underpin long term industrial strength.
A strong industrial and domestic base is built on competitive energy, minimal regulations, a tax system that rewards investment, and a labour market that gives businesses the flexibility to grow. Financial assistance of the kind that. This bill enables you to sit atop those foundations and not be deployed in their absence. My Lords, this bill had a Second Reading in another place on the 23rd of February, during a debate on my hon. Friend Dame Harriet Baldwin's eminently sensible and reasonable amendment relating to reporting requirements for UK export finance in relation to the steel industry, the Minister, in another place, argued that it was unnecessary because the steel strategy would be published in due course.
I'm sure the Minister knows what's coming. My Lords, the steel strategy was originally promised last year without reopening the entire debate. But with costs mounting daily at British Steel up to £370 million already, according to a recent letter from the minister's colleague, the noble Lady Baroness Lloyd, which I think is almost certainly a dramatic understatement. By the way, can I ask the noble Minister to be more specific? When will we see the steel strategy? My Lords, to conclude, I think it's worth heeding the words, the very wise words of President Reagan, who once said that the nine most terrifying words in the English language are I'm from the government and I'm here to help.
So we will therefore continue to press the government on whether their industrial strategy is truly oriented towards building competitive strength, or whether it risks drifting toward toward a model of managed dependency where the taxpayer bears the risk, the market loses its discipline, and British businesses are, in the longer run, no stronger for it.
17:52
Lord Pitkeathley of Camden Town (Labour)
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Lord Pitkeathley of Camden Town (Labour)
My Lord, in my experience, smaller businesses rarely wake up in the morning worrying about statutory ceilings. In the Industrial Development Act. What they worry about is whether they can secure the finance and insurance needed to win the next contract. In my day job, I spend a lot of time around smaller and growing firms, particularly in creative technology and service sectors. These are precisely the sorts of businesses that increasingly make up the modern export economy.
What they usually lack is not ambition. There is no shortage of that. What they lack are the financial tools that allow them to take on international contracts with confidence, manage risk and secure working capital. That is why I broadly welcome the intent behind this bill. Much of it is, in truth, a pragmatic adjustment. It updates the statutory limits under the Industrial Development Act and expands the capacity of UK export finance so that it continues, can continue supporting British exports exporters at scale.
In that sense, it is partially a piece of inflation catch up. The limit for financial assistance under the Industrial Development Act has not been increased. Since 2009. Quite a lot has happened in the economy since then, and the scale of support required to compete internationally has inevitably grown. Updating these ceilings before therefore seems sensible. However, raising the ceiling is the easy part. The more interesting question for Parliament is what happens beneath it? UK export finance is already operating at considerable scale.
In the most recent years, it supported hundreds of businesses, thousands of jobs and billions of pounds of economic activity. Those are significant numbers, but the real test is whether the system helps the right kinds of businesses to grow and export. So as we expand the capacity of these schemes, it would be helpful to understand how accessible they are to smaller firms, especially those outside the traditional large project and infrastructure sectors. The export finance has historically focussed on. Very often these firms are not looking for a vast intervention from government.
What they need is something more practical the ability to ensure risk, unlock working capital and give a bank the confidence to support an export contract. The bill also makes future increases in UK export finances statutory limit easier. It allows the government to raise the cap in increments of up to 15 billion through secondary legislation, and removes the limit on how many times the mechanism can be used. I should declare an interest as a member of the Secondary Legislation Committee in this House.
That flexibility may well be sensible, but if Parliament is effectively creating the ability to expand the program repeatedly over time, it seems reasonable that we should also have a clearer picture of how the portfolio is evolving. For example, it would be useful for Parliament to see a regular statement covering the composition of the portfolio, the share of support reaching smaller firms, the regional spread of activity and the level of financial risk and exposure being taken on. A dashboard.
If you like. The explanatory material also emphasises that UK export finance operates on a sustainable basis, and with the aim of delivering no net cost to the taxpayer over time. That's an important discipline and the scale of the commitments grows as the scale of the commitments grows. Understanding how that principle is being applied in practice becomes increasingly important. Ultimately, the success of this legislation will not be measured by the size of the ceiling we approve today. But whether more British firms are actually winning business around the world tomorrow.
So while I support the direction of the bill, I'll be grateful if the Minister could address two points. Firstly, how does the government intend to ensure that the expanded capacity of UK export finance translates into wider access for smaller and newer exporters across the country? And secondly, given the new mechanism allowing repeatedly increases in. Given the mechanism allows repeated increases in statutory limit, will the government consider providing Parliament with regular reporting on the size, composition and risk profile of the portfolio so that this House can see clearly how that expanded headroom is being used? If the government can provide reassurance on these points, many of us will feel comfortable supporting this, this sensible and pragmatic measure.
My Lords, I look forward to the minister's response.
What they usually lack is not ambition. There is no shortage of that. What they lack are the financial tools that allow them to take on international contracts with confidence, manage risk and secure working capital. That is why I broadly welcome the intent behind this bill. Much of it is, in truth, a pragmatic adjustment. It updates the statutory limits under the Industrial Development Act and expands the capacity of UK export finance so that it continues, can continue supporting British exports exporters at scale.
In that sense, it is partially a piece of inflation catch up. The limit for financial assistance under the Industrial Development Act has not been increased. Since 2009. Quite a lot has happened in the economy since then, and the scale of support required to compete internationally has inevitably grown. Updating these ceilings before therefore seems sensible. However, raising the ceiling is the easy part. The more interesting question for Parliament is what happens beneath it? UK export finance is already operating at considerable scale.
In the most recent years, it supported hundreds of businesses, thousands of jobs and billions of pounds of economic activity. Those are significant numbers, but the real test is whether the system helps the right kinds of businesses to grow and export. So as we expand the capacity of these schemes, it would be helpful to understand how accessible they are to smaller firms, especially those outside the traditional large project and infrastructure sectors. The export finance has historically focussed on. Very often these firms are not looking for a vast intervention from government.
What they need is something more practical the ability to ensure risk, unlock working capital and give a bank the confidence to support an export contract. The bill also makes future increases in UK export finances statutory limit easier. It allows the government to raise the cap in increments of up to 15 billion through secondary legislation, and removes the limit on how many times the mechanism can be used. I should declare an interest as a member of the Secondary Legislation Committee in this House.
That flexibility may well be sensible, but if Parliament is effectively creating the ability to expand the program repeatedly over time, it seems reasonable that we should also have a clearer picture of how the portfolio is evolving. For example, it would be useful for Parliament to see a regular statement covering the composition of the portfolio, the share of support reaching smaller firms, the regional spread of activity and the level of financial risk and exposure being taken on. A dashboard.
If you like. The explanatory material also emphasises that UK export finance operates on a sustainable basis, and with the aim of delivering no net cost to the taxpayer over time. That's an important discipline and the scale of the commitments grows as the scale of the commitments grows. Understanding how that principle is being applied in practice becomes increasingly important. Ultimately, the success of this legislation will not be measured by the size of the ceiling we approve today. But whether more British firms are actually winning business around the world tomorrow.
So while I support the direction of the bill, I'll be grateful if the Minister could address two points. Firstly, how does the government intend to ensure that the expanded capacity of UK export finance translates into wider access for smaller and newer exporters across the country? And secondly, given the new mechanism allowing repeatedly increases in. Given the mechanism allows repeated increases in statutory limit, will the government consider providing Parliament with regular reporting on the size, composition and risk profile of the portfolio so that this House can see clearly how that expanded headroom is being used? If the government can provide reassurance on these points, many of us will feel comfortable supporting this, this sensible and pragmatic measure.
My Lords, I look forward to the minister's response.
17:57
Lord Empey (Ulster Unionist Party)
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Lord Empey (Ulster Unionist Party)
My Lords, I. trade Minister and in Northern Ireland, as also a Vice president of the Institute of Export and International Trade for many years. The first committee I served on in your Lordships House was about 2012, and it dealt with it. It did an inquiry into SMEs, and I listened very carefully to what Lord Pitkeathley has just said. One of the interesting things was that at that particular time, export finance had just begun, I think, in its new current iteration from the old Export Credits Guarantee department, which still exists.
And it had only guaranteed companies in single figures, and they all tended to be the big battalions. Rolls Royce, British Aerospace, etc. etc. and it does. It has moved, it has changed, and I have no issues with the raising of the limits. Perfectly sensible. But as the previous speaker did say, it's what you do with the raised figures. It's currently supporting allegedly 2700 companies in the last current year. Now that is a tiny fraction of SMEs in the United Kingdom, which can be measured in their hundreds of thousands.
And it has become increasingly challenging to get companies to export because of the risks associated with it. We've only to look at our newspapers and television screens today to see some of those risks clearly and visibly exposed. So the question to me, is it at the scale that it is helping SMEs? It is simply insufficient because don't forget, it's not simply a UK export finance putting money in his pocket and giving it to a company.
It is guaranteeing and a bank is giving the money and the bank then goes through its processes. And that's where things start to unravel, in my view, because the banks take their own attitude to to lending, particularly to small and medium sized companies. A Rolls Royce or a BA systems happy days there. Big companies. There are a lot of government contracts, easy stuff. And if we need to look at the need to resolve this matter, we've only to look at our balance of trade.
This country hasn't had a balance of trade services surplus since 1983. And look at the gap with China. Massive. So I have asked on a number of occasions whether the departments would look at having a policy of providing information to companies on import substitution. It used to happen. But then I guess if we're moving towards closer integration with the EU, again, that will be seen by them as a challenge to their way of doing things.
So I'm just saying that I agree entirely that the. Raising of the perfectly sensible. But there has to be a focus on getting our smaller businesses to export because there are challenges. And if we leave it simply to how the banks are going to measure these things, I think we're not going to get the breakthrough that we need. And I would therefore ask the Minister to take that back to his department, because getting small and medium sized businesses to get exporting into their minds and even open the possibility of it to them, is the only way we're going to fix our balance of trade, relying on a diminishing number of large companies, which is what the reality is, is not going to be sufficient.
So it is the small companies, many of them family owned, and we know all the system about the two BMWs and the in the driveway. Why take the risk? Why bother? But if we don't bother, we're not going to see those companies create the jobs for the next generation. And we're facing AI challenges. We're facing all of these things which we really don't know how to measure at the moment. And I would just say to the Minister to ask his department to look again at whether some kind of direction or advice can be given, not only to export finance, but generally to our financial institutions as a whole, because it is that that is the source of the of the funding that is being guaranteed.
And it had only guaranteed companies in single figures, and they all tended to be the big battalions. Rolls Royce, British Aerospace, etc. etc. and it does. It has moved, it has changed, and I have no issues with the raising of the limits. Perfectly sensible. But as the previous speaker did say, it's what you do with the raised figures. It's currently supporting allegedly 2700 companies in the last current year. Now that is a tiny fraction of SMEs in the United Kingdom, which can be measured in their hundreds of thousands.
And it has become increasingly challenging to get companies to export because of the risks associated with it. We've only to look at our newspapers and television screens today to see some of those risks clearly and visibly exposed. So the question to me, is it at the scale that it is helping SMEs? It is simply insufficient because don't forget, it's not simply a UK export finance putting money in his pocket and giving it to a company.
It is guaranteeing and a bank is giving the money and the bank then goes through its processes. And that's where things start to unravel, in my view, because the banks take their own attitude to to lending, particularly to small and medium sized companies. A Rolls Royce or a BA systems happy days there. Big companies. There are a lot of government contracts, easy stuff. And if we need to look at the need to resolve this matter, we've only to look at our balance of trade.
