Social Media Ban for Under-16s

Baroness Lloyd of Effra Excerpts

Tuesday 16th June 2026 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I, too, thank the Minister for taking the Statement today and for her alert. On these Benches we welcome the fact that the Government have finally responded to the overwhelming public demand to protect our children online, especially from the bereaved parents: like the noble Viscount, Lord Camrose, I pay tribute to them and to their campaign. We share the Government’s diagnosis. There is a genuine children’s mental health crisis and the platforms have for far too long been allowed to profit from it.

However, we fundamentally disagree with the Government’s prescription. After months of insisting that a drawn-out consultation was absolutely necessary before any action could be taken, what has been announced appears to be a panicked policy cobbled together ahead of a by-election and a Back-Bench rebellion. It appears that DSIT’s own expert panel flagged a “substantial” lack of evidence to justify key aspects of the plans. Can the Minister tell the House what steps the Government are taking to address those evidence gaps before the regulations are laid?

The Australian model the Government are adopting is based on definitions and lists. It bans specific platforms while trying to carve out exemptions for messaging or education. As my honourable friend Caroline Voaden pointed out in the Commons, the internet moves far too fast for lists. The moment one platform is banned, another unnamed platform launches. This is, at its heart, a “dangerous dogs” approach to regulation, focusing on arbitrary categories rather than the actual risk of harm.

The Secretary of State made a startling admission at the Dispatch Box. She openly acknowledged that children will find workarounds, using VPNs or fake IDs, stating that

“kids will get around this … That is what kids do”.—[Official Report, Commons, 15/6/26; col. 606.]

If the Government themselves acknowledge that children will bypass this ban, how exactly does a policy built purely on exclusion protect them? Does it not simply give parents a false sense of security and, worst of all, let the tech giants completely off the hook?

As the noble Baroness, Lady Kidron, has tirelessly argued in this House, with our support, we must regulate the product, not just the child. This is about safety by design. Instead of an outright ban, the Liberal Democrats have consistently called for a targeted and coherent harms-based framework: films-style age ratings for platforms. Under our approach, platforms that deploy addictive algorithmic feeds or host inappropriate content would be legally restricted to users over 16 and the most extreme sites rated 18-plus. Will the Minister explain why the Government have rejected this approach and why the burden of proof is not being shifted to the tech companies themselves, forcing them to remove toxic, addictive features such as infinite scrolling, autoplay and manipulative algorithms.

As the Molly Rose Foundation has rightly warned, relying on blanket bans risks migrating bad actors, groomers and violent groups from banned platforms to permitted ones or into the dark web. We will end up playing a desperate, endless game of whack-a-mole with children’s safety. What assessment have the Government made of that migration risk?

There is also a dangerous cliff edge in what is proposed. DSIT’s own expert panel warned in writing that a sudden transition at 16 could lead to intensive uptake and increased risks. We risk keeping children in a sterile digital environment until their 16th birthday, only to suddenly expose them to harmful, unfiltered content the moment they come of age, without having helped them to safely develop the digital and emotional resilience they will need throughout their lives. What specific measures does the Minister propose to address that cliff edge?

The Statement is also glaringly silent on the commercial exploitation at the heart of this crisis. Will the Minister confirm when the Government intend to raise the digital age of consent from 13 to 16?

Finally, any ban or restriction is entirely meaningless if the regulator lacks statutory teeth. We have a fundamental enforcement deficit. The Australian experiment already demonstrates the immense difficulties with enforcement and circumvention: six in 10 children there are still on social media six months after the ban came into force. Will the Minister commit today to a formal review of Ofcom’s enforcement powers within six months to ensure that the regulator has the necessary tools—business disruption measures, injunctive relief— to compel tech giants to change their business models?

We will rigorously scrutinise the forthcoming regulations and continue to press the Government to move away from blunt exclusion towards a robust harms-based framework that holds these tech giants properly to account. This must be indeed big tech’s seat-belt moment, but a seat belt protects a passenger within a vehicle; it does not simply ban them from the road. We need a smart approach that allows young people to benefit from the best of the digital world—and indeed, as the noble Viscount, Lord Camrose, says, prepare to vote at 16—and to learn, connect and grow while properly dismantling the addictive profit-driven architecture that is doing them such harm.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

I thank the noble Lord, Lord Clement-Jones, and the noble Viscount, Lord Camrose, for their contributions. They have been at the forefront of calls to engage on how to make our online world safe for children growing up for many years, and I join them in paying tribute to the bereaved families who have also been tirelessly campaigning on this issue.

The Government set out earlier this year our intention to consult parents, children and young people on what more needs to be done. We also committed to act swiftly following that consultation. We repeatedly said, “The question is how we act, not if we act”. The two noble Lords have expressed concern about the Government’s consultative approach. Perhaps they have questioned whether it was needed. We feel that the approach has been both swift and responsible. A short, focused consultation was necessary so that we could hear that input. We received over 116,000 responses from parents, civil society, industry and, crucially, children and young people themselves. The magnitude of that engagement demonstrates the range of strong views. We felt that it was critical to listen to those children and families and to have a national conversation.

This week we have set out plans to ban social media platforms from allowing those under 16 to access them. On the point made by the noble Lord, Lord Clement-Jones, we have also announced our intention to restrict under-16s from accessing some harmful functionality, such as livestreaming and features that enable the discoverability of children and facilitate unrestricted communications with strangers. It is by doing those two things together that we build a safer future. Those features will also be off by default for 16 and 17 year- olds, and we have made it clear that we will age-gate features on AI chatbots that enable sexually explicit interactions to over-18s. We believe that will deliver graduated, age-appropriate experiences and address concerns about the issue of cliff edges, as highlighted by the noble Lord, Lord Clement-Jones.

On the question of speed and when we are going to act, we have committed to moving as quickly as possible to lay these regulations on social media by the end of the year, to vote as quickly as we can on those, and to implement them by spring 2027. By taking the powers in the Children’s Wellbeing and Schools Act, we can move at this speed.

Noble Lords also asked about the digital age of consent. We have said we will come back to some other questions that were raised in the consultation—for example, the digital age of consent and the risk of circumvention through virtual private networks—in July, when we will come back on further details.

On the question of different ages, it is indeed the case that there are many different ages in our legislation for access to alcohol and access to gambling. That is a feature of our legislation. We feel these are the right ages to restrict social media companies from providing services to under 16 year-olds—and, as I mentioned, setting the default features for 16 and 17 year-olds.

In terms of the scope, this is indeed based on the Australian criteria. We will set out, with the regulations later this year, exactly the criteria that we choose in our regulations. In respect of age verification, currently the Ofcom guidance recommends the following age-assurance methods for over-18s: passports, driving licences, credit cards, facial scanning, mobile network operator checks, open banking checks, or email-based age estimation. Some of these will not work for the 16-plus category. That is why the Secretary of State has asked Ofcom to look at options for highly effective age assurance for 16 year-olds. We have asked that it publishes its findings in October, so that Members of this House can consider them before voting on the regulations. So, to answer the question of the noble Viscount, Lord Camrose, on age verification, there are a variety of models.

On the question of evidence gaps, we are aware, obviously, that social media moves quickly and that new services may be provided. We think that this can provide some opportunities. The current legislation is set in a certain way. Once the legislation and the regulations are changed, this will provide the opportunity for providers to provide services that they do not today—for example, to access the news or other services. This may provide our children and young people with better opportunities than they have today.

We also recognise that some children may attempt to circumvent age restrictions. What we are setting out in this set of proposals is a new societal norm. We are resetting what is expected. This will benefit children today and, importantly, it will benefit children growing up today who have not yet reached the age of 13, 16 or 18—the generation of tomorrow.

On the question of enforcement powers, obviously this is an incredibly important point. We need the new regime to be effectively enforced. That is why the Secretary of State wrote to the chair and CEO of Ofcom to reinforce this and to ask that they ensure that there is robust and effective enforcement of the ban, and to submit to Parliament and make publicly available an update on their wider enforcement strategy, noting the legitimate interest of Members in the other place and of noble Peers here. We will ensure that Ofcom has the resources to properly enforce these new measures and to take strong enforcement action and protect all users more widely.

We recognise the importance of parliamentary scrutiny in this process, and I welcome the offers to collaborate and engage on the proposals we bring forward with the appropriate scrutiny—and, it seems, some extra scrutiny and critique from the noble Lord, Lord Clement-Jones. We all want to protect children online and ensure that their online life is as fulfilling as their offline life. It is a responsibility we take very seriously. We do not want children to have to navigate unsafe digital spaces. We believe that our statement of intent here will do that and will deliver to make sure that we give children the childhood they deserve.

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[Lord Nash (Con)]

But, given that apart from in relation to VPNs the Government have gone further than I was asking for, I commend their approach and particularly like its dynamic nature, which enables them, under the powers taken in the Children’s Wellbeing and Schools Act, to come forward with not just part 2 in July but parts 3 and 4, and so on, as technology moves on apace, so that we can play catch-up fast.

[Baroness Lloyd of Effra (Lab)]

I thank the noble Lord, Lord Nash, for his comments and, moreover, for his engagement over the last months—in fact, it was longer—with me on this topic. We will be able to continue that engagement—obviously, there will be scrutiny in the House—but also outside the Chamber. We committed to sharing the regulations with opposition spokespeople and the chairs of the Select Committees for scrutiny, and we will follow through on that.

On the definition and the scope, we plan to use the same model as Australia; that would capture user-to-user platforms whose purpose is to enable social interaction and which allow users to post material, alongside algorithms. The details of how those criteria will apply in the UK will be set out later this year. We have also said that purely educational services obviously will not be in scope.

On the question of enforcement, as I mentioned earlier, this is an incredibly important part of our thinking and approach. The Secretary of State and the department have interacted frequently with Ofcom. Noble Lords have made clear the importance of effective enforcement by Ofcom, and we have written to Ofcom to ask it to ensure that we can have robust and effective enforcement of this ban. The CEO of Ofcom has written back, confirming that that is what it will take forward.

Finally, on geotagging and location services, I will write to the noble Lord on that specific question.

[Viscount Colville of Culross (CB)]

I thank the Minister for the comments she has just made. She has just said that Ofcom will have a consultation on which age verification method will be used for identifying under-16s. However, I understand that the preferred form of age verification in this new social media regime will be ID documents, because the Government do not trust the age-verification technology for identifying under-16s. Will the Government continue to incentivise tech companies to come up with reliable technological solutions in this area? Surely, it is the responsibility of the tech companies to come up with this technology.

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[Baroness Lloyd of Effra (Lab)]

The onus will be on the social media companies to age verify. The specific point I referred to is that the Secretary of State has written to Ofcom to look at options for highly effective age assurance for 16 and 17 year-olds, as the current regime applies to those over 18 years old, for which there is already guidance. That is the specific question. We expect there to be further developments in this area to provide effective age assurance.

[Baroness Keeley (Lab)]

My Lords, I join my noble friend the Minister in praising the bereaved families, who have campaigned so powerfully on online safety. I welcome the harms-reduction approach that the Government have taken. As my noble friend has outlined, we know that there is much more to do. It is right that the Government act, because the tech companies have shown that they cannot be trusted to regulate themselves. The ban is a welcome start, but not sufficient in itself. Can my noble friend the Minister assure me that, once the regulations have passed—the Communications and Digital Committee looks forward to seeing the regulations —the regulator, Ofcom, will take the strongest possible line in enforcing them, including substantial fines for any firm that does not comply in reducing harms?

