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.

Package Travel and Linked Travel Arrangements (Amendment) Regulations 2026

Baroness Lloyd of Effra Excerpts

Tuesday 21st April 2026 Lords Chamber

Moved by

[Baroness Lloyd of Effra]

That the draft Regulations laid before the House on 2 March be approved.

Relevant document: 55th Report from the Secondary Legislation Scrutiny 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 welcome the chance to explain why these regulations are important, why an update to the current framework is necessary and how our approach safeguards holidaymakers while helping the travel industry to prosper.

Travel is central to everyday life for millions across the United Kingdom. For many households, a holiday is the biggest non-essential purchase they will make each year. Holidays support well-being and create precious shared moments for family and friends, as well as offering opportunities to discover new places, food and culture in the UK and abroad. The sector is also a major contributor to the economy, accounting for around £58 billion of UK output and supporting more than 1 million jobs.

Package holidays are a substantial part of that picture. In 2022 the UK package holiday market was worth around £11 billion, spanning high street agents, airlines, accommodation providers and small tourism firms across the country. Each year roughly 15 million to 20 million people in the UK take a package holiday, often choosing that option for its convenience and the additional protections it provides. The package travel regulations sit at the heart of those consumer protections, and these amendments are designed to help businesses to succeed while protecting holidaymakers. Put simply, the regulations are there to ensure that the package travel market functions properly. They reassure consumers, who often pay well in advance, sometimes many months before travelling, and they give traders a clear set of rules within which to operate. In practice, the framework provides insolvency protection if a firm fails, requires clear pre-contract information, sets out who is responsible when things do not go to plan and limits unexpected price increases after a booking is made.

These protections are valued by travellers and reputable operators alike, but they are effective only when they are clear, well understood and proportionate. Experience has shown that some parts of the current regime are not delivering as intended—they can be confusing for consumers and unnecessarily complicated for businesses. Following extensive engagement with industry, consumer bodies and other stakeholders, the Government have identified a set of targeted, practical reforms that will better serve both travellers and traders.

First, we will abolish the current category of linked travel arrangements. At present, LTAs sit somewhere between a package and a simple stand-alone booking and require businesses to put insolvency protection in place. However, the evidence is clear that this category is not meeting its original aim. Too often, consumers cannot tell whether protections apply and businesses are left uncertain about the precise obligations they must meet. That lack of clarity helps nobody. It can weaken confidence, drive up disputes and create avoidable costs, particularly for smaller operators.

Under these reforms, where a consumer makes bookings that in practical terms look and feel like a package—for example, purchasing multiple travel services through the same trader during a single visit—they will receive package protections. This will bring consumer protections in line with how people reasonably understand their booking. Alongside that, we will ease requirements for businesses that do no more than facilitate a customer to make a second booking within 24 hours. That means, for instance, that domestic tourism businesses can signpost customers to one another without automatically triggering wider regulatory obligations, supporting partnership and growth, while consumers remain protected by wider consumer law.

Secondly, reflecting the complex web of relationships involved in delivering a package holiday, we will make new provision to bring greater certainty about refunds and redress where organisers rely on third-party suppliers. Where services are cancelled, organisers will be entitled to receive funds from those third parties within 14 days, aligning organisers’ refund rights with those of consumers. We will also clarify the rules governing organisers’ ability to seek redress from third parties so that financial risk is shared more fairly across the supply chain.

For consumers, removing the confusing linked travel arrangements category and setting out more clearly when package protections apply will make the rules easier to navigate. Greater clarity reduces uncertainty and disputes, helps people book with confidence and reinforces trust in the market. When consumers are treated fairly, they are more likely to return, supporting growth and, in turn, the wider economy.

Consistent, high-quality protections encourage people to book with confidence, which in turn supports demand and rewards those businesses that comply with the rules. For businesses that sell packages, these proposals simplify compliance by removing unnecessary complications. At the same time, strengthening clarity around redress from third-party suppliers means that costs and liabilities can sit more appropriately with those responsible for failures. That will support better planning, healthier cash flow and more effective collaboration across the sector. Subject to parliamentary approval, the regulations will come into force in April 2027, giving the sector almost a year to prepare for and implement the new arrangements.

