Lords Chamber

Thursday 19th March 2026

(began 2 hours, 37 minutes ago)

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11:07
None Portrait Oral questions: Discharging patients is from hospital:consulting unpaid carers Baroness Pitkeathley (Labour)
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First First Oral First Oral Question First Oral Question Baroness Pitkeathley.
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None Portrait Oral questions: Technological assistance for flood detection and prevention The Lord Bishop of Sheffield (Bishops)
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Second Oral Question the Lord
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Lord Katz Portrait Lord Katz (Labour)
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Well, I thank the right reverend Prelate for bringing the actions of Rotherham Council to to our attention. It's absolutely right that the whole of South Yorkshire is subject to some. Some has been subject to some severe flooding, flood floodings and it's. And. And as he said, in places like Rotherham, sometimes basic simple solutions are are the best. I would say that to to address is wider point. We're working closely with local government to ensure lessons from recent flooding and innovations we are seeing across the country can be adapted at scale.

This is the purpose of the government's Flood Resilience Taskforce. It's to improve coordination across the whole system and translate local experience into national practice. Recently, the task force met in Manchester and consider how case studies from local partners in areas like Greater Manchester and also devolved governments such as Northern Ireland. In the case of the meeting the other day on innovation in forecasting, community resilience and emergency response can be replicated more widely. Local partners also directly engaged through regional flood and coastal committees through local resilience forums, which ensures that local knowledge such as in Rotherham and right reverend Prelate quoted such as innovation to reduce flood risk through natural flood management and sustainable drainage systems, informs national decisions on how best to roll out new technologies and share best practice across regions.
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None Portrait Oral questions: Resilience of rail infrastructure against future storms and floods Lord Berkeley (Labour)
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Is it.
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Earl of Kinnoull Portrait The Earl of Kinnoull (Crossbench)
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My Lords, the Network Rail, of course, being a state entity, it doesn't buy third party insurance anywhere. But the insurance industry does have an amazing amount of modellers and information about the natural perils in the United Kingdom, and particularly the sweet water peril and the saltwater peril that we're discussing here. And I wonder whether the noble Lord, the Minister, could tell us whether the insurance industry is being tapped for its expertise in trying to

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manage and predict these perils. The noble Lord asked a very

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The noble Lord asked a very pertinent question, and I will write to him. I believe that that's true, but I can't say for certain. What I can say is that following the Carmont disaster, where people the Carmont disaster, where people were killed as a result of an earthworks failure, the noble Lord earthworks failure, the noble Lord mayor wrote a very powerful report about earthworks maintenance for Network Rail. Dame Julia Slingo did similarly with the weather. In my tenure at Network Rail, network rail started by buying the cheapest weather forecast it could, and Julia has pointed out that actually.

You can now forecast the weather in two kilometre squares throughout throughout the country. And that's what they now do. And that helps prevention. But I will take what the noble Lord says very seriously, and indeed, I will write to him to make sure that the knowledge in the insurance industry is used.
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None Portrait Oral questions: Refugee movements following Israeli military action against Hezbollah in Lebanon The Lord Bishop of Chelmsford (Bishops)
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Fourth Oral Question, the Lord Bishop of Chelmsford. question. Standing in my name on the Order Paper. the Order Paper.
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None Portrait Business of the House
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My Lords, with the leave of the House, I beg to move the motion Paper.

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En bloc question is that the two motions in the name of Baroness Blake of Leeds be agreed to En bloc Blake of Leeds be agreed to En bloc as many as of that opinion will say content and to the contrary, not content and to the contrary, not content. The contents have it. Tertiary Education and Research Tertiary Education and Research Wales Act 2022 Consequential Amendments Order 2026. Lord Katz.

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Amendments Order 2026. Lord Katz. My Lords, I beg to move the motion standing in my name on the Order Paper. The question is that this motion

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The question is that this motion be agreed to. As many as of that opinion will say content and the contrary, not content. The contents have it. Renewables Obligation Amendment Order 2026 and one of the

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motion Lord Whitehead. My Lords of the House. I beg

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My Lords of the House. I beg leave to move the motions in my name on the Order Paper. En bloc.

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The question is two motions in the name of Lord Whitehead the agreed to En bloc.

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agreed to En bloc. Order, order, order.

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Order, order, order. My Lords. As many as of that opinion will say content.