[Baroness Lloyd of Effra (Lab)]

I thank my noble friend for the work of her committee, and for the scrutiny, ideas and suggestions that it has provided over the years. I stress again the importance of ensuring that these regulations are implemented. I will just say one other thing: one of the other benefits of the consultation is that there has been a national conversation and there is a very clear public expectation of how social media firms should operate. Therefore, in addition to the importance of Ofcom having the capabilities for its role, the Secretary of State has insisted that we look at making sure that Ofcom is properly funded. So the whole of society is moving to institute this new norm.

[Baroness Benjamin (LD)]

My Lords, it has been a long and winding road, but the Government have finally reached the door of common sense and agreed to a social media ban for under-16s—something that I, as well as parents, teachers and children themselves, have long been calling for. I too thank the bereaved parents for playing their part in bringing this change about.

However, social media platforms and opponents have wrongly argued that the Australian experience shows the policy is not feasible, and they are trying to blame age-assurance technology. Some suspect that they might be under instruction to sabotage age assurance to avoid the policy going beyond Australia. Does the Minister agree with the Australian eSafety Commissioner that many social media platforms are not enforcing the ban, and that these platforms should not try to claim that age-assurance technology is not working until they use it themselves? Enforcement matters. Furthermore, is the Minister aware that technology can now be embedded into mobile phones’ operating systems to prevent children viewing or uploading harmful material and getting around any ban? We should give children back their childhood and I am happy to work with the Government to do just that.

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[Baroness Lloyd of Effra (Lab)]

I thank the noble Baroness for raising two important points. We have been looking at the evidence from Australia and on age assurance. There are differences in the UK approach. Australia takes a reasonable-steps approach to age assurance, which contrasts with the UK approach of highly effective age assurance. We think the UK position has the advantage in having potentially more effective enforcement. We are seeing the development of other age-assurance technologies all the time. We announced very recently that children should not be able to take, share or view nude images: this is device-level technology. I underline, however, that the onus will be on social media companies.

[Lord Young of Acton (Con)]

My Lords, I declare an interest as the director of the Free Speech Union. I have read through the DSIT document published yesterday, Growing Up in the Online World: Progress Statement, but I could not find a single reference to Sections 15 or 16 of the Online Safety Act: namely, the duty not to remove or restrict content of democratic importance or journalistic content. Those duties, due to be activated I believe in July before the plan is put into effect, apply to all users, not just adults. How is the plan compatible with those duties? I know the plan includes some restrictions for 16 and 17 year-olds. Can the Minister assure the House that content of democratic importance and journalistic content will not be restricted for 16 and 17 year-olds, which is particularly important given that the Government intend to grant them the vote?

[Baroness Lloyd of Effra (Lab)]

Under-16s will still be able to access the internet and the news in that way. Social media is not the only source of news, nor is it always the most reliable or accurate source. We continue to work with the Department for Culture, Media and Sport to ensure that younger audiences can find and access high-quality, culturally relevant programming and content. We are working to strengthen access to trusted news across the UK as part of the local media action plan, because it is very important that young people can engage with high-quality local and national journalism.

[Baroness Alexander of Cleveden (Lab)]

My Lords, I also welcome the Government’s Statement, their commitment to cross-party working on this and their recognition of the importance of enforcement. I have a question about enforcement. The Statement indicates that Ofcom’s chair and CEO have been asked to carry out an urgent review of its enforcement capabilities. Given Ofcom’s rather patchy record, will there be any external input into its capabilities review? Will it be published? Thereafter, when Ofcom publishes an enforcement strategy, will the initial strategy be published prior to the regulations coming into force in the spring of 2027?

[Baroness Lloyd of Effra (Lab)]

The newly appointed chair of Ofcom has highlighted the importance to him of ensuring that Ofcom has the right capabilities in place. In writing to Ofcom to ask about capabilities and ensuring that there will be sufficient funding, we have emphasised how important that is to us. I will come back to my noble friend on the precise timing of some of these products. In general, the letters we exchange with Ofcom are made public but, if she does not mind, I will come back on her specific three questions.

[Lord Russell of Liverpool (CB)]

My Lords, earlier today, I had the enormous privilege to co-host with the noble Baroness, Lady Berger, who I suspect will try to ask the question after me, a group of the bereaved parents. Four of them spoke very bravely in person. Behind them were arrayed the photographs of even more children who lost their lives. They spoke very movingly. They said that while they absolutely welcomed the Government’s announcement yesterday, for them, that was the end of a long process of trying to get government to listen, but it is, at the same time, a beginning, because there is an awful lot more to do. If the Minister has not had the chance to read it, a very well-known bereaved parent, Ian Russell, wrote a very sensible piece in today’s Guardian about safety by design and how completely and utterly fundamental that is if we are going to get this right.

My question to the Minister goes back to enforcement. I know these large companies; they were clients when I was a headhunter. I know how well funded they are. We put in a lot of their top lawyers. They are very smart and have very deep pockets. The only way that we will be able to enforce is by joining with other jurisdictions, most obviously the European Union, to create a large enough economic bloc of customers and users of these technology companies—despite whatever the slightly incontinent current President or any of his minions may say—and by working together in a united way to make the companies realise that there is no “get out of jail free” clause. They have to be held to account, and they will be, but we can only do that together.

[Baroness Lloyd of Effra (Lab)]

The noble Lord—who has been a consistent advocate of ensuring that our children are safe online throughout the many months that I have been here, and he has played a very important role in doing so—is right that enforcement is absolutely key. He is also right to highlight that many other jurisdictions are looking at this and moving in this way. That will all be part of setting the new social norm and ensuring that not just this generation but the next generation grows up in a world in which social media operate very differently.

[Baroness Barran (Con)]

My Lords, I echo other noble Lords in thanking the Government for their announcement and the important progress that has been made, of course acknowledging that my noble friend Lord Nash in particular encouraged some of that movement. I want to press the Minister on the exception for educational services. She will be aware that there are concerns that edtech is often described as the Wild West and that just because a service claims to be educational does not actually make it educational. Can she reassure the House that, in particular, some of the apps that children have for homework on their phones will not automatically be seen as meeting the educational exemption? If she cannot clarify that today, maybe she could be very kind and write to me.

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[Baroness Lloyd of Effra (Lab)]

The noble Baroness is right to highlight the importance of the definitions and ensuring that we target the platforms that we intend to. The definition that we have adopted from that in Australia is

“whose purpose is to enable social interaction and which allow users to post material, alongside algorithms”.

We will look carefully at the criteria and how they apply to particular platforms and expected exemptions to ensure that when the regulation is applied in the real world. it achieves its purpose. We will be developing that during this year, so it may not be quite immediately that we update the noble Baroness.

[Baroness Berger (Lab)]

My Lords, I warmly welcome yesterday’s announcement of a social media ban. It will make a material difference to the future of many children and young people in our country and is what parents and carers across the country have been crying out for. I echo many of the sentiments expressed. I commend the courage and tenacity of the bereaved parents who every day have campaigned on this issue to ensure that no one else must suffer as they have to every single day. I echo the many points that have been made about enforcement.

On functionalities, many have talked about safety by design. The Prime Minister said that we were going to see stranger pairing stopped. It is right that this happens, but it must be associated with ensuring that no child or young person can be geotagged or located through location services. Stranger pairing is very dangerous—knowing where young people are should be restricted to the parents, carers and, potentially, the siblings of those young people.

[Baroness Lloyd of Effra (Lab)]

I thank my noble friend for her passionate advocacy of the importance of improving online safety for our young people and for the engagement that she has had over the years with the families and others. She is right to highlight that we are taking action on not just social media companies but the functionalities. I undertook to write to the noble Lord, Lord Nash, on geotagging and geolocation. I will make sure that I write to my noble friend at the same time.

Artificial Intelligence: National Security Implications

Baroness Lloyd of Effra Excerpts

Tuesday 16th June 2026 Lords Chamber

[Baroness Kidron]

To ask His Majesty’s Government, in light of the decision of the government of the United States to restrict foreign national access to Anthropic’s Claude AI models, Mythos 5 and Fable 5, what assessment they have made of the implications for the United Kingdom’s security; and what alternative sovereign UK systems or partnerships they are pursuing, if any.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

My Lords, no Government take AI sovereignty and security more seriously than this one. The UK is not a bystander when it comes to the security of AI. Our world-leading AI Security Institute was one of only a handful of organisations with access to both Mythos and Fable before they were released; they were used to identify risks in advance. We are investing £1.6 billion in the UK’s sovereign AI capabilities, made up of £500 million directly in UK AI firms via our sovereign AI fund and £1.1 billion via our AI hardware plan.

[Baroness Kidron (CB)]

I thank the Minister for that response. President Trump gave less than 90 minutes for Anthropic to make Mythos and Fable unavailable to any non-US citizens. In doing so, the White House went from a position of no AI regulation at all to 100% control. These systems are extremely powerful and anticipated to be able to break any other AI system, putting all critical industries and systems into meltdown, and we know other systems of the same ilk will shortly follow. In light of these developments, will the Government ask the AI Security Institute to develop red lines for AI systems deployed in the UK, including those used by government, and bring them forward in the promised AI Bill? Does the Minister not agree that the Government’s increasing dependency on US companies in health, education and security is creating a critical vulnerability for national security?

[Baroness Lloyd of Effra (Lab)]

We continue to support the AI Security Institute. It is very well respected by developers. That is why it has early access and is able to test the risks. Those risks are obviously going to develop as the models themselves evolve. It is also looking closely at the question of alignment, and that is something we are supporting in particular. In respect of sovereign AI, our approach is about building strength over key parts of the value chain to bring to the table technologies that no one else can do without.

For the UK, one of the most promising sectors is in AI hardware. We have brilliant start-ups in that area. That is why we announced the £1.1 billion AI hardware plan, which includes up to £400 million to purchase these new types of chips. In respect of regulation, as the noble Baroness knows, we are working with our regulators to support them to take account of the risks posed by AI and the opportunities brought by AI for increased productivity and effective regulation.

[Lord Vaizey of Didcot (Con)]

My Lords, my understanding is that the US Government took urgent action because of security flaws found in the AI model in question. They used the legislation that was available to them. There was no sinister or hidden agenda in their decision to cut it off, and it has been cut off from use by all American companies as well. It is also my understanding, as the Minister echoed, that the AI Security Institute, originally set up by Rishi Sunak and supported by this Government, is one of the leading bodies in the world in this work. Can the Minister assure us that the AI Security Institute is able to work closely with its US counterparts as we navigate this extremely complex field?

[Baroness Lloyd of Effra (Lab)]

The noble Lord raises very important points, including the fact that Mythos and Fable are unavailable worldwide, including in the US. He rightly stresses the importance of the AI Security Institute—its establishment, its ongoing support and funding by this Government, and the fact that it was able to test both Mythos 5 and Fable 5. We are in touch with the US Government and are monitoring the situation closely.

[Lord Clement-Jones (LD)]

My Lords, the Minister has mentioned the AI Security Institute. It identified ways to circumvent the safety guardrails of Fable 5 and Mythos before their public launch, including vulnerabilities that could allow the extraction of instructions for producing dangerous substances, yet the model was released by Anthropic regardless. Will the Minister now accept that voluntary co-operation with safety institutes is wholly insufficient at this level of capability and bring forward legislation giving the AI Security Institute the statutory power, where necessary, to delay or prevent the launch of dangerous frontier AI models in the UK?

