Lords Chamber

Wednesday 1st July 2026

(began 4 weeks ago)

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Baroness Cash Portrait Baroness Cash (Conservative)
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who they love deserves the full protection of the law. But this protection of the law. But this bill provides no necessary new protections and risks criminalising people who have done nothing wrong. people who have done nothing wrong. It is flawed, deeply flawed in its drafting, and the evidence on which it is based is at best weak and at worst, misleading. I will come back to that. The government's explanatory notes say that abuse ranges from beating a person to coercive control. But these are already crimes, and those who are not in a relationship are covered by harassment or common law assault.

The explanatory notes also say that the bill will cover psychological or emotional pressure, economic pressure and conduct that causes serious alarm or distress with a substantial adverse effect on usual day to day activities. An average day in most teenagers when one's parenting them as I am. My Lords, those terms that drafting would put in question a wife who asks her husband to stop wearing her clothes. Parents who tell their child they will not fund puberty blockers or cross-sex hormones, or a school that insists on referring to all its pupils as girls and boys.

Despite reassurances from the Minister in the other place. The way this bill is drafted causes all of these possible problems. So can the noble Lord, the Minister, tell the House why the bill contains no carve outs for such interactions? And can the noble Lord, the Minister, explain how the clear conflict with articles ten and eight, the right to freedom of expression and the right to private and family life are to be reconciled. This bill also hands the power of private prosecution to any organisation that wishes to use it, without requiring the consent of the Attorney General or the Director of Public Prosecutions.

That means litigious, bad faith, privately funded campaign groups like the Good Law Project could destroy the lives of those with whom it disagrees by bringing prosecutions. So can the noble Lord, the Minister, tell the House, why is there no requirement in this bill for prosecutorial consent? I turn now to the evidence base on which this bill is built. The Minister, Olivia Baillie, quite rightly stated in the House of Commons that it is beholden on us to ensure that this conversation is based on real facts.

But I'm sorry to say that she then relied on the Gallup report. My Lords, Gallup is an Lgbt+ abuse charity and she claimed that it contains hundreds of case studies demonstrating appalling abuse happening right now. In fact, it contains fewer than 200 identified cases. And of those, only 51 people were specifically seeking help with conversion practices. The rest were already seeking help for domestic abuse, forced marriage, housing or mental health. And the report, and I am sorry to say, the Minister also failed to mention a highly significant fact that Gallup ran a helpline on behalf of the government, funded to the tune of £360,000 over three years.

So this is a government contractors report created to justify further funding for that same contractor, presented as independent evidence. The Gallup researchers themselves admitted in their own report that the cases they found align with existing offences including ABH, rape, sexual assault, forced marriage and coercive control. Will the noble Lord, the Minister, explain why a report produced by a government contractor was presented to Parliament as independent research? The impact assessment, published yesterday, fares no better. That relies on a Stonewall opinion survey, which found that 10% of LGBT people had undergone an exorcism, which is one mathematician helpfully verified by the charity Sex Matters have calculated would imply 24,600 gay exorcisms a year in this country.

It is preposterous, incredible. And yet the government has used the same survey. Flawed methodology for the 75,000 to 93,000 prevalence figure on which the entire financial case for this bill rests. This isn't a small matter, because every government department is required to follow the Treasury's Green Book rule against cherry picking data. This document fails that test. So will the noble Lord. The Minister, please explain to us why the data has been used so selectively and what will be done to correct this? My Lords, I'm afraid it gets worse.

It is said the Bill will generate a benefit of £783 million by assuming, first, that this legislation will prevent 100% of conversion practices from occurring, and then that 38, very precisely 38% of those saved from conversion practices will also avoid depression. This curious 30% came from a US study with no assessment of multifactorial causes of depression, and without any peer review. And as for preventing 100% of offences, if any law in history had achieved that, we would have no crime at all.

The estimated costs of the Bill are then limited to 45 minutes of training, per police officer and other worker troubled with implementing it. No other police time. Court time. Wasted time is factored in. All to be confirmed. One might laugh, if only it were not so very gravely serious. I very much welcome the fact that this bill is going to a joint committee for Pre-legislative scrutiny. That scrutiny will be absolutely vital, as we can already see. Will the noble Lord, the Minister, give a firm assurance to this House that the Joint Committee will be given adequate time to take comprehensive evidence from all interested parties? It is worth us remembering that the Scottish Government tried a bill like this in 2024, and that the public ferociously rejected it, leaving it, as one commentator said, torn in shreds.

I very much hope the noble Lord, the Minister, will ensure the scrutiny required as this one goes forward.
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Lord Scriven Portrait Lord Scriven (Liberal Democrat)
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Just before I start. >> Just before I start. >> To say what I was going to say in the middle of all this conversion therapy, are individuals conversion therapy, are individuals who are dealing with trauma, and I think it's beyond beholden on all of us just to dial down the volume and discuss this in a much more calmer way. Now, my Lords, we on these benches welcome this statement and the publication of the draft draft Bill for Pre-legislative scrutiny.

And for eight years across five Prime Ministers, most of them conservative. We've heard repeated commitments to end conversion practices, conduct that the British Psychological Society and professional bodies have long condemned as unethical. So it is a relief to the 1 in 6 LGBT individuals who have been offered this unacceptable practice, that this government has finally advanced a draft text to fill any potential gaps in our laws. However, publication for pre legislative scrutiny is the commencement and not a conclusion of where we will get to.

The Liberal Democrats have constantly pushed for an effective, workable ban, and we acknowledge the government's intent to create a framework that includes protections regarding gender identity, as it is vital that all individuals are not subject to genuinely abusive, coercive or harmful practices. Yet we must acknowledge for some it is precisely around the intersection of gender identity, clinical guidance and. And the families fear that this legislation, this legislation will face its most contentious challenges. Striking the right balance here is an incredibly delicate task, and we and the government must get this right to avoid any unintended consequences.

In particular, we must ensure that the threshold of abusive acts causing serious harm is drawn with clear legal precision, so that it does not create problems. For example, for some parents. It is a fundamental, loving part of parenting to guide children as they navigate deep, complex questions about who they are. A parent who, in good faith advises a child to take time, or who expresses questions about social or medical transition. Is acting out of a care, out of care and duty for their child's protection? This legislation must be drawn carefully enough to guarantee that these supportive conversations within families do not unintentionally cause a crime to have been committed.

Furthermore, we must ensure absolute clarity for teachers, clinicians and therapists so that they can continue to offer objective, non-directive and exploratory support without the fear of legal reprisal or professional hesitation. The Liberal Democrats have always championed a balance between robust protections from abuse and the defence of civil liberties, free expression and freedom of religion. Because these boundaries between parental guidance and legitimate health care will be balanced, must be balanced, and the work of the joint committee will be incredibly welcoming in guiding this House to help in deciding the end of this legislation.

It provides the exact, rigorous cross-party forum needed to test these definitions, listen to all viewpoints and build the workable consensus required. Therefore, I ask the Minister three important questions. Firstly, how will the government ensure that the draft definitions explicitly and robustly protect the rights of parents to have open and loving conversations with their children without fear of investigation? Second, what specific steps have been taken to ensure that the Joint Committee scrutiny processes actively engage and engages with all views within the LGBT, Lgbtq+ community, family support groups and medical professionals to ensure that these boundaries are balanced and appropriate.

And finally, what is the anticipated timescale for this pre-legislative scrutiny so that this House can eventually examine the bill that is genuinely balanced, fair and effective?
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Lord Collins of Highbury Portrait Lord Collins of Highbury, Lords Spokesperson (Equalities) (Labour)
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Can I thank noble Lords for their questions? And can I say at their questions? And can I say at the start, what I am very acutely aware is that there is a consensus across this House. There are no bi partisan divides here. The previous government was committed to the principle of this legislation and welcomed it at the time. So I you know, irrespective of what the noble Lady says, there is consensus and there is concern because at the end of the day and the one thing I do agree with the noble Lady, we can all agree that no one should face abuse just because of who they are.

And our draft bill is about protecting Lgbt+ people from serious physical and psychological harm. Can I just say it is true? The Gallup charity, the anti abuse charity which has been supporting people for many, many years who suffered abuse, are only reflecting the evidence that's been given to them. And can I just say we you know, we must be clear that we are talking about victims of severe abuse here. One case of this abuse is one too many and is why we are criminalising this abuse.

So let's not just say that we are getting these things out of proportion. Can I also say, and I think the noble Lord Lord Scriven has addressed this, there are gaps in the existing law. But I mean, we can't prosecute offences properly with domestic abuse legislation, for example, or, you know, for example, coercive control. The legislation is designed for someone who has a relationship with an intimate partner, and it would not capture an offence committed by someone they did not know.

There are many other examples of gaps in the law that needs to be addressed. But secondly, and an important point that the noble Lady missed is that for the first time, we will have a clear definition in law of conversion practice. As with other offences such as upskirting or non-fatal strangulation. A definition is important to help victims understand what has happened to them and be able to come forward and for prosecutors to build a case. I'm confident there is a need to legislate in this area.

Can I also address the points by both noble, by the noble Baroness and the noble Lord, particularly in terms of parents and legislation? Can I be absolutely clear this government will not dictate, and this law does not dictate how people raise their children. Our measures are not intended to infringe on parental rights, to bring up their children in line with their beliefs or core values. We are clear that the ban must be balanced and targeted so as not to impinge on legitimate health care, or the range of broad support that those exploring their sexual orientation or gender identity might seek or receive.

That's absolutely clear. And of course, I would also stress that this draft bill is not about regulating medical care. We understand how important it is that people get the medical support they need, depending on their particular needs and circumstances, and this is a matter for the DHS and the NHS. But can I just say I you know, the Minister in the other place, Minister Bailey and myself have been right at the beginning very clear on the importance of the legislation scrutiny.

I very much welcome the fact that the Liaison Committee has agreed to this, and it will be scheduled, and the usual channels will be bringing forward the calls for participation in that committee fairly shortly. I think
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Lord Roborough Portrait Lord Roborough (Conservative)
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remain committed to that level of consultation. And can I say the government has no intention of government has no intention of interfering with people's right to religious belief and expression. We are not seeking to prevent people are not seeking to prevent people from living a life which aligns with their religious or cultural with their religious or cultural values. This isn't about telling people that they cannot hold certain views. We are targeting clear instances of abuse here and not sending a message that LGBT plus people deserve to be safe and.

But we are very clear about sending a message that they deserve to be safe from harm. An offence only occurs if someone seeks to change a person's identity through abusive conversion practices that results in harm. A religious leader teaching their faiths views on Lgbt+ matters should not be affected by this draft bill, and I think the principle that right reverend Prelate is raising in terms of counselling and advice is covered by what I've also said in terms of parental responsibility and medical advice.

These things are absolutely covered in this bill,

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but we will address these questions in the pre-legislative scrutiny. My Lords.

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My Lords. My Lords, I'd like to start. By congratulating. My. Noble friend on his appointment

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Noble friend on his appointment as the UK Special envoy for LGBT rights, and I think it's very significant that we need this role to address some of the real lack of to address some of the real lack of progress that we see around the world. I'd also like to thank my noble friend of the Minister for equalities for their important work in bringing forward this bill. Having grown up gay in the 1980s, I know what it's like to be a young person growing up in a society where people say that you are not normal and there is no sense of belonging by you and by your family.

I'm glad that that's no longer the case for very many people, but sadly, that is not universally the case. And I know people who are constantly put under pressure, not necessarily by their families, but by external third parties to change their identities. The draft legislation, I think, as a lawyer, does plug gaps in the criminal law. And so my question to my noble friend is, does he agree that passing this legislation and having examined it in the Pre-legislative scrutiny phase, will help you in your role as the special envoy, but also regain our rights as a leader in LGBT rights across the world?

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Yes. Well, I thank my noble friend for emphasising that point, because for emphasising that point, because I do think it is a really important point. And by the way, I also thank point. And by the way, I also thank him for his congratulations on my appointment as Special Envoy on appointment as Special Envoy on protecting global LGBT rights. Can I just say it's an additional task I just say it's an additional task I am extremely willing to take on, because I think in the current global climate, it really is important that we can set out how we and our values are so important in this country and how we have taken the lead, and that lead has shown other countries how to behave.

So absolutely clear on that. I don't think we should underestimate the importance of that, because I have seen in my recent travels, I was attending the inauguration of the well, I attended the conference of the Organisation of American States, where I met 200 civil society activists from across Latin America, Central America and South America who were talking to me about the sorts of pressures that they were under as LGBT people. It's unbelievable the pressure that they are under, but they were determined to highlight how progress can be made and progress can be made by actually seeing the example this country sets, and we shouldn't underestimate that.



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Yeah. Lord Rose, I appreciate the intention of the noble Lords Minister, but will the government note that already family lawyers have warned about allegations under have warned about allegations under this law, not under the law. This law, as drafted with its loose law, as drafted with its loose definition of abusive and so on, could indeed trigger criminalising parents. If you're a mom who says parents. If you're a mom who says to a teenager that they are born in the wrong body and you say, no, you're not, that that is a challenge to their identity.

And that that could even trigger social services investigations. Does the noble Lord hear those voices? And then could I ask the noble Lords if he can appreciate that in this pre-legislative scrutiny period, the last thing we want is consensus. What we actually need is scrutiny and proper and robust argument, so that we actually draft the law that the Minister obviously wants, but

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is not the one that's written down at present. Well, I think I'm inclined to

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Well, I think I'm inclined to agree with the noble Lady that scrutiny isn't you know, scrutiny scrutiny isn't you know, scrutiny is about challenge. And I have no problem with questions being asked. I have no problem in actually sort I have no problem in actually sort of addressing the issues that have been raised this afternoon. I have attempted to give very clear reassurances, and so did my noble, my hon. Friend in the other place, give assurances that this Bill will not interfere with the rights of parents, will not impact on the rights of medical people, giving advice, etc.

we are talking about horrendous abuse and the noble Lord Lord Hayward knows what I'm talking about because he's heard people, you know, tell them about their experience, serious harm and abuse. That's what we're talking about. And we all know that much of that remains hidden is not talked about because people are afraid to express it. And that's why I think it's really important. I come back to the original point. I said, in terms of the gaps in the law, that actually when people understand what they have suffered, is subject to law, is subject to the possibility of prosecution.

I think

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we will find a lot more people coming forward, and that's good for them and it's good for this country. My Lords, my Lords, can.

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My Lords, my Lords, can. side. This side.

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This side. We'll hear from the crossbench and then Labour. My Lords.

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My Lords. The noble, the noble. The noble

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The noble, the noble. The noble Right reverend Primate of Leicester talked about in 2017, the General Synod debating outlawing this whole question of conversion therapy. And I put my head on the block and
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Baroness Grender Portrait Baroness Grender (Liberal Democrat)
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supported that motion that it should happen, because in my book, should happen, because in my book, conversion is to make the person whole. But not oppressing is not to whole. But not oppressing is not to put your ideas onto them, which are not the question I've got. Why has not the question I've got. Why has the word conversion therapy been taken out? And you put in the word taken out? And you put in the word practice? Until I read the first.