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Content. And to the contrary, not content. The contents have it. Data Use and The contents have it. Data Use and Access Act 2025. (Consequential

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Amendments and Transitional Provision) Regulations 2026. Lord Lilley. My Lords, I beg to move the

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My Lords, I beg to move the motion standing my name on the Order Paper.

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Order Paper. This motion be agreed to. As many as of that opinion will say content. Content to the contrary, not content. The contents have it. And now we move to report of the

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And now we move to report of the Pension Schemes Bill Baroness Sherlock. My Lords, I'd like to move this
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Baroness Altmann Portrait Baroness Altmann (Non-affiliated)
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Yes. >> My Lords. >> I will not detain the House too long on this amendment. It is a small amendment, but I believe it is a very important one for members of pension schemes in auto enrolment and particularly women. The proposals in the Bill are to move small pots under £1,000, which are considered dormant. In other words, have had no contributions paid in and no contact from the member with the provider for 12 months.

And those can be moved to a consolidated scheme without member consent. Now, my my argument is simple 12 months is simply not long enough to consider that a scheme that hasn't had contributions paid into it is dormant, and that that member has no interest in the scheme. Imagine a woman, for example, who stops work for a period to care for loved ones or elderly parents, partners and or children. They may be stopping contributions for quite a while longer than a year, but their pension could be moved if the provider hasn't been able to contact them, and their money would be put into a consolidator scheme approved by the regulator over which they have no control.

So amendment 49 would extend the period before which somebody's pot can just be taken away, if you like, from one year to three years. And amendment 50 would extend it to two years. And this gives time for the government correct aim of improving data accuracy to actually take place. We know that most pension schemes have huge errors in their data, and don't always know how to even contact a member. It will also allow time for providers and trustees to trace members and for the pensions dashboard to and members to be able to find the pots themselves.

I understand that pension providers don't want to have these small pots, and that they may make a loss on them, but they should not be able to just get rid of them with such unseemly haste, in my view. And I hope that the government may accept the spirit in which this is meant, which is to protect members while also obviously still allowing the pots to be moved once it is beyond doubt that they are indeed dormant, I beg to move.
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Lord Fuller Portrait Lord Fuller (Conservative)
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Amendment proposed clause 22, >> Amendment proposed clause 22, page 24. Line 19 leave out 12 and insert 36.

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Once again, we have another policy designed by civil servants sipping lattes in that rather agreeable ground floor coffee shop at one Horse Guards Road, safe in the knowledge that their regular monthly salary, their generous taxpayer funded pensions and their ability to work from home a couple of days a week provides that comfortable lens through which they work and view the world outside. But outside, in the real world, we have whole armies of people who don't do the 9 to 5.

They live by their wits. They self-employed, they undertake seasonal work, term time, employment, employment. The man or woman for whom the Labour Party was established and whose salt money away for their retirement when they can. Many of these work hard and ask their accountant to do their books at the end of the year. It might take some time. Neither the worker nor the accountant worked as strict 12 month timescales. It might take three months to finalise the numbers in one year, nine months the next.

That's the untidy way in which the real world works. So to legislate to confiscate someone's pension after 12 months, as it was fly tipped by the side of the road to be swept into the dumpster of some poor performing default scheme, amounts to theft and an abuse of trust that undermines confidence in the pension system itself. I totally endorse amendment 49 in the name of my noble friend Baroness Altmann for another reason as well. Throughout the entirety of the canon of pensions legislation, we have a three year carryback that people can make up their pension liability, pension deficit over three years, and this is entirely consistent with that.

And consistency. Simplicity and understandability are the watchwords with which we should proceed.
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Lord Palmer of Childs Hill Portrait Lord Palmer of Childs Hill (Liberal Democrat)
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My Lords. >> Confrontational way than the noble Lord Fuller. I, from these benches confirm that we will be benches confirm that we will be supporting amendment 49, I. I do not believe the government should not support it should should fail to support this. It's in the name of Baroness Nye noble Baroness Altmann. It increases the time before a pot is considered dormant. In order to provide greater flexibility for savers like mothers, those on sabbatical. Mature students who may not add to their pots for 1 to 3 years.

We have no hesitation on these on these benches to support the noble Baroness Altmann motion, but not in quite such a confrontational terms

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as the Lord Fuller. My Lords, if I could continue

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My Lords, if I could continue the spirit of good grace, I wish our deputy Chief Whip a very happy birthday today. My Lords, I want to birthday today. My Lords, I want to speak briefly in support of an amendment 49 in the name of the noble Lady Baroness Altmann, and noble Lady Baroness Altmann, and which I have been pleased to sign. Fundamentally, this amendment is about ensuring that we do not move about ensuring that we do not move too quickly to classify pension pots as dormant and in doing so, risk making decisions on behalf of savers before they have had a fair opportunity to act for themselves by extending the period before a pot is treated as dormant.