[Baroness Lloyd of Effra (Lab)]

The AI Security Institute did test Mythos and Fable before they were launched. In light of the risks that they potentially posed—Mythos in particular—we also gave advice to our companies. We worked carefully with the National Cyber Security Centre to provide advice to companies and regulators on what needed to be done because, generally speaking, what we find with these potential new capabilities is that many of the basic mitigants that you need to take will inhibit the effectiveness of these new models. In respect of regulation, as I mentioned a moment ago, we continue to support the effectiveness of sector-based regulators regulating AI risks as they approach their sectors. They are best placed to know what those risks are and what the mitigants will be.

[Viscount Stansgate (Lab)]

My Lords, I commend the Government on having introduced the Cyber Security and Resilience (Network and Information Systems) Bill, whose remaining stages are, as it happens, going through another place this very day. The House knows—or, if it does not, it is rapidly coming to understand—that AI is being used to manufacture and promote all kinds of cyber threats and scams. Looking beyond the legislation, what more can the Government do to ensure, whether through the AI Security Institute or by other means, that the risks of AI can be mitigated not just for individuals but for businesses and indeed for the Government themselves?

[Baroness Lloyd of Effra (Lab)]

My noble friend highlights the importance of us being incredibly vigilant on cyber security. He highlights the important role that the cyber security Bill will play in bringing data centres, large load controllers and managed service providers into the regulatory ambit, as it were, but he is also right that we need to do more. The National Cyber Security Centre supports organisations through Cyber Essentials. It published new joint guidance with the AISI on preparing cyber defences for frontier AI. My noble friend also mentioned the importance of the Government taking cyber security seriously, which is what they have set out to do through the Government’s cyber action plan.

[Lord Tarassenko (CB)]

My Lords, I declare a conflict of interest as a senior adviser to the Alan Turing Institute, the national AI institute. We have known for a while that access to US big tech models might be restricted, and it will happen again. We should not rely on Chinese open source models either, for obvious reasons. There is an alternative: a UK sovereign AI model. The Alan Turing Institute has argued for several months that the UK has the technological capability in the institute, in academia and in its nascent AI industry. The UK also has sovereign data assets, such as data from the BBC and the Met Office. The Alan Turing Institute, as a national AI institute, could lead a team to train a sovereign model for millions of pounds, not billions of dollars, following UK values, including transparency and respect for copyright. The Council for Science and Technology’s AI subgroup and many others are convinced. What more evidence does DSIT need to fund the training of a UK sovereign AI model?

[Baroness Lloyd of Effra (Lab)]

We are very attentive to the importance of building out sovereign AI capabilities that complement the strength of the UK’s AI sector. At the model level, the sovereign AI fund has invested in Ineffable Intelligence and Cosine, and we are targeting companies innovating in hardware, providing an investment into Callison. In terms of the importance of investing in this area, that is an approach that we are able to take through the sovereign AI fund. In respect of the specific proposal that the noble Lord recommends, I am happy to pick that up with the department and come back to him specifically on that model.

[Viscount Camrose (Con)]

My Lords, I very much welcome the proposal of the noble Lord, Lord Tarassenko, for sovereign AI capability here. But I would welcome a great deal more clarity from the Government on what exactly they mean by sovereign AI. Does it mean a complete sovereign stack of hardware, software and data? Does it mean AI capability being sovereign, as the Tony Blair Institute suggested, or some variation of that? Until there is a clear definition, it will be very difficult to understand the way forward.

[Baroness Lloyd of Effra (Lab)]

Sovereignty is not just about controlling AI models. It is about building leverage over key parts of the value chain and bringing to the table technologies that no one else can live without. It is about looking at where the UK has competitive strengths and where we can support our most promising sectors and start-ups, whether through financial investment, support for R&D or support with visas and so on. We have identified five priority areas: compute efficiency and sovereign architecture; next generation AI labs and model development; AI for health and life sciences; AI for scientific discovery; and AI trust, integrity and assurance. Those are the areas in which we think the UK has a competitive advantage.

[Baroness Stowell of Beeston (Con)]

My Lords, bearing in mind that Fable is Mythos with guardrails, have the Government asked Anthropic whether it is addressing the jailbreak that threatens cyber security to a Mythos-style extent? If they are not addressing it, why not? There appeared to be some reluctance from Anthropic when the flag was first raised, which is surprising, bearing in mind how much emphasis that company places on security and safety. Have the Government sought confirmation from the US Administration that if Anthropic addresses that jailbreak, the US Government will lift the export control alongside all the other controls they have placed on this model?

[Baroness Lloyd of Effra (Lab)]

The focus of the AI Security Institute is on its great relationships with frontier developers in order to be able to test these and provide feedback to them. Indeed, it publishes its findings so that others can see them as well, allowing people to address those risks. As I mentioned before, we are in touch with the US Government, but it is not for me to talk about what the US Government do in terms of their export control decisions.

[Lord Dixon of Jericho (LD)]

My noble friend Lord Clement-Jones is right that this is about investment, but it is also about people. The Minister touched on visas briefly. Given that many of the leading researchers in the US are deeply concerned about the way the US Administration are taking action in this area, what practical steps are the Government taking to ensure that the UK is attractive to the very best AI researchers in the world?

[Baroness Lloyd of Effra (Lab)]

The noble Lord is spot on to highlight this point. On the approach that the sovereign AI fund is taking, it is investing. We are also providing access to compute, and we are able to support visas. The Global Talent Taskforce is looking to support researchers and expert scientists from around the world to bring them to the UK.

[Lord Brooke of Alverthorpe (Lab)]

Is my noble friend the Minister aware of the growing desire for the UK to have an independent sovereign entity in this field? That is going to cost a great deal of money, of course. First, can she copy the letter that she is sending to the noble Lord on the Cross Benches to the whole House? Secondly, can she please update us on the questions we keep asking about the possibility of developing a new public/private partnership to fund such a venture?

[Baroness Lloyd of Effra (Lab)]

I am very happy to make the letter regarding the suggestion from the Turing Institute and the noble Lord, Lord Tarassenko, available to all in the House. Our view is that the best way for the UK to build up strength, and hence sovereign strength, is not just about controlling AI models. It is about having leverage over key parts of the value chain by bringing those technologies here, supporting UK expertise and supporting people to come to the UK to build companies here, to stay and to scale. That is the approach we will take.

Online Hate Speech

Baroness Lloyd of Effra Excerpts

Tuesday 16th June 2026 Lords Chamber

[Baroness Berger]

To ask His Majesty’s Government what assessment they have made of the impact of online hate speech.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

Hateful online content impacts people and communities. Illegal hateful content can be used to incite violence and stoke public disorder. We have seen this across the UK. Even where legal, hate online can be used to divide communities. It can erode trust in public institutions and the media. The Government are clear that hatred or division, online or offline, will not be tolerated. We have both criminal offences and regulatory measures to prevent and punish this type of behaviour. We saw law enforcement use its powers to prosecute people for illegal online activity during the Southport riots, for example.

[Baroness Berger (Lab)]

My Lords, last month, X gave assurances to Ofcom, which were accepted, that it was taking steps to address illegal hate and harm on its platform. In light of the recent violence that we have seen in Belfast, and the role of X and its owner in inciting it, will the Government encourage Ofcom to revisit this judgment? Will the Minister also investigate the failure of X to remove five accounts which are breaking its terms of service by repeatedly posting anti-Jewish and Holocaust denial content?

--- Later in debate ---

[Baroness Lloyd of Effra (Lab)]

My noble friend is right to emphasise that there can be no justification for violence and disorder; there is no place for anti- semitism, either online or offline. As she also rightly noted, Ofcom launched a compliance programme to assess whether the biggest platforms have robust systems and processes to deal with illegal hate and terrorist material under the OSA. As she also pointed out, Ofcom also announced it had secured commitments from X on how quickly it will remove content.

Following the disorder in Belfast, Ofcom wrote to services to remind them of the duties, and the Secretary of State asked it to engage with those companies to understand what action they are taking. We will also take further action; shortly, we will be laying updates in Parliament to bring into effect Ofcom’s strengthened code of practice for crises. We will continue to monitor this, and have said to Ofcom many times that it has our backing to use its powers to enforce the duties that it is responsible for.

[Baroness Teather (LD)]

My Lords, does the Minister accept that AI-driven recommender algorithms are not neutral channels but active amplifiers of hateful content? What assessment has been made of the systemic risk duties in the Online Safety Act to address algorithmic amplification specifically, rather than individual pieces of content?

[Baroness Lloyd of Effra (Lab)]

The noble Baroness raises important questions about how platforms operate in practice and the interaction between the online and offline worlds. The Government’s document Protecting What Matters looks across many different government departments and sets out what we can do to support cohesive communities. We have said that we need to explore further how to tackle the spread of hateful content online and that we will look at the way in which algorithms can increase the spread of harmful content. We will set out what we will do as a result of those considerations.

[Lord Pickles (Con)]

My Lords, the Minister said that there was no place for antisemitism online. However, I am afraid that antisemitism is alive and kicking online with, as the noble Baroness, Lady Berger, said, conspiracy theories, Holocaust denial and extreme Jew hatred. This is having a rotting effect on British society and is a serious threat to public safety, social cohesion and democratic trust. We have heard the Minister give an excellent critique of what is happening, but we are looking for solutions that treat the underlying problem, not the symptoms of this dreadful disease.

[Baroness Lloyd of Effra (Lab)]

We share a commitment to tackling and stamping out antisemitism. It manifests in all parts of society and we need to act in all parts of society. In respect of the online world and the department, last month the Minister for Online Safety met with Jewish community leaders, Ofcom and major platforms to discuss how best to tackle antisemitism online. He made clear that he expects platforms to act swiftly on that content and we are exploring how we might take this joint work further on a longer-term basis.

[Baroness Kidron (CB)]

My Lords, social media is where many people and most young people get their news, but it is owned or controlled by a handful of tech billionaires whose views are shared disproportionately and who represent an existential risk to democracy—as we saw when Elon Musk, the owner of X, tweeted in support of the riots. Does the Minister agree with me that our public square has now been privatised and that, for the future of democracy and news, we need to consider an alternative way of sharing news with young people?

[Baroness Lloyd of Effra (Lab)]

The importance of accurate, trusted news is essential. The noble Baroness touched on many different matters in her question. In respect of young people and their access to social media, as I will be talking about shortly, we have put down proposals that will restrict social media platforms in providing content to under-16s. Providing accurate news is hugely important more generally and, as I mentioned on the previous question, we are looking at the role that algorithms play in social cohesion and the spread of online hate. The noble Baroness raises the very important point of media literacy, and we are working with young people and more generally through our media literacy plan to improve the ability of all people, whether young or old, to discern misinformation and disinformation in this important area.

[Viscount Camrose (Con)]

My Lords, online hate speech is not solely created by individual users. It is also generated and amplified by malicious state actors using algorithmic methods to inflame tensions and to undermine our social cohesion. So as the Government prepare to strengthen the Online Safety Act to require platforms to act more quickly during a crisis, can the Minister give us some idea of what might constitute such a crisis? In particular, do the criteria include evidence of co-ordinated algorithmic attacks, increasingly referred to as “cognitive warfare”?

[Baroness Lloyd of Effra (Lab)]

The noble Lord raises the importance of being attentive and aware of the potential for foreign states to spread disinformation online, and through the Online Safety Act we have made the foreign interference offence from the National Security Act a priority offence that places clear legal duties on services to proactively assess risks, prevent users encountering foreign interference content and remove it swiftly where it appears. Ofcom set out in its publication last week some of the answers to the specific questions about definitions that the noble Viscount raises, but I am happy to write to him afterwards if that does not fully complete the answer to his question.

