Crown Estate Bill [HL]

Baroness Hayman Excerpts

2nd reading
Monday 2nd September 2024 Lords Chamber

[Baroness Hayman (CB)]

My Lords, I declare my interests as chair of Peers for the Planet and as a director of the associated company. I, like others, congratulate the Minister both on his appointment and the clarity with which he introduced the Bill. I was grateful for the opportunity to discuss some aspects of the Bill with him last week.

Tempting though it is, I will not follow the argument of the noble Lord, Lord Howard of Rising, with which I did not agree. I look forward to the Minister taking on that challenge. I will—as the noble Lord, Lord Young of Cookham, predicted—address my remarks to the environmental, energy and biodiversity aspects of the Bill. I believe it is an important step on the road of turning aspirations in this area into delivery, and it is delivery we are going to need in the years taking us up to 2030 and beyond.

Despite that focus, I was extremely interested in the points raised by the noble Lord, Lord Young of Cookham, on governance, and by the noble Lord, Lord Turnbull, on the basis of the sovereign grant. I look forward both to the Minister’s response and, perhaps, to discussing those issues in Committee.

The King’s Speech briefing promised:

“This Bill will modernise The Crown Estate by removing outdated restrictions on its activities, widening its investment powers and giving it the powers to borrow in order to invest at a faster pace”.


Alongside that, the Crown Estate’s own strategic objectives make clear its mission of

“supporting the UK towards a net zero carbon and energy-secure future”

and

“stewarding the UK’s natural environment and biodiversity”.

So this Bill gives us the opportunity to look at the reforms in the context of the UK’s progress towards net zero and the part that the Crown Estate can play in helping with the delivery of the Government’s wider net-zero policies and aspirations—which are clearly already the aspirations and policies of the commissioners themselves.

If we are to achieve those aspirations, as has been said many times, we need to have cross-cutting measures that span and interconnect a wide variety of sectors and bodies that need to work positively together to achieve our statutory obligations and the progress that we want to see. There is a complicated jigsaw to put together here, and the Crown Estate is a critical and important part of that wider net-zero jigsaw.

As others have said, the Crown Estate is also an organisation that makes a not insignificant contribution to the government purse and whose investment firepower has the potential to make a difference in tackling the dual climate and nature crisis, which the Government have recognised as

“the greatest long-term global challenge that we face”.

To rise to that challenge, we need not only to integrate the work of all government departments—which, frankly, is difficult enough in itself—but to recognise the potential contributions and responsibilities of all UK organisations with a public role and that discharge important public responsibilities, which clearly includes the Crown Estate. I hope that in Committee we can explore how we can combine the rightly valued independence of the Crown Estate and its commissioners with ensuring that the legislative proposals contained in the Bill contribute to what the Crown Estate itself acknowledges is at the core of its strategic activities. It underlines the need

“to make a positive impact for net zero, nature and communities while creating financial value for the UK”.

Both the Crown Estate and the Government are clearly on the same page on this, yet the fundamental duties of the Crown Estate have not been updated over the last 60 years. I hope that there will be opportunity to discuss how we can acknowledge the shared understanding that we need not only to drive up renewable power generation but to better mitigate and adapt to climate change while creating space for nature-based solutions and natural capital. Those points have already been clearly made.

As a number of others have also made clear, the new borrowing and investing powers that the Bill gives to the Crown Estate clearly have the potential to contribute to the delivery of a low-cost, secure and flexible renewables-led energy system. However, it is important also to recognise, as the Climate Change Committee has said, that there are advantages to protecting the UK’s marine and coastal environments, given that they

“represent potentially very large natural carbon stores and may provide extremely efficient carbon removal”.

If we are imaginative and committed, we can ensure that the aims of generating renewable energy can go hand in hand with other aims, particularly in respect of our responsibilities to the natural environment and nature-based solutions for both the seabed and land. With a joined-up strategic approach, there are major opportunities for achieving both.