This country hasn't had a balance of trade services surplus since 1983. And look at the gap with China. Massive. So I have asked on a number of occasions whether the departments would look at having a policy of providing information to companies on import substitution. It used to happen. But then I guess if we're moving towards closer integration with the EU, again, that will be seen by them as a challenge to their way of doing things.
So I'm just saying that I agree entirely that the. Raising of the perfectly sensible. But there has to be a focus on getting our smaller businesses to export because there are challenges. And if we leave it simply to how the banks are going to measure these things, I think we're not going to get the breakthrough that we need. And I would therefore ask the Minister to take that back to his department, because getting small and medium sized businesses to get exporting into their minds and even open the possibility of it to them, is the only way we're going to fix our balance of trade, relying on a diminishing number of large companies, which is what the reality is, is not going to be sufficient.
So it is the small companies, many of them family owned, and we know all the system about the two BMWs and the in the driveway. Why take the risk? Why bother? But if we don't bother, we're not going to see those companies create the jobs for the next generation. And we're facing AI challenges. We're facing all of these things which we really don't know how to measure at the moment. And I would just say to the Minister to ask his department to look again at whether some kind of direction or advice can be given, not only to export finance, but generally to our financial institutions as a whole, because it is that that is the source of the of the funding that is being guaranteed.
18:02
Baroness Alexander of Cleveden (Labour)
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Baroness Alexander of Cleveden (Labour)
My Lords, it's a pleasure to >> My Lords, it's a pleasure to speak in. Three clause bill, and I commend the government on its brevity. It is a welcome change this week, after the 220 clauses of the Crime and Policing Bill, the 178 clauses of the tobacco Bill and the 1200 amendments that we will be wrestling with tomorrow again in the Assisted dying bill. As I think every noble Lord has spoken so far has noted, this bill does not change policy, only financial thresholds, and that narrow focus accounts for the broad cross-party consensus.
But I think more fundamentally, industrial assistance and trade policy remain a rarity in modern politics. They are matters of broad common ground. Like Lord Empey, I served as a Labour trade Minister in Holyrood and then as a trade envoy for a different government, proof that trade and industry can be common ground, at least in domestic politics. Of course, updating the financial thresholds after 16 years is eminently sensible. Likewise, using secondary legislation to raise the limits in the future, I want to use my time to make one substantive comment on each scheme.
First, the industrial assistance aspect. My own interest here dates to 1997, when I was working on the devolution settlement in the early days of the Blair government, and I can reliably report to the House that in all those years of campaigning for a Scottish Parliament, the minutiae of industrial aid rules had not caught the attention of even the most assiduous policy wonk. And so in government it proved quite tricky, because how do you devolve powers over trade and industry without undermining the financial level playing field within the UK? And of course, today, rightly, financial selective assistance and export finance remain reserved matters, but in a very elegant constitutional arrangement.
Scottish Ministers can prepare cases for financial assistance of up to £10 million for a single project, subject to a Commons resolution. So therefore, last night and it was last night after we'd finished, I took a look at the most recent Industrial Development Act annual report laid before Parliament in July on section eight spending. It's section eight spending we are discussing today, and that reported that neither the Scottish Government nor the Welsh Government had any section eight spending, compared to £2.9 billion of live schemes in England.
Now there are complexities about the coverage of section seven and section eight areas, and I appreciate that, given I am the last speaker in the debate today, at least from the backbenches, the Minister will not have time to digest material from his officials on this matter, but I would be grateful if he could write to me about the factors that he believes are influencing the uptake of section seven and section eight spending in the devolved governments. Now, my noble Lords, I feel that these complex distributional issues should not detract from the value of both industrial assistance, which is supporting thousands of jobs across the UK and leveraging in billions of pounds of private capital.
Can I therefore turn to export finance? The government can take pride that export its export finance portfolio is larger than at any point in history, and at 70% current utilisation, and with a strong pipeline of commercial opportunities, it is right to provide on going certainty to British businesses about future export support. But here I want to echo the remarks of Lord Pitkeathley and others on export finance. The devil is in the operational detail of the specific working capital and insurance schemes, and the ease of access to them by companies.
Now, I would like to place on the record that my right hon. Friend the Minister spent his entire parliamentary life in the private sector, so is well placed to ensure that bureaucratic creep does not diminish the effectiveness of support for exports, particularly as others have recognised for small and medium sized enterprises. They are, in fairness, 88% of the beneficiaries of UK export finance. But we do have to watch the opportunity costs for small firms caught in long, complex, unsuccessful applications that are deemed too high risk.
I want here to come to my final substantive point. I want to ask my noble friend, the Minister, to comment on the success of UK export Finance in delivering its underlying mandate, which is to support exports at no net extra cost to the taxpayer over time. Therefore, an echo of the question that Lord Sharpe asked. I want to invite the government to comment on their attitude to risk. Are the higher thresholds that we are being asked to approve today, a choice to adopt a higher risk appetite with respect to the likely return? Or are we are they simply an attempt to anticipate greater demand in the pipeline and in the future? I would welcome any guidance on that point.
And finally, in conclusion, I welcome the steps that were announced by the government this week to crack down on sanction busting. This was a point that the opposition had raised in the other place, and the Minister has responded this week with a new licensing scheme where there are any high risk exports that could be used in sanctioned busking situations. And finally, I would like to commend the focus of UK export Finance in helping British business to be part of supporting the reconstruction in Ukraine.
On that basis, I support the bill and I look forward to the minister's response.
But I think more fundamentally, industrial assistance and trade policy remain a rarity in modern politics. They are matters of broad common ground. Like Lord Empey, I served as a Labour trade Minister in Holyrood and then as a trade envoy for a different government, proof that trade and industry can be common ground, at least in domestic politics. Of course, updating the financial thresholds after 16 years is eminently sensible. Likewise, using secondary legislation to raise the limits in the future, I want to use my time to make one substantive comment on each scheme.
First, the industrial assistance aspect. My own interest here dates to 1997, when I was working on the devolution settlement in the early days of the Blair government, and I can reliably report to the House that in all those years of campaigning for a Scottish Parliament, the minutiae of industrial aid rules had not caught the attention of even the most assiduous policy wonk. And so in government it proved quite tricky, because how do you devolve powers over trade and industry without undermining the financial level playing field within the UK? And of course, today, rightly, financial selective assistance and export finance remain reserved matters, but in a very elegant constitutional arrangement.
Scottish Ministers can prepare cases for financial assistance of up to £10 million for a single project, subject to a Commons resolution. So therefore, last night and it was last night after we'd finished, I took a look at the most recent Industrial Development Act annual report laid before Parliament in July on section eight spending. It's section eight spending we are discussing today, and that reported that neither the Scottish Government nor the Welsh Government had any section eight spending, compared to £2.9 billion of live schemes in England.
Now there are complexities about the coverage of section seven and section eight areas, and I appreciate that, given I am the last speaker in the debate today, at least from the backbenches, the Minister will not have time to digest material from his officials on this matter, but I would be grateful if he could write to me about the factors that he believes are influencing the uptake of section seven and section eight spending in the devolved governments. Now, my noble Lords, I feel that these complex distributional issues should not detract from the value of both industrial assistance, which is supporting thousands of jobs across the UK and leveraging in billions of pounds of private capital.
Can I therefore turn to export finance? The government can take pride that export its export finance portfolio is larger than at any point in history, and at 70% current utilisation, and with a strong pipeline of commercial opportunities, it is right to provide on going certainty to British businesses about future export support. But here I want to echo the remarks of Lord Pitkeathley and others on export finance. The devil is in the operational detail of the specific working capital and insurance schemes, and the ease of access to them by companies.
Now, I would like to place on the record that my right hon. Friend the Minister spent his entire parliamentary life in the private sector, so is well placed to ensure that bureaucratic creep does not diminish the effectiveness of support for exports, particularly as others have recognised for small and medium sized enterprises. They are, in fairness, 88% of the beneficiaries of UK export finance. But we do have to watch the opportunity costs for small firms caught in long, complex, unsuccessful applications that are deemed too high risk.
I want here to come to my final substantive point. I want to ask my noble friend, the Minister, to comment on the success of UK export Finance in delivering its underlying mandate, which is to support exports at no net extra cost to the taxpayer over time. Therefore, an echo of the question that Lord Sharpe asked. I want to invite the government to comment on their attitude to risk. Are the higher thresholds that we are being asked to approve today, a choice to adopt a higher risk appetite with respect to the likely return? Or are we are they simply an attempt to anticipate greater demand in the pipeline and in the future? I would welcome any guidance on that point.
And finally, in conclusion, I welcome the steps that were announced by the government this week to crack down on sanction busting. This was a point that the opposition had raised in the other place, and the Minister has responded this week with a new licensing scheme where there are any high risk exports that could be used in sanctioned busking situations. And finally, I would like to commend the focus of UK export Finance in helping British business to be part of supporting the reconstruction in Ukraine.
On that basis, I support the bill and I look forward to the minister's response.
18:08
Lord Fox (Liberal Democrat)
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Lord Fox (Liberal Democrat)
My Lords, the noble Lord, the Minister called for wisdom and expertise and it's a great pleasure to follow the Baroness Alexander who displayed both of those. But who displayed both of those. But I'm afraid now the Minister has me. In the minister's admirably concise. Some interesting introduction. I think he set the scene, but I. I do want to look at some of the numbers because they are big numbers, not quite as big as our deficit trade deficit with China, but big numbers.
None nonetheless. So we've heard that the the bill increases the government's ability to provide financial support to industry and exporters by raising long standing limits. It boosts the cap on selective industrial financial assistance under the Industrial Development Act of 1982, from 12 billion to 20 billion. My Lords, that's a big increase and the maximum amount by which the Secretary of State can raise this limit in future has been increased from 1 billion to 1.5 billion. And that, again is reflecting inflation over the period since it was last adjusted in 2009.
The bill also significantly expands, as we've heard, the UK export finance statutory commitment limit under the Export and Investment Guarantee Act of 1991, increasing it from the current equivalent of around 84 billion sterling to 160 billion sterling, converting the limit from special drawing rights to sterling to to create some simplicity and allowing further raises of up to 15 billion through secondary legislation, without restricting the number of times such increases can be made. And I think it would be helpful if the Minister could confirm those numbers are correct, because he didn't use them in the in in his introduction.
But I do think it's important, for the record, that we have those these changes are, as we've heard, intended, to maintain uninterrupted support for investment, exports and jobs, ensuring the government can back key sectors such as advanced manufacturing, life sciences and defence without hitting these limits. The. The old limits. By raising these thresholds. Now, the government says that the bill prevents constraints on on viable products at a time when business are making critical investment and export decisions, providing necessary headroom to offer support only where justified, while tax, while safeguarding taxpayers and sustaining the UK's credibility.
That's what the government has said. On the face of it, this is sensible uprating which we support and however, its passage through the Commons wasn't without query and I would like to just raise some of those queries again for the Minister. Perhaps to recap some of the answers. My Lords in the Commons, MPs from several parties highlighted that the Bill authorises very large increases in industrial assistance and export guarantees, with relatively light ex ante control. There are weak safeguards, limited transparency and and limited scrutiny over what are or could be very large sums.