[Baroness Whitaker (Lab)]

Is my noble friend aware that online hate speech websites record just as virulent remarks about Gypsies and Travellers as about other protected minority ethnic groups? I have seen remarks such as, “Hitler had the right idea”, and “Bring back the gas ovens”. The children of the people who these things are said about go to school and experience extreme bullying. Can she try to ensure that it is explicitly recognised that Gypsies and Travellers are also a protected minority ethnic group, and also that the situation is exacerbated when the Leader of the Opposition in the other place stereotypes Gypsies and Travellers as getting away with crimes?

[Baroness Lloyd of Effra (Lab)]

My noble friend is right to emphasise the importance of protecting all those with protected characteristics and stamping down on all sources that stir up hatred and division, whether that is online or offline. The Online Safety Act requires platforms to remove illegal content, including threats that stir up hatred based on race, religion or sexual orientation. My noble friend is right to highlight the importance of that to many different groups.

Digital Safety: Children

Baroness Lloyd of Effra Excerpts

Tuesday 9th June 2026 Lords Chamber

[Lord Markham (Con)]

My Lords, there is total agreement across the House that children must be protected from harms online. Noble Lords will recall that amendments tabled by my noble friend Lord Nash on the impact of social media on children’s well-being were repeatedly resisted by the Government. We therefore welcome the Government’s recognition that further action is needed.

The Government have said that industry has three months to act and that legislation will follow if companies fail to do so. If Ministers are satisfied that these protections are so necessary, why have they chosen to rely on expectations from tech companies rather than legislating directly now? The proposals also appear to involve age assurance, device-level protections and enforcement obligations. What assessment has been made of the risk that younger users will simply remain on old operating systems, and of the practical challenges of implementing these measures across different manufacturers? The Government have also suggested that some educational platforms may be treated differently. What criteria will be used to determine any such exemptions?

Finally, can the Minister assure the House that, if the industry fails to meet the Government’s expectations within the three-month period, the necessary legislation will be ready to proceed without further delay?

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

I agree with the noble Lord that there is unanimity on the importance of tackling child sexual abuse online and taking measures to further restrict that and make it harder. As my noble friend Lord Hanson made clear during the passage of the Act, device-level nudity detection can play an important role in preventing children taking, sharing or viewing nude imagery.

This measure really looks at how to prevent those images getting online. That is a very important part of the strategy; it stops harm before it happens, in addition to the law enforcement activity that must happen in parallel. It applies to both old and new smartphones and tablets, and we expect tech companies to set up controls so that, if a parent hands down a phone, for example, all they have to do is reset it to enact this operating-level facility.

In respect of making sure that legislation is ready, as the Minister for Online Safety said in the other place yesterday, he is working carefully and closely in parallel with the Home Office to draw up legislation should that be needed, should the protections not be put in place at scale as expected.

[Lord Clement-Jones (LD)]

My Lords, I congratulate my honourable friend Munira Wilson on trying to extract some clarity from the Government after the Prime Minister’s speech yesterday before almost any of us arrived at London Tech Week. Sadly, it did not contain all of what was in the weekend media briefings. On these Benches, the Liberal Democrats have long called for a film-style harms-based age-rating system, with addictiveness as a central criterion, rather than a blanket ban on user-to-user services. Minister Narayan in the Commons subsequently indicated yesterday that addictiveness is

“very much on our minds”.—[Official Report, Commons, 8/6/26; col. 31.]

Can the Minister confirm that the forthcoming consultation response will explicitly adopt addictive design, including infinite scroll, autoplay and recommender algorithms as a harm category, triggering age-based platform restrictions, rather than relying solely on content type or constituting a blanket ban? Can she confirm that this will be enshrined in legislation, rather than a voluntary expectation of tech platforms?

[Baroness Lloyd of Effra (Lab)]

The consultation to which the noble Lord refers includes looking at features and functionalities; it looks at addictive algorithms, screen time and the impact on children’s health. The consultation has closed. There were many responses, and we are taking time to make sure that we have looked carefully at them—and, in addition to those responses, at the conversations that have gone on. I cannot pre-empt the Government’s response, which will come soon, but all the matters I have just mentioned were within the consultation for discussion.

[Lord Young of Acton (Con)]

My Lords, I declare an interest as the director of the Free Speech Union. Can the Minister tell us how the Government intend to safeguard against the obvious risks of requiring technology companies such as Apple to scan private messages before they are sent or received—also known, I believe, as client-side scanning? History teaches us that mass surveillance and censorship capabilities, however well intentioned, never remain narrowly scoped, whether in the hands of the state or private companies.

[Baroness Lloyd of Effra (Lab)]

The particular expectation that has been set for industry is in relation to nudity detection, and that technology has advanced substantially. Apple has rolled out device-level age assurance too. This is not about threats to privacy; it is about keeping children safe online. An adult will be able to switch it off if they want to, if they are able to verify that they are over 18. This measure is about keeping children safe. It is about implementing nudity-detection technology on children’s phones.

[Baroness Benjamin (LD)]

My Lords, it is great that the Prime Minister finally met bereaved parents and acted upon some of their concerns, but a social media ban or restriction is entirely meaningless if the regulator lacks statutory teeth, which has been the fatal flaw of previous legislation. We need an enforceable regime that remains democratically accountable to Parliament, not closed-door consultations or industry-captured advisory panels to quietly water down rules over time. What steps are the Government taking to put in place robust regulations—for example, to prevent children using VPNs to get around age restrictions—close enforcement gaps and stop technology platforms shifting addictive features or constantly adapting their algorithms’ design to bypass regulations?

[Baroness Lloyd of Effra (Lab)]

The noble Baroness is right to highlight the importance of the effectiveness of any regime; that is the central focus of what we are trying to do to keep children safe online. We need a regime that can be implemented, that can be navigated well by young people and their parents, and that is able to be communicated. That is one of the reasons we continue to support parents in having conversations with young people. The question about Ofcom’s enforcement powers is very important. We have made clear to Ofcom that it has the backing of the Government to take action. We have funded Ofcom so that it can take action and it has already launched 100 investigations and issued many millions of pounds in fines. That is the kind of regime we need. We need a regime that is effective and enforced.

[Baroness Keeley (Lab)]

My Lords, our debates around the issue of child safety in your Lordships’ House tend to highlight a lack of confidence that the big tech companies will do the right thing. They could make their products safe by design but they do not. If legislation is required after three months, can my noble friend the Minister assure the House that the legislation will be drafted and ready to go if, as many of us suspect, the companies do not act in the way that we want them to?

[Baroness Lloyd of Effra (Lab)]

My noble friend is right to highlight the high expectations we have for this to be rolled out. We have made it very clear that, if those high expectations for the rollout at scale of this nudity-detection technology for children’s devices does not happen, we will legislate. The Minister for Online Safety yesterday confirmed to the other place that he is working closely with the Home Office to draw up this legislation in parallel, so that we can act should that be necessary.

[Lord Grade of Yarmouth (Con)]

I declare my interest as a recently retired chairman of Ofcom. It is very easy to criticise the Online Safety Act and to criticise the regulator, and it is even easier to criticise the Government, but does the Minister agree with me that the force of the Online Safety Act and the work that Ofcom and indeed the Government have done in persuading tech companies to change their behaviour is not all negative? Indeed, this week, X voluntarily agreed to tighten up its procedures in respect of illegal hate and terror content, which Ofcom has scrutinised and agreed. So there are some successes. We are making some progress in a very difficult area.

[Baroness Lloyd of Effra (Lab)]

The noble Lord is right: there has been progress in implementing the Online Safety Act since the illegal content code and the children’s code came out. As I mentioned, there have been 100 investigations into companies. There is also the very important aspect of the communication with the wider public, and indeed with tech companies, on what action is expected and at what speed.

AI Regulation Bill

Baroness Lloyd of Effra Excerpts

Thursday 4th June 2026 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

My Lords, I am pleased to respond to this Question for Short Debate and I am thankful to the noble Lord, Lord Holmes, for initiating this debate, and for the wide variety of contributions made so concisely. It is such an important topic that if I fail to respond, I will of course follow up in writing.

The Government believe that AI has transformative potential for the UK: from scientific innovation and public sector reform, to increasing productivity to drive economic growth. To realise these benefits, we need to make sure that AI is used in a secure and controllable way. Our approach to regulation must enable innovation and protect our citizens from the risks that emerge as AI capabilities develop.

Recognising the point that noble Lords have made, that regulation and growth are not a trade-off, our regulating for growth Bill was announced last month in the King’s Speech. It is an example of how we will make the UK’s regulatory system fit for the future, so that it plays a full role in delivering growth and supporting innovation, including in AI, safely and sustainably. The Bill will create cross-economy sandboxing powers, so that businesses can test cutting-edge new products and technologies safely, prove what works, and then scale up delivery of these changes more quickly. That is how we regulate well and within a controlled environment.

As noble Lords have asked, we do believe that AI is a general-purpose technology with a wide range of applications, which is why the Government believe that most AI systems should be regulated at the point of use. Following the AI Opportunities Action Plan, the Government are committed to working with regulators to boost those capabilities. As a part of this, the Government issued letters to 19 regulators in January 2026, asking them to publish a plan setting out how they will enable safe AI-powered innovation. These regulators cover several high-potential sectors for AI innovation, including life sciences.

In addition, the Regulatory Innovation Office, which was launched in 2024, delivers targeted funding for regulatory experimentation through the regulators’ pioneer fund and the AI capability fund to support pilots, sandboxes and new regulatory pathways. For example, the MHRA is developing an AI-based tool to analyse drug-to-drug interactions in cardiovascular patients, and this will enable MHRA regulators to safely analyse the implications of proposed new drugs quickly and more effectively.

To respond to the question asked by the noble and learned Lord, Lord Thomas, we believe that AI in legal services is a multifaceted area and that a single AI regulator in legal services would risk duplicating existing regulatory functions, creating uncertainty. As I said, we have also written to the Legal Services Board asking for its plan on how to regulate AI safely.

As my noble friend Lady Antrobus mentioned, the issues of defence are complex. AI in defence is moving very fast. It is becoming a defining feature of modern warfare and, as she mentioned, a critical enabler of defence capability. We have an updated strategic approach to AI in defence, which reflects the more operational delivery-focused model. We are prioritising AI-enabled war-fighting advantage and enterprise transformation, strengthening governance and accountability, and ensuring that ambition is backed by the data, compute, skills and partnerships needed to scale at pace while taking a disciplined approach to frontier AI and maintaining robust standards. We also remain firmly committed to context-appropriate human involvement, which centres on humans as the accountable actors in the use of force. The role of any human intervention is therefore to ensure that responsibility and accountability are also clearly retained by people and not machines, to one of the important points my noble friend raised.

The noble Baroness, Lady Uddin, made a very important point about the fact that regulation does not happen without the context of the other measures we are taking to support the development of UK-based AI. We have launched our sovereign AI fund, supporting the development of AI capability here, as well as our support for the AI growth zones, as noble Lords will know. In addition, we are investing in the skills of people in this country. Effective regulation will only go hand in hand with a workforce, regulators and everybody being skilled to understand the risks and the judgments that have been taken day to day—including in media literacy, being able to take that discerning view about what people are seeing and consuming as part of media.