However, there will inevitably be times when these priorities may be perceived to be in competition with one another and times when it will then be important that we make decisions, and that we do so in a transparent way. This need not impinge in any way on the independence of the commissioners’ decision-making. Indeed, the provisions on the Crown Estate’s independence, set out in the 1961 Act, are extremely robust and will remain in place. Rather, it is a clearer and better articulation of what value and good management mean in the long term.

We are now getting to the stage where the detail of how we deliver the transition to clean energy really matters, and the Bill is a positive opportunity to link how the Crown Estate will achieve both delivering more renewable energy and infrastructure, while at the same time navigating the best ways to protect and enhance our natural environment. Drawing these different aspects together clearly in the context of the Bill would ensure transparency to the Government, the public, developers and wider stakeholders around how different considerations are being factored into decisions when the inevitable arguments arise about, for example, where to site projects, the need to preserve views of the countryside and to protect wildlife species, and how to balance those views against the opportunities for more clean energy, job creation and green growth—and, of course, the ever-present need to provide value for money for the taxpayer.

Both our nature and our energy aspirations need to be in the context of other broader issues: most obviously, as has been described by others, the interface and interaction with the urgent work on upgrading the transmission grid and securing our skills pipeline, so that the 20 gigawatts to 30 gigawatts of offshore wind the Crown Estate believes it can unlock is connected up to the places it needs to power.

So, I am afraid that it is not a simple jigsaw puzzle to fit together. However, the Bill gives us a chance to review the Crown Estate’s role in the context of not only enabling more offshore wind as an end in itself but rather as part of the whole landscape of net zero and environmental solutions that we will need to deliver in order to achieve our own environmental and climate targets and to lead from the front on the global challenges we face.

We are taking important and necessary steps with the Bill but we could make a major leap forward if we commit and understand that contributing towards the delivery of climate and environment targets is secured within the remit of all our institutions with a public function, and especially those with substantial investment muscle to generate public value, and that includes the Crown Estate.

Pension Investments

Baroness Hayman Excerpts

Tuesday 23rd January 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

The Chancellor and indeed the Government have put forward a number of reforms to ensure that we make the UK the best place not only to raise capital but to invest pensions in future. As I am sure the noble Lord has seen, we have been delivering on the recommendations of the noble Lord, Lord Hill, for overhauling the UK’s prospectus regime, we have been looking at the recommendations of Rachel Kent’s investment research review and we have been developing a new type of trading venue that will act as a bridge between private and public markets. We can be innovative, but this is a process of evolution not revolution.

[Baroness Hayman (CB)]

My Lords, I declare my interests as in the register. In their green financial strategy, the Government recognised that clarifying the fiduciary duties of pensions investors, which could help to increase support for long-term and sustainable investment in the UK, was needed. When will the Financial Markets Law Committee, which is reviewing the clarity of the law relating to fiduciary duty, be publishing its report?

[Baroness Vere of Norbiton (Con)]

I am grateful to the noble Baroness for raising this issue, about which I had a meeting last week with a number of fund managers. Some felt that the fiduciary duty needs to be changed, while others were content with it. The Government remain committed to considering how the fiduciary duty can be clarified. The financial markets group that she referenced is independent of government and includes various law firms and pension schemes. We look forward to the publication of its final report, but, as I say, it is independent of government and it will publish its report when it is ready.

King’s Speech

Baroness Hayman Excerpts

Monday 13th November 2023 Lords Chamber

[Baroness Hayman (CB)]

My Lords, I declare my interests as chair and a director of the associated company Peers for the Planet. I will follow the noble Baroness, Lady Sheehan, in two respects. The first is to start with a positive and welcome the measures in the gracious Speech in relation to smoking and finally achieving a generation that will be smoke-free in this country. The second respect is that I will also be speaking on issues relating to climate and energy.

As the noble Baroness said, there are two separate, and arguably contradictory, elements relating to these issues in the Government’s proposals. First, there is the plan to mandate annual licensing for North Sea oil and gas drilling, which is a specific policy proposal to be underpinned by legislation. In contrast, we have much a more high-level and aspirational commitment to

“seek to attract record levels of investment in renewable energy sources and reform grid connections”

as well as to

“lead action on tackling climate change and biodiversity loss”

and

“support developing countries with their energy transition”.