This amendment would delay when pots become eligible for automatic consolidation. That is important because it reduces the risk of pots being moved prematurely, perhaps at a point when an individual is between jobs, taking a short break on maternity leave, or simply has not yet re-engaged with their savings, it also gives savers more time to re-engage with their
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Baroness Sherlock Portrait Baroness Sherlock, The Minister of State, Department for Work and Pensions (Labour)
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of jobs, they've moved on and they've left small pots, small values scattered around in different places on which they are different places on which they are paying charges, often quite significant charges. And the value of that of that pot is diminishing. The policy, of course, was consulted on not by civil servants sitting in Horse Guards Parade, but by the previous government in 2023. The proposal this is the proposal that was consulted on by the previous government. I happen to previous government.

I happen to think they got this right, my Lords, and so too, so too did the range of opinion that was consulted. I'll say more about that in a moment, but the intention behind the policy is to capture the rights dormant small pots and have them transferred to a consolidated, which will be clearly classified by the regulator as being one that's been classed as having value for money and only to such a pot. The intention is to capture the right small pots that are genuinely dormant, while avoiding transferring pots belonging to members who remain actively involved with their pension saving.

Now, of course, no eligibility test will operate perfectly in every circumstance, but we believe the current 12 month period provides the right balance between effective consolidation and member protection. Let me explain why. But first off, the noble Lady Baroness Altmann would want to extend it to 24 or 36 months, and that would significantly extend the period during which a pot remains dormant. This isn't about industry. It's about risking detriment both to individual members who would continue to face charges for longer and to the wider scheme membership, who in practice subsidise these small deferred pots.

Either of those extensions would delay the consolidation of genuinely dormant small pots, leaving inefficiency excuse me, inefficiencies in the

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system for longer, resulting in go on. It's going to be a long day. To the noble Lady for giving way,

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To the noble Lady for giving way, but can I can I just say that if a pot has been forgotten about for many years, this problem won't many years, this problem won't exist even with my amendment, because it will have been dormant for over three years if it was left for over three years if it was left behind from a long time ago. I'm concerned about the people who are working at the moment, who may take

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working at the moment, who may take some time off and to give them a better chance. Just a little bit of patience. I'm just coming to that. So if you could just bear with me for a moment. However, either of her decision proposals to extend the period of dormancy would delay the consolidation of genuinely dormant, still small pots, leaving inefficiencies in the system for longer, resulting in higher costs for schemes and for members through higher charges. Where someone holds several small pension pots across multiple schemes, they will find themselves subject to multiple sets of charges over a number of years.

The longer the dormant dormancy period, the longer members will face those charges. It's well recognised that many schemes apply a flat fee, flat fee charge structure, and particularly those most affected by the proliferation of small pots, and that can compound the issue. So, for example, a saver with three separate small pots held across three schemes, each applying its own annual flat fee charge, could see those charges accumulate over an extended dormancy period. If the period were lengthened to 36 months, they could face four more annual charges.

Given the relative low value of many small pots, such cumulative charges do represent a significant risk of detriment to the member. But on the point about people taking a career break with the intention of returning to work, in the majority of cases, such members will be adequately protected by the 12 month dormancy window. The noble Lady Baroness Stedman-Scott mentioned maternity leave. This was looked at carefully during the consultation. Where someone's on paid maternity leave, employers should carry on paying pension contributions by Lord Hermer.

Contributions are being made, the pots are not are not dormant and so any period of dormancy would not stop, would not start until there were no contributions paid, so those pots would not be subject to dormancy criteria and not be consolidated. And even taking an unpaid break. The loss that lasts longer than 12 months would find the system included various safeguards. Firstly, every member will get a transfer notice before consolidation takes place, giving them a clear opportunity to opt out if they judge.

Consolidation is not in their best interests and as we develop the delivery design, we'll look to explore different forms of communication to understand how they can best support members engagement with the process. Secondly, under clause 115, the government is taking a power to require employers to provide updated information to schemes periodically. We will consult on how that should operate. But if subsequent evidence shows that career breaks present a genuine issue, we could simply require employers to notify schemes where a break is planned or underway.