The first section of the bill, which defines what these conversion practices are, you have to reorient yourself what actually we're talking about. Why hasn't that word conversion therapy been used? And then finally, I think we should, at this particular point in time, be committed to the scrutiny of the legislation. And all of us play a part in making sure that it arrives at a better place than it is at the

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moment. Well, I thank the noble Lord for his question. And I you know, I, I his question. And I you know, I, I sort of you know, I agree with him. I, I've tried to be clear that, you I, I've tried to be clear that, you know, what this bill does is criminalise abusive, harmful acts criminalise abusive, harmful acts intended to change a person's sexual orientation or transgender identity. That's what it's intended identity. That's what it's intended to do.

And I think, you know, listen, I think my right hon. My hon. Friend in the other place, and I intend to say here I, I welcome questions. I don't I'm not fearful of challenge. That is why we have put forward a very clear programme of Pre-legislative scrutiny. It's an opportunity for these issues to

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be properly addressed. So can I say, I am delighted that the Minister is here today that the Minister is here today with this piece of legislation, and I thank him for that. Can I say I thank him for that. Can I say also that when I was in the other place, I had members of my religious communities coming to me religious communities coming to me to talk about their fears, about conversion practices and therapies conversion practices and therapies being undertaken in our community for vast amounts of money.

Can the Minister assure me that we will do all that we can to protect the most vulnerable? We have to abuse, whilst not criminalising conversations about people's sexuality or gender identity? That is what my religious community

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would want me to ask. I'm glad my noble friend has asked that question, because I can't be clear. I might be offended can't be clear. I might be offended by someone saying to me, you, you, you know you're gay, we don't like it. Or it's against my religious belief. I don't want to be associated with you. I can certainly be offended, but I certainly be offended, but I wouldn't argue it should be against the law. I've never argued that. You know, when we have had debates You know, when we have had debates on same sex marriage in this House and the right Reverend Prelates colleagues have stood up and said, this is wrong.

I have never felt offended by that. Some of the comments in that debate I did feel offended by, but I express my views at the time. But I do think we can, you know, let's come back. You know, we have really positive values in this country. Where is our compassion? Where is our urge to actually protect people from abuse? That's what this legislation will do. And I'm confident where you do have. Look, please don't shake your head. You don't need to.

If you have questions and concerns. We have a process of pre-legislative scrutiny where these can be addressed. I'm not afraid of debate. I am not afraid of discussion. I am certainly not afraid of debate. I have debated things. Listen, as Minister for Africa, I faced presidents of countries who actually were criminalising my sexual orientation. I was not afraid to enter into debate with them, and I'm not afraid to enter into debate with you.

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Yes. Questions on a statement made in the House of Commons on Wednesday, the House of Commons on Wednesday, the 24th of June on the farming

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roadmap. My Lords, I thank the noble Baroness, the Minister, for Baroness, the Minister, for repeating the statement and also the noble Baroness, Lady Batters, for her excellent review on farming profitability. And indeed, my noble friend lady Rob, who is in her place for the Rock report, which also seems to have been carefully read by the government. I draw the House's attention to my register of interest as a farmer, forester and landowner, and also as a Commons owner and non grazing grazier on Dartmoor and the owner of Triple C's.

My Lords, this farming roadmap is intended to provide a long term strategy for farming for the next 25 years, but seems often disconnected from this government's other actions and policies. The Family Farms inheritance tax directly threatens long term business viability. The the partial U-turn has not been enough to restore broken trust or confidence. The £15 million investment and genetic improvement networks until 2029 remains overshadowed by the threat of the SPS negotiations to precision breeding and gene editing. Can the noble Baroness Sater Minister give us any assurance that these or the development of bovine bovine TB vaccinations will not be impacted? The roadmap promises to make trade easier with the EU through the SPS agreement, but the new regulations will also apply to our domestic produce without input from our own parliament.

Growers and breeders are making production decisions now for produce, which will be sold beyond mid 2027, without any guarantee that this produce will still be compliant. We have highlighted the need for a sufficient transition period to mitigate these potential consequences, but the government won't even publish an impact assessment until after the agreement has been signed. The roadmap also states it wants to protect UK farmers from unfair competition, yet it lacks any mention of closing the flag loophole on food packaging. The draft carbon budget order we debated just last week requires a reduction in livestock numbers and meat and dairy consumption.

The roadmap is right to say that farming and the environment should not be positioned against each other, but that is exactly what is happening. We saw this confusion recently between farming and the environment on Dartmoor, where the latest Elms agreements administered by Natural England require a 60 to 90% reduction in grazing pressure in a one size fits all policy for moorland around England. Natural England, disclaiming responsibility for any resulting pony cull is disingenuous, as the consequences of this will inevitably be sharp reductions in pony numbers.

The 2030 goal of 50% of triple C is being on track to be in favourable condition is disappointing. How is this progress from the 62% that Natural England reported to be unfavourable or improving status as recently as last year? What exactly has Natural England been doing all S's fails to reflect that every triple C, every Moor, and every part of every moor is different. Can the noble Baroness, the Minister, tell us whether she believes natural England is fit for purpose and delivers value for money for taxpayers who fund it?

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Yeah. My Lords, we need an overhaul of arms length bodies, of which there arms length bodies, of which there are over 34 in DEFRA alone. There is a clear lack of coordination, is a clear lack of coordination, accountability and value for money within the statement, though, we welcome commitments such as increasing domestic timber production and helping farmers and growers to access a greater share of the public sector food and of the public sector food and catering market. However, there are a number of concerning commitments in this roadmap doubling the number of Environment Agency farm inspections by 2029, turning sustainable farming incentives into unremunerated regulations, environmental permitting for dairy and beef farming.

A geospatial enabling programme to monitor land use. Does the noble Baroness, the Minister, believe that this punishment and regulatory approach is really the right one? Would it not be more helpful to farmers to deregulate and allow them to focus on their businesses? There are also encouraging comments throughout the roadmap for bringing in greater private investment to support environmental outcomes, which we on these benches robustly support. However, the detail is lacking. Can I ask the noble Baroness, the Minister, whether the water bill we expect in this session will include support for nature based solutions, helping farmers diversify their income, and also which other carbon and nature markets does the noble Baroness, the Minister, expect to deliver meaningful revenue for the rural economy by 2030? And I look forward to hearing the noble Baroness Eaton minister's response.



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My Lords. I thank the Minister for repeating the statement. I have several questions and would be more several questions and would be more than happy for her to write. If she is short by the time or the relevant information, and I also relevant information, and I also join in the. Thanks to Baroness Batters and more about the Rock review later. A central question review later. A central question for these benches raised by the farming Roadmap 2050 remains what in practical terms, has changed in in practical terms, has changed in the short term for farmers on the ground as a result of this document? The language of clarity and partnership is, of course, welcome, but many of the underlying challenges income instability and uncertain transition away from direct payments and rising regulatory pressures remain firmly in place.

What immediate measures within the roadmap are intended to restore confidence, particularly for small and upland farms? Turning to funding, the headline figure of 2.5 billion for England is in regular use, but there is limited clarity as to how that funding is allocated in practice. Can the Minister undertake to provide the House with a breakdown of that budget spent across the principal schemes, including the Sustainable Farming Incentive, countryside Stewardship, higher level stewardship and capital grants? In addition, what proportion of that budget was actually spent in 2526 and what is the projected spend for 2627? Can the Minister also confirm how many farmers have been in receipt of payments in each of the past six years, and whether the government expects that number to either increase or decline under the new framework? The reopening this week of the Sustainable farming incentive is, of course, welcome.

However, concerns remain about the operation of a first come, first serve system. What assessment has been made of whether this approach risks favouring better resourced farms with access to professional support, such as accountancy over small family farms, whom the early release scheme is intended to benefit. The roadmap presents itself as a shared vision, yet it makes no direct reference to Baroness Cox tenant farmers review. That review set out in clear and practical recommendations on fairness, access and security for tenant farmers, and recommendations in this roadmap appear to have been informed by that review.

It's just a bit of a shame there's no explicit acknowledgement of that on land use. The document does not adequately address the complexity of common land arrangements, particularly in upland areas. Commoners operate within systems of shared rights that do not align easily with standard scheme design. What specific provisions are being made to ensure that those farming common land are not disadvantaged? And I wonder if, in that context, will the government perhaps consider something like a rolling over of higher level stewardship agreements with appropriate uplifts to provide a certain level of continuity, while a more suitable long term approach is developed for the common land? What I'm calling conundrum, which affects around 4000 farming businesses on trade farmers continue to face a dual pressure competition from imports produced from lower standards and friction in exporting to key markets, particularly the EU.

I thank the Minister for keeping us regularly informed on progress with regard to the sanitary and phytosanitary agreement with the EU. Would it be fair to say that some of the assumptions underpinning the roadmap mean that we need this resolved sooner rather than later? And I just wonder if even the date in the roadmap is a little bit too late. Finally, the government says that food security is national security. Can the Minister explain how the roadmap will improve the UK's level of self-sufficiency? Over what timeframe and against which measurable indicators? And then finally, at present, the gap remains clear between the laudable ambitions set out in the roadmap, which I think we can all support, and the immediate realities facing farmers.

Can the Minister please explain how the government intends to bridge that gap in practice? In the meantime?
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Baroness Hayman of Ullock Portrait Baroness Hayman of Ullock, The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Labour)
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It's a number of questions. >> And obviously, I don't have an awful lot of time. We are talking about the statement on the roadmap. Many of the questions are actually not about the roadmap. They are much broader. So as I have only a certain amount of time, I shall concentrate initially on the questions to do with the roadmap. There was questions asked around the the EU SPS agreement which is still ongoing. I'm sure noble Lords are very aware that the summit was postponed.

We don't currently have a new date for the summit, but we are continuing with negotiations. Just because the summit has been postponed doesn't mean we are not continuing to engage with the EU, and we are making good progress on a number of areas. Clearly, I'm not able to talk to the House about specifics around gene editing, around pesticides and so on, because I just can't. Well, the negotiations are go on because I wouldn't want in any way to impact those negotiations or the the outcomes of it.

The noble Lord Lord Roborough said that that in the environment and farming are being pitted against each other. I would dispute that. I think we have a huge challenge in farming, which is what this roadmap is designed to tackle, which is why it's a long term plan. The 25 year plan farming is among the sectors that are most exposed to climate shocks, to environmental degradation and to growing resource pressures. So we have a huge challenge here. How are we supposed to maintain food production and food security and support profitable farming while we move towards a lower impact, market led and climate resilient system? And that's what this roadmap is designed to do.

We also know from our nature security assessment that ecosystem degradation is a significant risk to food production, which is why instead of the environment and farming being pitted against together, what we are trying to do here is bring in resilience to farming, because we know that environmental resilience means that we have better food security and better food production. And that's what this roadmap is designed to achieve. Regarding things like farm inspections and environmental permitting, what we're what we're trying to do here is actually make it more efficient and more effective.

We need to have inspections. We need to have permitting because we need to tackle things like water pollution, air pollution, problems with emissions. And I think it's really important that we get farm inspections better organised. I mean, we on a grant that we had a few years ago, we had three separate groups of people come around to inspect the same thing. And that's what we've got to stop. It's a waste of everyone's time and it's a waste of everybody's money. So we do need to look at how we regulate and how we manage permits regarding land use.

The noble Lord talked about land use. The land use framework is an important document because land management, again, is going to be absolutely central to our commitment to maintain domestic food production at at least its current levels, while at the same time restoring biodiversity, improving water and air quality and reducing emissions. As I just I just mentioned, and one of the key things that this document does as well is it brings together the different policies that we've got, because if we're not careful, we've got an animal welfare policy, we've got our land use framework.

You know, we've got a number of different policies, plus the different grants and the taxations that we have in farming. And we need to bring it together because if farmers are going to be able to properly plan for the long term future, they need to understand how all these different things link together. Because again, that's not helpful if you've got too many different things going on at the same time. So that's something else that we are, we are trying to, to, to look at here.

The water bill. I mean, I think the if you read, if you read the actual the document, it does mention the water bill alongside water pollution and also things like planning for reservoirs, for example. So there are various things to do with farming on water that are mentioned in the document that we, we really do need to be getting. Right. The noble Lady Brown is going to talk about the importance of restoring confidence. And again, absolutely, we need to do that.

But there are so many things that we need to do in order to ensure that farmers have that confidence. They need access to the right skills, they need access to the right advice. And again, that's central to our approach. I think one of the really important things about this roadmap is that we spent a lot of time talking to the sector right across the board for some time, because we wanted to hear what farmers had to say, what they were concerned about, what.

And there was a consistent message that came through whoever we spoke to, which is about the need for the clarity, clarity, so that they could plan for the future and the whole over. The overview of the roadmap is designed to answer that call for clarity so that farmers can plan so they know what the government is looking to achieve. They know what the future direction of travel is so that farmers can plan with confidence, because ultimately, farming, our farmers are businesses, and you can't plan for the future as a business unless you have some form of clarity and security in the future.

The noble Lady Baroness Grender also mentioned upland, so I thought that I would point out that page 37 has and page 38 in the document have a specific section on supporting upland farmers, and that includes improving access to schemes and support. One of the. Obviously, the bees in my bonnet I have is somebody in Cumbria. Is that upland have not had the access to support in the past and particularly common land, and I've spoken in this chamber about that before and I was very pleased the noble Lady raised that, because there's also a commitment in here to ensure that support is accessible, practical and viable for common land where improvements are needed.

Which is why, because the SFI, due to technical reasons, has not been available for common land. We have asked the RPA to specifically look at this in order to try and come up with something that will work for common land, and this is something that I am very keen to to encourage further on the breakdown of the the budgets and the details of the numbers of different applicants, I think it's probably the best thing is to write to the noble Lady with that.

It's quite a lot of detail that she has requested, and I wouldn't, off the top of my head, want to say something that wasn't entirely accurate. And the other question around small family farms? Well, the latest SFI that that we have just announced, and the statement on that is just just come out the written statement, the latest round is designed to specifically target smaller farms and to support smaller farms and those who haven't had an agreement, because what we want to do is to ensure as many farms as possible are involved in agreements that help support that sustainability, that improving the environment while while allowing them to continue to become more productive as, as farms.

And that leads into the whole discussion around food security. We have to get this right. We have to get our soils right. If we're going to have food security for the long term, we have to get our water pollution, our emissions, right. And which is why it's so important that we bring absolutely everything together. And I think also just thinking about small farms, that brings me back again to the comments made about Dartmoor and again about uplands, is it's really important to remember that we, as well as the farming roadmap, we are carrying out other things right now that are designed to make a difference.

Which again, comes back to the noble. Labour's point about this is 25 years. What are we doing now? And one of the things that I'm particularly excited about is the role that Hilary Cotton is going to be playing in running pilot schemes in both Dartmoor and Cumbria. On how to support those more challenging environments. And I think that hopefully that will make a real difference. And of course, she'll be working with local communities as well as with with Natural England on tenancies. It's great to see the noble Lady Baroness Rock.

She's done so much on tenancy, the the the vibrant tenanted sector is the headline on page 36 because I think I don't think a lot of people realise just how large the tenanted sector is. It's incredibly important that it's that it's supported in a way it needs to be. The Tenant Farmers Association welcomed the farming roadmap, and I'm looking forward to continuing to working in a constructive way with the noble Lady on how we can make sure the tenanted sector gets what it needs out of this roadmap.