To conclude, the package travel regulations support a relationship that is both complex and essential, between holidaymakers and the businesses that serve them. Consumers depend on firms to deliver trips that are frequently paid for long before departure and businesses depend on consumer confidence to invest and grow. These regulations make the relationship work by setting out clear rights and duties for both sides. The amendments preserve the central bargain: strong and trusted protections for consumers, alongside a regime that is practical, workable and proportionate for businesses. The reforms demonstrate the Government’s determination to uphold strong consumer protections while stripping away unnecessary red tape, helping travel businesses flourish and supporting growth in every part of the UK. I beg to move.

[Viscount Thurso (LD)]

My Lords, I declare my interests as president of the Tourism Society of the United Kingdom, and all the other things I am involved in within the hospitality industry—none of which now, sadly, is remunerated. I congratulate the Minister on underlining the importance of the hospitality and tourism industry to the United Kingdom. Certainly, I believe that it is one of our great growth industries and has tremendous potential for the future.

We are supportive of these proposals, which are broadly very sensible. The travel industry and the whole way in which people book their holidays have changed dramatically in my working lifetime and particularly over the last 15 or 20 years. The 2018 regulations were an attempt to corral some of the worst practices that were going on, with the development of the internet in particular. That they have been reviewed and considered and these proposals have been brought forward is indeed welcome. Getting rid of the two types of linked package, type A and type B, with type A going into the full package and type B disappearing, will be very welcome to many SMEs in particular. Frankly, my own little business in Scotland, that was probably in B, will be a beneficiary of that.

I have spoken to as many people in the industry as I can, and there is broadly a great welcome. I ask the Minister to keep a close eye on the implementation. I am glad that the year has gone in to give people time to make the necessary changes. There are some concerns about costs. The cost to business over 10 years, which is estimated at £98 million but offset by gains of £117 million, falls on slightly different people, so there are winners and losers in this. Broadly speaking, that is not a huge factor, but I think we should keep an eye on where the costs are just to make sure that we have got that right. I ask the Minister to continue to consult with the industry, both on the implementation of these regulations and what might be done to improve them in future. With that, I welcome their introduction.

[Lord Sharpe of Epsom (Con)]

My Lords, I follow the noble Viscount in agreeing that the consultation needs to be ongoing, and I will come back to that theme in a second. It is important that the Government reduce the administrative burden as well as protecting consumers, and this legislation attempts to do so. The Government say that the purpose of the package travel framework is to give consumers appropriate protections while also supporting growth, innovation and collaboration in the travel sector.

Therefore, there are parts of this instrument that we support. The removal of the confusing linked travel arrangements category and the clarification of rights around redress from third parties respond to genuine problems. The Government say that the present framework creates confusion for consumers and unnecessary complexity for businesses, and that stronger, clearer rules can support confidence and demand. But the real question for the House is whether the Government have listened carefully enough to what businesses told them in the consultation—a point I will come back to.

The Government’s own consultation response says:

“Stakeholders consistently highlighted the disproportionate compensatory obligations the regulations place on travel operators … especially in relation to being the compensator of last resort”.


It also records concern about the interaction between ATOL and the package travel regulations for firms selling both flight and non-flight products.

First, on domestic packages, the Government found that 65% of respondents supported exempting UK-only packages without passenger transport from the regulations. Accommodation providers and leisure businesses said the current rules can discourage them from offering simple bundled products. Some said the legal and insurance responsibilities attached to packaging up a stay with an activity or voucher act as a deterrent, especially for smaller operators, but the Government have ultimately decided not to proceed.

My first question to the Minister is this: if the Government accept that many domestic tourism businesses are being discouraged from innovating, what practical alternative are they offering those firms today? If they will not legislate in this area, how exactly will they help smaller domestic operators to bring new products to market?

Secondly, on insolvency protection, the Government say that trust providers supported allowing organisers to combine trust protection with bonding and that 57% of respondents said that greater flexibility would help businesses meet their obligations, but the same response also makes it clear that industry fears piecemeal reform. Businesses warned that more flexibility without clearer trust account rules, stronger insurance obligations and better oversight could actually weaken protection and widen the gap between regulatory intent and industrial reality. My second question to the Minister is: what work is the department doing to address the broader structural problems that businesses have identified on insolvency protection, rather than leaving them unresolved, and what timetable is there for that work?

Thirdly, on redress and refunds from third parties, the move to create a 14-day period for refunds of cancelled services and clarify that there is a right to redress is welcome, as far as it goes. However, there are ongoing difficulties with enforceability, especially against overseas suppliers, so my third question is: what use is a strengthened right to redress if a small or medium-sized organiser still cannot enforce it effectively against a supplier overseas, and what support enforcement mechanisms will the Government put in place?