Where appropriate. This would allow such pots to be made exempt from consolidation under regulations made under clause 25. However, when Lord Jay, the current evidence does not indicate this is expected to be a widespread problem. As I said earlier, the 12 month time frame formed part of the proposal consulted on with stakeholders across the pension industry and consumer representative bodies in 2023, and represents a supported middle ground long enough to ensure pots are genuinely dormant, not so long as to delay consolidation, necessarily, it is essential that the policy maintains the right balance between operational efficiency and member protection.

However, just to be clear, the bill currently requires the regulations to set a minimum of 12 months for a pot to be classified as dormant. That means if evidence suggests extending the period is necessary, that period could be set at a higher level, or it could be extended subsequently through secondary legislation. My Lords, we all want to avoid negatively impacting individuals who take periods of unpaid leave. But if we think about it, applying a blanket extension to the dormancy criteria can't be the right way to provide that protection.

A more appropriate approach is to design the policy framework with the necessary safeguards built in from the outset. And that's what we've done. Introducing simply, alternatively, a universal increase to the dormancy period would exacerbate the risk of detriment for everybody involved. Finally, I turn briefly to government amendment G 51. This is a minor and technical change. It replaces the word specified with the word prescribed in clause 23 to ensure consistent terminology throughout the bill. The amendment provides clarity and improves clarity and brings the clause into alignment with the drafting used elsewhere in the measure.

In light of what I have said, my Lords, I hope the noble Lady can withdraw her amendments and the House will

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support the Government. Amendment 51. My Lords, I thank the noble Lady, the Minister, for her reply and the Minister, for her reply and what she describes sounds very good in theory. My amendment is designed in theory. My amendment is designed to address the issue that that theory doesn't work in practice in the kind of pension world that we the kind of pension world that we have right now, there will be improvements, but they're not in place yet. There is no compensation place yet.

There is no compensation for a member whose pot is moved away to a worse scheme. There may have higher fees or they may have lower fees. They may get better performance, they may get worse performance. It should be incumbent upon all of us to make sure there is as much protection as possible. And if somebody has not paid in for years, then the three year limit will be fine because they will have exceeded it. Therefore, I do wish to test the opinion of the House on amendment 49 holds.



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The question is that. Order? The question is that amendment

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The question is that amendment 49 be agreed to. As many as of that opinion will say content. Content

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opinion will say content. Content and to the contrary, not content. Not content. The question will be decided by a division. I will advise the House a division. I will advise the House when voting is open. Thank you. when voting is open. Thank you.
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Baroness Bowles of Berkhamsted Portrait Baroness Bowles of Berkhamsted (Liberal Democrat)
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40 and the new. >> 40 and the new. >> Clause 28. See issues thoroughly in committee and I'm grateful to all noble Lords who contributed and all noble Lords who contributed and to those who have spoken to me since these amendments in this group remove the reserve power that would allow government to mandate asset allocations for workplace pension savers. We will vote on amendment 52, which is a consequential amendment, but it carries with it the business amendment, which is or the thing that it's really about, amendment 78 that deletes clause 28 C, and also amendment 96, which will then delete the now redundant savers interest test and all associated references.

Now, my objection here is one of principle why should government override trustees? We all know UK pension funds have invested too little in UK assets and private markets, but we also know why regulatory interventions. The charge cap and pressure into low cost indices and gilts have made it difficult to invest in anything that requires governance or research. The track record of intervention is not good, yet this clause proposes more intervention. It is described as a backup to the Mansion House Accord to be used if industry does not deliver, but if industry does not deliver, it will not be out of obstinacy.

It will be because the opportunities are not there at the right price or at the right risk. Mandation does not solve that. It simply overrides fiduciary and professional judgement. Even the threat of Mandation is intended to do the same. If regulated for this clause would reverse the burden of proof and raise the evidential bar for trustees. Trustees who already must act in members best interests would additionally have to show the regulator that the mandated allocation would cause material detriment, would cause material detriment in order to be exempted from allocation.

That's a very high bar flying under the guise of a savers interest test, we would be placing trustees under a new adjudicator of fiduciary duty, one that has no fiduciary responsibility itself, and a government with an inherent conflict of interest. And if I may say, no technical or regulatory qualification spending workers pensions instead of raising taxes is not fiscal discipline. It's concealment. And the power itself is extraordinarily broad. No time limit, no percentage, no end date and a rather dodgy exemplary asset list available to any future fancy.