These are high ambitions, but with no accompanying legislation or specific policy initiatives.

I have grave concerns about both sets of proposals: on the first, whether it is quite simply wrong in principle; and, on the second, whether it is mere words without the necessary substance behind them. Nowhere is there a commitment, which we need so badly, to provide a comprehensive, effective energy transition plan against which government proposals and government progress can be assessed.

I do not dispute, and I do not think anyone does, that we need existing oil and gas now and in the immediate future, and residual amounts once the majority of the grid is decarbonised, but the annual licensing regime proposed by the Government is, according to the FT, unlikely to reverse the dwindling reserves, a poor use of parliamentary time, and

“particularly short-sighted, given the volume of private capital globally now looking for a home in supporting the green transition”.

Last week the United Nations Environment Programme’s powerful Production Gap Report 2023 concluded:

“There is a need for governments to adopt both near- and long-term reduction targets for fossil fuel production and use”.


Yet our Government seem to be going in the opposite direction.

We will not achieve an orderly energy transition and meet ambitious electrification targets based only on top-line commitments and assertions for the future. We need serious plans led by government in partnership with industry, explained properly to the public, that are long-term in nature and accountable in their governance. That means key milestones, robust measures against which progress can be assessed, and clear roles and responsibilities. It means addressing the current woeful absence of comprehensive plans to address energy demand and efficiency, and a serious plan will need to address the fundamental lack of equity in our tax and subsidy regimes for investing in fossil fuels versus renewables and other clean technologies. It cannot be right that oil and gas companies receive a 29% investment allowance, which can rise to 80% for building new infrastructure, whereas renewable energy producers receive no investment allowance whatever. To put it simply, our taxation provisions favour the building of oil rigs over wind farms. I hope that when the Minister responds she will undertake to look at financial provisions to incentivise clean energy and support the move away from high-polluting, expensive and ultimately insecure fossil fuels.

The Prime Minister has committed to putting accountability and long-term decision-making at the heart of his Government. Without a transparent and robust transition plan that drives up renewables and exits fossil fuels, there is neither long-termism nor accountability. Industries and individuals in multiple sectors deserve to understand the Government's proposals for shifting our country’s energy profile and the implications and opportunities in green growth for those industries and individuals. If we wish to continue to lead globally, as the Government say they do, other countries need to see us doing this, and doing it well, at COP 28 and beyond.

Financial Services and Markets Bill

Baroness Hayman Excerpts

Consideration of Commons amendments
Tuesday 27th June 2023 Lords Chamber

[The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)]

My Lords, I beg to move Motion A and, with the leave of the House, will also speak to Motions B and C. I am grateful to all noble Lords for their considered scrutiny of the remaining issues in front of us today and throughout the Bill’s passage.

I will speak first to Lords Amendments 7 and 36, and I thank the noble Baronesses, Lady Hayman and Lady Boycott, in particular, for their leadership on these issues during the passage of the Bill.

The UK is a global leader in sustainable finance. The Government’s ambition to support the growth of this important area is demonstrated by the amendment relating to sustainability disclosure requirements made on Report, and the amendments in lieu of Amendments 7 and 36 introduced during Commons consideration.

I turn first to Lords Amendment 7. The regulators have an important part to play in supporting the Government’s ambitions, which was demonstrated by the inclusion of the net-zero regulatory principle at introduction. The Government have reflected carefully on the calls to ensure that the regulatory framework also reflects the Government’s nature targets.

While I welcome the intention behind Amendment 7, the Government cannot accept this amendment because it is too broad and therefore too open to interpretation. We have therefore brought forward Amendments 7A, 7B and 7C in lieu of Amendment 7, which add the relevant and well-defined targets made under the Environment Act 2021 to the new regulatory principle. It is important to recognise that addressing climate change and nature issues is not the regulators’ primary function, which is, broadly, to advance their objectives, including to protect the integrity of the financial markets and the safety and soundness of firms within the financial system and to deliver appropriate protection for consumers. Most of the levers for reaching our net- zero and environmental targets sit outside the regulators’ remit and control.