Fourthly, on other tourist services, the consultation exposed a real problem for many smaller businesses. The Government found that 55% of respondents wanted the “significant proportion” test removed. This test is used to decide whether an added tourist service, such as an excursion, spa treatment or event ticket, is valuable enough compared with the rest of the booking to make the whole arrangement a regulated package holiday. A modest add-on can become a significant proportion simply because the room rate is low, drawing smaller firms into regulation more easily than larger ones selling the same product. So my fourth question is: what further work will the department do with industry to produce a clearer and fairer test for other tourist services, particularly for smaller operators who say the present rules can work against them?

There is a further concern that we feel Ministers have not properly answered. Under the Government’s approach, firms may no longer be fully in control of when they are selling a package. The industry’s concern is that package status could be triggered not by a deliberate commercial decision of the operator but by the behaviour of the consumer during a single online journey. That matters because full package status brings with it major legal obligations including insolvency protection, organiser liability, refund obligations and, of course, wider compliance costs. The gateway concepts on which this reform depends—the “single visit” and “facilitates”—remain undefined in legislation. Businesses are being asked to accept materially greater liability, while the key terms determining when that liability arises are still unclear.

That lack of clarity creates a risk of unintended package organisers. Hotels offering add-ons, airlines selling accommodation or car hire through third-party plug-ins, and banks, supermarkets or white-label distributors that host travel products may all find themselves pulled into package organiser status without ever having consciously chosen to enter that market. The Government say that these reforms will make the rules clearer for consumers and support compliant businesses, but many in the industry fear the opposite: that it will mean more uncertainty for firms, more complexity in compliance systems and more scope for accidental liability. Can the Minister confirm that her department will publish statutory or regulatory guidance defining “single visit” and “facilitates” before any commencement date takes effect, so that operators at least have legal certainty about the scope of the new package definition?

There is one final question that I feel obliged to ask, because the Act under which this regulation is being made, namely the Retained EU Law (Revocation and Reform) Act 2023, actually expires in June this year. What replaces it? That is a question which my noble friend Lord Moylan asked during a debate on a transport SI recently, and to which the Government have yet to provide a satisfactory answer. Could the Minister have another go now, please?

We will not oppose these regulations today. However, I hope that the Minister can answer the questions I have raised.

[Baroness Lloyd of Effra (Lab)]

My Lords, I thank noble Lords for their contributions to this debate on the Package Travel and Linked Travel Arrangements (Amendment) Regulations 2026, and for underlining the importance of the sector. I also thank the noble Viscount, Lord Thurso, and the noble Lord, Lord Sharpe, for welcoming the measures we are putting forward today to simplify the rules. We will keep a close eye on implementation.

--- Later in debate ---

[Lord Sharpe of Epsom (Con)]

I welcome the Minister’s commitment to talk to the industry more about these regulations, but can she commit to listening to what they have to say? The reason I mention that is that the option to absorb LTA(A) into the package definition was never presented to the industry as a specific, serious or preferred option—the closest it came was as one of four multiple-choice questions. It is very important that the industry be listened to when it is airing its concerns, particularly about single visit and facilitation. I ask that of the Minister, and I apologise for delaying her.

[Baroness Lloyd of Effra (Lab)]

Yes, we will.

Motion agreed.

Britain’s Battery Future Report

Baroness Lloyd of Effra Excerpts

Monday 13th April 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)]

I thank the noble Baroness for her contribution to the commission and its report. A resilient domestic battery sector is essential to the future of our automotive industry, our energy security and our transition to net zero. The Government have demonstrated our commitment to support the UK’s battery and electric vehicle sectors in the modern industrial strategy, including the UK’s record commitment to battery research and development through the battery innovation programme.

[Baroness Northover (LD)]

Our major market is the EU, where shortly we must show that significant value in manufactured goods must originate here or in the EU. In the case of EVs, as the Minister will know, that is the battery. Does she agree, even having said what she has said, that we do not yet have the EV battery gigafactories on the scale we need? The commission on which I served made 10 recommendations. What is the Government’s response, in particular, to the urgent need to attract a major manufacturer to drive the economic incentives to put battery gigafactories in place before we are too late?

[Baroness Lloyd of Effra (Lab)]

As the noble Baroness highlights, the UK understands the need for gigafactories. We have two gigafactories committed to delivering a combined 55 gigawatts of capacity by 2030. We largely agree with the thrust of the recommendations in the report. On the specific question of attracting another major OEM, led by my noble friend Lord Stockwood, the Minister for Investment, the Office for Investment and the department are engaging global EV manufacturers to invest further in the UK, and we are utilising our comprehensive support offer, including DRIVE35 and the battery innovation programme grants, as well as potential national wealth fund support, to proactively engage potential OEM investors.