So we have long term security and longer term tenancies, because I think the average tenancy is now only over five years, which is really not ideal to say, to say the least. And I on I'm just about run out of time. I think the really important thing here is to say that the government is serious about having proper long term, year on year policy making so that farmers, instead of just having short term opportunities that actually farmers understand where the government wants to go.

Because if the farmers don't understand where the government wants to go and what we're trying to achieve and how we want to work with them on things like innovation and skills, those long term investment plans, then farmers never know where they're going to get the next grant from, where they're going to, to get the next trade agreement from. And that's what we're trying to achieve with this.
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Baroness Goldie Portrait Baroness Goldie (Conservative)
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On the Defence Investment Plan. >> On the Defence Investment Plan. >> My Lords, may I first. >> Of all thank the noble Lord, the Minister, for both the briefing and prior to the Defence Investment Plan, which he provided to me and my colleague Earl of Minto yesterday. I doubt of any plan was so dogged by delay and preceded by such drama as this one, but that doleful prelude was eclipsed by the gloom and scepticism which engulfed the plan when it became public.

And to quote my right hon. Friend in the other place, Mr. James Cartlidge, it is too little, too late. The threat we face is now this plan, lacking in significant detail, is for the next four years. It was intended to deliver the recommendations in the SDR. It does not. It should have laid out a path to the 3% of GDP needed before the end of this Parliament, never mind during the next one. It does not. As for a path to NATO's 3.5% of GDP by 2035, that apparently remains in the mists of the Prime Minister's imagination.

Undiscernible and shortly to disappear. My Lords, the Prime Minister criticises the previous government for not spending enough. But may I point out to your Lordships that my party responded to the threat as we understood it then, in the wake of a serious economic challenge inherited from a Labour government in 2010, and we still, despite austerity, kept the Lossiemouth base air base open, ordered the vital Poseidon planes, which operate from there ordered eight type 26 figures, five type 31 frigates which are being built now, launched the Global Combat Air programme to produce the next generation fighter, and commissioned the dreadnought programme to renew our nuclear deterrent.

Now, I am not going to speculate on Mr. Burnham's Harry Potter powers to wave a magic wand to fix this deficient defence investment plan, given his projected political strategy to date, fixing defence is not on any wish list I have seen. But I know none of this is a noble law. The minister's making, and he is here to answer questions which I know he will do with his customary loyalty, integrity and courtesy. So let me start with the secular states foreword to the plan.

If we strip out the state language, the £298 billion to be spent over the next four years, £283 billion of. That is not new money. It is simply what is required to keep the doors open, to pay the people turning up, and to ensure the day to day bills are paid. The crux question is how much is needed on top of that? And the chief of the Defence Staff, Sir Richard Knighton, says £28 billion of additional money is needed over the next four years to do what must be done to keep us safe.

My party is prepared to answer that call and fund it by reinstating the two child benefit cap Re-allocating up to £50 billion currently being spent on welfare and costly net zero projects, and scrapping Labour's catastrophic Chagos deal. Yes, this government is not prepared to answer that call and will short change defence by the £13 billion which it was never going to provide, and that is completely unacceptable. The former Secretary of State, John Healey, has said this plan leaves the country less safe.

The authors of the Strategic Defence Review have said the funding package is not enough. My Lords, what will it take for the government to actually listen to the service chiefs, the retired senior officers and indeed members of its own party and find the money they all say is needed to keep us safe. And my Lords, even the inadequate £15 billion which it is going to provide immediately starts to fall apart under scrutiny. We know from the Chancellor that £4.7 billion is not there.

According to the accompanying funding explainer. It is to be allocated that the autumn budget, presumably by a new Prime Minister and a new and as yet unknown Chancellor. If this were not bad enough, page 73 of the Defence Investment Plan is revealing. It discloses that 10.7 billion of the £15 billion is to come from defence efficiencies over four years. So as we speak, that money is not there either. This is accountancy, smoke and mirrors. Now, on the defence efficiencies, £1.1 billion is to come from reform and service redesigns.

So what reform. What redesign? What details can the noble Lord, the Minister, provide? £3.3 billion is to come through workforce and resourcing. What does that mean and what detail is available? £2 billion is to come through infrastructure. What infrastructure? How is that money to be provided? £0.2 billion is to come through digital. How £3.7 billion is to come through acquisition and supply chain. How

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has that figure been arrived at And what underpins that estimate is the more alert amongst. You will is the more alert amongst. You will have noticed that that totals £10.3 billion, not the £10.7 billion billion, not the £10.7 billion which is at the head of the reform. Defence reform efficiencies. So we Defence reform efficiencies. So we have another £400 million whistling into the blue yonder. And separately, the plan also states separately, the plan also states that 1.1 billion will come from asset sales.

So we ask the noble Lords Minister, what assets is the government going to flog off? My Lords, unless the questions which I have posed can be answered? This plan is meaningless. NATO mod politicians and the public need clarity about how much money is being given, when it is coming and how it is being provided, and smoke and mirrors and Treasury trickery. My Lords, do not cut it.
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Lord Fox Portrait Lord Fox (Liberal Democrat)
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Yeah. >> My Lords, this. >> Is clearly a. >> Very delayed and. Extremely underfunded plan. >> At 15 billion.

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At 15 billion. It falls. Well short of the 28. Billion, as we've. Heard requested by the Defence chief to keep our country secure. But we know that it actually falls even shorter than that, as nearly 5 billion is underfunded and some 11 billion or more relies on undetermined efficiency savings. So after months of paralysis with resignations and and Cabinet chaos, the government has short changed the armed forces. But we should remember it was the Conservatives who hollowed out our military, leaving the Army and Navy smaller than they had been for hundreds of years, and the Tories failed to look after service personnel properly through lack of suitable housing and poor mental health support.

And that was unforgivable. But this statement is a long way from solving these vital issues and many others. It's a political choice made by Sir Keir Starmer and the Treasury, and it leaves us less safe. Furthermore, it undermines our reputation as a leader in NATO. Last year, all NATO countries pledged to substantially increase investment so that we all hit 3.5% of GDP by 2035. But even if the missing money is found and the share of GDP that we spend on the share of GDP that we spend on defence by the end of the decade will only be 2.7%.

In media interviews today, the Procurement Minister, Luke Pollard, said that the spending review next year will describe a path pathway to get to 3.5%. My Lords, that review will need to find an extra £25 billion per year to get to our stated target. Given where we are starting from, this is hardly credible. And this lack of credibility is not just a domestic phenomenon. When I attend NATO parliamentary Assembly meetings, I can sense the reputation of the UK falling back. This is more than just worrying.

So I want to suggest some ways to increase investment and leverage what resources we have more effectively. The Liberal Democrats plan for defence bonds would provide an additional £20 billion at least, funnelling in private sector investment. This is not pie in the sky. Poland's Armed Forces Support Fund, for example, was established in 2022, and the main source of funds coming from this is by issuing bonds. For context, last year Poland spent 4.7% of its GDP on defence, and there are better ways of leveraging our existing defence spend.

The UK could take part in the nascent Defence, Security and Resilience Bank. This ticks a number of important boxes. It would be multilateral, it would work with a greater number of allies, and it would help project financing to span election cycles, and it would cost effectively pull in private finance. Multiplying our state investment by many times. Canadian Prime Minister Mark Carney is a major proponent of this initiative and met with Sir Keir's envoy, Gordon Brown, last month to discuss it.

But disappointingly, there seems to be no progress. The government could also be taking bolder steps towards working with our European allies. Last month, the Lib Dems announced a plan for a UK EU defence pact, including our intention to join the Security Action for Europe, the Safe programme. Now Andy Burnham is quoted as saying that favourable things, both about defence bonds and the DSR bank. He's also been historically in favour of closer relations with the EU. So does the Minister agree that the new Burnham led government should issue defence bonds, should work with Canada to deliver the DSR and join the Safe initiative in Europe? My Lords, there are also ways of making big spend.

Our big spend ticket items go a bit further. For example, the G Cap Combat Air programme currently involves the UK, Japan and Italy. However, Canada, Saudi and possibly Germany have been mooted as additional partners. Can the noble Lord, the Minister, please confirm that by adding to the G cap group, money could be diverted to other UK defence needs. Much has been made of the headline spend of the 5 billion for advanced uncrewed systems over the rest of this Parliament, and I'm sure it's welcome, as these systems are at the heart of modern warfare.

But to put this into context, the three year, £5 billion investment is only a tiny percentage of the plan's 298 billion spend over four years. My Lords, we welcome the commitment to establish six new energetics factories by 2030. However, the nine month delay in publishing this spending plan has frozen procurement and put many SMEs in in peril. Now we have a funding plan. How will the government change the procurement process to give SMEs the certainty to invest and the cash flow to thrive? Finally, last year's Strategic Defence Review rightfully stated that national resilience cannot be bought with military equipment alone.

It stressed the need for a comprehensive national conversation to shift our mindset and prepare the wider British public, local governments and business for hybrid cyber and non-traditional threats threats we're already facing. This is a whole society challenge that spans far beyond the MoD. So what concrete, concrete process is the Minister making with his government colleagues to initiate this national conversation?
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Lord Coaker Portrait Lord Coaker, The Minister of State, Ministry of Defence (Labour)
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First of all, can I thank Lord >> First of all, can I thank Lord Fox and Baroness Goldie for their contributions and important contributions and important questions? Let me start by dealing with some of the question, which really goes to the heart of what Baroness Goldie was saying, and indeed was at the heart of Lord Fox about the spending. And let me just put on the record some of the things that are said within. With respect to the Defence Investment plan, the only point I'm going to make of any sort of political nature is just to point out between 2324 and 2930, there will be a 27% real terms increase in defence spending.

But that's the only political point that I'm going to make, because I think all of us have a heart. The security and defence of our nation and how best we do that. The the. As the noble Baroness and indeed Lord Fox will know. And this. This chamber will know. The government has set out its plans. The £15 billion increase in spending that the government has agreed. Let me just say this is outside of the normal spending review process, which is not necessarily the the way in which governments normally do that, but I would come back and gently remind the noble Baroness that it's not unheard of for governments to actually take action outside of the new spending process, and then refer to the next budget as where some of the detail of that will actually be confirmed.

Indeed, the last government announced their five year NHS plan in 2018, outside the budget and outside the spending review. And what did they say when challenged about it? As the noble Baroness and I think Lord Fox, we will be able to explain exactly where every penny is coming from, but we will do that in the next budget. Let me also refer to. When the Conservatives published the Integrated Defence Review in 2020, what did they do? They set out the funding. They said that they will set out the funding at the next spending review.

So let's drop that. Some of that. This is an abnormal process. It's a really important point that the government has taken the decision outside of the spending review to reprioritise and reallocate spending between spending reviews. And what we've said is, in terms of the 3% in the next Parliament, which will lay out that that process, we will come back to that 3% and indeed to the 3.5% at the next spending review, which will be next year. That's not an abnormal process.

That's a process that governments have taken over the over the last few parliaments, when they've taken action outside of the of the spending review. So I think I think that's an important point to make. Indeed, in the spending review, if they notice, the foreword by the Secretary of State actually talks about the commitment to to 2035 as actually being a promise. And it's laid out in there. And he would expect, I would expect for all of us to be held to account with respect to that.

The noble Baroness, and indeed, I think Lord Fox mentioned the point about defence savings. Let me be clear about the efficiencies or the savings, whatever we want to say, because the the the allegation seems to be that that spending is that those efficiencies are to be taken out of the spending power that the department would have. Let me just be clear about this. The increase in spending power is not conditional on these efficiency savings. I think that's a really important statement for for us to make.

But let me be clear about this. Who would not expect the Treasury of any political party not to require a department to actually have some sort of target about tackling fraud, who would not see the use of increased efficiency through the use of AI or better technology is bringing about savings, which could be re reinvest. Who would not expect the Treasury to say, we would wish you to find efficiencies through an increased reliance on on consultancy. And who would not expect efficiencies to be dealt with, as many noble members opposite have called on me in the past to actually find a way of dealing with sometimes making sure that we have the most efficient use of of the workforce that we have.

The noble Lord Fox asked me about housing the government over the next ten years, having brought back and spent nearly £6 billion to bring homes back into public ownership, will spend nearly £9 billion over the next ten years on improving military housing. I think that's a hugely significant thing in terms of reputation. Again, that Lord Fox and let me just say this, and I often say this there are challenges that face this country, but the idea that this country is not respected in Europe, not respected across the globe is not the case.

The fact that this country is hugely respected in Europe, hugely respected across the globe. And if don't take my word for it, read what the Secretary general, Mark Rutter, said about the Defence Investment Plan, where he welcomed it, which you can read in today in yesterday's paper about the statement about about that. Let me just say, with respect to NATO and the really important point and the contribution we make to NATO, I'll tell you one thing. I don't want to risk the ire of Baroness Bennett, but let me just say let me let me let me just remind everyone that one of the most important contributions that our country makes is the is the contribution that the nuclear deterrent makes to, to NATO.

That's a huge contribution, a huge contribution that we make to the security of NATO, to the security of Europe and the security with respect to our to, to, to our defence. In terms of GCap, of course, there's always a need to look at new, new partners. A few weeks ago, I think the noble Lord and many other noble Lords who were questioning whether GCap would actually be in the document. Now the accusation comes. It's not spending it too late. It's over £8 billion worth of money.

Now it's not being spent quickly enough. Yeah. You know, so it's a huge amount of money with respect to GCap in terms of new partners with respect to that, of course, the government will negotiate that. But there has to be agreed, not only with ourselves. It has to be agreed with with with Italy and in Japan. So obviously that's important for us as well. SMEs. There's a whole section in the defence investment plan and again, not only on the big primes but also on, on on on SMEs.

All of the chiefs say to the noble Baroness, are content with the Defence Investment Plan and have been involved in bringing that investment investment plan forward in terms of. A number of noble Lords have asked me about private initiative, private finance initiatives, how we can bring that on board. I think the government is looking well. I know that the government is looking at the defence, Security and International Resilience Bank and whether that's a good way forward, rather than necessarily defence bonds, which count as borrowing.

So they're actually looking at that to see whether that is there. No decisions have been taken about that. But of course looking at alternative ways of being, and I'll just say to the noble, we try very hard to get into safe. And we failed and couldn't get into it. So it's not a question of trying to get into it. We tried and we will try again, but we weren't successful. But meantime, the country will obviously continue to do what it can to build up its own defences.

And I would just say the defence investment plan is a huge contribution to the defence of this country. It points the way forward. It's transformative and it improves our readiness. And I think for any investment plan to bring before this House and indeed to bring before this country, that's quite an important statement of where we are. Yeah.
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Lord Howell of Guildford Portrait Lord Howell of Guildford (Conservative)
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I do, I do welcome part of this plan. It's obviously got some holes in it, as we've already heard. But I also welcome. Every time I hear the Minister speak. I welcome a great deal of his comments and his profound thinking. But I'm wondering today whether the brief he's got and being given really tells the whole story, because not only have we heard that there are deficiencies on the. Budget side, but that that in the Second World War, for instance, our military spending rose to 6 to 9%, 69% of our total budget.