On the important points made about the fact that this is a global set of developments, and on the important role the UK has taken in the past and continues to take in shaping the passage of key international AI initiatives, we have indeed led on initiatives such as the Global Dialogue on AI Governance and the Independent International Scientific Panel on AI at the UN, and the Framework Convention on Artificial Intelligence in the Council of Europe. These are really important initiatives. Earlier this week I was at the OECD, where we as the UK were supporting the dissemination of principles for AI policy-making. It is very important that all countries apply regulation and policy effectively, as noble Lords have said. This is a globally developing set of initiatives.

Many noble Lords, including the noble Lords, Lord Harper, Lord Tarassenko and Lord Markham—and I heartily agree with them—mentioned the AI Security Institute. This is indeed an institute that the Government are proud of. It is world-leading and a centre of expertise, and has been analysing AI systems for two and half years. It is in an extremely unusual position globally, in that it has close collaboration with AI labs and has tested over 30 models to understand their potentially harmful capabilities. Leading industry players, including Anthropic and OpenAI, have made changes to strengthen AI model safeguards based on the institute’s findings.

This foundational research—to discover methods for building AI systems that are beneficial, reliable and aligned with human values—is essential, and these findings are shared with the Home Office, the NCSC and other national security organisations, enabling the UK to stay one step ahead of the risks brought by AI capabilities. We are committed to giving the institute the funding it needs through the spending review.

Noble Lords have highlighted the speed of development of AI models, and earlier this year Anthropic announced that Mythos represented a significant step-up in AI cyber capabilities. This is being monitored carefully by AISI and the NCSC, and they have published their findings on that. We have given further guidance to businesses and regulators on the measures that need to be taken to prevent and mitigate the risks of these further developments.

The noble Lord, Lord Taylor, mentioned the Cyber Security and Resilience (Network and Information Systems) Bill, which is moving to Report in the other place this month. It is designed to protect the services that the public rely on, and those regulations take an all-hazards risk-based approach that requires organisations to manage cyber security, physical security and broader operational risks, instead of specifying particular risks of technologies, in order to stay up to date and take into account further developments in technologies of the future.

I fear that I am not going to do justice to the topic of copyright.

[Lord Harper (Con)]

Just before the Minister sits down—we have seven minutes left before the debate runs out—can I ask her a question? My noble friend Lord Holmes drew attention to the Government’s original commitment to legislate for a cross-sector approach, and he referenced how the Government have now dropped that commitment. The only bit of legislation that the Government are doing is, as the Minister said, in the regulation for growth Bill, but I have not heard the Government explain why they have changed their approach from the one they originally set out. Can the Minister, in the seven minutes we have left, set out for noble Lords the reasons why the Government have done that? That would be helpful.

[Baroness Lloyd of Effra (Lab)]

Our view is that AI is a general-purpose technology with a wide range of applications, and also that regulators understand well the sectors they are regulating. They understand the risks that are present and understand, as many noble Lords have raised in the debate, the specific applications that AI is bringing, the potential risks to consumers and the nature of the competitive landscape—the balance between competition, incumbents and new entrants. That is the reason we are taking the approach to regulate at the point of use and using those regulatory frameworks.

We also already regulate AI in the UK—for example, in the Online Safety Act or under the GDPR—and, in some areas, across sectors. There are some areas in which legislation applies to the application of AI technologies.

[Lord Holmes of Richmond (Con)]

On that question of going domain-specific, what occurs in situations where there is a domain with no competent regulator? Similarly, how do the Government assure clarity, consistency and coherence of approach? As a citizen, you may come across AI—as noble Lords have rightly identified—in defence, education, health, tax and benefits. If you do not some sense of a guiding mind or horizontal direction, how can you possibly deliver consistency and clarity for people wherever they may come across AI?

[Baroness Lloyd of Effra (Lab)]

In all regulation, there is obviously a balance between consistency and context-specific, appropriate regulation. It is not always the case that consistency is the most appropriate or first-order principle. It may be that, as we have been discussing, there are many issues: a focus on growth, a focus on consumer protection or, for the energy markets in particular, a motivation towards decarbonisation. That is why the regulator, for whichever market we are talking about, is very well placed to look at how their objectives, as set out in their statutory duties, are best applied in the context of this new technology, which provides different functionalities and the opportunity for new innovation.

That is one reason we have also given these sandboxing powers. We realise that the current set of statutory frameworks was set up assuming that humans would always, for example, be in vehicles or crew vessels. We may need to adapt that in order to take account of the potential new innovations that AI brings, while doing so in a safe and secure way.

Committee adjourned at 4.13 pm.

Business Hiring

Baroness Lloyd of Effra Excerpts

Monday 1st June 2026 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

The UK labour market and economy remain resilient despite geopolitical uncertainties. The UK had the fastest growing-economy in the G7 in Q1 2026. On the labour market, ONS data shows that there are 416,000 more people in work than a year ago. Its business insights survey shows that over 80% of businesses intend to either maintain or increase their staff levels in June 2026.

[Lord Hunt of Wirral (Con)]

I greatly regret to tell the House that the latest figures from the Office for National Statistics show that the number of young people not in training, education or employment has exceeded 1 million. I believe we are heading to figures for 18 to 24 year-olds which have not been seen since 2008 when, under the previous Labour Government, the future looked very grim. Recent measures were introduced by the Government, including the business-busting Employment Rights Act, the national insurance contributions—the list is endless, and if noble Lords would like to read them all, they are in the report of the unemployment adviser, Mr Alan Milburn, or the essay published by the previous Prime Minister. Will the Minister wake up and do something about this?

[Baroness Lloyd of Effra (Lab)]

I do not accept the characterisation presented. We recognise there is a crisis of participation, and Alan Milburn’s interim report clearly laid out many of the contributing factors in health and education, which have been there for many years. Under the previous Government between 2021 and 2024, the number of young NEETs increased by 250,000. This is an issue that we are tackling. As I mentioned, in Q1 of 2026 the economy was one of the fastest-growing in the G7. We are taking actions on youth employment, supporting young people to get into work, supporting them with work experience, training and apprenticeships. This is exactly what we need to do in these circumstances.

[Lord Razzall (LD)]

My Lords, in a slightly calmer vein than the noble Lord, Lord Hunt, can I ask whether the Minister is aware that the ONS Labour Force Survey flash figures for April show a 100,000 reduction in payroll numbers? Does she think that this indicates that, as the year goes on, there will be an increase in unemployment, or does she think—as is so often the case—the ONS has got it wrong?

[Baroness Lloyd of Effra (Lab)]

I do not know that my commenting on forecasts will necessarily add to the discussion. I am happy to talk about the actions we are taking to support the economy and young people especially to increase activity and get the experience they need to secure good jobs today and for the future. That is why we set out our modern industrial strategy and why we are supporting young people getting into training and apprenticeships. We have reformed the apprenticeship levy into a growth and skills levy to make it more attuned to the needs of business so that those young people can get jobs today.

[Lord Livingston of Parkhead (Non-Afl)]

My Lords, I talk to a number of businesses and work in very major businesses, and I see the issues that they are having about employing young people just now. When will the Government accept that, in addition to technology changes, the raft of legislation that makes it more expensive, more difficult and more risky to recruit young people is an issue? At what point will the Government look back and say, “We want growth, we want to employ young people and we want to give them a chance, so we will have another look at our legislation because we got it wrong”?

[Baroness Lloyd of Effra (Lab)]

Where I can agree is that we want to create an economy where people feel confident to employ young people. I draw some figures and analysis to this House’s attention: under the last Government, between 2021 and 2024, the number of young NEETs increased by 250,000. I mention that because the noble Lord drew attention to measures that have happened subsequently, thus putting his analysis into question. Businesses are able to employ NICs reliefs for those under 21 and under-25 apprenticeships. I highlight those changes on NICs. Obviously, the NICs changes that came in last year do not apply to young people, so I do not accept the noble Lord’s analysis. I highlight to the House the measures we are taking to support young people and give them opportunities so that they get experience of work—employers mention that young people should have good experience of work in order to get their employability up.

[Baroness Armstrong of Hill Top (Lab)]

My Lords, all the analysis of NEETs shows that the resilience of young people is an absolutely critical aspect of getting them into the modern labour market and labour force and keeping them working. The previous Government stopped, through austerity, many of the early evidence-based programmes that would build the resilience and the ability of young people to continue through difficulties. Any young person today will have huge difficulties, and we therefore have to make sure that we have those early intervention programmes to build the resilience of young people.

[Baroness Lloyd of Effra (Lab)]

My noble friend is right to draw attention to the importance of many different contributors to the employability, ability and capabilities of young people. That is indeed around skills and training, which is why we are investing in further education and in matching skills with the modern industrial strategy, working with employers. It is also why we are paying attention to changes in provision on mental health and in early years, such as the expansion of free school meals, to provide all children with the best start in life.

[Lord Bellingham (Con)]

My Lords, will the Minister tell the House exactly which part of the Employment Rights Act will create jobs and encourage employment?

[Baroness Lloyd of Effra (Lab)]

The Employment Rights Act will benefit 18 million workers. Having secure employment where you know that you have the right to sick pay and that you can take leave when you have a family is an attribute of a modern functioning labour market.

[Lord Sikka (Lab)]

My Lords, I am surprised that the Minister did not remind the Opposition that youth unemployment was 1.25 million in 1984. They are keeping quiet about that. What assessment have the Government made of the possibility that a freeze or a reversal of the state pension age could release jobs for younger adults?

[Baroness Lloyd of Effra (Lab)]

That is a question that I personally have not put my mind to. I am happy to discuss it with my colleagues.

[Lord Sharpe of Epsom (Con)]

My Lords, 42 years on, I remind the House of my noble friend’s statistic that there are over 1 million NEETs at the moment. How depressing is that?

To follow on from my noble friend’s question, retail and hospitality are often young people’s first chance to enter the labour market, yet these are the sectors being hit hardest by the Government’s own policies. In April this year, the BRC, UKHospitality and the Food and Drink Federation, among others, sent a joint letter to Peter Kyle warning him that an inflexible guaranteed hours regime could mean an end to flexible roles altogether. They urged the Government to raise the reference period from 12 weeks to at least six months and to set the low-hours contract to eight hours. Will the Minister commit to listening to business and making these changes?

[Baroness Lloyd of Effra (Lab)]

We committed during the passage of the Employment Rights Act to consult trade unions, businesses and all those affected as we take forward the other measures there, including the measures to which the noble Lord refers. At the appropriate time, we will put that out to consultation, which will be open to everyone to respond to.

On hospitality and retail, it is recognised that this is a very important first step, and that is one reason why we are expanding opportunities through the new foundation apprenticeships in hospitality and retail, launching a level 2 administrative assistance apprenticeship from August and introducing the £2,000 hiring payment for employers that recruit young apprentices.

Sovereign AI Fund

Baroness Lloyd of Effra Excerpts

Monday 1st June 2026 Lords Chamber

[Lord Clement-Jones]

To ask His Majesty’s Government what strategy they have to ensure that the Sovereign AI Fund will support sovereign AI infrastructure and reduce public sector dependence on foreign hyperscale cloud providers.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

The sovereign AI fund will support early-stage British start-ups at strategically important parts of the AI value chain, including AI infrastructure and compute. It is not designed to replace foreign cloud providers or achieve total UK self-sufficiency. Instead, the fund seeks to reduce our strategic dependence and ensure that the UK has a stake in a world economy transformed by AI.