[Lord Sharma (Con)]

My Lords, the Minister mentioned gigafactories, and we need to speed up the process of getting more gigafactories operational in the UK if we are not to miss out on investment and jobs. She also mentioned electric vehicles. The Labour Party manifesto did not include any road pricing measures, yet from 2028 we will have road pricing for electric vehicles and hybrids. Can the Minister tell the House whether she and her department are involved in any discussions across government on a further expansion of road pricing, perhaps to cover all vehicles on our roads?

[Baroness Lloyd of Effra (Lab)]

We are supporting the performance and efficacy of the ZEV mandate in the transition to additional electric vehicles on the roads and in line with our net-zero commitments. We are supporting that through a range of measures to support people to transition to zero-emission vehicles and to support the expansion of charging infrastructure. On the question of road pricing, let me follow up with the noble Lord and write to him on that question.

[Lord Ravensdale (CB)]

My Lords, I declare my interest as a chief engineer working for AtkinsRéalis. High electricity prices feature strongly in the report as a barrier to investment. There is no easy fix here, but does the Minister agree that the Government need to take a more fundamental look at the electricity market, whether that involves market reform or system design, because prioritising cheap as well as clean electricity is fundamental to the future of industry and growth in the UK?

[Baroness Lloyd of Effra (Lab)]

We have set out in our Clean Power 2030 Action Plan a road to energy security, and to the clean power the country needs, to provide clean energy for the future as well as securing our energy independence. We have seen the importance of that in recent months. We have also taken steps to cut energy costs for industry, particularly in areas of the industrial strategy that are especially energy-intensive.

[Lord Young of Cookham (Con)]

My Lords, further to the Question of the noble Baroness, Lady Northover, what steps are the Government taking to secure a domestic supply chain for battery materials, to reduce our dependency on China?

[Baroness Lloyd of Effra (Lab)]

The new critical minerals strategy sets out the ambition to meet 10% of the UK’s demand from domestic production and 20% from recycling, and no more than 60% of any critical mineral from a single country. For battery supply specifically, the ambition is to produce at least 50,000 tonnes of lithium in the UK in the next decade. The most recent round of battery innovation programme collective R&D grants have refunded recycling projects to fulfil these goals.

[Lord Barber of Chittlehampton (Lab)]

My Lords, I thank the Minister for the work she is doing on this subject. I want to draw attention, in my role as chancellor of Exeter University, to three things in the south-west that she might not be aware of. Agratas, in Somerset, is building the biggest EV battery plant; Altilium in Devon is recycling lithium in a dramatic way; and in Cornwall, lithium is being mined. Putting the whole cycle together, would the Minister like to visit the south-west—or send one of her officials to visit these plants—to see what it is doing on this important theme?

[Baroness Lloyd of Effra (Lab)]

My noble friend is absolutely right to highlight the role of the south-west. Last week, the Secretary of State announced during a visit to Agratas in Somerset a £380 million government grant, which will support the construction of one of Europe’s largest gigafactories, notably built using 100% British steel. But if I get the chance, I would very much like to take up his suggestion.

[Lord Fox (LD)]

My Lords, notwithstanding the developments that the Minister just spoke of and her Answer to my noble friend’s Question, it is clear that significant elements of battery vehicles will not be made in this country in time for the 2027 review of the rules of origin requirements, nor will they be there to meet the “Made in Europe” requirements which are likely to come in. Can the Minister tell your Lordships’ House what the Government are doing in advance of those negotiations to make sure that British electric cars will be able to be sold in the European Union?

[Baroness Lloyd of Effra (Lab)]

The noble Lord is right to highlight the importance of the EU as the largest market for UK-manufactured cars. The EU remains the UK automotive sector’s largest trading partner. We are talking closely with the EU on all aspects of regulatory developments in respect of EU battery rules, the EU digital battery passport and the “Made in Europe” content rules, because we want to continue to press the EU to avoid any detrimental impact on the UK and EU’s automotive sectors, given the integrated UK-EU supply chains.