And here we are talking about three and 3.5%, maybe rather more than that when you look at the unfolding scene. So I just wonder whether we shouldn't be a bit more frank with the British people, or briefing should or the government's words should, in reminding us that we are beginning to move towards a total war footing. That is what the late Robert Skidelsky Lord Skidelsky was often reminding this House that this is the way we are going, and the sort of percentages that I'm talking about are the ones we're going to have to seriously consider.

I don't not call that term comes through at all in the blue paper that we've all been given to read. Also, can I just add, I'm very, very pleased that we're reaffirming the global air combat, huge global air combat cooperation between ourselves and Japan and Italy. This link with Japan and Japanese industry is hugely important. It's our way in one of our ways in to the German consumer markets of Asia, which is where all the action is going to be. So good on that.

But let's have a brief that honestly faces we are moving towards a war footing, and that is going to cost far more than we're considering. Now.
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Lord Coaker Portrait Lord Coaker, The Minister of State, Ministry of Defence (Labour)
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The. I mean, in terms of, of the >> The. I mean, in terms of, of the I think the really catastrophic decision to pick out of what my noble friend said, given the importance that I attach, the government attaches. And I know right across this House we. We attached. The catastrophic decision was the delay in 2010 to the renewal of the nuclear deterrent and the delay for for a number of years with that. That was, in my view, a really bad decision, which has caused us now to be in a situation where, where, where months and months and nuclear submarines are at sea.

There's a problem which we deal with around that. And the fact that with the renewal of the deterrent, which is included in the defence investment plan, will become later than than we we would wish it talks about annington homes that's been brought back in, which was a disastrous decision to to put that to privatise that. We brought that in back in as a cost of 6 billion, billion pounds. But can I just say a number? I know a number of people would have wanted to come in and wouldn't be able to as long as it within we have the Armed Forces bill on, on Monday, and I'm perfectly happy if if noble Lords or Baroness wish to put a question in there with respect to the Defence Investment Plan, I'm perfectly happy with that.

Alongside that, so that people can't feel that they've not had the opportunity to ask a question about something which is massively important to the defence and security of our nation and beyond. So I'm perfectly happy to do that

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on Monday. Within the context of the Armed Forces Bill. My Lords. The time for this question is this statement is complete. I'm this statement is complete. I'm just going to give the chamber a moment to move around, and then moment to move around, and then
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Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
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Lord Sharpe of Epsom. Thank you. My apologies for that. I was asleep My apologies for that. I was asleep at the wheel much, much like the England defence. My Lords, I rise to move amendment 16 and 17, standing in my name, and that of my noble friend Lord Hunt of Wirral. But may I first thank the noble Lord, the Minister, for his letter on clause 44, and for meeting us to discuss the Bill and the ways in which it may be improved.

I welcome his confirmation that the government's intention is for workers pension benefits to remain unchanged. But where the Bill gives the Secretary of State powers to modify or apportion pension rights and liabilities, transfer, accrue accrued rights between schemes and amend scheme terms, workers and pensioners do need more than an assurance of present intent. They do need a clear legal safeguard and, my Lords, Amendment 17 provides that safeguard. It would ensure that regulations made under clause 44 could not reduce the value of accrued pension rights or benefits, nor make the terms on which benefits accrue less favourable in future.

Amendment 16 addresses consultation and engagement. It would require the government to consult affected undertakings, pension trustees and managers, scheme members and beneficiaries, trades unions, the Pensions Regulator and the Pension Protection Fund and to have regard to the interests of members and beneficiaries, including the protection of accrued rights and the secure security of benefits. The Minister has suggested that full consultation before the use of these powers may not be realistic. Where urgent action is required, we understand the need to avoid delay where a transfer must take place swiftly.

But my Lords, urgency cannot mean that pension stakeholders are simply bypassed if consultation cannot practicably take place before a transfer, will the Minister commit to a prompt and meaningful consultation afterwards and in any event, before any further pension regulations are made? Will he also confirm that the government will engage formally with the pensions Regulator, the Pension Protection Fund, trustees, scheme members and their representatives so that any necessary arrangements to protect members, accrued rights and the

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long term security of their benefits. My Lords, I beg to move. Amendment proposed clause 44,

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Amendment proposed clause 44, page 28. Line 16 at end. Insert the

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words as printed on the Marshall. Lords. I too am confused because

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I also thought Amendment 20 was in this group. I co-signed amendment 20 because I do feel I wanted to indicate.
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Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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best for the rest of the match this afternoon. Look, firstly, let me afternoon. Look, firstly, let me thank the noble Lord Lord Sharpe for for his contribution and also for his amendments. Amendment 20 in for his amendments. Amendment 20 in the name of the noble Lord Lord Fox will require the government to provide a statement to Parliament provide a statement to Parliament outlining the value of contingent liabilities and the steps the government would take to minimise taxpayer's taxpayer exposure to taxpayer's taxpayer exposure to them before an intervention.

As I've set out previously, the government is somewhat constrained in the procedural steps it can take before exercising the power in the Bill. This is why the transfer of powers are exercisable by regulations subject to a negative procedure. We will likely be operating in a fast moving commercial environment, where intervention needs to be taken at pace and negative procedure. Transfer regulations do not require prior parliamentary approval before they take legal effect. It is not appropriate to publish details of a private companies contingent liabilities prior to to nationalisation.

If a steel undertaking is brought into the public sector, its financial its financial position will rightly be subject to parliamentary scrutiny, including the publication of its annual report and accounts. The government will, of course, take steps to minimise taxpayers exposure to liabilities wherever possible. Any decision to exercise the transfer of powers will be subject to the usual principles of managing public money and government approval processes. Turning to amendment 17, tabled by the noble Lord Sharpe, which seeks to prevent any pension regulations from reducing accrued pension rights or benefits or worsening future pension terms.

I thank the noble Lord for his amendment and understand his concerns that the government may adversely affect pension rights, benefits or terms for employees. I would like to reassure the noble Lord that any use of these powers would be considered on a case by case basis, with the primary objective of ensuring alignment across pensions. These powers give the government the flexibility to achieve this. Any changes to the terms would likely be due to regulatory change or changes where pension terms may need to be standardised or contributions adjusted, the government would seek to consult regulators, unions and employees where possible on any future changes.

My Lords, I will now turn to amendment 16, which seeks to require the Secretary of State to consult with affected steel undertakings and affected pension stakeholders before exercising the pension powers to address the noble Lord Lord Dubs concerns, perhaps it would be useful to set out the government's intent behind clause 44. Now. Clause 44 is essential for managing the consequences of a transfer for pension schemes and for employees rights under a pension scheme. It enables the government to make provision for pension schemes where the steel undertaking is or was an employer.

These powers are necessary and give the government flexibility on a case by case basis to make suitable pension provision a suitable provision for pensions during the transfer, for example, the provision would enable the government to modify terms in the event of a regular change where pension terms may need to be standardised upon transfer of contribution minimums adjusted. It also gives the government flexibility on a case by case basis, if needed, to consider a fair division of pension liabilities between the transferor and the transferee in complex transfers.

In the case of British Steel, if, after Royal Assent, the government decided that nationalisation nationalising British Steel was necessary in the public interest, this power would not be required. To the best of our knowledge, British Steel has a defined contribution scheme, so there is nothing to transfer or leave behind in relation to the requirement to consult before exercising these powers. I wish to reassure the noble Lord that wherever possible, the government would seek to consult with regulators. However, a statutory duty to consult could delay and transfer the pension schemes, causing uncertainty and concern among employees.

This is exactly what the government is trying to avoid. So, my Lords, for these reasons, I do not consider these amendments necessary and ask that they be withdrawn.
18:13
Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
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I'm very grateful to the noble Lord for his answers and for noble, the noble Lord Lord Fox for the noble Lord Lord Fox for correctly pointing out that I neglected to mention amendment 20 on contingent liabilities. We will on contingent liabilities. We will come back to that. As regards the other two amendments, 16 and 17. I'm very grateful to the noble Lord the Minister's commitments, particularly about consultations where possible. Perhaps we could explore what that actually means potentially in practice in another forum, because people's pensions are their future and their security, it is vital that the government ensure that workers pension rights are properly protected.

And I have no doubt at all that the noble Lord, the Minister, agrees with that remark and that the relevant experts, regulators and representatives are fully consulted as these powers are exercised. We are merely trying to explore how that is done, so I look forward to picking that subject up again in the future. But for the present, I

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beg leave to withdraw. Amendment 16. Is it your Lordship's pleasure that this amendment be withdrawn? Amendment by. Leave withdrawn. Amendment 17 not moved. The question is that clause 44 stand part of the bill. As many as of that opinion will say content the contrary, not contents. The contrary, not contents. The contents have it. Amendment 18 not moved. The question is that clause moved. The question is that clause 45 stand part of the bill, as many of that opinion will say, content the contrary, not contents.

The contents have it. The question is that clauses 46 to 4049 En bloc stand part of the bill, as many of that opinion will say, content consent. Contrary not. Contents. Contents. Have it. Amendment 19 Lord Wigley not moved. The question is. Clause 50 stand part of the bill. As many as of that opinion will say content. Content contrary not content. The contents have it. Amendment 20 not moved. We now move to the next group, beginning with amendment 21.

Lord Sharpe of Epsom sorry.
18:15
Lord Hunt of Wirral Portrait Lord Hunt of Wirral (Conservative)
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Lords, I rise. >> To move amendment 21 standing in my name and the name of my noble friend Lord Sharpe of Epsom. Ultimately, this amendment puts into the bill what the government say is there is their objective. The then Secretary of State for Business and Trade said that the government's aspiration for British Steel was a co-investment agreement with a private sector partner to secure a long term transformation. The future of British Steel cannot rest indefinitely on public ownership.

Continuing working capital injections, together with an open ended commitment from the taxpayer. It must be a viable, competitive and investable business, able to secure private capital for the investment and the transformation that it requires. Yet that objective does not appear on the face of the Bill. There is no statutory duty on the Secretary of State to seek a private sector purchaser, no clear exit route from public ownership, and no requirement to report to Parliament on progress. Without that discipline, there is a real risk that nationalisation becomes not just a temporary intervention to stabilise and restore business, but an accumulative, accumulating and indefinite cost to the taxpayer.

And if the government are serious about a private sector led future for British Steel, they should have no difficulty in accepting that duty. And, my Lords, amendment 23 from the noble Lord Lord Fox is very important indeed. It goes to the heart of concerns raised throughout these debates, including by my noble friend Lord Redwood, on the first day in committee, that the government need a genuine business strategy for steel, where nationalisation is contemplated, there must be a strategy for skilled employment, retraining, reskilling and local economic renewal.

Workers cannot be treated as an afterthought to a transfer of assets or a balance sheet exercise. So I look forward to hearing the minister's response and I beg to move.

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Amendment proposed after clause 50. Insert the new clause as

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printed on the Marshalled List. My Lords, I rise to speak to amendment 23 and my name, and I'm amendment 23 and my name, and I'm very pleased to hear the words that the noble Lord hunt just made because I, I, I had put in my notes because I, I, I had put in my notes that I feel this is an important amendment, and I hope it's pushing at an open door in. In the previous
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18:19
Lord Redwood Portrait Lord Redwood (Conservative)
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My Lords, these are indeed two >> My Lords, these are indeed two important amendments. It is a tragedy what has been happening to our steel industry in this country. It suffered considerable decline under the last government thanks to very high energy prices and decarbonisation, which turned out to be disruptive. And in the last full year of the Conservatives, we were down to 5.6 million tonnes of manufactured steel, around half our requirement. There has now been a further very big collapse, such that last year, I think output was around half of that in 2023, around 2.5 million tonnes.

And we are heading for an even smaller output this year, unless the business plan is provided and kicks in and starts to do something to help the the ailing Scunthorpe business, which we are talking about, and I think we're united in our belief that this is not what we want from our steel industry, and it means we have a chronic dependence of, in the last year, 7.1 million tonnes on imported steel and we are heading to a position where we import practically all of our steel.

And of course, I fear we're going to discover that unless we do something about electricity prices, even when electric arc production starts to kick in on a bigger scale, it's going to be very difficult to sell that steel at a profit because the electricity costs are unrealistic and uncompetitive, as well as the general carbon taxes and carbon costs, which have been adversely affecting the blast furnaces. So I would urge the government, again, given our common interest in saving jobs and having a better steel sector to provide that plan and that thought through work which should be shared without commercial secrets, with the the wider public and with both Houses of Parliament, to give us some confidence that there is a way out of this very deep tunnel.

We're going down to producing less and less steel of our own. And I would also mention that the government has clearly introduced a very penal tariffs on importing steel from non EU sources, with the 50% increase in tariff. And it hopes that that is going to change the situation. But because it has relaxed the the quotas for the EU, I suspect that we are still extremely vulnerable to EU import competition at a time when our industry is not properly competitive.

So they will find that the tariffs are not actually going to protect the diminishing British steel industry. But they will find that the much bigger and somewhat stronger steel using industries in the United Kingdom are very gravely affected, because more than half our imported steel may well have to come from sources that do attract tariffs, and that will be very penal and therefore will reduce the amount of steel using activity we can undertake. So I would urge the government to take some of these points seriously, and I'm glad that two sensible amendments have been put forward to concentrate this debate.
18:23
Lord Wigley Portrait Lord Wigley (Plaid Cymru)
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My Lords, I'm glad to have the opportunity to support amendment 23 by the noble Lord Lord Fox by the noble Lord Lord Fox concerning the jobs and industrial transition strategy, which is very much in line with the comments that much in line with the comments that I was making in our previous set of debates, because these points, the question of protecting skilled employment, particularly, and the need to reskill and to deliver the tangible economic renewal and support economic resilience in the local communities is very, very close to my own heart and is very close to the minds of those in places like Port Talbot who have faced insecurity in these matters.

So I hope the government will be able to, if not accept this amendment, at least underline their agreement with the approach that it has, and I'd be very surprised if it wasn't the government's approach, in fact. But when it comes to amendment 21, perhaps if I can address this to noble Lord, Lord hunt, who moved this amendment, if a duty is placed to find a private sector purchaser as soon as possible, then surely that has to be constrained very much more than this amendment does.

What would be the situation if an overseas company in the private sector were to make a bid? The whole logic, as I see it, behind the nationalisation that we have here, is to defend the strategic interests of the United Kingdom, as well as the economic interests. And if the. An important part of the steel industry were to fall into overseas hands, perhaps a perfectly reputable company, but an overseas company outside the control of anybody within the United Kingdom, does that not then raise serious questions? These are issues that I put, in fact, to the noble Lord, Lord hunt, rather than to the Minister, because I regard that as a serious weakening of the strategic objectives that this bill has and which are objectives which

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I generally support. My Lords. Firstly, let me thank the noble Lords Lord Fox, Lord Redwood and Wakely for their contributions. I'm very grateful that the noble Lord Sharpe and for that the noble Lord Sharpe and for raising important questions about the future structure and operations of any steel undertaking that may of any steel undertaking that may be brought into public ownership under this Bill before addressing their specific amendments. I should
18:25
Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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their specific amendments. I should make this very important point. No decision has been made in relation to any particular steel company, any decision to exercise the powers in the Bill can be made only after the Bill has received Royal Assent, and only if the statutory public interest test is satisfied. With that important caveat, let me turn to the specific amendments in before the Committee. I now turn to amendment 21 in the name of name of Lord Sharpe and Lord Hain hunt, which would place a duty on the Secretary of State to secure a private buyer for any nationalised steel undertaking at the earliest opportunity.