[Lord Clement-Jones (LD)]

My Lords, the Secretary of State has said that Britain

“must be an AI maker, not an AI taker”,—[Official Report, Commons, 18/3/26; col. 55WS.]

and the sovereign AI unit’s own chair has promised British start-ups a guaranteed route to government contracts. But even the AI Minister, Mr Narayan, has admitted that procurement is too hard for British start-ups across government. So when will public procurement, in particular the G-Cloud framework, be reformed to match that promise? Will “sovereign AI” not remain just a slogan without that?

--- Later in debate ---

[Baroness Lloyd of Effra (Lab)]

Public procurement through G-Cloud must deliver value for money, security, and effective public services. Suppliers are not selected or excluded purely on the basis of nationality where they meet operational security and value for money obligations. The commercialisation of the sovereign AI fund to make the Government an early customer for strategically important UK start-ups is ongoing across technical, commercial and government leads to ensure that a robust, flexible, and scalable option is available.

[Lord Ranger of Northwood (Con)]

My Lords, perhaps I could highlight that the biggest challenge I see is not just initial funding. We welcome what the sovereign AI fund will do to provide compute and help commercialisation at a start-up moment for British AI companies, but the tragedy that we are seeing right now is losing those companies to international funders and overseas platforms. Once they reach a point for scaling, what will the fund or the Government do to help retain them, so they remain headquartered in the UK and continue to succeed commercially here?

[Baroness Lloyd of Effra (Lab)]

The noble Lord is right. Our ambition is to make the UK the best place to start, to scale and to stay. That is not just for the AI sovereign fund, important though that is, but for the ecosystem. That is why we are investing in public compute, so that firms here will be able to access it, why we have our ambition for UK procurement and why we are looking at measures such as AI growth zones: to make this country one of the most attractive, as we can see from the amount of foreign direct investment that is already coming into the UK.

[Baroness Berger (Lab)]

My Lords, France, Germany, South Korea, Switzerland, Singapore, Canada and Ukraine are all investing in their own sovereign AI models, for a variety of reasons, including data control, data protection and, most importantly, economic competitiveness. What consideration are the Government giving to using the sovereign AI fund to invest in the UK’s own sovereign AI model?

[Baroness Lloyd of Effra (Lab)]

As I mentioned just now, the sovereign AI fund is one of the components of how we think about UK strength. With it, we are looking at where we can have a UK strategic advantage. The five main priority areas that we have outlined are compute efficiency and sovereign architecture, next-generation AI labs and model development, AI for health and life sciences, AI for scientific discovery, and AI for trust, integrity and assurance.

[Lord Patel (CB)]

My Lords, I commend the Government for their sovereign AI development, particularly the Isambard-AI project at Bristol University, which has one of the world’s fastest processors. My question relates to parallel development. Do the Government still have a plan for the parallel development of the cloud, to assist in both digitisation and health research data for the NHS?

--- Later in debate ---

[Baroness Lloyd of Effra (Lab)]

I welcome the noble Lord’s welcome, as it were, for the developments happening here in the UK. It is true that the UK has a lot to offer. On cloud discussions and the provision of data, the National Data Library is advancing and we have gone through our period of discovery, with five areas of kick-starters, so we can provide UK public data to those who can benefit from it. Separately, we are using the sovereign AI fund to develop the domestic technology sector, so that it can provide one of the options for government procurement in the future.

[Lord Markham (Con)]

My Lords, the Competition and Markets Authority has expressed concerns that AI may entrench the market power of a small number of cloud providers. If the sovereign AI fund is not designed to increase the UK’s strategic authority in the cloud space, what are the Government’s plans to do so?

[Baroness Lloyd of Effra (Lab)]

The noble Lord is right to refer to the independent Competition and Markets Authority. It has conducted a major, 22-month investigation into the cloud market and is now acting. It has announced a package of actions to strengthen competition in business software and cloud services. It will be launching a strategic market status designation investigation into Microsoft’s business software system in May that will allow the CMA to examine cloud licensing and actions from Microsoft and Amazon on improving cloud interoperability and reducing egress fees. In terms of the role the AI sovereign fund might play, it is at a relatively early stage of development. Infrastructure is one of its priority areas, and we will see what opportunities come in the near future.

[Lord Brennan of Canton (Lab)]

My Lords, my noble friend Lady Berger listed a number of countries that have decided to go down another path in terms of developing sovereign AI. Can the Minister outline to us why the UK is not choosing to take that path and rather may be relying, as some of us fear, far too much on the powerful tech bros of America to supply the needs of this country?

[Baroness Lloyd of Effra (Lab)]

The UK benefits from access to many international service providers, whether from America or elsewhere. The way we think about sovereignty is in ensuring that the UK has the capability, access and influence it needs to ensure that the technologies that will shape our economy do so in the interests of the UK. The reason we have focused on the areas I mentioned before for the AI sovereign fund is to increase our economic resilience and reduce strategic dependency by building areas where the UK can realistically develop a comparative advantage.

[Baroness Kidron (CB)]

Representatives of the sovereign AI unit have repeatedly said that the companies it funds or supports with compute must comply with “applicable UK law”, including when copyright law applies to their training activity. However, they have been unwilling to say whether they will fund or support companies that scrape UK copyrighted material overseas without a licence. Will the Minister confirm that the UK sovereign AI fund will not use taxpayers’ money to support companies that train on copyrighted work without a licence, irrespective of where that training happens, whether in the UK or elsewhere? If she is unable to answer categorically, will she undertake to write with a complete answer?

[Baroness Lloyd of Effra (Lab)]

The noble Baroness is correct to highlight that we have been clear that copyright rules should be respected and the use of copyright works to train AI in the UK requires a licence unless an exception applies. Companies supported by the sovereign AI fund are expected to comply with applicable UK law, including copyright. When we are talking about compliance in relation to grant-funded compute allocations, they equally must comply with copyright law while undertaking that funded activity.

[Lord Walney (CB)]

Is the Minister open-minded about the huge potential that the UK embracing an open-source AI model alongside allies may accrue to the country to put us back in the premier league rather than needing to be reliant on America and overseas?

[Baroness Lloyd of Effra (Lab)]

It is not an area on which I feel I can definitively give an opinion on the view of the Government. I know from the cyber security point of view that there are many merits and disbenefits of open-weight models in terms of their cyber security credentials, and that is something that we are working on very carefully.

Processed Russian Oil Products: Sanctions

Baroness Lloyd of Effra Excerpts

Thursday 21st May 2026 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, the Minister may not have been in the Chamber earlier, but I hope she has been made aware of the concerns expressed by the noble Lord, Lord Rooker, and my noble friend Lord Gove about the fact that the Government are now permitting the importation of Russian-derived oil products into the United Kingdom. I quoted the Ukraine sanctions commissioner directly. He said that, in his view, the Government’s action

“may still generate additional revenues for Russia’s war machine”.

It would be helpful to know what the Minister’s response is to that commissioner. Simultaneously, the Government are also blocking new North Sea oil and gas licences on our own doorstep. With thousands of skilled jobs, billions in tax revenues and our national security all hanging in the balance, will the Minister explain to this House why the Government’s energy policy is rendering this country more exposed, not less, to hostile foreign actors and volatile global markets?

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

My Lords, I want to make it clear that our sanctions regime against Russia is tougher today than it was last week. It is categorically not the case that we are waiving or easing sanctions. On 19 May the Foreign, Commonwealth and Development Office laid the Russia (Sanctions) (EU Exit) (Amendment) Regulations to legislate for several key measures to continue to tighten our pressure on Putin’s regime. These regulations include a new maritime services ban on Russian liquefied natural gas, which will restrict Russia’s access to the UK’s world-leading shipping and insurance services, disrupting its ability to transport Russian LNG. It further includes export prohibitions against Russia, as well as new import prohibitions to restrict the transfer of any refined oil products derived from Russian crude oil and of the import of Russian uranium. As has regularly been the case for sanctions on Russia for several years, targeted short-term licences have been introduced for our LNG maritime services ban and the refined oil import ban in order to support flexibility in UK supply in global markets.

We have made it clear here, and the Minister for Trade made it clear in the House yesterday, that these licences are temporary, will be reviewed regularly and are not intended to protect Russian interests. The sanctions regime today is tougher than it was last week. In respect of the lessons of this crisis for energy security and for the UK’s reliance on foreign fossil fuels, the lesson that we are taking is that we need more homegrown renewable and nuclear energy. We need to continue the decarbonisation so that, for example, with the transition to electric vehicles, we are less reliant on overseas imports of energy.

[Lord Purvis of Tweed (LD)]

My Lords, there is no plan because it is not in force as a result of the extremely broad and open-ended exemption that has been announced. I have debated, and this House has scrutinised, every single Russian sanction since the start of this war. I have called repeatedly for stronger efforts to prevent circumvention and loopholes, but there is now no point in calling for those if the Government put in such an exemption as they have this week. Will the Minister now bring forward urgent legislation to ensure that we scrutinise what the Government’s intent is, rather than a behind-the-scenes and sleekit licence that is open ended, avoids any parliamentary scrutiny and is up to an official rather than Parliament to decide?

[Baroness Lloyd of Effra (Lab)]

The Minister for Trade and the department are responsible for these licences. The Russian sanctions came into force yesterday. We have made it clear that these licences are temporary and time limited.

[Lord Purvis of Tweed (LD)]

They are not.

[Baroness Lloyd of Effra (Lab)]

Sorry, the noble Lord is absolutely right, the licences are not time limited, but they are temporary and they will be reviewed regularly. It is our intention that these are temporary licences. This phased implementation of sanctions is common and standard practice. It is the approach that other allies—for example, Canada and Australia—have taken. The SI will go through the usual parliamentary process as it is implemented.

[Lord Stirrup (CB)]

My Lords, signals matter, to friends as well as to enemies. No matter how the Government now seek to parse this decision, they have created the perception that their appetite for sanctions will be limited by the degree of pain the measures cause us. Does the Minister think that sending such a very bad signal is worth the strictly limited benefits that will accrue from it?

[Baroness Lloyd of Effra (Lab)]

This is a package of strengthened sanctions. The Minister for Trade has acknowledged, as I do today, that the communication of this could absolutely have been better, because these are strengthening sanctions. That is the message that we are very keen to communicate today to this House, to the other place and to the public. The Prime Minister spoke to President Zelensky last night. The President confirmed that he appreciates the support that the UK provides to Ukraine. We are very clear that we stand with Ukraine. We are supporting it with finance, military support and training for military personnel. We are clear that we will continue to put pressure on Russia.

In respect of the licences specifically and the considerations that we are taking into account, including market instability, the beneficiaries of such instability and potential price hikes could include Russia. That is one of our considerations with regard to these temporary licences.

[Baroness Hayter of Kentish Town (Lab)]

My Lords—

--- Later in debate ---

[Baroness Hayter of Kentish Town (Lab)]

My Lords, the support from this country for Ukraine has been steadfast and bipartisan, and I regret very much what we are seeing. I think Mr Putin will be delighted to see the attacks on what is going on now. We have been steadfast in our support for Ukraine, and I think we have had a bipartisan approach to minimising the impact of events in the Middle East on people and businesses in this country. Can my noble friend the Minister confirm what she has said: that the sanctions package overall is stronger, while providing businesses facing complex supply chain issues with temporary flexibility? Can she commit to keeping this under review, with the aim of fully implementing the new, stronger sanctions regime as quickly as can possibly happen?