The amendments in lieu will ensure that, when acting to advance their objectives, the regulators will be required to consider the Government’s commitments to achieve the net-zero emissions target and the environment targets. I assure noble Lords that the amendments do not weaken the requirement for the regulators to consider the Government’s net-zero target. FSMA requires the regulators to act in a way that advances their statutory objectives when carrying out their general functions. When advancing their objectives, the regulators must also have regard to the regulatory principles, which aim to promote good regulatory practice.

It is for the independent regulators to decide how best to meet the requirements placed on them in legislation when discharging their general functions. The drafting of the amendments in lieu makes this clear: the regulators are required to have regard to the regulatory principle only in so far as it is relevant to advancing their objectives. This does not change the effect of the net-zero requirement, but the Government considered that this additional language was needed, alongside expanding the principle, to make this point clear and to ensure consistency. I am confident that the Government’s approach meets the intended effect of Amendment 7, and I hope noble Lords will acknowledge it as a significant step to further support the growth of sustainable finance in the UK.

I turn to Lords Amendment 36 on deforestation-linked financing. As I set out on Report, the Government again support the intention behind this amendment. The policy considerations for tackling the financing of deforestation risk commodities are complex. We are grateful for the work of the Global Resource Initiative and in particular its report on this issue from May 2022. This emphasised the need to take a staged approach and that further exploratory work would be needed to investigate the implementation of a prohibition on the financing of the use of prohibited forest risk commodities.

The Government have therefore brought forward Amendment 36A in lieu of Amendment 36, which commits the Treasury to undertake a review to assess whether the financial regulatory framework is adequate for the purpose of eliminating the financing of illegal deforestation and to consider what changes to the regulatory framework may be appropriate. This will ensure that any intervention is scoped appropriately and that the UK moves in lockstep with our international partners to ensure the effectiveness of any regime in tackling the financing of illegal deforestation.

The Treasury will be required to undertake this review within nine months of the first relevant regulations under Schedule 17 to the Environment Act being made. This will enable the Government to reflect those regulations in the review, which is essential if we are to have a joined-up and effective approach.

As the Government set out in the updated green finance strategy, we will convene a series of round tables this year. These will form the basis of a taskforce to drive forward the work of this important review and support the development of clear conclusions. This will complement the Government’s existing commitment to explore how best the final Taskforce on Nature-related Financial Disclosures—or TNFD—framework should be incorporated into the UK policy and legislative architecture. As the GRI report acknowledged, the developing work of the TNFD is increasingly important, especially as it has now included recommendations relating to deforestation in its draft standards.

Following the review, the Government will consider what further action is appropriate to progress the goal of eliminating the financing of illegal deforestation. The Bill and the existing provisions in FSMA provide the Treasury with extensive powers, including through the regulated activities order or the designated activities regime, to bring new activities into the scope of regulation if needed.

Finally, I turn to Lords Amendment 10. As the Economic Secretary set out yesterday, and as I set out on Report, the Government cannot accept this amendment. While I acknowledge the intention behind it, I reiterate the point that financial inclusion is a complex societal issue that cannot be solved through financial regulation alone. The Government are committed to the aim of ensuring that people, regardless of their background or income, have access to useful and affordable financial products and services. The Government’s view is that the FCA’s current and ongoing initiatives around financial inclusion demonstrate that it can already effectively support the Government’s leadership on this agenda through its existing operational objectives and regulatory principles.

Parliamentary scrutiny of the introduction of the new secondary growth and competitiveness objectives for the regulators comes after two consultations on the Future Regulatory Framework Review and extensive engagement with industry and other stakeholders. It is not appropriate to amend the regulators’ objectives, which are crucial to the effective regulation of financial services in the UK, at this late stage of the Bill’s passage without due consultation. Furthermore, the FCA’s new consumer duty, which comes into force on 31 July, seeks to set a higher and clearer standard of care that firms owe to their customers, and includes a new principle requiring firms to act to deliver good outcomes for consumers. It is important that the sector is given the opportunity to embed these important new requirements before considering further action of a similar nature.