As a matter of corporate governance, however, we would expect responsibilities for exploring future ownership options to rest with the company's board and chair working closely with Ministers rather than being imposed as a statutory duty on the Secretary of State. More fundamentally, I wish to reassure the committee that the government shares the amendment's underlying objective. As we have made clear in a steel strategy, the long term future of the UK steel industry depends on attracting sustained private investment. Public ownership is not an end in itself.

It is a means of safeguarding a strategically important asset where exceptional circumstances require government intervention. The government does not envisage a steel undertaking remaining in public ownership indefinitely. Our objective would be to stabilise the business, restore its commercial viability and place it on a sustainable footing so that it is well placed to attract private investment in due course. That said, timing is critical. A company requiring nationalisation is by definition, unlikely to be to be an attractive investment.

On day one, it will first need financial stability, stability and operational improvements and in many cases, a revised strategic direction before credible private investors are prepared to commit significant capital. Throughout that process, Ministers and the company's leadership would remain in close dialogue about its long term future, including the most appropriate ownership model and opportunities for private investment when the conditions are right. So I hope this reassures noble Lords that the government's ambition aligns with the intent behind this amendment.

We are happy to consider further whether there are appropriate ways to make that position clearer, but we do not believe that placing a statutory duty of this kind in the Bill would improve its operation. I finally turned to amendment 21 in the name of the noble Lord Lord Fox, which would require the Secretary of State to publish a jobs and industrial transition strategy after the exercise of the principal transfer of power. I fully appreciate the purpose of this amendment.

If the government were required to intervene to safeguard a steel undertaking, Parliament would rightly expect a credible plan for its future. The government shares that objective. However, the success of any nationalised steel undertaking will ultimately depend on strong commercial leadership, not a strategic, not a strategy prescribed by legislation. One of the government's first priorities would be to appoint a board and an executive team with the expertise, commercial experience and vision to restore the business to long term sustainability.

The detailed strategy for the company's future, including its workforce investments, operation industrial Transition, should therefore be developed by that leadership team in close partnership with Ministers, rather than being imposed from Whitehall via a statutory reporting requirement. That approach provides the flexibility to respond to changing commercial circumstances while ensuring the company is run on sound business principles. That said, I recognise the importance of parliamentary scrutiny when a steel undertaking enters public ownership, Parliament should have appropriate opportunities to understand the company's strategic direction and to hold the government to account for its stewardship.

I am therefore happy to reflect further on the most appropriate mechanisms to provide that transparency. I am grateful to the noble Lord for raising these important issues. I hope I have provided assurances about the government's approach. For that reasons that I have set up, I respectfully ask the amendment be withdrawn.
18:30
18:32
Lord Fox Portrait Lord Fox (Liberal Democrat)
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responding to the Minister's response to amendment 23. I think there are circumstances that he's quite right. The Minister is quite right that it is up to the management of the company to set strategy and set its own, its own course. But that course will have wider implications than simply the company itself. It will have implications on the community in which that company is located. And that is something that the government and local government and indeed the Welsh Government, if appropriate, have have to be concerned about.

And I think that was very much part of the point that I was bringing forward. I do think there might be another way of doing this, and perhaps we can discuss it when we get to a later group, but I'm pleased to hear the minister's relatively positive response. My Lords, turning to amendment 22. And in a sense, the purpose of this does follow on from amendment 23 and actually keys into to to some of what the noble Lord Redwood was talking about just now, because an area not covered, I think, to date is, is the need for the wider supply chain to have an explicit voice in what's going here.

And we should remember that the that there are about 400,000 employees working in the steel using community and about 4000 in the steel production capacity. So so this is a ten times bigger part of, of, of, of our national. Wealth. And we need to make sure that there is a place for those steel producers to have a voice within the strategic decision making that, that that will be going forward. Now, now, I believe the government has got a steel board, but I think it's not clear to me how the steel users community are feeding into that steel board.

And I think things that we have seen with the setting of tariffs has indicated that the the the users have a somewhat second class status within the decision making process going forward. So what this amendment envisions is the creation of a statutory stakeholder advisory committee, advisory committee. This is to make sure that those those producers are well represented in the decisions that government make concerning the industry, things like tariffs, my Lords, and of course, union and community interests and those kind of things would should also be included.

Now, whilst I am flexible, very flexible about the approach taken to do this, I do feel there needs to be a formalised approach, a statutory approach. We've seen with respect to the proposed tariffs that users are falling behind the producers on the government's agenda. This amendment is there to ensure that there's a formal voice, a formal voice of the users. Trade associations do a great job, but in the end, Secretaries of State can, can and do ignore them on a regular basis.

This amendment is there to add a voice for the manufacturers in any debate. I beg to move. Amendment 22.
18:35
Lord Redwood Portrait Lord Redwood (Conservative)
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Amendment proposed after clause 50. Insert the new clause as printed on the Marshalled List.

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My Lords, I. I welcome the intent behind. 22 because I do think we should not be careless about the interests of the steel using industries and. Many years ago I was responsible for Darlington Simpson Rolling Mills. In those days that was a profitable and successful business. But the. The price of raw material was absolutely critical to that type of operation. I was very interested to learn from noble Lord Fox that he thinks that there are ten times as many people involved.

That may well be an underestimate. When I was trying to do some research on this, I. I identified a number of sectors and areas where steel use is an important part of cost, and I came up with about 200 billion of business activity in those areas, excluding construction, which is obviously, of course, the main main steel user in the country. And that was many times the amount of turnover we're talking about in trying to protect maybe 2 million tons of, of steel production in this country from our own resources.

So I do think both in setting the tariffs and in setting the plans and in the details of any future nationalisation, we we need to have fuller recognition than we've had so far of the legitimate interests and concerns of the steel using industries. And I do hope that Ministers will see that. We're also interested in a report, an audit on where we are already. Because whilst we haven't nationalised British Steel, it's just the fact that we don't own the assets, but we otherwise are completely responsible for those jobs, for those those people and their families.

We are completely responsible for the the safety and success of the production processes that those two ageing blast furnaces. And we are completely responsible for that part of what remains of the British steel industry. So I think we are probably owed a bit more consultation and plan already.
18:38
Lord Wigley Portrait Lord Wigley (Plaid Cymru)
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My Lord, I'm delighted to support the amendment moved by Lord support the amendment moved by Lord Fox and to be following Lord Redwood as well, because Lord Redwood. I'm sorry Lord hunt is not in his place at the moment, but both of them will be very familiar with a project that took place in northwest Wales 4050 years ago. Now the construction of the pumped storage scheme at Llanberis by the Cegb. Now, the reason that is relevant is that in the very early days of that project, the Cegb were wise enough to pull together trade union leadership and the local authorities in a regular meeting to review issues that were arising.

And over the ten year period of the construction of that exciting project, only about a week was lost due to industrial difficulties. The company, the Cegb, were working with the workforce and the local community, and problems were sorted before they boiled up to triggering strikes and all the rest. And therefore, all I would say is that it's in motivated self-interest to have this approach to bring in these forces and with good leadership coming from the companies involved. Yes, from central government as well, but from local government and from the trade unions involved within that company.

So many problems can be overcome before they cause difficulties and boil up to something that they don't need to be. And therefore, the approach, I believe, is one which should appeal to the government. I am very glad to support the amendment.
18:39
Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
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My Lords, I thank the noble Lord >> My Lords, I thank the noble Lord Lord Fox for this amendment, and he's quite right to point out the decisions about the future of a steel undertaking infect a wide range of sectors which rely on secure domestic supply, including, of course, defence, construction, advanced manufacturing and critical national infrastructure. Now, national security has rightly featured prominently throughout our debates, and if the government are relying on that argument to justify the exercise of these exceptional powers, it's surely right that those with responsibility for defence and critical infrastructure should have a voice in the wider policy discussion.

I think the numbers that were cited by both Lord Fox and my noble friend Lord Redwood, are quite staggering as to the number of workers that are potentially affected in the broader and wider supply chain, the steel using community. I would say it's difficult to argue that they're not really being consulted, as the noble Lord Lord Fox pointed out, and that's certainly true of the representations that we are getting from members of that community. So I would urge the government on this occasion to have a careful think about what this amendment is trying to achieve.

It recognises, as Lord Wigley has pointed out, the importance of the workforce and of local communities. Workers, their representatives and local authorities will understand better than most the consequences of a transfer of jobs, skills supply chains and, of course, the local economy. It's difficult to see how the government can judge properly what's in the the public interest without hearing from the workers, communities, industries and strategic sectors most affected by the decision. So I look forward to hearing the minister's response.
18:41
Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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My Lord, I'm pleased to inform the honourable Lord that we have equalised. So come on, England. Firstly, let me thank all noble Lords Redwood Weekly Shop for their contributions and I'm grateful to the noble Lord Lord Fox for tabling amendment 22, which would require the Secretary of State to consult a stakeholder advisory Committee before determining whether an intervention under the Bill is in the public interest. I fully understand the motivation behind the amendment. Decisions of this significance should be informed by expert views, and I have considerable sympathy for the desire for strong parliamentary and stakeholder engagement.

However, as I've said earlier, in relation to earlier amendments, the government cannot support a statutory precondition of this nature. The powers in this Bill are intended for exceptional circumstances in which events may be moving quickly, and decisive action is required. Introducing a mandatory consultation process before intervention could delay action at precisely the moment when speed is essential to protect jobs, safeguard strategic capability and secure the future of a steel undertaking. In some cases, a delay would could undermine the very purpose of the intervention.

Nor do I believe that establishing a statutory advisory committee is necessary to ensure the government receives expert advice. We already have, and my ministerial colleague, Minister McDonald, regularly maintains contact and extensive engagement with the sector through a wide range of established forums. This includes the Steel Council, the Steel Council, working groups, the Metals Circular Circularity Group and a programme of industry roundtables. Alongside those formal structures, Ministers and officials regularly meet with steel producers, downstream users, trade associations, trade unions, recyclers and other stakeholders throughout the supply chain.

These relationships provide the government with a detailed understanding of the opportunities and challenges facing the sector, and ensure that policy is informed by those with direct operational experience. I'm also pleased to inform the Committee that we will shortly be inviting the UK Metals Council, which I understand is the largest downstream user group to join the Steel Council, so we are reaching out to the downstream users too. This will strengthen representation of downstream users and ensure their perspectives are fully reflected in future discussions about the sector.

The government believes firmly believes that sustained engagement with industry is essential to delivering our steel strategy. But there is an important distinction between ongoing engagement and creating a statutory procedural hurdle that could impede timely intervention when the national interest requires it. For those reasons, while I fully recognise the amendment's intent, I do not believe it would improve the bill and I therefore respectfully request the noble Lord to withdraw his amendment.
18:44
Lord Fox Portrait Lord Fox (Liberal Democrat)
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I thank. >> Noble Lords for their contribution to this this short debate, and it was stark that when debate, and it was stark that when the. That the Minister went through his long list of parties that the the the the the Minister at the other end consults with the vast majority of the ones that the noble Lord Redwood and I were discussing came under the other stakeholders category. So it is encouraging that the UK Metals Council will be invited.

I take the point about the the the nature of preconditions to any, any, any activity. And I understand the the the, the minister's reaction to that. But I think the purpose of this, of this amendment was to really make the point that that that the users are underrepresented as they stand and whether adding the metals, the UK Metals Council is sufficient to reweight that we can wait and see, but I, I hope that the Minister can go away and perhaps come back to us with with a statement as to how the users will become central to the government's philosophy in making plans going forward, rather than another stakeholder, which is where they currently seem to be with.

But leaving that to one side, I beg leave to withdraw. Amendment 22.

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Your Lordships pleasure that this amendment be withdrawn. Amendment by leave withdrawn. Amendment by leave withdrawn. Amendment 23. Lord Fox not moved. The question is that clause 51 The question is that clause 51 stand part of the Bill, as many of that opinion will say, content the contrary, not contents. The contrary, not contents. The contents have it. Before I move to the next group, I just want to the next group, I just want to point out that amendment 25, which is in the next group, is in fact in clause 54, not 53, as printed on

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the Marshalled List in clause 52, amendment 24. Lord Fox my Lords, I rise to

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Lord Fox my Lords, I rise to move amendment 24 and speak to move amendment 24 and speak to amendments 25, 26, 27, 28, 39 and 45 that are all in my name. I think I must have gone slightly mad at I must have gone slightly mad at the time. My Lords, as promised, when we touched on the contingent liabilities earlier, this group homes in on how such liabilities affect possible compensation in the event of nationalisation. As I set out during the Second Reading, the possible environmental liabilities and further and future remediation costs for, let's say, a a site as large as Scunthorpe are potentially huge.

Scunthorpe has been there a long time. It's a very big site. The site also has employed a lot of people for a long time and their pensions, pensions and any contingent liabilities should be fully understood by Parliament. As we discussed in in in the previous group debate. Now these contingent liabilities are likely to majorly impact the current and future valuation and sustainability of any steel undertaking. The current draft has. Evaluating the environmental liability as a voluntary exercise, and the pension liability seems to be have been ignored.

But I take on board what the Minister has just said and perhaps withdraw that. That sense, as there does seem to be some elements covered now, amendments 24, 25, 26 and 27 together require the payment, the payment of compensation, that the payment of compensation cannot be made until the Secretary of State has published a written estimate of the environmental liabilities of the steel undertaking, providing them, providing to them by an independent valuer. Amendment 28 requires that payment of compensation cannot be made until the Secretary of State has published a written estimate of pensions.

Liabilities of the steel undertaking provided to them by an independent valuer. Amendment 39 requires the government to report on the compensation paid under any Compensation Scheme regulations made under section 52. And finally, My Lords, amendment 45 seeks to place a limit on financial assistance and compensation, while additional without additional parliamentary approval. This new clause prevents the Secretary of State from paying more than £500 million, which I would point out is quite a lot of money in financial assistance and compensation under the act, unless the House of Commons passes a resolution authorising them to do so.

In this way, we are ensuring there is no blank cheque. My Lords, I'm happy to approach these issues in other ways, as long as the material objective of this group of amendments is achieved. I beg to move amendment 24.
18:49
Lord Redwood Portrait Lord Redwood (Conservative)
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As clause 52, page 34. Line 15. At the end, insert the words as At the end, insert the words as printed on the Marshalled List. >> My Lord, I'm glad the noble Lord

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My Lord, I'm glad the noble Lord Fox has raised this. It was also something I mentioned in our previous debates. In my experience of old industrial sites, the land under the. The plant and around the plant is often heavily polluted and may contain toxic substances. And so clearly the government needs a report on that and would need to not only consider it when considering any possible compensation to previous owner, but also I would need to have it as part of the costings of the whole project, because sooner or later that land does have to go in to be cleaned.