[Baroness Lloyd of Effra (Lab)]

I thank my noble friend for reminding us all of the cross-party commitment to supporting Ukraine, which I know is felt strongly across this place. I absolutely confirm that the package of sanctions against Russia is stronger than it was two days ago. It has introduced new restrictions on oil products refined from Russian crude in third countries. It includes a maritime service ban on Russian LNG to restrict Russia’s access to the UK’s world-leading shipping and insurance services. I can also confirm, in answer to her question, that these are going to be targeted short-term licences and exemptions that will be reviewed regularly. We absolutely intend that they are only temporary.

[Lord Ahmad of Wimbledon (Con)]

My Lords, I speak as the Minister responsible for taking through the SAMLA regulations. First, can the Minister respond as to why Section 55 has not been applied in this case? Secondly, it is customary, as I used to do with the noble Lords, Lord Collins and Lord Purvis, to give headlines to all people across this House about impending sanctions. I disagree with the premise: it is not about politicising the issue but about standing united behind Ukraine. Today, when we grant a general licence as an exemption—which is indefinite, and the Minister should confirm that from the Dispatch Box—we are, in the eyes not just of Mr Putin but of Ukraine—weaker in our support.

[Noble Lords]

Hear, hear!

[Baroness Lloyd of Effra (Lab)]

I really emphasise that this package of sanctions is stronger than it was. We have put in place stronger sanctions. The general licence in respect of oil products applies to two products only: jet fuel and diesel. We have made it clear, and I repeat, that these are intended to be temporary licences. They will be reviewed regularly. It is very common practice, as it was under the previous Administration, to introduce licences in these cases, so there is no unusual practice or anything out of line in the approach that we have taken. I will have to write to the noble Lord on his question on Section 55.

Self-employed: Paternity Leave

Baroness Lloyd of Effra Excerpts

Wednesday 20th May 2026 Lords Chamber

[Baroness Penn]

To ask His Majesty’s Government what steps they are taking to provide paternity leave to the self-employed.

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

The Government are undertaking a review of parental leave and pay, which presents a much-needed opportunity to consider our approach to the system and whether the support available meets the needs of modern working families, including the self-employed. The review will conclude in early 2027 with a set of findings in which the Government will outline next steps for taking any potential reforms forward to implementation.

[Baroness Penn (Con)]

My Lords, why do the Government need another review to tell us what is obvious: that excluding nearly one in four fathers from our system of paternity pay is unfair and needs fixing? Becoming a new father can be stressful and expensive, as well as wonderful and joyous. But if the Government are committed to supporting families now with the cost of living, can the Minister commit to closing this loophole in 2026, not in another year’s time?

[Baroness Lloyd of Effra (Lab)]

I thank the noble Baroness for her advocacy for the importance of paternity leave and parental rights. We have already delivered real change through the Employment Rights Act. On 6 April, paternity leave and unpaid parental leave became day-one rights. Alongside these changes, we are undertaking this comprehensive review of the system to consider whether further reforms are required. We have engaged with a broad range of stakeholders, alongside evaluating other sources of evidence. We have received almost 1,500 responses to the call for evidence, and it is important that we consider these carefully before deciding what further reforms are required.

[Lord Fox (LD)]

My Lords, we thank the noble Baroness, Lady Penn, for bringing this question up; it is really important. However, it is not just about rights that do not exist; current rights and their take-up is also a really important issue, and I hope the review will look at that. According to the 2025 Unison parental leave survey, there was an 86.3% uptake of maternal leave but only a 31.8% uptake of paternal leave. Paternal leave is just as important—in fact, even more important—because fathers are an important influence. Will the review look at the take-up of existing rights, as well as developing rights of the sort the noble Baroness, Lady Penn, talked about?

[Baroness Lloyd of Effra (Lab)]

The noble Lord is right to draw attention to the importance of fathers and mothers, the whole family unit and kinship carers in nurturing families, and the role of families in our communities. The review is wide-ranging. It is considering all existing entitlements and is looking at the implications for economic growth, labour market participation, maternal health and the best start in life. I am sure it will also look at the uptake of existing measures as well as potential extensions to entitlements, on top of what is already in place.

[Baroness O’Grady of Upper Holloway (Lab)]

My Lords, it is nearly a year since the Women and Equalities Committee recommended the introduction of a paternal allowance for self-employed working fathers and other parents, similar to the maternity allowance for self-employed mothers. The committee also said that the lack of any provision for self-employed working dads was “deeply unfair”. Do the Government agree?

[Baroness Lloyd of Effra (Lab)]

The Government agree that more can be done to improve the system. The review is looking at the extension of entitlement to potential support for self-employed fathers as well as others in this quite complex system. We are looking at how we can take that forward. The review will conclude early in 2027 with findings and the next steps for reform.

[Baroness Hayman (CB)]

My Lords, the Minister is of course right that there are complexities, and the review will have to look at all of those. However, there is the very uncomplex issue of the right of self-employed men to some sort of paternity leave. It would be reassuring to know that the Government recognise that this is an issue of principle that they must deal with, alongside the many other issues.

[Baroness Lloyd of Effra (Lab)]

We are clear in the terms of reference for the review that it considers the needs of self-employed parents, including fathers and partners. We agree that more can be done to improve the system. We are taking evidence, looking at international comparisons and looking to build on what we have already done. For example, we are bringing 32,000 parents into scope for paternity leave and around 1.5 million for unpaid parental leave as a consequence of the Employment Rights Act.

[Lord Evans of Rainow (Con)]

The Minister has said twice at the Dispatch Box that she will report back with a decision in early 2027. Will that be January or February 2027?

[Baroness Lloyd of Effra (Lab)]

We are considering the extensive reports, as I mentioned, and all the evidence. We will conclude early in 2027.

[Lord Watts (Lab)]

Have the Government considered looking at the previous Government’s proposals in this area to see what lessons can be learned?

[Baroness Lloyd of Effra (Lab)]

I am pleased to say that, as a result of the Employment Rights Act, we have established new rights for parents through paternity leave and the unpaid parental leave day-one rights to bring more parents into scope, so that they can access parental leave and support their families.

[Baroness Penn (Con)]

Does the Minister recognise that the lack of proper pay is the number one reason for a lack of take-up of existing rights? Will she confirm whether the new day one right to paternity leave is for paid or unpaid leave?

[Baroness Lloyd of Effra (Lab)]

The paternity review will look at whether we should extend the current entitlement for qualifying employees under the new rights that have come in, which for qualifying employees is two weeks’ leave paid at the statutory rate. The parental leave and pay review is considering whether this entitlement is sufficient.

[Lord Hintze (Con)]

My Lords, what is the cost of this scheme that the Government want to bring in?

[Baroness Lloyd of Effra (Lab)]

The costs of all the schemes that are being suggested and the potential expansions of rights, whether for self-employed fathers or mothers, will be considered. We have taken into account the costings that have been put to us by some of the groups that are advocating for these measures, and we are assessing the full costs of these as part of the review.

[Lord Hunt of Wirral (Con)]

Does the Minister not accept that the real problem is that employment costs are rising to such an extent that it is now much more difficult for businesses to offer enhanced paternity leave and other support for working parents? Will she consult with her colleagues and bring forward a clear strategy to reduce business costs, so that more employers and self-employed parents have the flexibility to support families when a new child arrives?

[Baroness Lloyd of Effra (Lab)]

I am pleased to take this opportunity to say that the UK had the highest growth in the G7 in the last quarter. I am also pleased to highlight the measures we are taking to reduce costs on business—for example, ending mandatory strategic reports. I am also pleased to talk about the measures we are now taking to support families with the cost of living, be it energy costs or expanding free school meals.

[Lord Kirkhope of Harrogate (Con)]

Will the Minister confirm that, compared to years ago, when society put more responsibility on mothers than it should in bringing up children, society is now much better, in that fathers share responsibilities far more than they did then? Will she therefore join me in congratulating those parents who work together to bring up their children to best effect?

[Baroness Lloyd of Effra (Lab)]

Parents and families of all compositions are trying their best to bring their children up. The Government are there to provide support, whether through, for example, free school meals or employment rights. There are many ways to do so, which is why there is complexity in looking at what further should be done.

[Lord Bellingham (Con)]

My Lords, during the passage of the Bill that became the Employment Rights Act, the Minister talked a lot about consultation with small businesses—for example, the FSB, the union of independent businesses and the NFU. Can she tell the House how much support from small businesses there was for this measure and the wider measures? Will there be ongoing consultation, maybe every year, on the impact of these measures in the future?

[Baroness Lloyd of Effra (Lab)]

The terms of reference of the parental leave and pay review make it clear that we are consulting businesses and looking at the impact on the Exchequer. We will continue to consult businesses of all sizes in taking forward this suite of reforms.

British Industrial Competitiveness Scheme

Baroness Lloyd of Effra Excerpts

Wednesday 22nd April 2026 Lords Chamber

[Baroness Kramer (LD)]

My Lords, this debate picks up from the Oral Question earlier on the IMF, which warned that the global economy is losing momentum as a result of the Iran war, with the UK expected to be the hardest hit of the G7 economies. The Government need to rethink in the shadow of war, not just to watch and wait.

That brings me to BICS. We welcome plans to bring down some of the highest energy prices in the world, and we are pleased that BICS, which benefits 10,000 of the most energy-intensive businesses, will also provide a one-off payment to cover this year. However, the money will not actually come until next year, so when will those businesses, all of which have to plan ahead and need to know the details—indeed, many are negotiating a whole variety of contracts as we speak—find out exactly what they will get, including which benefits and when they will come?

Many other businesses are threatened by rising costs here and now. I am not clear that the Government have recognised the acute energy cost problems for food businesses and agribusinesses, which not only will have a huge impact on the cost of living of ordinary people but, as we are now starting to hear from some reports, might even lead in certain areas to food shortages. Surely this is a call to action, so what action can we expect?

Frankly, many SMEs, the backbone of our communities, are on the brink from many kinds of pressures, as the Government will be very much aware. SMEs are exposed to a deregulated energy market, with very little support to face it. There is widespread concern about a lack of competition, which has the effect of locking them out of good deals by which they can price energy more effectively. SMEs with more than 50 employees do not even have access to the Energy Ombudsman. The hospitality industry is an extreme case right now and, frankly, it is pretty desperate. Will the Government at the very least instruct the CMA to open an urgent investigation into the state of competition in the energy retail market for hospitality? Will they find some quick solutions for all the areas I have covered? We cannot afford for these industries to endure any more stress and potentially curtail or curb their business.

Of course SMEs need to achieve energy efficiency, but we all know that means upfront costs. Will the Government set up an energy security bank as a mechanism to provide SMEs with low-cost finance so that they can invest in energy tech? They can then repay that finance because of the savings they make, so it would be a sensible and appropriate way to generate a circle of financing. With that, we would need a real overhaul of the business rates system. At the moment, firms are penalised if they invest in productive energy saving investments made on their premises. This is surely the opposite of what the Government want. Will they take action on these fronts quickly?

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)]

I am grateful to the noble Baroness for bringing the topic back to the British industrial competitiveness scheme.

We are making this intervention because the party opposite left us with the highest industrial energy prices in Europe. When it entered office in 2010, electricity prices were 8.42p per kilowatt hour; when it left office in 2024, they were 25.97p per kilowatt hour. It is no surprise that, under the previous Government, output in the UK’s energy-intensive manufacturing industries fell to the lowest level in 35 years. That is why we have to take action. We are learning the lessons of other previous schemes to do so in a way that is responsible, keeps to our fiscal rules and is funded, focused and targeted. That is why the BIC scheme is targeted as it is. It will be of benefit and is aligned with those areas of the industrial strategy that will support the growth in manufacturing that we all want to see.