Nothing prevents a government choosing its preferred assets, including those that no one else will touch, and compelling 22 million savers to invest in them. That is not the route to pension security, my Lord. For all these reasons, the only responsible course is to remove this power, and I do intend to test the opinion of

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the House. I beg to move. Amendment. Proposed clause 40, page 38, line 12 leave out and condition two. I.

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I fully support everything that the noble Lady Baroness Bowles has said, and I am very sad to be in said, and I am very sad to be in the position of needing to do so because I support the government's because I support the government's aim of helping pension schemes put more money into UK investments and
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Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (Crossbench)
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When you're trying to solve a problem, it's best to try to understand the root causes of the understand the root causes of the problem and then resolve those causes. Diagnose and treat the disease, not the symptoms. And disease, not the symptoms. And that's why I've repeatedly asked the noble Lady, the Minister, why she believes UK pension funds have she believes UK pension funds have been so reluctant to invest in so-called UK productive assets. Now, I know the noble Lady gets frustrated with me asking this question regularly, but she has never actually answered it.

She always responds, as she did again on the 11th of March, by explaining what the symptom is that UK pension funds invest a much lower proportion in UK productive assets than international comparators. She's right, and as noble Lady Baroness Altmann has just pointed out, I don't think any of us disagree with that. But she does not answer the fundamental question why are UK assets apparently so unattractive to UK pension funds? What are the barriers to investment that we need to remove? The noble Lady? The Minister has often told us that the Mandation power is just a backstop to the voluntary Mansion House agreement, and it probably won't be used.

But my Lords, that is precisely the problem. It doesn't need to be used. It's very. Existence is in effect mandation, as the times pointed out so clearly on Saturday, a voluntary agreement ceases to be voluntary if it is underwritten by a promise of compulsion. So even if the power is not used, it still creates a fiduciary duty problem. The trustees are still effectively being forced to act in a way that they might not believe to be in the best interests of members, but they won't even have the defence of.

We were only following orders. If it turns out badly, and the Minister has never given an adequate response to the question of who should bear the risk if the government mandated assets result in poor performance on the 11th of March. The noble Lady, the Minister said, and I quote, this power does not direct schemes into specific assets or projects. What it does is set a broad framework aligned with the industry's own voluntary commitments. Under the Mansion House Accord, trustees retain full discretion over individual investment selection and the balance between asset clauses.

But, my Lords, that is not what the bill says. What it actually does is give the government power to require that an undefined and unlimited percentage is invested in qualifying assets, and qualifying assets are defined as, and I quote, an asset of a prescribed description and I, I stress an asset, not just a class of assets. There is no limit in the bill on what those assets can be, except that they can't be listed on a recognised exchange. So, contrary to what the noble Lady has told us, specific assets or projects can be prescribed and nor does the bill require them to be in the UK.

They can be anywhere in the world, and the first regulations to define the asset allocation are subject to the affirmative procedure. But after that, my Lords, any future government can prescribe any asset anywhere in the world on any percentage under the negative procedure. Now, as the noble Baroness Lady Bowles has pointed out, a scheme can apply for an exemption, but it is an incredibly high hurdle. A scheme must prove that the asset allocation requirement would cause, and I quote, material financial detriment to members.

That is extraordinary, not just not in members interests, but material financial detriment. So, my Lords, contrary to the noble Lady, the Minister's assurances, this unlimited mandate power can be used to direct trustees to invest in classes of assets or indeed specific assets, it fundamentally undermines the fiduciary duty of pension trustees. This dangerous power must be removed from the bill and the government should instead focus, as I said at the beginning, focus its efforts on identifying

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and removing the underlying barriers to UK investment. Yeah. My Lords, I.

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My Lords, I. Rise in this mini. Debate to speak. In full support of this amendment. I am extremely concerned amendment. I am extremely concerned about the principle of government directing any form of investment. I don't think any government has a

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don't think any government has a strong record in terms of making. Investments, and to compel pension funds to make such investments would be incredibly
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Lord Johnson of Lainston Portrait Lord Johnson of Lainston (Conservative)
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investments would be incredibly dangerous. As Lord Vaux of Harrowden has just so wisely said, we're setting ourselves a very, very dangerous precedent here that we will all, as people who want to retire at some point, live to regret. My second point is the technical point, which I think Lord Faulks also touched on, but is worth exploring slightly further, which is the description of what a directed investment is. What is a UK investment? The sort of thing we would be told we have to invest in.