And if there is any current risk to watercourses, it might be sooner rather than later. That action would need to be taken. So I trust that will all be properly investigated and has been properly investigated. In the case where we've already taken operational and financial responsibility for the plant, in the case of Scunthorpe and the other set of liabilities which can occur in these situations, which probably should be mentioned for the sake of completeness, is that it is a good idea to find out about current and retired staff, to see whether there are any long term health issues that have arisen, which can be attributed in any way to the processes they have been handling and the working conditions they've been in, because those two are both need sensitively treating and can, if something has gone wrong, amount to significant sums of money.
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18:52
Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
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My Lords, I'm very grateful to >> My Lords, I'm very grateful to the noble Lord for Lord Fox for tabling these amendments, and they tabling these amendments, and they do raise an important point of principle, where the government are taking a steel undertaking into public ownership, the environmental pension and other contingent liabilities which may fall on the taxpayer should be clear to Parliament and, of course, to the public. Now, the Minister in the other place suggested that further disclosure was unnecessary because the government already had a reasonably good understanding of the potential liabilities and that the independent value would take them into account.

But that's not the same as ensuring that Parliament can see the likely costs before compensation is paid, and before further public money is committed. I was very taken with my noble friend Lord Redwood's comments about the environmental impact from memory, and I might have this date wrong, but I think the oldest of the blast furnaces dates back to 1939. So it's inconceivable that that site is not contaminated in some way, which we probably don't really have any accurate historical records for. And I've also recalled the reason why I was a bit lukewarm on my own amendment 20, and I hate to say this, and I hope I never have to admit it again, but it's rather because I preferred the noble Lord Fox.

Amendment 27, a shocking admission to have to make my Lords environmental remediation, pension obligations and historic liabilities can amount to very substantial sums. The government are using taxpayers money and Parliament should be able to scrutinise the liabilities being assumed alongside the compensation and support being provided. For those reasons, the amendments make a valuable contribution to transparency and accountability, and I look forward to the Minister's response. Thank you.
18:54
Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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Yes, I did the the your Lordships House says we are two one up. Harry Kane. Thank you. My Lords. The noble Lord Lord Faulks has raised several amendments with regard to the compensation provisions in the bill. I appreciate his careful attention to detail, to detail, which is a key aspect of this bill, and I will respond to the points raised in order. I will preface these points by noting that if introduced, compensation regulations will be subject to the affirmative procedure, thereby providing opportunities for parliamentary scrutiny.

Turning to amendment 27 on the approach to environmental liabilities in the compensation process, the noble Lord Lord Faulks has indicated that this would have the effect of preventing the payment of compensation until the independent valuer has delivered to the Secretary of State a written estimate of the environmental liabilities of the undertaking in question, and that the Secretary of State had published that estimate and laid it before Parliament. It is important that the independence of the valuation process is maintained.

It is not appropriate for the inputs to the valuation exercise to be disclosed before the valuer reaches their determination. This may risk exposing the independent valuer to undue pressure while they are still deliberating on an outcome, thereby undermining the independence and the fairness of the compensation scheme. Nonetheless, the government would have the power to direct the independent valuer to consider environmental liabilities in their determinations of compensation, and we also intend to allow the final compensation determinations to be made public, including any consideration of environmental liabilities carried out.

There is an opportunity for further parliamentary scrutiny as the Compensation Scheme regulations will be subject to the affirmative procedure, allowing all members to debate the specific framework set at that stage. Now, amendment 24 would prevent the payment of compensation until an estimate of liabilities arising from the environmental and health and safety matters under clause 544 is provided to Parliament, an important principle of the compensation process is that it is assessed independently to ensure that affected parties are treated fairly.

The proposed amendment would begin to erode this independence by making the payment of compensation contingent on parliamentary scrutiny of one of the factors that would inform the outcome. It is therefore not feasible to proceed with the proposed amendment as a General point compensation scheme regulations would require the independent valuer to consider environmental liabilities as part of the assessment. Additionally, in the event that a steel company is nationalised, we would expect it to publish an annual report setting out its financial position, including any liabilities.

I now turn to amendment 28. The noble Lord is also a table, a similar amendment that would require the Secretary of State to publish an estimate of pension liabilities of the relevant steel undertaking before compensation is paid. I understand the concern noble Lord has has made taking on unknown liabilities and putting undue pressure on the public balance sheet. If the government decides to nationalise British Steel, subject to the public interest test, I can reassure reassure the noble Lord that the government would not be taking on a large contingent pension liability.

The company's pension scheme is a defined contribution scheme with a pot funded by contributions made by the employees and the company over time. In other cases, the pension scheme may be based on different arrangements, but we have built flexibility into the Bill to address these circumstances on a case by case basis. The pension power in clause 44 allows us to adapt to regulatory changes, standardised terms and adjust contribution minimums minimums where necessary. It also allows for the consideration of a fair division of pension liabilities between the transferor company and the government Corporation.

This follows the approach in the Banking Act, where relevant pension liabilities will form only part of the picture in the valuation, exercise and will and publishing them in isolation without the wider context would not be helpful. As I've already mentioned, following nationalisation, we would expect contingent liabilities to be included in the company's annual reporting. Now, referring to amendment 25, I'm more sympathetic to the normal Lords amendment that the compensation regulations must provide for the appointment of an independent valuer in all cases, to determine compensation.

The current wording makes it discretionary. Whether an independent valuer is or isn't involved in any given case. In practice, it is very likely that the government will consider it fair to provide for an independent valuer to be established in For the transfer. The clause is currently discretionary because there could be situations where independent valuation isn't required, for example, where the government and the transferor agreed on a summer. It would be unnecessary for the legislation to acquire to require that an independent valuer be engaged.

However, my Lords, I will reflect further on the noble Lords points and consider how to expect to return to this at Report stage. I refer to amendment 26, which is to ensure that environmental and health and safety obligations are considered as part of the assessment of compensation. I hope I can provide some reassurance on this point, as the government anticipates that where the principle transfer powers are used to nationalise a still undertaking compensation scheme regulations would require an independent valuer to take these matters into account when conducting their assessment.

I am not sure that the specific drafting of the amendment achieves the intended effect, but we can look at whether there is anything more we can do to bring clarity on this point. Amendment 39 seeks to extend the reporting requirements for financial assistance so that they can. They also cover compensation provided under clause 52. However, in the case of a. Of compensation, the amount, if any, will be payable only once based on the independent valuers determination and will not change over time.

As I've already set out, we will publish the amount of any compensation. The question of regular reporting does not arise as no new information will be provided. I now turn to amendment 45, which would cap the amount the government can pay as financial assistance or compensation. Financial assistance, more generally will be covered in further detail in the following group, and I will cover it more fully then. However, a fixed cap of any kind on financial assistance would risk constraining the government's ability to respond effectively to circumstances as they arise.

A cap on compensation will also cut the compensation process itself, which is a crucial safeguard of this bill. Taken together, my Lords, I hope that I've given noble the noble Lord and all noble Lords the clarity required on this subject. I thank all noble Lords, Lord Redwood, Wrigley and Sharp for their contribution on this group of amendments, and asked amendment be withdrawn?

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Could the noble Lord please address the question of. Why should address the question of. Why should steelworkers in Scunthorpe, or in Port Talbot, or anywhere else have faith in the government's faith in the government's provisions for pensions when they failed to safeguard the pensions of failed to safeguard the pensions of allied steel and Allied steelworkers in Cardiff, and continue to do so?

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continue to do so? I would have to write to the Nobel laureates because I do not have any specific information on the particular pension scheme.
19:02
Lord Fox Portrait Lord Fox (Liberal Democrat)
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My Lords, I thank noble Lords >> My Lords, I thank noble Lords for their contributions, and particularly the noble Lord Wigley. Who, who who was saying what I was thinking, but he said it with authority because he he understands the issue quite viscerally, I think, to those those workers. And it was in my mind that some level of protection or some safeguard needs to be there. I thank particularly the Minister for his thorough, very thorough answers. And because they're so thorough, I am going to have to spend some time in hands with Hansard, reading them through to find out how much comfort there is in there.

I think his comments regarding amendment 25 was certainly encouraging, and hopefully we can we we can come to some sort of agreement on that, on the others. I think I will have to come back to the noble Lord later, but with those comments, I beg leave to move to withdraw amendment 24. This amendment be withdrawn. Amendment is by leave withdrawn. The question is that clause 52 stand part of the bill. As many as that opinion will say content contrary, not content.

The contents have it in clause 53. Amendment 25. Lord Fox not moved. The question is that clause 53 stand part of the bill as amend that opinion will say content contrary not content. The contents have it in clause 54. Amendments 26 to 28. Lord Fox not moved. We come now to amendment 29,

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Lord Fox. Not moved.

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Not moved. Amendment 30. Lord Shaw not

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Amendment 30. Lord Shaw not moved. Amendment 31. Lord Shaw not moved. Amendment 31. Lord Shaw not moved. Question is that clause 54 stand part of the bill as content contrary not content. The contents contrary not content. The contents have it. The question is that clauses 55 to 57 stand part of the bill. Is there any that opinion will say content contrary, not content. The contents have it in clause 58. Amendment 32, Lord sharp.
19:04
Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
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Yes. >> My Lords, I rise to move. Amendments 32, 33, 34, 35, 40 and 41. Standing in my name, and that of my noble friend, Lord Hunt of of my noble friend, Lord Hunt of Wirral. My Lords, these amendments address a basic question. If the government are to provide financial assistance under these powers, what limit is there on the liability being placed on taxpayers? And I did hear what the noble Lord, the Minister had to say in the last group, but I will carry on regardless and probe a little further.

My Lords clause 58 permits financial assistance in an exceptionally broad range of forms. It could be grants, loans, guarantees, indemnities, the acquisition of shares or assets, contractual payments or other expenditure. It is additional to any other funding powers available to Ministers. Yet the Bill contains no overall financial ceiling, no requirement for advanced detail to Parliament and no explicit statutory value for money test. We understand the need for urgent support, but the government's stated objective is not permanent public subsidy. It is a viable, competitive, private sector led future for British Steel, and that requires a business capable of attracting investors with capital commercial expertise in a long term commitment.

To achieve that, public support must be disciplined, transparent and as limited as is consistent with the securing of the strategic objective. Otherwise, the government risks creating a perverse incentive. A prospective purchaser may conclude that it need only operate the business efficiently enough to maintain access to public support, rather than efficiently enough to establish a genuinely sustainable commercial future. And this would be an indefinitely subsidised business model, with the taxpayer carrying the risk. My Lords Amendment 32 would place a £2.5 billion limit on financial assistance until August 2029.

That figure reflects the government's own stated steel funding envelope in the Steel Strategy. Amendment 33 provides a further test of proportionality by limiting assistance over five years to £1 million per employee. It is intended to ensure that support is targeted at transformation and viability, rather than becoming a substitute for a credible business plan. Amendment 34 would require a detailed statement to Parliament before assistance is provided. Parliament should know the amount, form and recipient of support, its intended purpose and expected effect and any conditions, repayment arrangements, guarantees, indemnities or other liabilities attached to it.

That's particularly important where exposure may not appear as a simple cash grant, guarantees and indemnities may create significant liabilities, which only crystallise later. Taxpayers should not be asked to accept those risks without clear disclosure. Amendment 35 would ensure that the Secretary of State is satisfied that financial assistance represents value for money. Value for money does not just mean ignoring strategic capability, national security, skilled employment or supply chain resilience. But Ministers must weigh those against the the costs, the liabilities, the alternatives and the likelihood that support will lead to a competitive business capable of standing on its own feet.

In the other place, it was rightly argued that if the government believes in this intervention, they should be willing to set limits on it. Without such limits, taxpayers are simply being asked to sign up to an unlimited liability. The government have already been providing working capital support and have been in discussion with potential private sector partners. They should therefore now have a clearer understanding of the likely financial assistance required, the risks involved and the route to a sustainable outcome. My Lords, turning to amendments 40 and 41, the government have been providing monthly updates on working capital being provided to British Steel since the passing of the Steel Industry Special Measures Act of 2025, which is welcome.

It should be the same for the financial assistance if British Steel or indeed any steel undertaking is nationalised. I therefore beg to move.
19:08
Lord Fox Portrait Lord Fox (Liberal Democrat)
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Amendment proposed clause 58, page 39. Line five. After assistance, insert the words as assistance, insert the words as printed on the Marshalled List. I'm writing because there's an amendment in my name. Amendment 37. amendment in my name. Amendment 37. I have to say that this amendment covers concerns regarding the level of financial assistance, but also focuses on the relationship between the United Kingdom and the EU on this. I think we actually covered this in a previous group yesterday. So I'm not Monday, so I'm not opening that.

But I do have some contributions which I hope are helpful to the noble Lord shark. I'm still reeling from his bombshell over the last the last group. But bear with me. Clause 52 compensation section says section one A says the Secretary of State must make regulations for compensation. That clause 57 makes those regulations subject to the affirmative procedure. So that's for compensation. However, clause clauses 5859 financial assistance do not have such requirements to make affirmative regulations, and it seems to me that there is an asymmetry here.

If the government is prepared to have a affirmative procedure for the compensation process, why is there not an affirmative process for the for the financial assistance process? And it seems to me that if the Minister was prepared to give ground on that, then many of the discussions that the noble Lord shark wishes to have about financial assistance would be had during. During the discussion of the affirmative resolution, and I think that is a a helpful and indeed.

Balanced way of dealing with this issue.
19:10
Lord Redwood Portrait Lord Redwood (Conservative)
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My Lord, I'm grateful. The. The two noble Lords on the front bench have set out this challenge to the government. There is an absolute requirement for accurate, speedy and regular financial reporting. When you have a company in Los really struggling now, some many years ago now, when I was chairman with a large group of industrial companies reporting to me, and I'm pleased to say none of the subsidiaries were reporting anything like the losses or the cash hemorrhage or British Steel, and we couldn't afford it.

Such a thing. But what I do remember myself and the chief executive was if we saw one of our subsidiaries in danger of going into loss or dipping into bad performance, not only would they be on monthly reporting, but quite often they'd be put onto weekly reporting. And it wasn't just that we wanted to know the bad news early, because it started a conversation between ourselves and other senior directors and executives with the the leading executives of the ailing subsidiary around how can they generate more cash and revenue? How can they win more business? How do they reduce costs in the meantime, if there's no immediate prospect of increasing the revenues because you needed to reduce the cash outflow? And so my advice to Ministers is they have taken responsibility for British Steel many months ago, is that they should be seeing that kind of information, because it is it is their responsibility now.

And they decided to undertake this action without advice on value for money. And so they need to have that sort of detailed information in front of them. But they also need or their representatives need that informed conversation with the people they entrusted with running this business to find out why. As I understand it, the numbers are still not going in the right direction. And you do need it weekly and certainly monthly, because these things accumulate and the losses in this business have already accumulated.

We are led to believe, by the National Audit Office to 642 million. I also think the the description that the government has offered help with working capital is true, but I don't think it's the whole story because as I understand it, there is a massive trading loss. And so as I as I understand it, the taxpayers through the Ministers and the Treasury, are having to pay trading losses, which means you're a combination of subsidising the customer who's getting it too cheaply and paying for costs, which you need to meet, which the customer isn't going to pay for.

And then in addition, you may need to provide additional working capital to provide the the work in progress and the stocks and raw materials for the next bit of production. But I would regard the loss as a as a different category from the provision of additional working capital to keep the business running, and I would be much more worried about the loss. But my. My conclusion is from my business experience with industry is that cash is the king. And by all means look at the PNL.