We have been clear that the conflict in Iran is not our war. We will do everything we can to shield businesses from its worst effects. The BICS has been designed as a long-term measure to support growth and competitiveness in our strategic manufacturing sectors. It is not a short-term response to fluctuations in oil prices. The best way we can progress in that sense is to de-escalate and learn the lessons of the past. Reliance on fossil fuels has caused some of this volatility. In the last decades, we have seen spikes in energy prices caused by fossil fuel shocks, which is why we are committed to our clean power mission. With clean, homegrown power, we will secure better energy security and more resilient energy supply.

I was asked about the position in the North Sea. We value production from the North Sea and its workforce. We will introduce new transitional energy certificates that will enable some oil and gas production in areas adjacent to already licensed fields linked via a tie-back or in areas that are already part of an existing field. Developers can also apply for these transitional energy certificates for production in areas adjacent to already licensed fields linked via a tie-back. But they will not be able to carry out new exploration because, regardless of where it comes from, the price of oil and gas in the UK is determined by international markets. We are price takers, not price makers. The only way to take back control of Britain’s energy and bring down bills for good is with clean, homegrown power.

Drilling in the North Sea is simply too marginal to make a difference to the overall supply of commodities traded in an international market. The North Sea has been in natural decline for the past 25 years. New licences to explore new fields would also take up to 10 years to be developed and would not make any difference to UK domestic energy production now.

The noble Baroness raised a question about the timing and implementation of the payments. In our consultation, we heard strong calls from the industry for the Government’s support to be felt sooner. That is one of the reasons why we have announced that there will be an additional payment for businesses that are eligible for the BICS. That payment will be delivered next year and will reflect the support that businesses would have received had the scheme gone live sooner.

I was asked about the scope of the BICS. It covers 10,000 electricity-intensive manufacturing businesses. Why are more businesses not eligible? The answer is that the BICS is targeted where it will have the greatest impact on growth. It focuses on the highest growth potential sectors identified within our industrial strategy, such as the car industry, aerospace and defence—those most exposed to high electricity prices. It is right that we implement this tailored scheme for them so that we give those businesses a fair shot at winning in the global economy.

On timing, the BICS will be delivered next year, in line with the commitment set out in our modern industrial strategy. The exemptions on bills will take effect from April next year for the renewables obligation and the feed-in tariff levies. Exemptions from the capacity market levy will then kick in from next October. In our consultation paper, we have set out the regulatory changes and the scheme delivery to make sure that the BICS works effectively.

On support for SMEs and the hospitality sector, we are closely in touch with other sectors. We are engaged in supporting the development of high streets and hospitality with sense of place. The scheme will be open to SMEs in those eligible sectors, and I encourage any businesses that are considering whether they are eligible to consult the eligibility checker, which we will make available in the summer, to see whether they qualify, and then to go through the process of applying for the BICS.

The BICS is an excellent targeted scheme that will bring down electricity prices, with an average discount of 25%. For those businesses, it will bring electricity costs in line with other economies in Europe, and it will set us up over the long term as we create the pro-business, pro-investment environment that we need for growth.

[Lord Gove (Con)]

I congratulate the Minister on the beautiful complexity of a scheme that picks winners and allocates taxpayers’ money to those winners so that they can avoid paying a subsidy to other winners that have been picked in the energy sector. Tony Benn would be proud.

My home city is Aberdeen. Given how competitive the energy sector is overall, can the Minister tell us: as a result of this and other government interventions, over the next five years will the number of jobs in the energy sector in Aberdeen rise or fall?

[Baroness Lloyd of Effra (Lab)]

On support for the transition, we have set out a lot of detail on the energy transition with the Clean Energy Jobs Plan. On the North Sea specifically, the North Sea Future Plan sets out how we will scale up our North Sea clean energy industries, such as the government-backed Acorn, Viking and East Coast carbon capture clusters, the UK’s first regional hydrogen network and our plan to host the world’s biggest offshore wind farm. We are very supportive of places and industries as they transition from fossil fuel economies to the clean power agenda.

[Lord Sikka (Lab)]

My Lords, all businesses and households deserve lower energy bills. This can be done by cutting the profit margins of energy companies. Since 2020, they have made £125.7 billion in profit, which is roughly £4,400 per household, and inflicted enormous pain on businesses and households. I am sure the Minister knows that countries with significant public ownership of energy have lower energy bills. When and how will the Government eliminate profiteering in the energy sector and build a resilient economy?

[Baroness Lloyd of Effra (Lab)]

The noble Lord raises the question of the business environment and electricity prices. One of the most important things for businesses around energy prices, business confidence and investment capability is the fiscal situation. Last week, the IMF welcomed the UK’s notable improvement in our public finances, with the economy growing by 0.5% in the three months to February. Taking long-term steps to create a stable economy will enable sound finances, lower prices and enable investment in energy over time, which will bring prices down.

[Lord Lansley (Con)]

My Lords, the alleviation of the high policy costs imposed on energy-intensive and internationally competitive manufacturing in this country is to be welcomed. I will ask a question about the manufacturing sectors that will benefit from the BICS. These are the industrial strategy’s eight sectors and the related foundational technologies, but that leaves out some key manufacturing sectors. The Minister will have heard what was said in the other place about ceramics, and I want to ask about food manufacturing, which is our largest manufacturing industry. It is highly internationally competitive, but exposed to a great deal of international competition. It is often energy-intensive. Given what is happening in the agritech sector, there is considerable potential for growth. I never thought that the industrial strategy’s eight would be designed to leave others behind. I hope that this Minister will give food manufacturing and ceramics the opportunity to make their case as well.

[Baroness Lloyd of Effra (Lab)]

The noble Lord is right that there are many thriving and growing businesses, industries and sectors in the country. Not all of those are going to be covered by the BICS. In the eligibility consultation that we put out before this confirmation, that was one of the questions that we consulted on. We expanded the scope, from the beginning to the end of the consultation, from what we thought was going to be about 7,000 businesses to 10,000 businesses. The focus of the scheme is on the strategic manufacturing sector supporting frontier industries, as the noble Lord mentioned, and foundational manufacturing industries. We are looking carefully at supply chains—for example, fertiliser availability and cost—as we monitor the impact of the current situation in the Middle East.

[Earl Russell (LD)]

My Lords, I thank the Minister for her response. I pick up on a point that my noble friend made as part of her formal response to the Statement in relation to the retail energy market. The Minister may need to go away and think about it, and that may well be the answer. Does the Minister admit that there is scope for further action to make sure that the retail energy market is more competitive and that SMEs are able to secure good energy deals, there is competition in that market and they have access to the ombudsman scheme?

[Baroness Lloyd of Effra (Lab)]

The noble Earl has raised the question again and he is right to draw my attention to the fact that I did not address it the first time round. This scheme will be subject to the Subsidy Control Act and the necessary declarations. That detail is set out in the consultation paper that we published. On his specific question about the CMA and the retail energy market, I will revert to him.

[Baroness Dacres of Lewisham (Lab)]

My Lords, while the scheme supports energy-intensive sectors, can my noble friend the Minister set out how it will strengthen the competitiveness of our manufacturing base while still supporting jobs and growth in our communities across the country?

[Baroness Lloyd of Effra (Lab)]

I thank my noble friend for her question. The BICS will bring down electricity costs in line with other economies in the EU14, cutting costs by £35 to £40 per megawatt-hour, which will enable businesses to compete. The scheme is open to businesses of all sizes in Great Britain and is aligned with all the support that is going into the industrial strategy, including investment in skills and people.

[Lord Fuller (Con)]

My Lords, in a survey of its members, which produce the essential chemicals that drive our manufacturing economy, the Chemical Industries Association reports that those members are suffering from increased energy costs and raw material costs, that output is down and that whole branches of the industry are at risk of closure. For food businesses, protective atmospheres are at risk. For medical businesses, vaccines are harder to produce. For defence businesses, ballistic protection, clean energy and nuclear safety are at risk. Does the Minister accept that the BICS money is spread so thinly as to be irrelevant for the largest energy users? Does she agree that these large businesses need help now, not in 12 months’ time? The 1,000 jobs a month that are being lost in my noble friend’s area, Aberdeen, in related energy businesses cannot wait for the Government’s BICS.

[Baroness Lloyd of Effra (Lab)]

This is a long-term support programme to support industries in line with the industrial strategy. I have heard calls to expand and deepen the scheme. We have designed the scheme to support about 10,000 businesses that are aligned with the manufacturing frontier industries and the foundational industries, such as chemicals. They will get that support. We have heard the calls to act sooner and for transitional relief. That is why there will be a payment next year, reflecting the situation had the scheme been applied this year.

[Lord Johnson of Lainston (Con)]

My Lords, I was extremely excited about this debate today. I saw “British Industrial Competitiveness Scheme” and raced to read the Minister’s Statement. But all I see in it is simply a series of taxes that were being levied on businesses being discounted back to them, as my noble friend Lord Gove said. Why are we engaging in such a complex progress?

To pick up on a point made by the Minister, she said that there was no point in exploiting our North Sea oil and gas assets because it would not shift the global price. That is like saying that we should not grow wheat in this country because it will not shift the global price. The tragedy is that we have everything in this country. We are a wealthy country—we are as wealthy as any country in the world in our natural fossil fuel resources. It beggars belief that we could actively decide, in this act of self-harm, to limit the opportunity for our nation to access these resources. What needs to change for the Government to change their mind and take advantage of what God has given us? That is what businesses really want.

[Baroness Lloyd of Effra (Lab)]

We have seen the damage that volatility and energy price spikes have caused in the past. That is why the long-term plan towards a clean energy future will bring more stability, more resilience and more homegrown power.

In respect of the North Sea, as I mentioned earlier, we will introduce new transitional energy certificates that will enable some oil and gas production in areas adjacent to already licensed fields that are licensed via a tieback or areas that are already part of an existing field. That is what we are doing. The only way to take back control of Britain’s energy and bring down bills for good is with clean, homegrown power.

[Baroness McIntosh of Pickering (Con)]

My Lords, I shall press the Minister on North Sea oil, as she rehearsed it this afternoon. We just had a debate on clean energy. My noble friend Lord Moynihan on the Front Bench said that 70% of gas imports to the UK are coming from Norway and that they are potentially under a challenge from the Norwegians because they are not that keen on exporting their oil to a third country. Are the Government apprised of that? That surely should be setting off alarm bells about why we need to take more oil from the North Sea.

Can I also just press the Minister on the urgent case for the phytosanitary agreement to be reached with the European Union? As my noble friend Lord Lansley said, our largest export now is food manufacturing. Salmon is part of that, and it is obviously very perishable. It is vital that we get a phytosanitary agreement with our nearest importing neighbours at the earliest opportunity.

--- Later in debate ---

[Baroness Lloyd of Effra (Lab)]

The noble Baroness is right that resetting the relationship with the EU is a priority for the Government. We are working across a number of fields to progress all the dossiers that we have set out across energy, food, SPS and so on.

In respect of the noble Baroness’s specific question around Norway, I am not aware of that, and I may have to revert to her on it. I am not aware of any issues around security of supply for fuel, oil and gas or any issues of that kind.