And there are potential ethical and risk concerns around how export finance could be used. Critics argued this scale of contingent liability exposes taxpayers to significant risk, with Parliament largely limited to retrospective annual reports rather than regular detailed scrutiny. Which of which firms and which sectors have been supported. And I think that was the point. The noble Lord Pitkeathley made for updates as to where the money is going. In the Commons, cross-party amendments are sought to block support where there is a reason to believe modern slavery or human trafficking is present in the supply chains, and that we on these benches absolutely believe that's unacceptable for any taxpayer backed finance to underwrite that sort of exploitation.
So it would be useful to know from the Minister how that will be overseen. Other amendments aimed to prevent, as we've heard, export finance supporting goods which are likely to be re-exported to sanctioned destinations. And it's very important that those safeguards are strengthened and any loopholes removed. My Lords, my Lords, there are questions also about how all this fits in with the industrial strategy. The bill certainly expands financial capacity, but what's the government plan for which sectors and which regions should should benefit, particularly, as we heard concerning steel, which is an ongoing issue and other strategically important industries, so can the Minister case.
Confirm how will the applications for this will be managed? Are they on a first come, first serve basis, and does it stop when we run out of money, or is there some sort of strategic overlay that will be put onto applications for, for, for drawing down on these funds? And if there is, who will be managing this overlay and how will it be overseen and reported back to, to your Lordships house, my Lords. Also talking about industrial assistance.
I part of my my last eight years has been the replumbing of the United Kingdom post-Brexit, and one of the many acts that I worked on was the Subsidy Control Act of 2022. So we'd be very interested to know that. How does industrial assistance be managed within within the Subsidy Control Act so that the noble Baroness Alexander also brought up the Internal Market Act, which was also part of the Replumbing. And I think she's asked some really important questions around that as well, because there are constraints around what can and can't be done, not least our own constraints.
But those constraints were built looking at GATT and looking at other things in the outside world. Additionally, as we heard, and I'm really grateful from the local noble Lord and his really knowledgeable input on SMEs, I also had an observation that historically, the bulk of export finance money goes to larger firms. It doesn't go to SMEs. And although this bill is being pitched as helping SMEs, there's no real indication in the bill how that will be done, because experience shows that they will not be the major recipients of this uprating.
So, like the noble Lord, I really await the minister's views on these. There is also this issue about government finance crowding out other finance and in a sense, how will how will the the process be managed so that actually you're crowding in and not crowding out because it's really important that you're not actually displacing investment that would have come in any, in, in, in, in any case. So we really need to know that public money is going to be genuinely used as additional rather than substitution.
My Lords, I look forward to the response of the of the Minister on these issues, but I should say that notwithstanding those we support the changes being brought that brought forward. In conclusion, it's important to support investment, exports and jobs in sectors such as manufacturing, life sciences and defence, and vital that these are extended into these these supports into SMEs. But on a broader foot, a huge lever for UK exports would be to be included in the UK security action for Europe, so-called safe financial instrument.
And as the Minister knows, this would give access to up to 150 billion of finance. So can the Minister update us on where we are on attempts to find our way into that program? And, of course, the looming threat of Made in Europe will exclude, will do the opposite of what we're seeking to do here. It will exclude our businesses, in particular our automotive businesses from from, from, from exports. Clearly, the closer the UK is to the EU, the easier this will be to resolve.
But as the noble Lord the Minister knows in this case time is of the essence. So this bill is important. But sorting out our relationship with the. With the European Union should be the priority. That said, we support this bill.
None nonetheless. So we've heard that the the bill increases the government's ability to provide financial support to industry and exporters by raising long standing limits. It boosts the cap on selective industrial financial assistance under the Industrial Development Act of 1982, from 12 billion to 20 billion. My Lords, that's a big increase and the maximum amount by which the Secretary of State can raise this limit in future has been increased from 1 billion to 1.5 billion. And that, again is reflecting inflation over the period since it was last adjusted in 2009.
The bill also significantly expands, as we've heard, the UK export finance statutory commitment limit under the Export and Investment Guarantee Act of 1991, increasing it from the current equivalent of around 84 billion sterling to 160 billion sterling, converting the limit from special drawing rights to sterling to to create some simplicity and allowing further raises of up to 15 billion through secondary legislation, without restricting the number of times such increases can be made. And I think it would be helpful if the Minister could confirm those numbers are correct, because he didn't use them in the in in his introduction.
But I do think it's important, for the record, that we have those these changes are, as we've heard, intended, to maintain uninterrupted support for investment, exports and jobs, ensuring the government can back key sectors such as advanced manufacturing, life sciences and defence without hitting these limits. The. The old limits. By raising these thresholds. Now, the government says that the bill prevents constraints on on viable products at a time when business are making critical investment and export decisions, providing necessary headroom to offer support only where justified, while tax, while safeguarding taxpayers and sustaining the UK's credibility.
That's what the government has said. On the face of it, this is sensible uprating which we support and however, its passage through the Commons wasn't without query and I would like to just raise some of those queries again for the Minister. Perhaps to recap some of the answers. My Lords in the Commons, MPs from several parties highlighted that the Bill authorises very large increases in industrial assistance and export guarantees, with relatively light ex ante control. There are weak safeguards, limited transparency and and limited scrutiny over what are or could be very large sums.
And there are potential ethical and risk concerns around how export finance could be used. Critics argued this scale of contingent liability exposes taxpayers to significant risk, with Parliament largely limited to retrospective annual reports rather than regular detailed scrutiny. Which of which firms and which sectors have been supported. And I think that was the point. The noble Lord Pitkeathley made for updates as to where the money is going. In the Commons, cross-party amendments are sought to block support where there is a reason to believe modern slavery or human trafficking is present in the supply chains, and that we on these benches absolutely believe that's unacceptable for any taxpayer backed finance to underwrite that sort of exploitation.
So it would be useful to know from the Minister how that will be overseen. Other amendments aimed to prevent, as we've heard, export finance supporting goods which are likely to be re-exported to sanctioned destinations. And it's very important that those safeguards are strengthened and any loopholes removed. My Lords, my Lords, there are questions also about how all this fits in with the industrial strategy. The bill certainly expands financial capacity, but what's the government plan for which sectors and which regions should should benefit, particularly, as we heard concerning steel, which is an ongoing issue and other strategically important industries, so can the Minister case.
Confirm how will the applications for this will be managed? Are they on a first come, first serve basis, and does it stop when we run out of money, or is there some sort of strategic overlay that will be put onto applications for, for, for drawing down on these funds? And if there is, who will be managing this overlay and how will it be overseen and reported back to, to your Lordships house, my Lords. Also talking about industrial assistance.
I part of my my last eight years has been the replumbing of the United Kingdom post-Brexit, and one of the many acts that I worked on was the Subsidy Control Act of 2022. So we'd be very interested to know that. How does industrial assistance be managed within within the Subsidy Control Act so that the noble Baroness Alexander also brought up the Internal Market Act, which was also part of the Replumbing. And I think she's asked some really important questions around that as well, because there are constraints around what can and can't be done, not least our own constraints.
But those constraints were built looking at GATT and looking at other things in the outside world. Additionally, as we heard, and I'm really grateful from the local noble Lord and his really knowledgeable input on SMEs, I also had an observation that historically, the bulk of export finance money goes to larger firms. It doesn't go to SMEs. And although this bill is being pitched as helping SMEs, there's no real indication in the bill how that will be done, because experience shows that they will not be the major recipients of this uprating.
So, like the noble Lord, I really await the minister's views on these. There is also this issue about government finance crowding out other finance and in a sense, how will how will the the process be managed so that actually you're crowding in and not crowding out because it's really important that you're not actually displacing investment that would have come in any, in, in, in, in any case. So we really need to know that public money is going to be genuinely used as additional rather than substitution.
My Lords, I look forward to the response of the of the Minister on these issues, but I should say that notwithstanding those we support the changes being brought that brought forward. In conclusion, it's important to support investment, exports and jobs in sectors such as manufacturing, life sciences and defence, and vital that these are extended into these these supports into SMEs. But on a broader foot, a huge lever for UK exports would be to be included in the UK security action for Europe, so-called safe financial instrument.
And as the Minister knows, this would give access to up to 150 billion of finance. So can the Minister update us on where we are on attempts to find our way into that program? And, of course, the looming threat of Made in Europe will exclude, will do the opposite of what we're seeking to do here. It will exclude our businesses, in particular our automotive businesses from from, from, from exports. Clearly, the closer the UK is to the EU, the easier this will be to resolve.
But as the noble Lord the Minister knows in this case time is of the essence. So this bill is important. But sorting out our relationship with the. With the European Union should be the priority. That said, we support this bill.
18:17
Lord Stockwood, Minister of State (HM Treasury) (Labour)
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Lord Stockwood, Minister of State (HM Treasury) (Labour)
Thank noble Lords for their contribution and feedback in this debate. I'm also thankful for the general support for the provisions in this small but important bill. As I mentioned, this bill will ensure the financial assistance the government has provided the UK export finance, and it means it will be available in the Industrial Development Act 1982 will be able to continue from the £1.5 million to support a Yorkshire manufacturer to enable in Gloucestershire's finest truffles to be exported across the world, and indeed to continue to let them be exported to Lord Stockwood household to £20 million in support of the aviation specialists in Surrey, all the way to over £808 million in support of Scottish manufacturing.
SME UK Export Finance is supporting growth and jobs across the whole country and this bill will enable them to go even further. Additionally, financial assistance under the Industrial Development Act has provided £520 million of funding to the private sector capital investments to support continued growth of our life sciences sector via the Life Sciences Innovative Manufacturing Fund. As I discussed in my opening remarks, these provisions ensure that the government can continue to support British industry and British exporters, putting them on the strongest possible footing to contend in today's increasingly competitive global landscape.
I'd now like to take the opportunity to address specific points raised in this debate, starting with my noble friend Lord Pitkeathley, who has asked some important questions, and I'm grateful for the advanced site of the specific interest in today's debate on the issue of expanded capacity of UK export finance translate into wider access for smaller and new exports across the country. In 2425, that contribution to GDP was up £5.4 billion, supporting 469 SMEs during that year. Ukef has also recently commissioned research from Oxford Economics, which showed that there are 115,000 businesses, all predominantly SMEs, by the way, in the supply chains of businesses whom Ukef supports directly.
These supply chains extend to all parts and regions of the UK. To go even further in the support of SMEs just in January. My right hon. Friend, the Secretary of State for Business and Trade, announced a commitment from the UK's top high street banks for further £11 billion package to lend more to small business and medium sized enterprises across UK, supported by UK's guarantee. All of this will boost UK exports and economic growth to the question of providing Parliament with regular reporting, which Lord Fox also referred to.
UK export finance reports to the Parliament every year through its annual reports and accounts process, which are both cleared through the National Audit Office, comprising details of all the transactions supported their impact on the UK economy and progress against the business plan targets. This also includes statutory obligations requiring importance for spending levels under section seven of the Export and Investment Guarantees Act, and in relation to the Industrial Development Act. I can assure my noble friend that nothing in this bill will change the existing reporting requirements around the use of support under the Industrial Development Act or the regular existing reporting arrangements.
Sections 11 and 15 of the Ida require the government to provide Parliament with an annual report setting out how it has discharged these functions under the act, and that will continue. The annual report is presented to Parliament and includes detailed reporting on the provision of funding to support businesses through numerous different schemes and funds. This covers both expenditure and commitments for a given year, as well as the total commitment to date. Now moving to the noble Lord Sharpe, who noted broader concerns about the burdens on business, regulation, energy costs, etc.
and before I fully answer, I would like to say that we largely agree on the role of government. It is not to de-risk businesses. It's largely to create confidence and our growth prospects and set the conditions of success for the private sector. It is one of the reasons I came into government. I believe firmly in that and took my own earning potential down to zero seven months ago. In order to do that as, as my as my noble friend Baroness Alexander says, this is a place where we often find much common ground.