Is it a company where their headquarters is domiciled in London that employs a certain number of people? It does a certain thing in the UK specifically related to certain asset classes. The reality is you're going to have enormous problems if you try and force money into certain parts of the economy, you'll get crowding out excess price. An example could be we're going to force these pension funds to invest in infrastructure. And so you'll have a crowding out of other investments into infrastructure projects that will be mispriced, will create problems when it comes to trying to generate returns.

We should be very careful about that. Prescription over investment is one of the worst things a government can possibly do, and I think we should acknowledge that in this House and as has been mentioned, why are we talking about forcing people to buy things that other people don't wish to buy, when we should be trying to create an economy that people want to invest in? And I would call upon the noble Lords Minister to put that as the priority, rather than trying to force people to do things they don't wish to do, and will cause enormous problems in the long term.
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Lord Wolfson of Aspley Guise Portrait Lord Wolfson of Aspley Guise (Conservative)
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My Lords, I begin by declaring an interest as Chief Executive of an interest as Chief Executive of Next PLC, a company that has over 20,000 colleagues in enrolled in an 20,000 colleagues in enrolled in an auto enrolment pension. I want to convey to the government just how worried people are at the idea that the government is planning to mandate how their pensions, their life savings should be invested, to be told that a percentage as yet to be determined, should be invested in certain classes of assets at yes, at yet to be defined by Ministers who can give no indication as to what they actually want to do with these powers is deeply worrying.

Good investments don't need to be mandatory. In fact, there is the inherent suspicion that investments which are compelled are unlikely to be very good investments. In fact, it's worse than that, my Lords, because if the demand for certain asset classes is artificially increased, then the returns are likely to fall further. Why pay a healthy return to an investor who has no choice but to invest in your class of asset? Now, it might be argued that whilst mandated investments are not so good for pensioners, they will be good for the nation as a whole.

This is a very dangerous precedent, my Lords, and it's not credible. It's not credible because government are not well placed to allocate capital in this way. They are subject to political pressures. The competing priorities of their backbenches, the media, the polls. Now, I join other noble Lords in saying that the government is not wrong to worry that British pension funds show an alarming tendency to avoid investing in UK businesses. But there are better answers than this reform. The regulatory regime make the UK a more attractive place to invest in, but compulsion is the worst possible solution, and it is that compulsion that goes to the heart of my concerns and many others about this power, because the greatest risk of this power is that government abuses it.

That in the thick of some political storm, under pressure to boost the economy, under pressure to serve some interest group, it mandates large scale, misguided investment in some part of the economy. As a last roll of the dice. Now, I should stress, my Lords, that I completely accept that this government would not abuse this power. But can the noble Lord, the Minister, be so sure that all future governments, perhaps led by their political opponents, will not abuse it? Other noble Lords have rightly spoken about the breadth of these skeleton powers.

They're not quite Henry the Eighth Powers, but to me, my Lords, they look very much like Robert Maxwell Powers, the powers to control and direct the investment of other people's hard earned savings for purposes other than their benefit. Back then we said never again. Never again will we put the savings of so many people in the hands of so few powerful people. Never again will we risk people's life savings being invested for anything other than their benefit.

My Lords, this power takes us back in the wrong direction. It should not stand. I

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support Baroness Bowles amendment. Yes. My Lords, those people have done

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My Lords, those people have done the right thing and saved our retirement. Have made a bargain with the state in exchange for little help on the way in. The little help on the way in. The state will be relied on a little bit less on the way out. That's the deal and the responsibility of finding people to look after your finding people to look after your money lies with the individual and the trustee or investment managers they appoint. On that simple truth,
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Lord Fuller Portrait Lord Fuller (Conservative)
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they appoint. On that simple truth, London has developed global leadership in asset and investment management, and the entire city ecosystem has created a tax gusher that pays for defence schools and hospitals. We should not place it or its reputation under threat. Now, we've heard a lot from the Dispatch Box over the last 12 months or so about the sort of investments that government thinks we should invest in, and we need to learn some lessons from history, green schemes, forgetting that when they tried this under political direction in Sweden, it created the $5.8 billion northvolt disaster and all the public sector pensioners lost their shirts.

The Minister from the Dispatch Box lionised the large Canadian public sector schemes as the model that should be followed. Last year, their investment returns went down by 5%. At the same time as our own LGPS went up by nine. Ministers want schemes to backfill UK infrastructure, perhaps steel. Steel, which we now learn has cost us over £1 billion in little over a year, money that will be never seen again. Carbon storage, passive funds which by arithmetic lead you into bubbles or into high risk private assets.