I ask noble Lords not to insist on Amendments 7, 10 and 36 and to agree with the Commons in their Amendments 7A, 7B, 7C, and 36A in lieu. I beg to move.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register, and will speak to Amendment 7A. I thank the Minister and her team for the considerable efforts that have been put in, since the Bill left this House, to find a way to respond positively to the issues raised in my original amendment, which was supported from all sides of the House. As the Minister knows, the central issue was that of providing a clear legislative basis for financial regulators to act, not only on our climate change duties, which the Government themselves recognised and included in the original Bill, but in relation to our duties relating to the natural environment.

This issue is seen as important in Parliament but also outside it. The inclusion of nature was supported both by Professor Sir Partha Dasgupta and, in a statement last week, by a group of eight leading financial firms. I am extremely pleased that the Government decided not to try to completely overturn the amendment but to introduce the amendment we have before us now, the basis of which the Minister has just explained. It recognises that the importance of climate should go alongside the importance of nature, which was not there originally.

Financial Services and Markets Bill

Baroness Hayman Excerpts

3rd reading
Monday 19th June 2023 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I join in the thanks to the Minister, who has been very generous with her time, as has the Bill team, and who provided us with explanations and listened to our issues and concerns. I also give particular thanks to my noble friends Lord Sharkey and Lady Bowles on my Benches, who bring extraordinary expertise and analysis to all these issues. They covered for me while I was recovering from surgery, and I very much appreciate their willingness to pick up and carry that burden.

I join in the good words about the noble Lord, Lord Tunnicliffe. He has been an absolute stalwart on this entire portfolio. He is phenomenal in dealing with statutory instruments especially—an area that most of us avoid. I will miss the opportunity to be with him on these Benches, as it were, when these issues come forward again. He might have made a very good leader of the Labour Party, I should say. I also thank the noble Baroness, Lady Chapman, and the noble Lord, Lord Livermore, for the final stages and their close working. The Cross Benches have been quite exceptional on this Bill, as, frankly, have some on the Back Benches of the Conservative Party. It has been an excellent example of cross-party working in the interests of better governance.

A striking feature of the Bill has been that common concern, particularly focused on the issues of parliamentary scrutiny and the accountability of regulators to Parliament. There have been modest steps to improve the Bill on those issues, but there is a great deal more to be done. I remain concerned, as do my Benches, about the risk being injected back into the financial services sector, but again, that is business for another day. We hope that the Bill will go through unamended in the other House. The improvements that come particularly from Peers for the Planet and from those involved in financial inclusion have been important. Again, my thanks to the attendants and the others who have supported us so well throughout this entire process.

[Baroness Hayman (CB)]

I join in the gratitude expressed to the Minister, who has been her usual courteous and committed self in discussing the considerable amendments that were needed to this Bill, bringing through something far better than we had at the start of the process. The noble Lord, Lord Vaux, and the noble Baronesses, Lady Wheatcroft and Lady Boycott, were all highly involved in the process. Like others, I believe we made some important changes in terms of forest risk and making certain that nature as well as climate are involved in this Bill. My only plea, the Minister will not be surprised to hear, is that I hope very much that when the Bill is considered in the other place, those amendments hold and we do not have to have the argument all over again in this House.

Bill passed and returned to the Commons with amendments.

Financial Services and Markets Bill

Baroness Hayman Excerpts

Report stage
Tuesday 13th June 2023 Lords Chamber

[Lord Naseby (Con)]

I declare an interest as trustee of the Parliamentary Contributory Pension Fund. As a trustee, but also on my own behalf, I have no concern about pension funds being incentivised. We are there, as trustees, to look after our pensions in the future. Incentives are one thing, but, as a trustee, I am not sure I want to be dictated to and told I have to consider high-growth funds in particular.

When I look at proposals from our fund managers, I look at the return expected over a period of time. Obviously, we are long-term investors, and it may be that a firm has the potential to be one that produces excellent returns. I do not think, on the whole, that pension funds are there to help smaller and newly created firms grow. On the other hand, I can say quite honestly that proposals are in front of us in relation to infrastructure which have considerable merit. I suspect that positive decisions will follow in due course. I ask my noble friend and the Opposition to bear that in mind.