And it's one of the reasons, as I say, that I'm proud to be part of this government, because this government firmly believes in it. As part of that, we have a clear industrial strategy trade strategy plan for small business and medium sized businesses, and a plan to make work pay to address long standing barriers to growth. These are underpinned by new policy co-creation approaches, with new initiatives being developed to respond to all businesses top concerns. I spend much of my time on roundtables speaking to CEOs, SMEs and businesses to ensure that we get the feedback requisite to ensure we are making the right decisions on energy prices.
Last month, we concluded an eight week consultation on the British Industrial Competitive Scheme because it's called. This scheme will reduce electricity bills for eligible manufacturing businesses by up to 25%, and we are keen to ensure we go further within the macro environment for energy prices. It's absolutely critical that we remain competitive and we're trying to do as much as we can in that area. So the question of balance between private capital and UK funds and Project Support UK exists to help UK exporters win overseas contracts, deliver them and get paid for doing them.
It does this by providing competitive financing terms to prospective buyers, supporting working capital requirements and trade finance to help exporters develop and insuring against buyer default. UK does not provide grants, state aid or equity support. Just to reiterate, it does not provide grants, state aid or equity support. It charges a premium for its product and Ukef complements, rather than competes with the commercial sector and helps crowd fund and fund private investment. It is clear to say also that Ukef remains a hugely profitable part of the UK.
PNL. To the question of the steel strategy and when it's come in, I recognise the importance of that question from the noble Lord. The steel strategy is imminent. Meaning that it's. Thank you for your vote of confidence. It is imminent. We are. We are. We're hoping to announce something in the coming weeks. We recognise the importance of this publishing the strategy industry and the government is committed to putting the industry on a sustainable long term footing. It is vital for a broader strategic resilience as a country over the coming years.
To the question raised by the noble Lord MP about does HMG have plans to provide information to businesses on import substitution, Ukef can provide support that is conducive to exports. Its overseas support is conditional on sourcing from the UK, shifting supply chains towards UK firms. UK, UK customers support an estimated 115,000 UK businesses in the supply chain, which shows that when Ukef promotes UK exports, the benefits cascade throughout the UK supply chain and throughout the UK economy. This bill is not changing policy or the mandate underpinning this this reality.
To my noble friend Baroness Alexander, the question about. Can I write to her about the uptake of the export support by devolved administration? I'd be happy to follow up with the noble Baroness on this specific statistics. Following this debate to the further question of the success of UK in delivering on its mandate, it operates at a net cost, no net cost to the taxpayer over the economic cycle, and has generated more than £850 million of return to the Exchequer over the past four years.
Risk is carefully managed and monitored, with regular reporting to Parliament as part of its statutory obligation and HM Treasury oversight. I firmly believe that as part of the portfolio of assets that we have in terms of supporting UK business, the UK is one of our strongest and most prominent capabilities. To the question, my noble Lord Fox is around the numbers referred to. Are they correct? I can confirm the numbers are correct. I'm grateful for him for his role in advertising. The great work in this legislation seeks to do in supporting UK businesses and UK funding.
Application to the question and management of sector. The sector overlay that my noble Lord mentioned. Ukf operates UK wide, supporting supporters in every nation and every region. Allocation is in fact demand led. I'm sorry. This is the downside of a technology entrepreneur trying to use technology to create efficiencies. I'm afraid the allocation is demand led and based on commercial viability as you would imagine, not geography or sector. UCF's business plan includes an ambition that at least 80% of businesses it supports will continue to be based outside London.
That doesn't mean that London is important, but regional development and support is absolutely critical to the whole of the UK success and to the question raised about the the. The impending pressure of the Made in Europe policy, I can I can firmly agree with the noble Lord. This is absolutely critical and we are engaged on this with alacrity and pace. So in conclusion, I hope the arguments I have set out satisfy colleagues that the provisions in this bill are simple and straightforward.
They are necessary to improve economic growth, and they will provide the government with the means to give much needed financial support to industry and businesses up and down the country. I thank the noble Lords across the House for this informed debate, for their wisdom, and it's been great.
**** Possible New Speaker ****
Could I ask you to take. The noble Lord Singh to be intervening because it's not on the intervening because it's not on the speakers list? No, no.
**** Possible New Speaker ****
speakers list? No, no. Order. Order. I'm sorry, I'm
**** Possible New Speaker ****
Order. Order. I'm sorry, I'm sorry. Or the order to.
**** Possible New Speaker ****
sorry. Or the order to. Point of order been well made. I just I can tell the noble Lord that is important. And there's a whole strategy with UCF and indeed the government to ensure that the opportunity that this bill creates is indeed articulated to the SME community as well. With that in mind, I'd like to thank the noble
**** Possible New Speaker ****
Lords across the House for this informed debate, and it's with great pleasure that I beg to move. Question is that this bill.
**** Possible New Speaker ****
Question is that this bill. Be. Now read a second time. As many of that opinion. Say, content contrary, not
**** Possible New Speaker ****
content. The contents have it. My Lord, I beg to move that this
**** Possible New Speaker ****
My Lord, I beg to move that this bill be not committed. Question is that this bill be not committed as many of that not committed as many of that opinion is. Content. Content content. The contents have been.
**** Possible New Speaker ****
My Lords, I beg to move that time. Question is that this bill be.
**** Possible New Speaker ****
Question is that this bill be. Now read a third time as many of that opinion shall see content contrary, not content, and the
**** Possible New Speaker ****
contents have it. My Lords, I beg to move that this bill do now pass.
**** Possible New Speaker ****
this bill do now pass. Question is that this bill do now pass as many are that opinion shall say, content, not content. shall say, content, not content. The contents have it. Perhaps if noble Lords wish to move, they may noble Lords wish to move, they may Schools Schools are Schools are recording and reporting of seclusion and restraint. (England) Regulations 2025 motion of regret. Lord Lucas.
SME UK Export Finance is supporting growth and jobs across the whole country and this bill will enable them to go even further. Additionally, financial assistance under the Industrial Development Act has provided £520 million of funding to the private sector capital investments to support continued growth of our life sciences sector via the Life Sciences Innovative Manufacturing Fund. As I discussed in my opening remarks, these provisions ensure that the government can continue to support British industry and British exporters, putting them on the strongest possible footing to contend in today's increasingly competitive global landscape.
I'd now like to take the opportunity to address specific points raised in this debate, starting with my noble friend Lord Pitkeathley, who has asked some important questions, and I'm grateful for the advanced site of the specific interest in today's debate on the issue of expanded capacity of UK export finance translate into wider access for smaller and new exports across the country. In 2425, that contribution to GDP was up £5.4 billion, supporting 469 SMEs during that year. Ukef has also recently commissioned research from Oxford Economics, which showed that there are 115,000 businesses, all predominantly SMEs, by the way, in the supply chains of businesses whom Ukef supports directly.
These supply chains extend to all parts and regions of the UK. To go even further in the support of SMEs just in January. My right hon. Friend, the Secretary of State for Business and Trade, announced a commitment from the UK's top high street banks for further £11 billion package to lend more to small business and medium sized enterprises across UK, supported by UK's guarantee. All of this will boost UK exports and economic growth to the question of providing Parliament with regular reporting, which Lord Fox also referred to.
UK export finance reports to the Parliament every year through its annual reports and accounts process, which are both cleared through the National Audit Office, comprising details of all the transactions supported their impact on the UK economy and progress against the business plan targets. This also includes statutory obligations requiring importance for spending levels under section seven of the Export and Investment Guarantees Act, and in relation to the Industrial Development Act. I can assure my noble friend that nothing in this bill will change the existing reporting requirements around the use of support under the Industrial Development Act or the regular existing reporting arrangements.
Sections 11 and 15 of the Ida require the government to provide Parliament with an annual report setting out how it has discharged these functions under the act, and that will continue. The annual report is presented to Parliament and includes detailed reporting on the provision of funding to support businesses through numerous different schemes and funds. This covers both expenditure and commitments for a given year, as well as the total commitment to date. Now moving to the noble Lord Sharpe, who noted broader concerns about the burdens on business, regulation, energy costs, etc.
and before I fully answer, I would like to say that we largely agree on the role of government. It is not to de-risk businesses. It's largely to create confidence and our growth prospects and set the conditions of success for the private sector. It is one of the reasons I came into government. I believe firmly in that and took my own earning potential down to zero seven months ago. In order to do that as, as my as my noble friend Baroness Alexander says, this is a place where we often find much common ground.
And it's one of the reasons, as I say, that I'm proud to be part of this government, because this government firmly believes in it. As part of that, we have a clear industrial strategy trade strategy plan for small business and medium sized businesses, and a plan to make work pay to address long standing barriers to growth. These are underpinned by new policy co-creation approaches, with new initiatives being developed to respond to all businesses top concerns. I spend much of my time on roundtables speaking to CEOs, SMEs and businesses to ensure that we get the feedback requisite to ensure we are making the right decisions on energy prices.
Last month, we concluded an eight week consultation on the British Industrial Competitive Scheme because it's called. This scheme will reduce electricity bills for eligible manufacturing businesses by up to 25%, and we are keen to ensure we go further within the macro environment for energy prices. It's absolutely critical that we remain competitive and we're trying to do as much as we can in that area. So the question of balance between private capital and UK funds and Project Support UK exists to help UK exporters win overseas contracts, deliver them and get paid for doing them.
It does this by providing competitive financing terms to prospective buyers, supporting working capital requirements and trade finance to help exporters develop and insuring against buyer default. UK does not provide grants, state aid or equity support. Just to reiterate, it does not provide grants, state aid or equity support. It charges a premium for its product and Ukef complements, rather than competes with the commercial sector and helps crowd fund and fund private investment. It is clear to say also that Ukef remains a hugely profitable part of the UK.
PNL. To the question of the steel strategy and when it's come in, I recognise the importance of that question from the noble Lord. The steel strategy is imminent. Meaning that it's. Thank you for your vote of confidence. It is imminent. We are. We are. We're hoping to announce something in the coming weeks. We recognise the importance of this publishing the strategy industry and the government is committed to putting the industry on a sustainable long term footing. It is vital for a broader strategic resilience as a country over the coming years.
To the question raised by the noble Lord MP about does HMG have plans to provide information to businesses on import substitution, Ukef can provide support that is conducive to exports. Its overseas support is conditional on sourcing from the UK, shifting supply chains towards UK firms. UK, UK customers support an estimated 115,000 UK businesses in the supply chain, which shows that when Ukef promotes UK exports, the benefits cascade throughout the UK supply chain and throughout the UK economy. This bill is not changing policy or the mandate underpinning this this reality.
To my noble friend Baroness Alexander, the question about. Can I write to her about the uptake of the export support by devolved administration? I'd be happy to follow up with the noble Baroness on this specific statistics. Following this debate to the further question of the success of UK in delivering on its mandate, it operates at a net cost, no net cost to the taxpayer over the economic cycle, and has generated more than £850 million of return to the Exchequer over the past four years.