We're at 5:00 this morning, the Financial Times published an excoriating demolition of the claims that private equity funds do, as well as the Chancellor claims, especially as the J curve gets stretched out beyond ten years. I could go on, I won't. The point is that whilst Ministers want to pick winners, they've been selling lemons. The pound shop pundits are trying to force feed the most risky parts of the market. The bits. The other professionals turn their noses up or consider they're not right for the man in the street, down the throats of those for whom taking excessive risk is not necessarily the right thing.

The government's job is to create the environment for the best and most attractive investment ideas to come forward, not to beat pensioners with a stick and strong arm them

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poorer long after Rachel Reeves and Torsten Bell have become a footnote in history. It's our duty to stop this, and we must. Yeah.

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Yeah. My Lords, I declare my interest as an employee of Marsh, whose sister company, Mercer, is a sister company, Mercer, is a pension consultancy, master trust provider and a signature to the Mansion House Accord. I speak in strong support of this group, beginning with amendment 52, which
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Lord Ashcombe Portrait Lord Ashcombe (Conservative)
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would remove the power to mandate asset allocation while preserving the requirement on scale. This is a

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targeted, proportionate change that keeps the legitimate objective of ensuring sufficient scale. In the.

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In the. Market without stripping trustees of the fundamental responsibility to make investment responsibility to make investment decisions. I've never supported, and it has become abundantly clear in recent weeks that the bulk of in recent weeks that the bulk of industry does not support the government's proposed power to government's proposed power to mandate asset allocation. I have listened carefully to Ministers in both houses over the past weeks who say these clauses are simply reserved power intended to ensure that the Mansion House Accord operates.

Even accepting that characterisation, the House should not lose sight of two important points. First, the schemes that signed up to the Mansion House Accord did so in good faith and with trustee agreement. Second, those signatories did so on the basis of explicit caveats caveats that recognise trustees fiduciary duties, the necessity of a reliable pipeline of assets, and the imperative that the market shift from a narrow focus on a broad cost to a broader assessment of value across the whole investment chain, including my clients.

It is therefore deeply disappointing to see the government invoke the Mansion House Accord agreement as though it represents blanket industry support for intervention in private finance and trustee decision making. It does not conflating a voluntary conditional industry commitment with a license to centralise investment allocation decisions, risks doing grave damage to good governance and to member outcomes. For these reasons, I urge noble Lords to support these amendments. Remove the dangerous part and mandate asset allocation. Keep the focus on scale.

Let trustees, acting with their fiduciary and statutory duties, continue to determine the investment strategies that best serve their members. The amendments

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before us achieve that balance. My Lords, I signed amendment 52 in the name of the noble Baroness in the name of the noble Baroness Bowles of Berkhamsted because let's be candid about this. This is not the government's money. And there the government's money. And there seems to become an attitude that because the government uses tax relief and other ways to encourage people to invest in private people to invest in private pensions, all of a sudden now, just because it's not being invested in projects the government wants,
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Baroness Coffey Portrait Baroness Coffey (Conservative)
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projects the government wants, instead of government taxpayers money being put into those projects, that somehow they are going to tell people what to do with their cash. Now, even on things like auto enrolment, which are have been a force for good, it's not mandatory. People can opt out because there's always been a recognition. It's somebody's salary. It's their choice on what they do with it in their take home pay. So this goes completely against that because some, I won't use unparliamentary language, but some, some way of just almost being blind to the fact that it's not the government's money.

Now, my particular concern is that there never was a human rights impact assessment. I have written to the Attorney General to understand this, because I think this could well be covered, in effect as an asset, a personal property under article one, protocol one. And yet the government seems to be quite happy to say this meets the human rights test. We've never seen any backup to that. So I would be grateful if the Minister would publish any assessment that they've done before we get to Third Reading.

But to be straightforward about this, this is the wrong approach. The voluntary accord is the right approach, and that's why I'll be supporting this if it is tested.

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Right. My Lords, we. Know that a much higher

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Know that a much higher percentage. Of pension fund assets can happily be invested in UK can happily be invested in UK assets. It was the case when I was managing pension funds. The reason it isn't now is entirely what it isn't now is entirely what politicians have done to the system, and we should seek to undo it. Not and we should seek to undo it. Not in not fudge that as the noble Lord Lord Vaux of Harrowden says, my particular recommendation to the government is that rather than giving the government power, they should give pensioners and investors in pension schemes power.