[Lord Hunt of Wirral (Con)]

My Lords, according to the Society of Motor Manufacturers and Traders, the Government’s EV mandates imposed an industry-crushing £6 billion-worth of costs on manufacturers in 2024 alone. This is putting the 183,000 jobs which this sector supports at considerable risk. If the Government want the EV transition to endure, surely, they must proceed at a pace that industry can bear. Is it not now time to reverse these mandates, as the Official Opposition, I am happy to confirm, are committed to doing? Can we not now bring industrial policy back in line with economic reality?

[Baroness Lloyd of Effra (Lab)]

We are monitoring the performance and efficacy of the ZEV mandate and last year we introduced additional flexibilities, providing manufacturers with more tools to decarbonise in a way that protects jobs and boosts investment. We have a large range of measures to support people to transition to zero-emission vehicles, including salary sacrifice schemes, generous company car tax rates for electric vehicles and the new electric car grant, as well as support for local EV infrastructure to support the transition.

[Lord Boateng (Lab)]

My Lords, two-thirds of the world’s production of cobalt comes from the Democratic Republic of the Congo. The UK produces no cobalt whatever, yet our EV manufacturing industry relies heavily upon cobalt. Cobalt is extracted in Africa using child labour, with damage to the water aquifer and a range of other environmental and political degradation. What steps are the UK Government taking to ensure that their cuts in ODA do not impact adversely on countries such as the DRC?

[Baroness Lloyd of Effra (Lab)]

My noble friend is right to highlight the importance of battery supply chains and the challenges of potential forced labour exposure, particularly upstream, in raw material extraction and in refining stages. The UK is supporting international frameworks such as the UN guiding principles and the OECD guidelines so we can contribute our expertise in responsible mining and enable UK businesses to play a role in the development of global supply chains with strengthened due diligence.

Artificial Intelligence: Impact on Employment

Baroness Lloyd of Effra Excerpts

Monday 13th April 2026 Lords Chamber

[Baroness Berger]

To ask His Majesty’s Government what assessment they have made of the impact of developments in artificial intelligence on current levels of employment.

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

The AI and the Future of Work Unit has been set up to research and monitor AI’s economic and labour market impacts and to provide policy advice. The unit published its first assessment in January, finding that AI capabilities are progressing rapidly and noting that hiring has been falling faster in occupations more exposed to AI, although it stressed that whether AI is responsible for these patterns remains unclear. To further increase the Government’s capability to monitor and anticipate AI’s economic impacts, the Chancellor announced a new AI Economics Institute supplementing the future of work unit with a broader focus on the economics of AI.

[Baroness Berger (Lab)]

My Lords, we already know there is a growing challenge in the graduate job market exacerbated by AI, as we have recently discussed in your Lordships’ House. A study by King’s College London has shown that senior leaders across all job markets will be needed who cannot be replaced by AI. What plans do the Government have to ensure there is no dearth in senior leadership further down the line due to a lack of entry-level recruitment?

[Baroness Lloyd of Effra (Lab)]

The Government recognise that entry-level roles are important for building skills and progression pathways that underpin future leadership capability. Progression to senior leadership depends not only on job numbers but on the quality of training and in-work development. The Government want everyone to have access to the best opportunities, no matter what stage they are at in their career. Through the £1.5 billion youth guarantee and the growth and skills levy, we are expanding high-quality training, apprenticeships and workplace experience so people can progress in a changing, AI-enabled labour market.

[Lord Kirkhope of Harrogate (Con)]

My Lords, one of the good things about the Government’s industrial strategy was the establishment of regional professional businesses and services hubs, partly to look into the provision of AI services, supported by Skills England which was to map where AI skills gaps were. Will the Minister please update us on when those hubs will be operational and when Skills England will produce their first statistics?

[Baroness Lloyd of Effra (Lab)]

Reducing the AI skills gap and understanding the impact of the labour market’s change due to AI is indeed something that we are looking at closely. DSIT regularly reviews the AI labour market and skills gap, and we are working with Skills England to fully understand the needs. I will need to update the noble Lord on the role of the regional centres he mentions after this session.

[Lord Clement-Jones (LD)]

My Lords, the Government have cited their own Ipsos research that 84% of people at work have not undertaken any AI training in the past 12 months. The Government’s AI skills boost programme is welcome, but it is not enough. Will the Minister commit to personal learning accounts, giving individuals genuine choice over their upskilling, and to prioritising putting the creativity and critical reasoning at the heart of the national curriculum that AI cannot replicate?