Risk is carefully managed and monitored, with regular reporting to Parliament as part of its statutory obligation and HM Treasury oversight. I firmly believe that as part of the portfolio of assets that we have in terms of supporting UK business, the UK is one of our strongest and most prominent capabilities. To the question, my noble Lord Fox is around the numbers referred to. Are they correct? I can confirm the numbers are correct. I'm grateful for him for his role in advertising. The great work in this legislation seeks to do in supporting UK businesses and UK funding.
Application to the question and management of sector. The sector overlay that my noble Lord mentioned. Ukf operates UK wide, supporting supporters in every nation and every region. Allocation is in fact demand led. I'm sorry. This is the downside of a technology entrepreneur trying to use technology to create efficiencies. I'm afraid the allocation is demand led and based on commercial viability as you would imagine, not geography or sector. UCF's business plan includes an ambition that at least 80% of businesses it supports will continue to be based outside London.
That doesn't mean that London is important, but regional development and support is absolutely critical to the whole of the UK success and to the question raised about the the. The impending pressure of the Made in Europe policy, I can I can firmly agree with the noble Lord. This is absolutely critical and we are engaged on this with alacrity and pace. So in conclusion, I hope the arguments I have set out satisfy colleagues that the provisions in this bill are simple and straightforward.
They are necessary to improve economic growth, and they will provide the government with the means to give much needed financial support to industry and businesses up and down the country. I thank the noble Lords across the House for this informed debate, for their wisdom, and it's been great.
**** Possible New Speaker ****
Could I ask you to take. The noble Lord Singh to be intervening because it's not on the intervening because it's not on the speakers list? No, no.
**** Possible New Speaker ****
speakers list? No, no. Order. Order. I'm sorry, I'm
**** Possible New Speaker ****
Order. Order. I'm sorry, I'm sorry. Or the order to.
**** Possible New Speaker ****
sorry. Or the order to. Point of order been well made. I just I can tell the noble Lord that is important. And there's a whole strategy with UCF and indeed the government to ensure that the opportunity that this bill creates is indeed articulated to the SME community as well. With that in mind, I'd like to thank the noble
**** Possible New Speaker ****
Lords across the House for this informed debate, and it's with great pleasure that I beg to move. Question is that this bill.
**** Possible New Speaker ****
Question is that this bill. Be. Now read a second time. As many of that opinion. Say, content contrary, not
**** Possible New Speaker ****
content. The contents have it. My Lord, I beg to move that this
**** Possible New Speaker ****
My Lord, I beg to move that this bill be not committed. Question is that this bill be not committed as many of that not committed as many of that opinion is. Content. Content content. The contents have been.
**** Possible New Speaker ****
My Lords, I beg to move that time. Question is that this bill be.
**** Possible New Speaker ****
Question is that this bill be. Now read a third time as many of that opinion shall see content contrary, not content, and the
**** Possible New Speaker ****
contents have it. My Lords, I beg to move that this bill do now pass.
**** Possible New Speaker ****
this bill do now pass. Question is that this bill do now pass as many are that opinion shall say, content, not content. shall say, content, not content. The contents have it. Perhaps if noble Lords wish to move, they may noble Lords wish to move, they may Schools Schools are Schools are recording and reporting of seclusion and restraint. (England) Regulations 2025 motion of regret. Lord Lucas.
18:29
18:29
Lord Lucas (Conservative)
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Lord Lucas (Conservative)
the Secondary Legislation Scrutiny Committee for drawing my attention Committee for drawing my attention to these regulations. That committee is the Punishment Battalion of the House of Lords Committee system. You get a huge. I've served my time on it. You get a huge pile of papers every week. a huge pile of papers every week. You absolutely have to read and understand them all. There is no escape. It is a huge amount of hard escape. It is a huge amount of hard work and I am very grateful to them.
They picked up on the impact assessment being private schools only. My concerns run wider. I don't disagree with the directions that the orders are taking to make schools safer involve parents more particularly when we have a prospect of more. Send children in in mainstream incidents that require seclusion are unplanned, cathartic happenings. Suddenly a child is banging his head on his desk uncontrollably. The teacher, whoever they are, has to know what to do. There has to be an effective system of support for that teacher and the child.
Proper records have to be made. Schools ought to be self-critical, self-improving places, and parents ought to be involved. But good things absorb time, especially what should be teacher downtime and senior management team time. Good things have more money and good things if not thought through. Displace other good things. So it is very important to think through carefully the objectives, methods and impact. When we are doing creating things like these regulations. And in the case of these orders, that was clearly not done, just the impact statement.
Covering independent schools only is ridiculous. Most of the impact of these regulations is on state schools. That is where the cost for the system, for the government lies. To say that the training requirement is to staff in the school who have they talked to? It is clear that they have talked to nobody. My local secondary school has every staff member trained. Of course they have to be trained. They're the ones in front of whom these incidents occur. They have to be masters of de-escalation and understanding how to call in the support system.
Every single one of them needs to be trained to a standard. And in terms of the response, average sized secondary school, about 1000 pupils, they have 20 fully trained staff who are capable of dealing with the details of an incident, so to say. Two staff is just they are living in a different world. And again, the time to record that. It says in the impact statement of 30 to 100 and 20s my Lord's talking to schools and lawyers and others, a simple incident would take an hour, a complicated one a day.
There's so much to be done. There's lots of people who have to be brought into the discussion. Time has to be taken to help the teacher wind down. Quite apart from looking after the child and taking care to record fully and accurately exactly what's happened, the time taken to learn from what's happened. And again, frequency. The impact statement uses the rate of internal exclusions. But that is a process which is not in any way connected to isolation or restraint.
And the secondary, there are maybe 50 internal exclusions a week, varying in severity from ten minutes to a day. Seclusions two a week. There is just no connection between the two. No. There is no way that internal exclusions should have been used, let alone suggested as a measure for how frequently frequent inclusion exclusion is. Sorry, isolation is. So we're looking all in all for the state system at a cost of the order of £100 million per annum.
Steady state. Not talking about the initial cost for everyone of getting up to speed. In alternative provision or special schools. We have a totally different environment where. The sort of outbursts, which are rare in mainstream education may be anticipated, maybe part of the makeup of a child, something that the school has to adapt to over the long term. They require a different approach, a different set of regulations. That doesn't seem to be provided for in the regulations or discussed in the impact statement.
When it comes to the detail of what incidents are and are not seclusion, it is very hard to tell from what's in the regulations whether what you have in front of you is, is, is, or is not covered by the regulations. It is acknowledged that we have very little data on what is happening on seclusion. But the government's proposals for gathering further data are very limited. My Lords, all together, it was a lackadaisical, unserious, unconnected, uncaring.
Set of regulations and impact statement, unconnected to reality. And it is important that the Department for education does much better than this. It's not hard. All that it takes is to do what I have done. Talk to some heads, talk to some lawyers. Talk to some, talk to the schools. Unions sense. Check what has been produced. Only takes a few hours. So what I would like the Department for education to do is review the processes, especially the supervision that generated the orders and the impact statement that we have in front of us, understanding realities, having the courage to trust professionals, working out which strategies will yield the best results.
Getting the wording right, my Lords, that's important to make sure that the impact of these good things on schools is kept within bounds. And as I said, a sense check. Have a set of friends that you can turn to to ask for advice. What's really going on in schools are these how are these proposals going to work are these proposals going to work in practice? My Lords, the impact statement says, and I agree that there is a lack of good data.
The department and schools should be collecting all the data they need to understand what's going on in the area of seclusion and restraint, how it varies through the system and how best to improve practice. So, my Lords, what the government should be doing is asking all schools for a simple record of everything, including incidents that are resolved without the need to employ seclusion or restraint. This data is there in the electronic systems of schools. It is really quick and easy to produce and with the with a total picture of what's going on in the system, it would really be much easier for the department to formulate policy.
And when it's wanting to look at things in detail and to gauge what's required by way of detailed research, having the overall picture will make it much easier to select the right examples, the right coverage for them, for the department to gain a real understanding of what is best and worst practice in the system, and having the overall data will enable individual schools to benchmark themselves to look at how they compare with other schools in the system, and will help their improvement.
So, my Lords, I very much hope that the government will also improve on its proposals for data collection. The government has a commitment to high quality in schools. It should have a high commitment to high quality in its regulations. I beg to move.
They picked up on the impact assessment being private schools only. My concerns run wider. I don't disagree with the directions that the orders are taking to make schools safer involve parents more particularly when we have a prospect of more. Send children in in mainstream incidents that require seclusion are unplanned, cathartic happenings. Suddenly a child is banging his head on his desk uncontrollably. The teacher, whoever they are, has to know what to do. There has to be an effective system of support for that teacher and the child.
Proper records have to be made. Schools ought to be self-critical, self-improving places, and parents ought to be involved. But good things absorb time, especially what should be teacher downtime and senior management team time. Good things have more money and good things if not thought through. Displace other good things. So it is very important to think through carefully the objectives, methods and impact. When we are doing creating things like these regulations. And in the case of these orders, that was clearly not done, just the impact statement.
Covering independent schools only is ridiculous. Most of the impact of these regulations is on state schools. That is where the cost for the system, for the government lies. To say that the training requirement is to staff in the school who have they talked to? It is clear that they have talked to nobody. My local secondary school has every staff member trained. Of course they have to be trained. They're the ones in front of whom these incidents occur. They have to be masters of de-escalation and understanding how to call in the support system.
Every single one of them needs to be trained to a standard. And in terms of the response, average sized secondary school, about 1000 pupils, they have 20 fully trained staff who are capable of dealing with the details of an incident, so to say. Two staff is just they are living in a different world. And again, the time to record that. It says in the impact statement of 30 to 100 and 20s my Lord's talking to schools and lawyers and others, a simple incident would take an hour, a complicated one a day.
There's so much to be done. There's lots of people who have to be brought into the discussion. Time has to be taken to help the teacher wind down. Quite apart from looking after the child and taking care to record fully and accurately exactly what's happened, the time taken to learn from what's happened. And again, frequency. The impact statement uses the rate of internal exclusions. But that is a process which is not in any way connected to isolation or restraint.
And the secondary, there are maybe 50 internal exclusions a week, varying in severity from ten minutes to a day. Seclusions two a week. There is just no connection between the two. No. There is no way that internal exclusions should have been used, let alone suggested as a measure for how frequently frequent inclusion exclusion is. Sorry, isolation is. So we're looking all in all for the state system at a cost of the order of £100 million per annum.
Steady state. Not talking about the initial cost for everyone of getting up to speed. In alternative provision or special schools. We have a totally different environment where. The sort of outbursts, which are rare in mainstream education may be anticipated, maybe part of the makeup of a child, something that the school has to adapt to over the long term. They require a different approach, a different set of regulations. That doesn't seem to be provided for in the regulations or discussed in the impact statement.
When it comes to the detail of what incidents are and are not seclusion, it is very hard to tell from what's in the regulations whether what you have in front of you is, is, is, or is not covered by the regulations. It is acknowledged that we have very little data on what is happening on seclusion. But the government's proposals for gathering further data are very limited. My Lords, all together, it was a lackadaisical, unserious, unconnected, uncaring.
Set of regulations and impact statement, unconnected to reality. And it is important that the Department for education does much better than this. It's not hard. All that it takes is to do what I have done. Talk to some heads, talk to some lawyers. Talk to some, talk to the schools. Unions sense. Check what has been produced. Only takes a few hours. So what I would like the Department for education to do is review the processes, especially the supervision that generated the orders and the impact statement that we have in front of us, understanding realities, having the courage to trust professionals, working out which strategies will yield the best results.