Let them. There are structures in the Bill which allow pensioners to express their opinions on what
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Baroness Stedman-Scott Portrait Baroness Stedman-Scott (Conservative)
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OK. >> My Lords. >> Of all the groups and of all the amendments we have tabled and discussed on this bill, for me, discussed on this bill, for me, this is the most important mandate is, rightly and understandably, the is, rightly and understandably, the most contentious part of this bill. I'm grateful to all noble Lords who have helped to raise awareness of this issue, which, as I am sure the noble Lady the Minister is aware, has garnered a lot of attention and criticism outside of this place.

The Abi have written to the Minister and the Other place, Torsten Bell to warn him of their serious concerns about the mandate power, saying that it is not necessary for the government to mandate investment. They have asked the government to withdraw this part of the Bill. Pensions UK have been unambiguous on this point. They too have called on the government to remove this power from the bill, warning that it would harm free and open market competition aimed at driving better saver outcomes.

They have said Mandation would put these outcomes at risk. More recently. Paul Johnson, formerly of the IFS, wrote strongly against Mandation in an article in The Times. Just the headline and strapline will give the Minister all the information that the noble Baroness needs, telling pension funds where to invest will not end. Will the government's desire to boost UK assets is understandable, but overriding the fiduciary duty of trustees crosses a line my Lord, industry are clear, the experts are clear, and much of this House are

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clear that the government should not be directing Private sector investment. It is

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Private sector investment. It is obvious that this power overrides the fiduciary duty of trustees. the fiduciary duty of trustees. This is a radical step, and it establishes the principle that it is appropriate and desirable for is appropriate and desirable for governments to tell schemes how to invest, to meet their own political. invest, to meet their own political. The government are right to want investment in UK assets. Indeed, I am sure no one in this chamber would not welcome more money in UK assets.

But if the picture is not where we want it to be, then the question for the government is why? Why is the UK not attracting that capital? What barriers exist and what reforms are needed? Instead of doing that work, the government have reached for a shortcut, a reserve power, which is really a threat to compel investment. My Lords, this is reckless. It sets a dangerous precedent. And the government's central defence that they do not intend to use the power raises two unavoidable questions.

Firstly, if they never intend to use the power, then why are they legislating for it? Secondly, and how can the noble Baroness Lea Minister assure us that the power will not be used when they themselves will not be in office for ever? This power is going into law, and it will mean I'm afraid it will. I am afraid, outlast the Minister, and indeed all of us. The noble Baroness, the noble Baroness, cannot speak for future administrations or indeed political parties like reform.

God help us, who have signalled a great willingness to direct investment. The government is handing future Ministers this power, not merely their own. My Lords, I won't detain the House any further than to say that this power must be removed. It is a massive overstep from the government, and despite all the assurances of the Minister, no one is yet convinced that this can remain industry. Reject it. Experts have expressed serious concerns about it, and the Minister must remove it.

Mine. I am sure the noble Baroness has listened to all noble Lords contributions, and as my noble friend Lord Wolfson said, we must remove this Robert Maxwell power. We will. On these benches, and I'm sure others support the noble Lady wholeheartedly if she

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matter. Hey! My Lords, as we've heard, the

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My Lords, as we've heard, the combined effect of these amendments will be to remove from the bill the government's reserve power to require certain pension schemes to require certain pension schemes to hold a prescribed percentage of their assets in qualifying assets. As Lady Balls indicated, we explored this territory in some explored this territory in some depth at committee and noble Lords made a number of detailed and considered arguments. It's been considered arguments. It's been good to have an opportunity to talk to a number of colleagues since then and to discuss their concerns.

The government has reflected, but the government continues to regard the asset allocation reserve power as a necessary part of the reform package that this bill introduces, and I will set out why. Let me make the headline case is that there is strong evidence that savers interest lie in greater investment diversification than we see today in the DC market. And I think that probably is at least broad agreement on that. DC pension providers themselves have recognised this. A small allocation to private markets as part of a diversified portfolio offers the potential for better risk adjusted returns over the long term.

But despite that recognition, many providers are not yet acting on it. Lord Dannatt is not because diversification is against savers interests, it is insignificant part because of competitive dynamics. The pressure to keep costs as low as possible in order to win and keep new business from employers, and the difficulty of any single provider moving ahead of the market. Now that this isn't just the government's view. I mean, this is what the industry has said
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