That will give you an indication. But a business has to generate more cash than it spends. Otherwise it goes bankrupt. And this is the the fundamental discipline that is needed for Ministers to impose through their their chosen representatives on this business. And they need to be seeing the cash line of outflow starting to reduce. Otherwise, they need a very fundamental rethink of policy.
19:14
Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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Firstly, let me thank our noble Lords for their contributions. In this group. I will address each of the issues raised in turn. Amendment 32 and 33 in the names of noble Lord Sharpe and Lord hunt would impose a cap on the amount of financial assistance the government could provide. Under the Bill, amendment 32 seeks to place a statutory cap of 2.5 billion on financial assistance until 50th August 2029. Amendment 33 applies a cap on a different basis relating to the number of employees in a steel undertaking, imposing a fixed cap of any kind on financial assistance would risk constraining the government's ability to respond effectively to evolving circumstances.

It could ultimately undermine the very objectives the bill is designed to achieve, which is namely, the protection of our domestic capability in a strategically vital sector. The bill contains proportionate and robust measures to ensure transparency and accountability in the provision of financial assistance. Clause 59 requires the Secretary of State to report to Parliament on the use of financial assistance every 12 months. Furthermore, any financial assistance provided by the government will be subject to the established framework and I'm sure all noble Lords would know for managing public funds, including the Treasury approval processes.

Departmental Accounting Officer responsibilities and reporting to Parliament through the usual public spending controls. A cap on compensation will also undermine the fairness and independence of the compensation process. It is important. It is an important safeguard in the Bill that those affected by the exercise of principle transfer powers can receive compensation. This must be based on a recent assessment rather than subject to an arbitrary cap. As I've said before, the government is minded to nationalise British Steel, subject to the public interest test.

In the government's view, British Steel currently has a new Commercial Value amendment, amendment 38 in the name of a noble Lord, for amendment 34 in the names of noble Lord Sharpe and Hunt would require that before providing any financial assistance, the Secretary of State must first put forward a proposal to Parliament for doing so, setting out the underlying underlying details. Amendment 38 also stipulates that a select committee must have 90 days to provide any recommendations on the proposal before it can proceed.

My Lords, I would respectfully suggest that these amendments are not realistic, given that financial assistance may need to be provided at pace immediately following a transfer, it is unlikely that there would be time for the parliamentary scrutiny for for parliamentary scrutiny envisaged by these amendments without imposing significant risks to the continued operation of the steel undertaking. On a similar theme, amendment 35 would limit clause 58 by requiring the Secretary of State to provide financial assistance only if first satisfied that doing so would secure value for money.

I do not think this is this needs to be set out in statute as noble Lords would know, value for money considerations are already embedded in government decision making. Financial assistance under the Bill can be provided only in connection with, or in consequence of the exercise of the transfer of powers. Funding will be subject to the usual government spending channels and will be guided by well established managing public money principles to ensure it is value for money and affordable. The Bill provides a provision for annual reporting on financial assistance to ensure transparency about any costs incurred by the government.

Amendments 40 and 41 would increase the frequency of government reporting on financial assistance from annual to monthly. The government recognises the importance of parliamentary oversight of public spending. However, my Lords, the proposed frequency of reporting is disproportionate, disproportionate and would impose an additional burden on the department and a national entity when the focus should be on operational challenges. Reporting annually to align with the company's annual reporting cycle is pragmatic, pragmatic and strikes the right balance between transparency and minimising the burden on the new company.

The government will also continue with its usual public spending reporting requirements, including the publication of the Department for Business and Trade annual accounts, which will include any costs incurred under this provision. Finally, the noble Lord Faulks raises the question of how agreements with the EU may affect the value of the steel undertaking. Of course, my Lords, the government is mindful of the impact of international trade agreements on the steel sector and has been extensive discussion about recent measures on this issue.

We all want to see all British steel companies thriving. And of course, the same would apply to the government's approach to any national steel undertaking, or rather to a national steel undertaking. I want to reassure the noble Lord that this is an issue that this government and my fellow Ministers at the Department for Business and Trade take very seriously. However, it is not suitable to include this addition in this clause, which is focused on enabling the government to provide financial assistance to a National Steel undertaking.

My Lords, I hope I have been able to provide your Lordship with sufficient reassurance on this matter and ask that the amendment be withdrawn.
19:19
Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
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I'm very grateful to the Minister for his response, and I agree with him, actually, that the focus must be on operational focus must be on operational challenges, but I think the noble Lord, the Minister, would also have agreed very much with what my noble friend Lord Redwood had to say. When it comes to cash flow, he is a businessman. He will know exactly what my noble friend was talking about, and therefore I don't think that the focus should be on operational challenge solely on operational challenges.

They're obviously also has to be a very, very keen focus on the cash position. And I would have thought that the transparency that we're suggesting would actually aid the government in that if one month is not right as per amendment 40. Very happy to have a conversation on what might be right. But we do think 12 months is far too long a gap between reports. And actually, far be it from me to help the government in this regard. But I would have thought it would minimize the potential for political shocks if there was a more of an ongoing dialogue with the British public about the state of play at any entity that is nationalised, as opposed to just one off bombshells on an annual basis.

But I'll leave that for the government to ponder. My Lords, I'm very grateful to the noble Lord Fox for his helpful comments about asymmetry. He is correct, and I do believe the government's heart may be in the right place on all this. We do want to see growth. We do want to see investment. We do want to secure jobs in the steel sector, but we are ultimately talking about taxpayers money. And that's why we think there must be clear limits and proper discipline around this.

Financial assistance. Support shouldn't just be simply open ended with no clear ceiling or no transparent statements of exposure, and no statutory tests of value for money. We would welcome further discussions with the Minister on how the Bill can better reflect those safeguards, but for the

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present, I beg leave to withdraw the amendments. Lordships. Pleasure that this amendment be withdrawn. Amendment is by leave withdrawn. Amendments 33 to 35. Lord Sharpe not moved. 33 to 35. Lord Sharpe not moved. Amendment 36. Lord Wigley not moved. We come now to amendment 36. A Lord We come now to amendment 36. A Lord Fox. My Lords, my Lords, I thought
19:21
Lord Fox Portrait Lord Fox (Liberal Democrat)
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Fox. My Lords, my Lords, I thought it would be helpful to, in this group of amendments to bring together the. The some necessary levels of scrutiny about which I've spoken in various other groups in various different ways, so I rise to move amendment 36 A and speak to amendment 38 and 41 a in my name, my Lords, as as prefaced in the previous group, amendment 36 A requires financial assistance under clause 58 to be approved by resolution of both Houses of Parliament before it may be provided by amending clause 58 financial assistance under subsection under under the subsection must be provided through regulations specifying the financial assistance provided, proposed to be provided and the estimated cost to public funds of that assistance.

These regulations would be subject to the affirmative process procedure. My Lords, the in amendment 38, the Minister has already got his revenge in early, I think in the previous group, because this outlines a mechanism by which parliamentary scrutiny of the Public Interest test and nationalisation could work, and I propose a new clause after 58 that prevents financial assistance being provided until 90 days after information package of financial assistance has been made available to a select Committee of the House of Commons, or indeed one of the House of Lords as well.

My. My Lords, I think I. I take the Minister's point about timing, but I think this is a useful probing amendment to look at the role of select committees going forward on the scrutiny of this, and I hope the Minister will have something more broad to say. If if if he still continues to shoot down the principle of of of the timing of this intervention, because this amendment proposes that the select committee should look at the details and nature of the amount of financial assistance, the intended beneficiary or beneficiaries of the financial assistance, the expected purpose and effect of that financial assistance, any conditions, repayments, arrangements, guarantees, indemnities or other liabilities attached to the financial assistance and any other information.

Secretary of State believes it is necessary for the Committee to have, in order to complete its consideration of the proposal. My. My Lords, whether this is before or post hoc, this is an important investigation that needs to be had by by the the the select committees, either of just the the Commons or indeed the Commons and and the Lords. Of course, this would any information that that would be made public that might compromise national security, fiduciary duties or indeed commercially sensitive issues wouldn't be wouldn't be included.

So going forward, I think it'd be useful to hear from the Minister, his his understanding of how select committees will involve moving on. I, I had hoped to persuade the government to commit to an annual parliamentary debate of the steel industry, the. Its strategy, the market and the state of nationalised businesses in the industry, with one debate both in the Commons and one in the Lords with. With taking place once a year, once a year. As long as there were still steel undertakings in in in public ownership.

Perhaps we can discuss this. But the amendment 41 proposes an alternate approach to information sharing. It requires the Secretary of State to make a written ministerial statement every three months on the progress of any nationalised steel undertaking. Now, during the the the during the passage of the Steel Industry Special Measures Act Rsma, which we did, those of us who were here in in just before Easter last year, many Ministers committed to a a debate six months following Royal Assent on the use of direction giving powers.

And that took place in October 26th, 2020 525. I've just lost a year. Somehow this was a commitment to a single occurrence, but it also included a commitment to a monthly written ministerial statement on the use of direction giving powers. Now British Steel were taken into public ownership. This commitment would fall away, replaced by any, only replaced by any commitments associated with this bill. Now, to date, there are no provisions of anywhere near this level of information sharing within this bill.

So without this amendment, as the cost to the taxpayer increases, the level of parliamentary scrutiny will actually decrease, creating less scrutiny for steel nationalisation than there is under Rsma. So I do not accept I don't I accept that a monthly report may be unreasonable. And I know the Minister in in our discussions has mused about half yearly, but I actually think a quarterly is a sensible interval to have these reports. And that is what this amendment seeks, seeks, seeks to achieve, and I think I don't think any, any, any Minister would be afraid of doing this, because, of course, I think as the point, the noble Lord Sharpe made in the previous group, having a level of public understanding of what's going on, both the difficulties and the struggles as well as the cost, I think is an important part and indeed, the importance of the industry.

This is an opportunity to restate that. And also coming back to the point about what's happening in the communities and what's happening with jobs and what's happening with skills. And I think we would expect that to be included in those, those, those, those, those quarterly reports. So I, I feel if we're not getting a debate every year, which I think this in a way would be a better, a better response. So taking those together, I think these three amendments are designed to deliver a level of comfort and affirmative process for for assistance.

A role for the select committees and a quarterly reporting mechanism. My Lords, I beg leave to move. Amendment 36, a amendment proposed clause 58, page 39. Line seven at end. Insert the words as printed on the Marshalled List.
19:28
Lord Hunt of Wirral Portrait Lord Hunt of Wirral (Conservative)
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My Lords. and I thank the noble Lord, Lord Fox, for these amendments. It's not just a case of public understanding. I think the public would expect Parliament to hold the government to account, and in many ways, I hope we're pushing at an open door with these amendments in an area involving potentially substantial financial assistance, the government must be able to provide both Houses of Parliament with a clear indication of what is going to be the estimated cost to public funds.

Parliament must be able to scrutinise not only the possible of financial assistance, but its scale, its purpose, its conditions and its likely liabilities. Now, amendment 38 proposed 90 day period, which we've already debated a little earlier, strikes, I believe, a sensible balance. It would allow an expert select committee to examine the proposals and make recommendations, while preserving the government's ability to proceed once that scrutiny has taken place. And I just say to the noble Lord, Lord Fox, who several times seemed uncertain as to whether it should be a select committee of the House of Commons or of the House of Lords.

I've always been a great believer in the Joint Select Committee, and something of this importance requires both Houses of Parliament to scrutinise, and the best way to do that is through our expert Select Committee process. Parliament has enormous expertise which should be used in determining the appropriate level and the form of support. That's particularly important where taxpayers may be exposed through grants, loans, guarantees or indemnities. So I do hope the noble Lord, the Minister, will be able to respond positively on how he intends to proceed.
19:31
Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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My Lord, I'm grateful for all contributions in this group of amendments. I refer to amendment 38 amendments. I refer to amendment 38 in the name of the noble Lord Fox, which would require that before providing any financial assistance, the Secretary of State must first put forward a proposal to Parliament for doing so, setting out the underlying details. Amendment 38 stipulates that a select committee must have 90 days to provide any recommendations on a proposal before it can proceed. My Lords, I would respectfully suggest that this amendment is not realistic, given that financial assistance may need to be provided immediately following a transfer, it is unlikely that there would be time for parliamentary scrutiny envisaged by this amendment without imposing significant risks to the continued operation of the steel undertaking.

My Lords, I appreciate the noble Lords intention in tabling this amendment, but for the reasons I've just outlined, I would ask that this amendment be withdrawn. But I'll come back to the various other amendments now. Amendment 36 A would require the financial assistance power and cost 56 to be exercised by regulations specifying the purpose and estimated costs. Understand the desire for further parliamentary scrutiny of the costs that might be incurred in relation to an intervention in a steel undertaking. The government has been transparent about the costs incurred to date as a result of the intervention at British Steel under the Special Measures Act, estimating future costs relating to nationalisation is more challenging because they would depend on decisions not yet taken about the future operation of a particular steel undertaking.

I hope I can provide reassurance by emphasising the extensive controls over expenditure that would apply by default. If these provisions are used, the government would need to consider the potential range of costs and to make the usual value for money tests under the accounting officer. These spending processes are subject to ongoing parliamentary scrutiny by the Public Accounts Committee. In fact, the Permanent Secretary to the Department for Business and Trade appeared before the PAC last week to discuss steel.

As with amendment 38, I am concerned that the amendment put forward does not reflect the operational realities of a potential intervention. It is likely that there would be urgent and immediate pressures to draw down on the financial assistance spending power to maintain operations in a way that is not conducive to the secondary legislation process set up. However, my Lords, I do understand that the noble Lord would like to us to go further in this respect, and I appreciate the constructive engagement that I've had with him on this and other issues.

I will, of course, consider whether anything more can be done to give him the reassurance he does, or rather, he desires. Amendment 41, A tabled by the noble Lord again would require the Secretary of State to make a written ministerial statement every three months on the process on the progress of any publicly owned steel undertaking. I'm sympathetic to this amendment and recognise Parliament's interest in the bill's impact on the steel industry, employment and public finances. This is why the Bill requires the government to produce an annual report on financial assistance under the Act, and the company would publish its annual report and accounts.

I do not think that reporting every three months for as long as is still undertaken remains in public ownership is necessary. However, the principle is sound, and my noble Lord has made, and the noble Lord has made some excellent points. I recognise that our current reporting commitments may not encompass the full scope of his amendments. My Lords, I just would ask him to withdraw his amendment and the government will consider this further report.
19:34
19:36
Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
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My Lords, I rise to speak to amendments 47 and 48 standing in my name, and that of my noble friend, Lord Hunt of Wirral. These amendments address two costs which bear directly on the viability and the competitiveness of transferred steel undertaking. They are the carbon border adjustment mechanism and the United Kingdom Kingdom Emissions Trading Scheme amendment 47 would exempt a transferred steel undertaking from the carbon border adjustment mechanism in respect of iron and steel goods imported for use in its business.

Amendment 48 would supply the United Kingdom Emissions Trading Scheme in relation to installations forming part of such an undertaking. These amendments go to a wider question, which has run throughout our debates whether the government's approach will genuinely secure steel making in this country, or simply add further costs to an industry already exposed to its intense international competition. The government's own impact assessment on the free allocation review makes the point. It accepts that reducing free allocations increase increases business's exposure to carbon costs.