[Baroness Lloyd of Effra (Lab)]

The noble Lord is right that AI poses challenges and opportunities to those in the labour market. The AI skills boost programme that the Government have announced is extremely ambitious in its reach. It will see a major expansion to upskill 10 million workers, which is a huge endeavour and will see the UK fit to grab the opportunities of the AI technology that is coming today.

[Lord Empey (UUP)]

My Lords, will the Minister tell the House what discussions she has had with our universities and colleges of further education to assess what changes they are making in the curriculum that they are offering to students and the nature of those? There is a risk with AI that a lot of junior degree activity will be removed. It is therefore also important to find out what research these institutions are undertaking to try and assess the future implications.

[Baroness Lloyd of Effra (Lab)]

We work closely with Skills England and with the DfE to understand the changes that AI is bringing and what that means in terms of the education system, what skills students need to develop and how to apply them. We are supporting the expansion of AI education in universities, for example through the TechLocal AI degree accelerator. This is a conversation that is ongoing. As the noble Lord suggests, it is something that we need to be very mindful of.

[Baroness Nargund (Lab)]

My Lords, I declare my interest as chair of The Pipeline, a gender parity consultancy. Our latest research has shown that 43% of young women entering the workforce are concerned that AI will replace them. Given that AI is increasingly taking over administrative tasks and that women are overrepresented in administrative roles, what assessment have the Government made of the gendered impact of AI on employment? What targeted plans are in place to support all those in the workforce, particularly young women, with AI training and upskilling opportunities?

[Baroness Lloyd of Effra (Lab)]

My noble friend is right that there may be differential impacts throughout the labour market. ONS analysis suggests that administrative roles may see greater transformation from AI, while our AI adoption research shows that marketing, administration and IT are the most common areas of current or planned use. The AI and the Future of Work Unit is monitoring sectoral and distributional impacts, including on gender and region. We will support those through the commitment to upskill 10 million people by 2030 and, alongside the Women in Tech Taskforce, to champion diversity in the UK tech sector.

[Viscount Camrose (Con)]

My Lords, I declare my technology interests as set out in the register. We should be cautious about the assumption that improved AI skills alone will enable job seekers to adapt to a changing labour market. The misapplication of AI in recruitment often generates unmanageable volumes of synthetic job applications, making it impossible to identify genuinely qualified candidates. Without an efficiently functioning recruitment market, the Government’s efforts to boost employment will be even less effective than they currently are, so will the Minister please encourage the future of work unit to look into the matter urgently?

--- Later in debate ---

[Baroness Lloyd of Effra (Lab)]

The noble Viscount has rightly highlighted the importance of responsible AI in recruitment guidance. As he knows, the Government have set out good practice for recruitment practitioners and agencies in procuring and deploying AI systems for HR and recruitment. I am sure that this will be a topic that the future of work unit will consider as it takes forward its work.

[Lord Londesborough (CB)]

Does the Minister agree that AI is becoming a rather convenient punchbag for our rising unemployment? Are not the real culprits low growth, poor productivity and increasing costs and taxes on jobs? If so, why not focus on the opportunity rather than the perceived threat and do more to encourage the creation of new roles around AI, notably in the fields of technology, data and financial services?

[Baroness Lloyd of Effra (Lab)]

Indeed, the OECD estimates that widespread AI adoption could boost UK productivity by 0.4 to 1.3 percentage points annually. That is why we have an AI Opportunities Action Plan and why we have already progressed 38 of the 50 recommendations. The AI sector already employs 86,000 people in the UK and is growing rapidly. We are doing everything we can to support the safe and sustainable adoption of AI so that companies and workers can benefit.

[Lord Vaizey of Didcot (Con)]

My Lords, the noble Lord’s question was spot on, but may I focus on a slightly different area? I read over the weekend that Anthropic has produced software that it now deems too dangerous to launch publicly because of its huge impact on cyber security. This artificial intelligence is apparently able to crack all the flaws and bugs in cyber security systems, which obviously could have a devastating impact on our economy, given that it is now so digitally based. What plans do the Government have to discuss this concerning issue with Anthropic?

[Baroness Lloyd of Effra (Lab)]

We take the security implications of frontier AI seriously. Through our AI Security Institute, we have world-leading expertise in this area and maintain continuous engagement with global technology leaders. For obvious reasons, I am not going to comment on the specifics of all those engagements, but, in order to stay ahead of evolving threats, businesses should act now to strengthen their online defences. The NSCS’s guidance outlines how to secure Cyber Essentials certification and patch vulnerabilities quickly. AI capabilities are moving fast, but strong fundamentals are still effective.