Getting the wording right, my Lords, that's important to make sure that the impact of these good things on schools is kept within bounds. And as I said, a sense check. Have a set of friends that you can turn to to ask for advice. What's really going on in schools are these how are these proposals going to work are these proposals going to work in practice? My Lords, the impact statement says, and I agree that there is a lack of good data.
The department and schools should be collecting all the data they need to understand what's going on in the area of seclusion and restraint, how it varies through the system and how best to improve practice. So, my Lords, what the government should be doing is asking all schools for a simple record of everything, including incidents that are resolved without the need to employ seclusion or restraint. This data is there in the electronic systems of schools. It is really quick and easy to produce and with the with a total picture of what's going on in the system, it would really be much easier for the department to formulate policy.
And when it's wanting to look at things in detail and to gauge what's required by way of detailed research, having the overall picture will make it much easier to select the right examples, the right coverage for them, for the department to gain a real understanding of what is best and worst practice in the system, and having the overall data will enable individual schools to benchmark themselves to look at how they compare with other schools in the system, and will help their improvement.
So, my Lords, I very much hope that the government will also improve on its proposals for data collection. The government has a commitment to high quality in schools. It should have a high commitment to high quality in its regulations. I beg to move.
18:38
Lord Mohammed of Tinsley (Liberal Democrat)
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Lord Mohammed of Tinsley (Liberal Democrat)
The question is that this motion be agreed to. be agreed to. >> Thank my Lords rise to speak on these regulations. As someone who's spent many years working with young spent many years working with young people, particularly the most vulnerable. Let me begin by saying to the Minister that we on these benches support the main aims of this Statutory Instrument. The safety, dignity and well-being of our children must always come first. When a young person is confused, means they are kept alone or physically restrained in their movements, is limited and it is a serious step.
My Lords, these are sensitive situations. There must be handled with great care and it's therefore right that we improve transparency. It's also right that parents receive a written record of what's happened as soon as possible. The department is correct in recognising that seclusion must be. It can just. Sorry. It can be just as harmful as the use of force. However, my Lords, although the principle behind these regulations is sound, they are. Concerns, my Lords, about how the government has gone about introducing them.
First, we should acknowledge the confusion that occurred during the rollout. As we heard earlier, as this secondary legislation scrutiny Committee pointed out that the original measure had to be withdrawn and replaced by replaced because the Minister accidentally signed the wrong draft. I'm told, my Lords, we asked that we ask our students to check their work carefully before handing it in. It is reasonable to expect the same standards here as the committee rightly said. This kind of mistake cannot have, should not have happened.
But the bigger concern is the government's impact assessment. My Lords, the government estimates that the cost of recording these incidents will be between 1.6 million and 6.3 million a year, equivalent to to the time of up to about 137 full time teachers. Yet this estimate only includes 2443 independent schools in England. Why is the question I asked the government? Because the Department of Education decided that state schools are not businesses, I'm told, and therefore left them out of the calculations.
My Lords, this is a serious oversight. They are more than 21,000 state schools in England, almost nine times the number of independent schools. By leaving them out, the government has avoided confronting the true cost of this policy. In reality, the amount of time required will be far greater than the figures suggest. We should also look at the assumptions behind these figures. My Lords, the department estimates that it will take two teachers between, I'm told, 30 to 100 and 20s to record an incident and report it to a parent.
My Lords, I have to ask, has anyone making these calculations worked in a busy school recently? The idea that two teachers can promptly and sensitively record a stressful incident involving restraint seclusion is in more in 1 or 2 minutes simply does not reflect reality. As a committee noted, the estimated time is realistically low. In practice, this will leave mean that already overworked, overstretched teachers will either have to work longer hours or spend less time on the other important tasks, such as teaching and supporting their pupils.
Let me be clear, my Lords, we fully support the aims of protecting students and ensuring parents are properly informed. But the way the government introduced these measures raises legitimate concerns. There have been unavoidable procedural mistakes. My Lords. Very optimistic estimates on the time involved and the impact assessment that leaves out our 21,000 state schools where most of this work will actually take place. So my question to the Minister is what practical support will be provided to teachers in state schools to help them meet these new responsibilities, without the unreasonable burden on staff that are already working extremely hard?
**** Possible New Speaker ****
My Lords. My Lords.
**** Possible New Speaker ****
Please let me thank the noble forward. This Statutory Instrument.
**** Possible New Speaker ****
We understand His Majesty's Government's intention. It has been some years since the last update in reasonable force policy, and has reasonable force policy, and has never been a consistent, consistent and standardised measure across our and standardised measure across our schools. As to how seclusion and restraint are recorded and reported, His Majesty's loyal opposition supports the principle of introducing such a regime, as does the noble Lord Lord Mohammed of Tinsley. That being said, my Lords, much like my noble friend Lord Lucas, we would like to probe the government on the impact assessment alongside the updated statutory guidance that will come into force in April this year.
We do understand the rationale behind the need for new guidance after many years, and appreciate that the grounds in which teachers will be legally permitted to use reasonable force will be the same. But there are several issues on which we seek clarification. The new guidance makes it clear that teachers must, I quote, be adequately trained in its safe and lawful use and in preventative strategies. And whilst it stops short of implementing a national training standard, the impact assessment assumes that each school will be responsible for ensuring that training is completed in accordance with the principles of the guidance.
The impact assessment attempts to outline how this will work in practice. But, my Lords, our concerns resound with those of the noble Lord Lord Lucas and the noble Lord, Lord Muhammad, as the Secondary Legislation Scrutiny Committee noted so well. The department has not accounted for schools in the state sector in their budgeting and are suggesting a cost of just over £350,000 to independent schools. But, my Lords, is the government suggesting that there will be no cost to the state sector to implement this change? And if that is the case, can we please have clarification on how they get to their zero cost calculation? Equally important, my Lords.
Lord Lucas mentioned his local school and the noble Lord Lord Mohammed highlighted so eloquently his numbers. This will have an impact on the efficacy of Seclusions and the ability to restrain the most disruptive of pupils. Is it realistic to assume that only two teachers need to be trained from each school for just two hours? Is the real number not a significant multiple of that? To ensure appropriate understanding and governance? My Lords, children's behaviour is irregular and unpredictable. Every teacher in the classroom must be confident that they have the legal right to use reasonable force and seclusions where necessary.
It is a great concern to the opposition that this measure may negatively impact teachers, who have not received the official training to take the necessary steps of using reasonable force. But please let me be clear, my Lords, neither teachers, pupils nor parents desire any use of force. But sometimes, regrettably, it is the only option left. Similarly, my Lords, in assuming that only two teachers receive two hours of training in each school, it is likely that the assessment has materially underestimated the administrative time and cost of the new training which the noble Lord Lord Lucas put a figure on, and the noble Lord Lord Mohammed also referred to the timing.
It takes more than 30s to two minutes to report these incidents, and we should never be in a situation where serious disruption goes unchecked because a teacher is worried about repercussions. Nor do we wish for an unexpected and overly burdensome cost on schools, because the government has unintendedly not costed the policy correctly. We would be most grateful if the noble Baroness May Minister can provide detail on these key shortfalls in the impact assessment that has been highlighted so well by other noble Lords outside of the of the administrative costs that these regulations and guidance will impose on schools and teachers.
There is also the question of their impact on behaviour. We, of course, welcome a standardised and reporting measure in principle, but that such a measure exists presupposes that restraint and more importantly, seclusions will be part of school life. My Lords, no teacher enjoys having to give seclusions, and we accept that there are often negative consequences on the well-being of children as a result. But the reason why they are necessary is because there are, unfortunately, children whose behaviour disrupts and threatens the other pupils in the class and teachers.
Therefore, the fact that one of the guidances stated intentions is to, I quote, minimise the need to use restrictive interventions. Raises alarm bells on our side of your Lordships House. In theory, intervening early, introducing intervention strategies or undertaking other preventative measures intuitively are of vastly preferable option to seclusion. Early interventions and strategies do work, but they must not be mistaken for a replacement for more serious measures. As many noble Lords will know. Disruption is, unfortunately a natural part of school life, and it is clear from the evidence that cutting down on seclusions exclusions and general punitive measures will not fix this.
I simply refer to the Scottish Government's own research. Low level disruptive behaviour has increased since 2006 with serious disruptive behaviour including verbal abuse, physical aggression and violence towards staff and pupils. On the increase since 2016. That worsening of behavioural trend is directly correlated with the loosening of tough behavioural sanctions. Temporary exclusions have consistently decreased by around 70% since 2006. My Lords, there were zero permanent exclusions last academic year, which I believe makes it crystal clear replacing serious measures with lesser sanctions does not work.
This is obviously not what the instrument intends to do, nor what the government wants. But will the Minister consider that by narrowing the scope of the use of strict punishments, including seclusions and exclusions in school, we inadvertently fall into the trap of worsening behaviour trends as just highlighted. And yes, of course, new early intervention strategies are an excellent idea. But when done in conjunction with upholding the sometimes necessary use of seclusions and exclusions, we would simply ask that the noble Baroness Shah Minister and the department will commit to revisit the incoming recording and reporting process that many people, not just noble Lords here, feel is poorly costed with with an inadequate oversight.
with with an inadequate oversight. And then reassure your Lordships House that the government accepts House that the government accepts that inclusions and exclusions are, regrettably, sometimes a necessary part of school life.
My Lords, these are sensitive situations. There must be handled with great care and it's therefore right that we improve transparency. It's also right that parents receive a written record of what's happened as soon as possible. The department is correct in recognising that seclusion must be. It can just. Sorry. It can be just as harmful as the use of force. However, my Lords, although the principle behind these regulations is sound, they are. Concerns, my Lords, about how the government has gone about introducing them.
First, we should acknowledge the confusion that occurred during the rollout. As we heard earlier, as this secondary legislation scrutiny Committee pointed out that the original measure had to be withdrawn and replaced by replaced because the Minister accidentally signed the wrong draft. I'm told, my Lords, we asked that we ask our students to check their work carefully before handing it in. It is reasonable to expect the same standards here as the committee rightly said. This kind of mistake cannot have, should not have happened.
But the bigger concern is the government's impact assessment. My Lords, the government estimates that the cost of recording these incidents will be between 1.6 million and 6.3 million a year, equivalent to to the time of up to about 137 full time teachers. Yet this estimate only includes 2443 independent schools in England. Why is the question I asked the government? Because the Department of Education decided that state schools are not businesses, I'm told, and therefore left them out of the calculations.
My Lords, this is a serious oversight. They are more than 21,000 state schools in England, almost nine times the number of independent schools. By leaving them out, the government has avoided confronting the true cost of this policy. In reality, the amount of time required will be far greater than the figures suggest. We should also look at the assumptions behind these figures. My Lords, the department estimates that it will take two teachers between, I'm told, 30 to 100 and 20s to record an incident and report it to a parent.
My Lords, I have to ask, has anyone making these calculations worked in a busy school recently? The idea that two teachers can promptly and sensitively record a stressful incident involving restraint seclusion is in more in 1 or 2 minutes simply does not reflect reality. As a committee noted, the estimated time is realistically low. In practice, this will leave mean that already overworked, overstretched teachers will either have to work longer hours or spend less time on the other important tasks, such as teaching and supporting their pupils.