I will also comment on the proposed new subsection (3) on consultation. In addition to the parties listed, I would like to see the trade associations of, for instance, investment trusts, the associations of fund managers and a number of other organisations in the financial world which group together. If we are going to help our country in terms of growth, consultation should be with those at the coalface and those varying funds, et cetera.

I have reservations. I understand the driving force behind the amendment, but it does need some refinement before it is considered as a possible way forward.

[Baroness Hayman (CB)]

My Lords, I support this amendment, which fits very well alongside the discussions we had on the fiduciary duty of pension fund trustees. I will not push those amendments to a vote, but the work being done, as the Minister described, on having a clear and close look at the fiduciary duty for pension fund trustees would complement this amendment. I do not think it is threatening in any way to pension fund trustees; it is very carefully framed and asks the Treasury to publish a review on incentivisation. It is perfectly possible, in the words of the noble Lord, Lord Naseby, to fine-tune it after the review—that is the purpose of the consultation.

This amendment is worth while. The noble Baroness, Lady Chapman, referred to the UK Infrastructure Bank and its recognition of nature-based projects and types of infrastructure as assets that could be invested in. I was involved in that amendment, on which the Minister, in her usual helpful style, listened and took action. I hope that she will similarly recognise the virtues of this proposed new clause and I support the amendment.

[Baroness Bowles of Berkhamsted (LD)]

My Lords, I added my name to this amendment and suggested the inclusion of the Pension Protection Fund, partly because there is already quite a big conversation around how we will incentivise investment and be prepared to take a bit more risk, because the UK seems to have become very risk-averse. There has been regulatory encouragement, if you like, for pension funds to be somewhat risk-averse; I am not sure it is actually risk- averse to end up in a situation where you invest everything in sovereign bonds and have a systemic risk but, setting that conversation aside, gilts have always been regarded as a very steady investment. It has perhaps been forgotten how to invest for reward.

The fiduciary duty is important and we need to look at it, because there are implications if you suggest in any way to trustees what they ought to do. Of course, that does not mean that you have to take zero risk as a trustee—you must understand the risk and reward dynamic—but, if we move through legislative steps, we would have to add to the list of consultees a whole load of lawyers to help sort out how we deal with the common-law fiduciary duty. Overall, this is a good amendment, making the Government part of this conversation and drawing in more consultation so that more people can input with common purpose, instead of there being lots of consultations all over the place.

Of course, there is work being done by parliamentary committees and I hope notice will be taken of those, and maybe care taken, looking at proposed new subsection (4)(b) and

“adjusting the terms of reference for DB Local Government Pension Schemes (LGPS) funds to consider regional development as an investment factor”.

To some extent they can do that already, especially in the amounts that are retained where the local authorities are investing directly rather than through the pooled funds—and I have to declare an interest here in potentially listing a fund.

Financial Services and Markets Bill

Baroness Hayman Excerpts

Report stage
Thursday 8th June 2023 Lords Chamber

Moved by

[Baroness Hayman]

15: Clause 25, page 39, leave out lines 11 to 13 and insert—
“(c) the need to contribute towards achieving compliance with sections 1 (the target for 2050) and 4(1)(b) (net UK carbon account) of the Climate Change Act 2008, and the conservation and enhancement of the natural environment, including compliance with relevant targets approved by Parliament, the Scottish Parliament, Senedd Cymru, and the Northern Ireland Assembly.”Member’s explanatory statement
This amendment adds nature to the new regulatory principle on net zero emissions.

[Baroness Hayman (CB)]

My Lords, when we debated this on Tuesday evening I was greatly encouraged by the support from all sides of the House for adding nature, alongside net zero, to the regulatory principles in the Bill. We also had support externally, particularly from Professor Dasgupta himself. I am afraid that I did not find the Minister’s arguments compelling, and therefore I would like to test the opinion of the House.