It accepts that energy intensive industries producing globally traded commodities are particularly vulnerable, because they cannot simply pass those costs on to consumers. It also recognises the danger of carbon leakage, production, investment, jobs and emissions moving overseas rather than emissions genuinely being reduced. The assessment says that the traded carbon price could be approximately £25 per tonne lower by 2030, if free allocations did not fall in line with the industry cap. So this is a policy choice and it has consequences for industry.

The steel sector has warned of the effect of reducing free allocations. It has described the proposed changes as, and I quote, an earthquake moment. The government must listen to that warning. Cbam can affect imports into the domestic market. It does not protect a United Kingdom producer competing in export markets. Moreover, higher costs can be passed down the supply chain to downstream manufacturers, reducing their competitiveness and risking the relocation of activity and jobs abroad. So we've now seen the government introduce new trade measures with substantial tariffs and lower quota volumes.

And regarding this, the Minister in the other place, Chris Bryant, said, and I quote, we are determined to make sure that we have a proper steel production industry in the UK, and that means we have to take some tough measures, end quote. But thus far, the tough measures appear to fall on downstream manufacturers and inevitably, therefore, on British consumers. The government cannot impose new trade barriers and costs on those who use steel, while also increasing carbon costs for domestic producers, and then claim to have solved the competitiveness problem.

When will the government get tough on the ideological net zero policies, which are imposing very substantial costs on the steel industry? So the government need to make a clearer choice. Do they want US steel sector, which can compete, can invest and can employ people in the United Kingdom, or do they want to continue a policy framework which makes domestic production more expensive and pushes activity overseas? This is particularly important as the government pursue electric arc furnace production. If they want greener steel, they must ensure that the electricity required to make it is available at a competitive price.

It's no good requiring industry to electrify, while maintaining a policy environment in which power and carbon costs make that transition commercially unviable. My Lords, the government should not use nationalisation to shield itself from the consequences of its own industrial and environmental policies. It should instead create the conditions in which steel can be produced competitively in Britain, with lower energy costs, realistic carbon policy and a serious commitment to preventing industrial activity from leaving our shores. I beg to move.
19:40
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19:41
Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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I'm grateful to noble Lord, to the noble Lords and Lord hunt for their thoughtful amendments that have. Have tabled on the UK Emissions Trading Scheme and the Carbon Border Adjustment Mechanism, and for their impact on the steel sector. My Lords, a common theme across these amendments is the proposal that a publicly owned steel undertaking should be exempt from one or both of these measures. I understand the concerns that have been raised about the sector's competitiveness and the costs faced by steel producers.

However, I must be clear that the government cannot support this approach. We remain firmly committed to industrial decarbonisation and to securing a competitive, sustainable and low carbon future for the UK steel industry. The UK cannot build a resilient steel sector by exempting it from the very policies designed to support the transition to cleaner production, and to create a level playing field against higher carbon imports. The UK Emissions Trading Scheme and a carbon border adjustment mechanisms are complementary policies.

Together, they encourage investment in cleaner production while ensuring UK producers are not undercut by imports from countries with lower environmental standards. Exempting a publicly owned steel undertaking from these measures would not only undermine those objectives, but also create an uneven regulatory framework within the UK steel sector. With this in mind, I will turn to the amendments tabled by the noble Lord Sharpe and noble Lord hunt. Amendment 47, which seeks to exempt a publicly owned steel undertaking from Cbam.

I understand the noble Lords concern that Cbam will increase the cost of imported products for steel undertakings. However, I wish to emphasize that Cbam purpose is to ensure that imported carbon intensive goods face comparable carbon prices to those of domestically produced goods. It gives industry confidence to invest in the UK, knowing that their decarbonisation efforts will not be undermined. Cbam makes no exemptions for particular UK firms. Its intent is to target a problem of carbon leakage and to ensure that highly traded, carbon intensive goods from overseas, including steel, pay a comparable carbon price to that paid by UK manufacturers.

I turn now to amendment 48, which seeks to exempt the publicly owned steel undertaking from the emissions trading scheme. I'm sympathetic to the fact that this also imposes a cost on activities that have significant emissions. However, like amendment 47, accepting amendment 48 will provide preferential treatment based on ownership and undermine a level playing field across the industry. The transition to low carbon steel must be fair, credible and and consistent across all operators, whether publicly or privately owned. I wish to emphasise that the ETS includes targeted protections for energy intensive trade exposed industries, and that includes steel.

Further protections will be introduced through the Cbam from 2027. It is for these reasons that I cannot support this amendment and ask that they be withdrawn.
19:44
Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
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Well, I'm very grateful to the noble Lord, the Minister. But I've got to admit I'm very disappointed got to admit I'm very disappointed in this response. I wonder if he's a bit disappointed in the response he had to give himself. It seems to me that you can either have decarbonisation or you can have a competitive steel industry at this precise moment in time. You cannot have both at this precise moment in time. They are mutually exclusive. That is not to say we should not pursue net zero in the future.

Of course we should, but this is a particularly exposed industry at a particularly critical time. So I'm afraid, my Lords, that the response has made clear that Ministers are just not willing to make the difficult choices needed to secure a competitive future for what is an energy intensive industry. The Secretary of State for Energy Security and Net Zero continues his net zero agenda, and steel, which is one of our most energy intensive intensive. But as the government admits itself, strategically important sectors continues to face rising costs and therefore declining competitiveness.

So we continue to urge the government to abolish the Emissions Trading Scheme and Cbam, and to allow industry to operate efficiently, at lower cost and with a better prospect of protecting jobs. Now, my Lords, the alternative path is the path we've seen in the North Sea, where the government's net zero policies are leading to thousands of jobs being lost every month, and the government should not mistake that, make that repeat that mistake with regards to steel, if the government genuinely wants the United Kingdom to be a strong exporter of steel, and we do on this side of the House, they must first ensure that electricity and carbon costs do not make British production uncompetitive.

My Lords, we may well return to these issues at a later stage of the Bill, but for the present I beg leave to withdraw the amendments.
19:46
Lord Hunt of Wirral Portrait Lord Hunt of Wirral (Conservative)
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Your Lordship, that this amendment be withdrawn. Amendment is by leave withdrawn. Amendment 48. is by leave withdrawn. Amendment 48. Lord Sharp not moved. We come now to amendment 49. Lord Chancellor,

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Lord hunt. My Lords, I rise to speak to

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My Lords, I rise to speak to amendments 49, 50, 51, 52, 53, 54 and 55. Standing in my name. In the name of my noble friend Lord Sharpe of Epsom. As we just discussed the explosion of environmental, social and governance, ESG red tape has created a vast and complex web of rules which force businesses to comply with political targets at a cost to investment, job creation and, above all, to the competitiveness of Britain.

Admittedly, I should add a declaration of interest. As a practising solicitor in the City of London, this is undoubtedly created an explosion of work, and therefore that is probably why I should declare an interest. But I don't take any pride in the fact that ESG reporting requirements have become more and more burdensome and onerous. This is why I'm delighted to confirm that His Majesty's official opposition has committed to repealing a number of ESG reporting requirements, including those addressed by this group of amendments, so that unnecessary business costs can be removed and businesses can focus on investing, growing and creating jobs.

However, if the government is going to nationalise a steel undertaking, then in order to minimise the cost of its transition, attract private sector investment and reduce the burden on the taxpayer, they should at least disapply these regulations in respect of that undertaking. Now, British Steel employs more than 4000 people. It is therefore likely to be caught by a number of these costly and burdensome requirements. Amendment 49 would disapply the company's strategic reporting requirements.

Those regulations require quoted companies to include annual greenhouse gas emissions information and reporting on environmental impacts in directors reports. Amendment 50 would disapply greenhouse gas emissions and related environmental reporting requirements. Amendment 51 would exempt a nationalised steel undertaking from the Energy Savings Opportunity Scheme. This requires large companies, including those with more than 250 employees, or turnover above the relevant threshold to carry out energy audits every four years to identify energy efficiency opportunities.

Amendment 52 would disapply the energy and carbon reporting requirements, which apply to large companies and limited liability partnerships. Amendment 53 would remove executive pay ratio reporting requirements. These require certain companies to report chief executive pay against median, lower quartile and upper quartile employee pay, with the figures subject to audit. Amendment 54 would disapply forest risk, commodity due diligence and reporting requirements. These would require businesses using certain commodities to conduct supply chain due diligence and publish annual reports.

And finally, amendment 55 would disapply climate related financial disclosure requirements. These require companies and LPs to report how their boards oversee climate risks, the impact of climate change on strategy, and the metrics and targets used to assess those risks. Now, none of these requirements reduces electricity costs, secure orders improve productivity or make British Steel more competitive. And yet each requires additional reporting, auditing and compliance costs on a business which the government may have taken into public ownership at substantial expense to taxpayers.

So I ask the noble Lord, the Minister, if the government are serious about making a national nationalised steel, undertaking viable, investable and capable of returning to the private sector, they should focus on reducing unnecessary burdens and allowing management to concentrate on commercial recovery, investment, modernisation and jobs. I beg to move.
19:52
19:52
Lord Leong Portrait Lord Leong, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
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Do you want him to respond to >> Do you want him to respond to you? All right. My Lords. Noble you? All right. My Lords. Noble Lord Sharpe and Hunt have tabled a number of amendments regarding the deregulation of the steel sector. deregulation of the steel sector. These amendments focuses on three core areas of regulation industrial action, environmental regulations and reporting, and company reporting. Firstly, I want to recognise the concern, noble Lords, that any publicly owned steel undertaking will face a significant array of reporting requirements.

That is true, and the government believes that these are necessary to ensure that any publicly owned company operates in a similar way to its privately owned companies. Any publicly owned steel undertaking must protect its workers rights, fulfil its environmental obligations and transparently report on its progress. At the outset, I would like to make the general point that a company under public ownership is ordinarily treated as a public corporation. That is, it is run as a private company with an independent board of directors operating under broad strategic direction from government Ministers.

It is right, therefore, that such a company is subject to the regulatory framework within which any similar private company operates. I would also like to emphasise to noble Lords that amendments seeking to level the playing field within the steel industry are inconsistent with that position. Instead, the amendments in this section seek to give preferential treatment to publicly owned steel undertakings. I will now address the amendments directly to amendments 50, 51, 52, 54, 54 and 55. I believe that they are intended to address the noble Lords concern that the government's industrial decarbonisation policies could impose additional costs and burdens on publicly owned steel undertakings.

In summary, these amendments seek to exempt private, publicly owned steel undertakings from a number of statutory requirements, including greenhouse gas reporting, the Energy Savings Opportunity Scheme, Energy and carbon reporting, forest risk, commodities, due diligence and climate related financial disclosure. Whilst I recognise the concern of the noble Lord that there is a range of requirements on the steel sector with regard to environmental reporting, I cannot support this amendments today. The reporting requirements the opposition have identified are integral to this government's commitments to decarbonising our industries.

Our Steel Strategy set out a vision for a move towards green decarbonised steel production. We are committed to supporting the sector in achieving these objectives, as evidenced by the £500 million of funding to Tata Steel for the development of their electric arc furnace in Port Talbot, a public steel company, no more than any other steel company, should not be exempt from these important transparency requirements. Accepting this amendments would undermine the government's industrial decarbonisation policies intent, creating an unfair system for other domestic steel producers.

The government is committed to revitalizing the entire UK steel industry, not only the companies in public ownership. Alongside this, the government believes that these requirements are critical to industrial decarbonisation and to meeting net zero. I finally turned to amendments 49 and 53, which I will address together as both seek to exempt a publicly owned steel undertaking from existing corporate reporting requirements. Amendment 49 would disapply the strategic reporting requirements under chapter four A of the Companies Act, 2006. While amendment 53 would remove the requirement to publish information on executive pay ratios, I recognise that the purpose of these amendments is to reduce the administrative burden on any publicly owned company.

However, the the government does not believe that public ownership should entail lower standards of transparency or accountability. Indeed, if a steel undertaking is brought into public ownership, there is even greater expectation that it should operate openly and be subject to appropriate public scrutiny. That is why the government expects any publicly owned steel undertaking to comply with the standard reporting obligations that apply to comparable public corporations. Its annual report and accounts should provide parliament, taxpayers, employees and the wider public with a clear and comprehensive overview of the company's financial position, operational performance, governance and remuneration arrangements.

Transparency is not merely a regulatory requirement, it is an essential part of maintaining public confidence. It supports effective parliamentary scrutiny, promotes sound corporate governance and demonstrates that public assets are managed responsibly. It also serves a practical commercial function should the company seek external finance, strategic partners or, in due course, a return to private ownership. Prospective investors and creditors will rightly expect access to robust, reliable and consistent corporate reporting. Maintaining those standards will enhance, enhance rather than diminish the company's long term prospects.

For all these reasons, the The government believes that a publicly owned steel undertaking should be held in the same high standards of openness and disclosure as comparable public corporation. Public ownership should set the bar for transparency, not lower. My Lords, I. So I therefore hope that I have explained why the government cannot support these amendments, and I respectfully invite the noble Lord to withdraw the amendment.
19:58
Lord Hunt of Wirral Portrait Lord Hunt of Wirral (Conservative)
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My Lords. Perhaps I should first deal with the question raised by the noble Lord, Lord Fox, in a way seeking to point the finger perhaps at me as a Minister, for having introduced some of these requirements. Well, indeed, I was a Minister for 16 years, and I cannot recall having introduced any of these requirements at any stage. In fact, in fact, the noble Lord. The Minister answered the noble Lord Fox, by pointing out under Tony Blair the Companies Act, 2006 started a process of requiring companies to include many of the things we're now debating and discussing.

So that's his answer. Perhaps when he next gets to his feet, perhaps next week sometime he might tell us what Vince Cable, who inherited all those requirements, did about minimising the burden on business. Undoubtedly. Undoubtedly, there is an overregulated regime at the present time facing the private sector, and in many ways, we are seeking to alleviate that burden. So far as the new nationalised steel industry is concerned, if the government proceeds down that road. So I do remain concerned that the government do not recognise the cumulative burden these requirements place on an energy intensive and strategically important industry.

If Ministers are really serious about restoring a nationalised steel undertaking to competitiveness and attracting private sector investment, they should be looking to reduce unnecessary compliance costs, not preserve them. But no doubt we'll return to these issues at a later

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stage. For the present, I beg leave to withdraw the amendment. Because it Your Lordship, that this amendment be withdrawn. Amendment is by leave withdrawal amendments 50 to 55. Lord Hunt's amendments 50 to 55. Lord Hunt's not moved. The question is. Clauses 61 to 64 stand part of the bill. As 61 to 64 stand part of the bill. As many that have been will say, content not content, the contents have it. The question is that this have it. The question is that this be the title of the bill, as many of that opinion will say.

Content contrary, not content. The contents have it. My Lords, that concludes the proceedings on the Bill. The the proceedings on the Bill. The House will now resume. My Lords, the Committee of the whole House, to which the Steel Industry Nationalisation Bill was committed, has gone through the same and has directed me to report it to your

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Lordships without amendments. My Lords, I beg to move that the House do now adjourn.
14:30
None Portrait Oral questions: Potential role of innovation and technology in reducing drink-driving Baroness Hayter of Kentish Town (Labour)
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