Let me be clear, my Lords, we fully support the aims of protecting students and ensuring parents are properly informed. But the way the government introduced these measures raises legitimate concerns. There have been unavoidable procedural mistakes. My Lords. Very optimistic estimates on the time involved and the impact assessment that leaves out our 21,000 state schools where most of this work will actually take place. So my question to the Minister is what practical support will be provided to teachers in state schools to help them meet these new responsibilities, without the unreasonable burden on staff that are already working extremely hard?
**** Possible New Speaker ****
My Lords. My Lords.
**** Possible New Speaker ****
Please let me thank the noble forward. This Statutory Instrument.
**** Possible New Speaker ****
We understand His Majesty's Government's intention. It has been some years since the last update in reasonable force policy, and has reasonable force policy, and has never been a consistent, consistent and standardised measure across our and standardised measure across our schools. As to how seclusion and restraint are recorded and reported, His Majesty's loyal opposition supports the principle of introducing such a regime, as does the noble Lord Lord Mohammed of Tinsley. That being said, my Lords, much like my noble friend Lord Lucas, we would like to probe the government on the impact assessment alongside the updated statutory guidance that will come into force in April this year.
We do understand the rationale behind the need for new guidance after many years, and appreciate that the grounds in which teachers will be legally permitted to use reasonable force will be the same. But there are several issues on which we seek clarification. The new guidance makes it clear that teachers must, I quote, be adequately trained in its safe and lawful use and in preventative strategies. And whilst it stops short of implementing a national training standard, the impact assessment assumes that each school will be responsible for ensuring that training is completed in accordance with the principles of the guidance.
The impact assessment attempts to outline how this will work in practice. But, my Lords, our concerns resound with those of the noble Lord Lord Lucas and the noble Lord, Lord Muhammad, as the Secondary Legislation Scrutiny Committee noted so well. The department has not accounted for schools in the state sector in their budgeting and are suggesting a cost of just over £350,000 to independent schools. But, my Lords, is the government suggesting that there will be no cost to the state sector to implement this change? And if that is the case, can we please have clarification on how they get to their zero cost calculation? Equally important, my Lords.
Lord Lucas mentioned his local school and the noble Lord Lord Mohammed highlighted so eloquently his numbers. This will have an impact on the efficacy of Seclusions and the ability to restrain the most disruptive of pupils. Is it realistic to assume that only two teachers need to be trained from each school for just two hours? Is the real number not a significant multiple of that? To ensure appropriate understanding and governance? My Lords, children's behaviour is irregular and unpredictable. Every teacher in the classroom must be confident that they have the legal right to use reasonable force and seclusions where necessary.
It is a great concern to the opposition that this measure may negatively impact teachers, who have not received the official training to take the necessary steps of using reasonable force. But please let me be clear, my Lords, neither teachers, pupils nor parents desire any use of force. But sometimes, regrettably, it is the only option left. Similarly, my Lords, in assuming that only two teachers receive two hours of training in each school, it is likely that the assessment has materially underestimated the administrative time and cost of the new training which the noble Lord Lord Lucas put a figure on, and the noble Lord Lord Mohammed also referred to the timing.
It takes more than 30s to two minutes to report these incidents, and we should never be in a situation where serious disruption goes unchecked because a teacher is worried about repercussions. Nor do we wish for an unexpected and overly burdensome cost on schools, because the government has unintendedly not costed the policy correctly. We would be most grateful if the noble Baroness May Minister can provide detail on these key shortfalls in the impact assessment that has been highlighted so well by other noble Lords outside of the of the administrative costs that these regulations and guidance will impose on schools and teachers.
There is also the question of their impact on behaviour. We, of course, welcome a standardised and reporting measure in principle, but that such a measure exists presupposes that restraint and more importantly, seclusions will be part of school life. My Lords, no teacher enjoys having to give seclusions, and we accept that there are often negative consequences on the well-being of children as a result. But the reason why they are necessary is because there are, unfortunately, children whose behaviour disrupts and threatens the other pupils in the class and teachers.
Therefore, the fact that one of the guidances stated intentions is to, I quote, minimise the need to use restrictive interventions. Raises alarm bells on our side of your Lordships House. In theory, intervening early, introducing intervention strategies or undertaking other preventative measures intuitively are of vastly preferable option to seclusion. Early interventions and strategies do work, but they must not be mistaken for a replacement for more serious measures. As many noble Lords will know. Disruption is, unfortunately a natural part of school life, and it is clear from the evidence that cutting down on seclusions exclusions and general punitive measures will not fix this.
I simply refer to the Scottish Government's own research. Low level disruptive behaviour has increased since 2006 with serious disruptive behaviour including verbal abuse, physical aggression and violence towards staff and pupils. On the increase since 2016. That worsening of behavioural trend is directly correlated with the loosening of tough behavioural sanctions. Temporary exclusions have consistently decreased by around 70% since 2006. My Lords, there were zero permanent exclusions last academic year, which I believe makes it crystal clear replacing serious measures with lesser sanctions does not work.
This is obviously not what the instrument intends to do, nor what the government wants. But will the Minister consider that by narrowing the scope of the use of strict punishments, including seclusions and exclusions in school, we inadvertently fall into the trap of worsening behaviour trends as just highlighted. And yes, of course, new early intervention strategies are an excellent idea. But when done in conjunction with upholding the sometimes necessary use of seclusions and exclusions, we would simply ask that the noble Baroness Shah Minister and the department will commit to revisit the incoming recording and reporting process that many people, not just noble Lords here, feel is poorly costed with with an inadequate oversight.
with with an inadequate oversight. And then reassure your Lordships House that the government accepts House that the government accepts that inclusions and exclusions are, regrettably, sometimes a necessary part of school life.
18:51
The Earl of Effingham (Conservative)
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The Earl of Effingham (Conservative)
My Lords, I'm grateful to have the opportunity today to respond.
**** Possible New Speaker ****
To concerns raised by noble Lords and to clarify areas of misunderstanding, including in some of the analysis. During the course of the analysis. During the course of this debate, the question of how schools use restrictive interventions, including physical restraint and seclusion, goes to restraint and seclusion, goes to the heart of how we keep children safe, how we support staff, and how safe, how we support staff, and how we uphold the trust of families. These interventions can have real and lasting effects, which is why
**** Possible New Speaker ****
To concerns raised by noble Lords and to clarify areas of misunderstanding, including in some of the analysis. During the course of the analysis. During the course of this debate, the question of how schools use restrictive interventions, including physical restraint and seclusion, goes to restraint and seclusion, goes to the heart of how we keep children safe, how we support staff, and how safe, how we support staff, and how we uphold the trust of families. These interventions can have real and lasting effects, which is why
18:51
Baroness Smith of Malvern, Minister of State (Education) (Labour)
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Baroness Smith of Malvern, Minister of State (Education) (Labour)
this government has taken such care in revising the use of reasonable force in schools guidance, and strengthening the framework around their use. Yet, my Lords, it is equally true that there will be moments rare but critical when the use of reasonable force or another restrictive intervention is both lawful and necessary to keep a child or those around them safe. child or those around them safe. And we can't shy away from that reality in such circumstances. Staff must be confident in what the law allows clear on how to act safely and supported by leadership that builds strong partnerships with families and provides parents a clear and timely picture of their child's experience.
This sits at the heart of our wider approach. Calm, caring and predictable environments supported by early support. First intervention as set out in our recently published Schools White paper. In doing so, we ensure that every school and every classroom provide a safe, supportive place where every child, including those with special educational needs and disabilities, feels that they belong and can thrive. My Lords, it was with these principles in mind that we introduced new regulations requiring schools to record and report all incidents of seclusion and non-forced related restraint to parents.
Strengthening consistency and ensuring parents are informed about significant events affecting their child. The consultation we undertook early last year provided invaluable insight, and I. Whilst I understand the frustrations of the noble Lord Lord Lucas, I do think some of the words that he used about the department's approach to engaging with schools, with professionals, with trade unions, which is widespread, are actually in the work that we do. Were were not fair and were significantly overstated. During the course of that consultation, we heard clear concerns from parents Ofsted and the Equality and Human Rights Commission about inconsistency in the monitoring of seclusion compared with physical force.
There was real concern that this could lead schools to view seclusion as somehow easier or safer. That is not a message that any of us would wish schools to take, and the updated guidance directly addresses that risk. The revised guidance and new legislation equips schools to develop clear and inclusive policies, ensuring that safeguarding sits at the centre of decisions about restrictive interventions. It places strong emphasis on early help, understanding what sits behind behaviour, and using prevention and de-escalation strategies wherever possible.
But it also recognises that when an intervention is necessary, staff must feel supported and able to act appropriately, lawfully and safely. Importantly, every decision must take account of the welfare and needs of all children, including those with Send, ensuring responses are proportionate and rooted in an understanding of children's needs and experiences. From April 2026, my Lords schools will be legally required under these regulations to record and report each significant incidence of incident of force, seclusion or non force related restraint to parents as soon as possible.
On the point about seclusion raised by the noble Lord Earl of Effingham, I think it's just worthwhile reminding ourselves about the definition of seclusion within this guidance in this in these circumstances, we're talking about non-disciplinary interventions. I understand his concerns, which I share about the need to ensure that teachers have the wherewithal and the ability, whether or not through suspension or other disciplinary disciplinary measures, to maintain the calm classrooms that every child deserves.
But the the seclusion being covered in this these regulations doesn't relate to those disciplinary areas. And by the way, the government in the most recent schools white paper themselves came forward in relation to disciplinary provisions with proposals for how we can better handle, for example, internal suspensions. But those are not covered here for clarity, seclusion here applies only where a pupil is prevented from leaving a space and is detained alone, other than as a disciplinary measure. This reflects the Equality and Human Rights Commission definition, which describes seclusion as the withdrawal of a pupil against their will and their confinement alone in a space they are not free to leave.
And in response to to points raised by the noble Lord, Lord Lucas, in some of his communication. To be clear, seclusion does not include brief voluntary timeout, agreed calming arrangements or the planned non-disciplinary use of separation or sensory spaces to support a pupil to regulate their emotions. So schools must record all incidents of seclusion and non force related restraints. They may choose to record additional information, but such measures should not be described as seclusion. On the point about the extent to which this process can be used for school improvement.
Well, we do expect schools to use the data they collect to review their approaches and reduce the need for restrictive interventions through early support, first approaches. And of course, greater transparency will build trust with families and reassure the wider public about how such interventions are used. I recognise the concerns raised about the evidence base underpinning the impact assessment. There is currently no national data set on seclusion or non force restraint. Internal exclusions were therefore used as a cautious proxy because no better evidence exists.
This is an imperfect measure and the frequency of these incidents will vary significantly between settings. In many secondary schools they are very rare. However, in the absence of more robust data, it was the only viable approach, and it may also be helpful to clarify that the monetised analysis of the impact assessment focuses on independent schools because under better regulation requirements, we must quantify the impact of new duties on businesses, and independent schools fall within that definition.
State funded schools do not and so are not included in that element of the assessment. That is not to say there won't be an impact on state funded schools, and I'll come to what that might be in a moment. It's simply to say that the approach taken in the impact assessment was in line with the government's better regulation requirements for how impact assessments are put together. My Lords, the noble Lord, Lord Lucas also raised concerns, as did others, about the department's estimate of the time it will take school staff to record incidents while the evidence base is limited.
I would like to to reassure noble Lords that this estimate assumes that schools already have or will put in place efficient and streamlined record keeping systems, and our contacts with schools suggest that that is the case in very many cases. Many do so already as part of wider safeguarding responsibilities, and our guidance is designed to support schools rather than add unnecessary burden. It's worth emphasising that many schools, as I've already suggested, rarely use force or restrictive interventions, and this has been fully reflected in our assessment of burden.