Financial Services and Markets Bill

Baroness Hayman Excerpts

Report stage
Tuesday 6th June 2023 Lords Chamber

[Baroness Wheatcroft (CB)]

My Lords, I thank the Minister for her introduction of Amendment 4 and her willingness to engage with Peers on the topic of sustainable disclosure requirements. However, while a government amendment on this important topic is welcome, what we have heard is yet more delay. A cynic might judge the amendment to have a whiff of green- washing about it. It does not do enough and does not do what is required. The amendment seeks to give regulators and Ministers the necessary powers to bring forward rules and regulations on SDRs in fulfilment of commitments that they made in 2019, 2021 and again in the green finance strategy in March this year.

Amendment 114 is an effort to be helpful because, despite making commitments for five years, the Government still do not have the powers to make sustainable disclosure requirements happen. Amendment 4 does not confer those powers. The noble Baroness, Lady Ritchie of Downpatrick, submitted a Parliamentary Question on this issue on 14 November last year, and the Government’s response was that:

“The FCA has extensive powers to … impose some of the Sustainability Disclosure Requirements”.


The noble Baroness also asked about the powers available to the Department for Work and Pensions, which would legislate for sustainability reporting by occupational pension schemes. An extensive search of the powers held by the DWP in relation to public reporting and sustainable reporting has found none that is suitable.

Amendment 4 gives the Treasury the power to issue a policy statement on SDRs and to require the regulators to report against it, but it is not an obligation—the Treasury “may” prepare an SDR policy statement. As the Minister admitted in her response last year to the noble Baroness, Lady Ritchie, the FCA does not have the powers to actually implement SDRs. It seems that we are looking at a Whitehall paper trail that keeps everyone occupied but with no meaningful legislation.

I am in favour of easing unnecessary burdens on business. However, repeatedly indicating—as they have for five years—that the Government are planning to legislate but not actually doing it creates a burden in itself for business. Should it invest in data, in systems or in strategy? After so many reassurances but so little progress, and more reassurances today, no one really seems to know the answer.

I noted with interest that the Minister’s letter to Peers ahead of tabling this amendment said that

“the Financial Conduct Authority is taking forward Sustainable Disclosure Requirements (including consumer facing requirements) under its existing objectives and rulemaking powers which are sufficiently broad for the purpose”.

I would like to understand the misalignment between that statement and the earlier Answer to the Question from the noble Baroness, Lady Ritchie. Is it because there has been a change of heart and the Treasury has discovered that the powers exist after all? I would be grateful if the Minister could clarify that. Or has the Treasury limited its proposals from its original ones so, while it did not have the powers for the original proposal, it does for the new, limited proposals? Or—and it would be deeply disappointing if this were the case—is the reference in the Minister’s letter to the FCA to “taking forward” SDRs intended to mean that the FCA would be merely progressing the work but not actually implementing it? Again, I would be grateful for clarification. The FCA consultation on SDRs closed on 25 January. We are promised a policy statement in the third quarter but, without statutory powers, that would be pointless.

I hope the Minister will be able to answer those questions and now, if we are able to accept the amendment, I hope she will be able to go a little further. While the amendment sets the right tone, it does not do what is needed. It embraces the idea of SDRs but does not make them a reality. The same governmental reluctance to take real action lies behind my Amendment 7, concerning vote reporting. If investors are to make serious decisions on ensuring that their savings are put to work in a sustainable way, it is essential that they be able to see how those who manage the money choose to vote on corporate issues. That is a crucial part of being an engaged investor. The FCA itself acknowledges that. Earlier this year, its vote reporting group stated:

“Improving transparency of how asset managers vote on behalf of their clients will mean investors can better hold them to account on their stewardship”.


We would all want that, but currently it is not possible for investors always to learn how their investments are being voted. Yes, there is now an FCA requirement under the shareholder rights directive that fund managers and insurers produce an annual report on how they have voted, but it is only that they must comply or explain; and even then, the requirement is only that they should report on significant votes. The FCA gives no guidelines as to what should be deemed significant, and what one investor feels is significant may not concur with what a fund manager deems so.

The fund manager is required to report only at group level, so, in terms of the individual funds in which investors and pension funds might be invested, how their votes have been voted in the individual funds cannot be seen; it is only possible to see across the group, which is effectively meaningless for many people who want to find out how their money is being used. A report is required to be made only annually—a hopeless timescale in an industry that moves as fast as this one. Nor is there any standard form for vote reporting. It is not a lot to ask in a digital age. The SEC in the US certainly demands it.

For all those reasons, the current situation does not serve investors as well as it should. Amendment 7 would require FCA-regulated investment managers and insurers to provide clients and those investing with them with voting information that they requested in a standard format and within 30 days. In Committee the amendment on this topic included pension funds in the requirement to report but, mindful of the DWP review of pension fund reporting, the current amendment is much narrower and does not prejudge the review. However, in the meantime it should help pension funds to monitor the way their investments are being voted. It is true that the FCA vote reporting group has yet to reach conclusions, but there is no reason to wait for that. Parliament has the power to put demands on the FCA, and this is a case where it should.

The Government accept the need for good stewardship by investors, and transparency on voting aids that. It is important, indeed crucial, for good corporate governance that decisions taken on behalf of investors should be clear and easily ascertainable. Making voting records available speedily in a machine-readable way would be a service to investors that, thanks to digital innovation, should be easy and relatively cheap to implement. Why would the Government resist that? I beg to move.

[Baroness Hayman (CB)]

My Lords, I declare my interest as chair of Peers for the Planet and apologise for the fact that I may need to speak a little longer than I normally would on Report. This is a very diverse group of amendments on different subjects, some of which are quite technical, but I can be brief in relation to Amendments 4, 7 and 114, which the noble Baroness, Lady Wheatcroft, has just so ably described. I appreciate that the Minister has done what she said she would on SDRs and tried to make some progress, but I fear there is still a legislative gap there—a gap that we could, on this Bill, usefully fill for her. I support what the noble Baroness has said and look forward to the debate on Amendment 91, on forest risk commodities, to which I equally give my support.

Energy Profits Levy

Baroness Hayman Excerpts

Tuesday 9th May 2023 Lords Chamber

[Baroness Penn (Con)]

My noble friend makes an important point. Investors in these companies can come from all sources, including pension funds. It is right and proper that they think about the return they get from their investments when making those decisions.

[Baroness Hayman (CB)]

My Lords, I declare my interests. May I take the Minister back to her fundamental argument that the electricity generator levy, which applies to renewable energy, is completely different from the energy profits levy? She has argued strongly that the latter needs the additional investment allowance to encourage investment in oil and gas, but somehow the electricity generator levy does not need that additional investment incentive. Is she absolutely sure that that is true and is she in any way concerned about the report that we may lose some offshore wind projects because of it?

[Baroness Penn (Con)]

The electricity generator levy reflects a historic approach to how we pay for our electricity. New electricity contracts are often done, for example, under the contracts for difference process, which is not subject to this levy. We have also put in place a wide range of other measures to support investment in renewables. That is why we have such a great track record and why I have every faith that we will meet our stretching targets on decarbonisation in future.

VAT: Building Repairs and Maintenance

Baroness Hayman Excerpts

Wednesday 19th April 2023 Lords Chamber

[Baroness Penn (Con)]

I can confirm to the noble Baroness that we already have a reduced rate of VAT in place for energy-efficiency installations. She will also be aware that we are extending the available support through a new energy company obligation, the energy-efficient Great British insulation scheme. It is estimated that the scheme will make around 300,000 homes more energy efficient, primarily through the installation of insulation measures, reducing household bills by around £300 to £400 on average per year and, crucially, reducing emissions.

[Baroness Hayman (CB)]

My Lords, I draw the House’s attention to my interests, as set out in the register. Is not the noble Lord, Lord Swire, absolutely right on this point: we have underestimated the effects on the Government’s statutory net-zero targets of the demolition of existing buildings and not taken into account the embodied carbon that occurs? The noble Baroness referred to the exemption from VAT on energy-saving materials, but that does not go across the board at the moment. The announcement in the Budget of a consultation on further extension of it was welcome, but I wonder if she can tell me when the Government expect some results from that consultation.