My Lords, these regulations themselves introduce no new training requirements. The only new cost is the time for staff to familiarise themselves with the reporting and recording requirements, and then the reporting itself. And for many schools, this will simply involve logging an effort, an event using existing systems. So I think the points that noble Lords were making about the level of training, certainly in the case of the noble Lord Lord Lucas, it appeared to me that what he was talking about was the level of training necessary to understand the nature of the different interventions, how they might be used and what should be put in place in in advance of them.
And of course, it is right that training is necessary for that area of work. We heard as part of the public consultation, a strong call from the sector for mandatory training standards, not for the recording and reporting, but for the understanding of when these interventions should should be used and how they should be used. Respondents from schools, parents and specialist organisations told us unequivocally that strong evidence informed training is essential if staff are to de-escalate situations confidently and use restrictive interventions safely and appropriately when they're necessary.
And we've listened carefully to that feedback and work is now underway on the next phase of this work programme, in which the department will explore the case for such standards and develop detailed recommendations on what robust, proportionate and deliverable training requirements could look like across different types of schools. So, as I've suggested then, the impact assessment therefore reflects only familiarisation time and the time required for recording. It doesn't relate to any wider workforce training which schools already undertake as part of their safeguarding responsibilities.
On that basis, the assumption of two members of staff, not necessarily teachers, by the way, completing the familiarisation task is considered proportionate. Decisions about any broader training will remain, with school leaders shaped by the needs of their pupils and their sitting on the other point, raised by the noble Lord, Lord Lucas, about a national data collection, it would obviously have helped to answer some of these questions. Was there a mandated national data collection? But having myself been not only for 11 years teaching in schools but also previously as an education Minister, I do doubt whether or not schools would welcome the idea of an additional burden, and it would be a burden of expecting a national data collection.
So, as with all of these things, we need to bear in mind the need and the wish for greater analysis and evidence alongside the requirements that we place on schools. And I don't think the case is made for a national data collection in this particular circumstance. So in closing, I would thank noble Lords for raising the points that they have done today and for prompting a discussion, and I hope for enabling me to to clarify some of the points that have been made and to respond as well in relation to the broader intention of the regulations.
The government will continue to work closely with schools, parents and the wider sector to ensure that restrictive interventions are used only when absolutely necessary. Always safely, always lawfully and always in the best interests of children.
This sits at the heart of our wider approach. Calm, caring and predictable environments supported by early support. First intervention as set out in our recently published Schools White paper. In doing so, we ensure that every school and every classroom provide a safe, supportive place where every child, including those with special educational needs and disabilities, feels that they belong and can thrive. My Lords, it was with these principles in mind that we introduced new regulations requiring schools to record and report all incidents of seclusion and non-forced related restraint to parents.
Strengthening consistency and ensuring parents are informed about significant events affecting their child. The consultation we undertook early last year provided invaluable insight, and I. Whilst I understand the frustrations of the noble Lord Lord Lucas, I do think some of the words that he used about the department's approach to engaging with schools, with professionals, with trade unions, which is widespread, are actually in the work that we do. Were were not fair and were significantly overstated. During the course of that consultation, we heard clear concerns from parents Ofsted and the Equality and Human Rights Commission about inconsistency in the monitoring of seclusion compared with physical force.
There was real concern that this could lead schools to view seclusion as somehow easier or safer. That is not a message that any of us would wish schools to take, and the updated guidance directly addresses that risk. The revised guidance and new legislation equips schools to develop clear and inclusive policies, ensuring that safeguarding sits at the centre of decisions about restrictive interventions. It places strong emphasis on early help, understanding what sits behind behaviour, and using prevention and de-escalation strategies wherever possible.
But it also recognises that when an intervention is necessary, staff must feel supported and able to act appropriately, lawfully and safely. Importantly, every decision must take account of the welfare and needs of all children, including those with Send, ensuring responses are proportionate and rooted in an understanding of children's needs and experiences. From April 2026, my Lords schools will be legally required under these regulations to record and report each significant incidence of incident of force, seclusion or non force related restraint to parents as soon as possible.
On the point about seclusion raised by the noble Lord Earl of Effingham, I think it's just worthwhile reminding ourselves about the definition of seclusion within this guidance in this in these circumstances, we're talking about non-disciplinary interventions. I understand his concerns, which I share about the need to ensure that teachers have the wherewithal and the ability, whether or not through suspension or other disciplinary disciplinary measures, to maintain the calm classrooms that every child deserves.
But the the seclusion being covered in this these regulations doesn't relate to those disciplinary areas. And by the way, the government in the most recent schools white paper themselves came forward in relation to disciplinary provisions with proposals for how we can better handle, for example, internal suspensions. But those are not covered here for clarity, seclusion here applies only where a pupil is prevented from leaving a space and is detained alone, other than as a disciplinary measure. This reflects the Equality and Human Rights Commission definition, which describes seclusion as the withdrawal of a pupil against their will and their confinement alone in a space they are not free to leave.
And in response to to points raised by the noble Lord, Lord Lucas, in some of his communication. To be clear, seclusion does not include brief voluntary timeout, agreed calming arrangements or the planned non-disciplinary use of separation or sensory spaces to support a pupil to regulate their emotions. So schools must record all incidents of seclusion and non force related restraints. They may choose to record additional information, but such measures should not be described as seclusion. On the point about the extent to which this process can be used for school improvement.
Well, we do expect schools to use the data they collect to review their approaches and reduce the need for restrictive interventions through early support, first approaches. And of course, greater transparency will build trust with families and reassure the wider public about how such interventions are used. I recognise the concerns raised about the evidence base underpinning the impact assessment. There is currently no national data set on seclusion or non force restraint. Internal exclusions were therefore used as a cautious proxy because no better evidence exists.
This is an imperfect measure and the frequency of these incidents will vary significantly between settings. In many secondary schools they are very rare. However, in the absence of more robust data, it was the only viable approach, and it may also be helpful to clarify that the monetised analysis of the impact assessment focuses on independent schools because under better regulation requirements, we must quantify the impact of new duties on businesses, and independent schools fall within that definition.
State funded schools do not and so are not included in that element of the assessment. That is not to say there won't be an impact on state funded schools, and I'll come to what that might be in a moment. It's simply to say that the approach taken in the impact assessment was in line with the government's better regulation requirements for how impact assessments are put together. My Lords, the noble Lord, Lord Lucas also raised concerns, as did others, about the department's estimate of the time it will take school staff to record incidents while the evidence base is limited.
I would like to to reassure noble Lords that this estimate assumes that schools already have or will put in place efficient and streamlined record keeping systems, and our contacts with schools suggest that that is the case in very many cases. Many do so already as part of wider safeguarding responsibilities, and our guidance is designed to support schools rather than add unnecessary burden. It's worth emphasising that many schools, as I've already suggested, rarely use force or restrictive interventions, and this has been fully reflected in our assessment of burden.
My Lords, these regulations themselves introduce no new training requirements. The only new cost is the time for staff to familiarise themselves with the reporting and recording requirements, and then the reporting itself. And for many schools, this will simply involve logging an effort, an event using existing systems. So I think the points that noble Lords were making about the level of training, certainly in the case of the noble Lord Lord Lucas, it appeared to me that what he was talking about was the level of training necessary to understand the nature of the different interventions, how they might be used and what should be put in place in in advance of them.
And of course, it is right that training is necessary for that area of work. We heard as part of the public consultation, a strong call from the sector for mandatory training standards, not for the recording and reporting, but for the understanding of when these interventions should should be used and how they should be used. Respondents from schools, parents and specialist organisations told us unequivocally that strong evidence informed training is essential if staff are to de-escalate situations confidently and use restrictive interventions safely and appropriately when they're necessary.
And we've listened carefully to that feedback and work is now underway on the next phase of this work programme, in which the department will explore the case for such standards and develop detailed recommendations on what robust, proportionate and deliverable training requirements could look like across different types of schools. So, as I've suggested then, the impact assessment therefore reflects only familiarisation time and the time required for recording. It doesn't relate to any wider workforce training which schools already undertake as part of their safeguarding responsibilities.
On that basis, the assumption of two members of staff, not necessarily teachers, by the way, completing the familiarisation task is considered proportionate. Decisions about any broader training will remain, with school leaders shaped by the needs of their pupils and their sitting on the other point, raised by the noble Lord, Lord Lucas, about a national data collection, it would obviously have helped to answer some of these questions. Was there a mandated national data collection? But having myself been not only for 11 years teaching in schools but also previously as an education Minister, I do doubt whether or not schools would welcome the idea of an additional burden, and it would be a burden of expecting a national data collection.
So, as with all of these things, we need to bear in mind the need and the wish for greater analysis and evidence alongside the requirements that we place on schools. And I don't think the case is made for a national data collection in this particular circumstance. So in closing, I would thank noble Lords for raising the points that they have done today and for prompting a discussion, and I hope for enabling me to to clarify some of the points that have been made and to respond as well in relation to the broader intention of the regulations.
The government will continue to work closely with schools, parents and the wider sector to ensure that restrictive interventions are used only when absolutely necessary. Always safely, always lawfully and always in the best interests of children.
19:04
Lord Lucas (Conservative)
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Lord Lucas (Conservative)
My Lord, I'm very grateful to the Minister for her comprehensive reply, much of which I completely agreed with. I would only take agreed with. I would only take issue on two points. One is the restriction of the impact statement to independent schools in understanding how regulations work, what effect they have on the system, and sharing that information with Parliament. Surely the policy should be that the coverage should be extended to include state schools.
That is, the great majority of the consequences of this particular set of regulations, and not to share that with Parliament. As the Committee observed, is surely not the right way of going about things. Secondly, when it comes to data collection, most schools will just have this data. Data collection is just a matter of turning a switch or two in the central system, so that that data then flows into the government system. No extra recording, no extra actions beyond just adding a few fields to the data already going to government.
I really don't understand that that's difficult, but I'm grateful for the Minister,
**** Possible New Speaker ****
and I beg you to withdraw my motion. Question. Is that this motion?
**** Possible New Speaker ****
Question. Is that this motion? Is it your Lordships pleasure that this motion be withdrawn? The motion is by leave withdrawn. Schools recording a report in Seclusion act number two, regulations number 25. Motion. regulations number 25. Motion. Regret. Lord Lucas not not move, Regret. Lord Lucas not not move, not move. Or withdrawn. My Lords, I beg to move. That the House do now
That is, the great majority of the consequences of this particular set of regulations, and not to share that with Parliament. As the Committee observed, is surely not the right way of going about things. Secondly, when it comes to data collection, most schools will just have this data. Data collection is just a matter of turning a switch or two in the central system, so that that data then flows into the government system. No extra recording, no extra actions beyond just adding a few fields to the data already going to government.
I really don't understand that that's difficult, but I'm grateful for the Minister,
**** Possible New Speaker ****
and I beg you to withdraw my motion. Question. Is that this motion?
**** Possible New Speaker ****
Question. Is that this motion? Is it your Lordships pleasure that this motion be withdrawn? The motion is by leave withdrawn. Schools recording a report in Seclusion act number two, regulations number 25. Motion. regulations number 25. Motion. Regret. Lord Lucas not not move, Regret. Lord Lucas not not move, not move. Or withdrawn. My Lords, I beg to move. That the House do now