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.

AI Growth Lab

Baroness Lloyd of Effra Excerpts

Thursday 26th March 2026 Lords Chamber

[Lord Holmes of Richmond (Con)]

I beg leave to ask the Question standing in my name on the Order Paper and declare my interests as set out in the register as adviser to Endava plc, the Crown Estate, Submer Ltd and Simmons & Simmons LLP.

[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 growth lab is a regulatory sandbox designed to accelerate AI innovation and adoption across the UK in a supervised and safe setting. In the recent call for evidence, we asked for views on how best to operationalise the AI growth lab. Responses are being carefully considered in ongoing policy development and will inform forthcoming legislation that we intend to bring forward.

[Lord Holmes of Richmond (Con)]

My Lords, the AI growth lab is an excellent intervention. We have a great tradition in this country of sandboxes, and this follows on from there. It will require primary legislation, and it is not alone in that: there is an increasing number of areas where the Government say they want to act in terms of AI, all of which will require primary legislation. Rather than taking a bit by bit, Bill by Bill approach, does the Minister not agree that clarity, consistency and coherence will be better served by bringing forward a cross-sector AI Bill that would be good for the citizen, the creative, the consumer, the innovator and the investor? Will the Government take the opportunity of the upcoming King’s Speech to bring forward such a Bill?

[Baroness Lloyd of Effra (Lab)]

The noble Lord has a great deal of expertise in this area and, as he knows very well, AI is a technology that has many different applications. We are committed to a context-based regulatory approach where most AI systems are regulated at the point of use. As a novel technology, it can develop in areas which cross regulatory barriers or give particular opportunities for new product and service development. That is the reason for the AI growth lab, which will model a new approach to regulation, with the power to make rapid temporary amendments to regulation to safely test and prove application. As the noble Lord says, the UK’s experience of sandboxes is emulated around the world.

[Viscount Colville of Culross (CB)]

My Lords, any AI growth in this country will depend on trust between tech companies and content rights holders. This will depend on robust transparency requirements being created, and quickly. However, the Government, in their report on AI and copyright last week, said they were going to sit on their hands and monitor the effects of transparency rules in other countries. Why is this country not taking the lead on this crucial issue to create a world-class, transparent copyright system for AI development?

[Baroness Lloyd of Effra (Lab)]

As the noble Viscount knows, we published our report and impact assessment on AI and copyright and we have outlined three or four specific areas we will be taking forward, including digital replicas, AI labelling and looking at mechanisms for creatives to control their works online. It is clear that we need to keep considering the approach and we have not as yet found a solution that will address all the concerns.

[Earl Russell (LD)]

My Lords, the Government have conspicuously rebranded their AI Safety Institute as the AI Security Institute and have been shifting their language from “safety” to “growth”. Can the Minister confirm that safety obligations will be among the regulatory red lines that can never be modified in the sandbox, and, if safety is genuinely protected, why are the Government so reluctant to bring forward safety duties in a proper AI Bill?

[Baroness Lloyd of Effra (Lab)]

There will indeed be safeguards built into the AI growth lab. Modification powers would operate with robust safeguards to protect fundamental rights and safety. The lab’s design must balance the need for rapid reform and, as both noble Lords have mentioned, the importance of retaining public trust and confidence in the UK’s high regulatory standards.

[Lord Hunt of Kings Heath (Lab)]

My Lords, I understand the need for proportionate regulation in this area, particularly because the UK already has considerable investment and wishes to see more investment in the future. But there is one area, superintelligent AI, where there is the potential for loss of control, particularly over defence and security systems, and where some legislation is required to prevent some of these developments. In taking this forward, will the Government consider this?

[Baroness Lloyd of Effra (Lab)]

The specific proposals around the AI growth lab are separate from considerations on the development of superintelligent AI and the risks that poses. We are extremely fortunate in the UK to benefit from the AI Security Institute, which is testing those models and is also able to advise the Government, and indeed the wider economy and all market participants, on the risks that superintelligent AI may pose. As we speak today, it is uncertain exactly what some of those risks are.

[Lord Vaizey of Didcot (Con)]

My Lords, we have had a plethora of initiatives on AI. We had the welcome announcement of the sovereign AI fund last week. All of them are welcome individually: Innovate UK, ARIA, the AI Security Institute, the British Business Bank, and the National Wealth Fund. Could we perhaps have a moratorium on announcements of AI initiatives and perhaps an overview and co-ordination of this plethora of bodies?

[Baroness Lloyd of Effra (Lab)]

In our AI opportunities action plan we have indeed set out a plethora. That is because this is a technology that provides great potential benefits, and adoption is absolutely key. We need all areas of the economy to be thinking about the implications. We are a heavily service-based economy and it is very much in our future interests to adopt this technology and harness its benefits, whether that is in healthcare, energy efficiency or many other areas. So we will continue to focus on all areas of the development of AI, from data centres to regulation.

[Lord Markham (Con)]

My Lords, my experience as Health Minister in this space is that we have fantastic innovation and fantastic pilots: the joke in the NHS is that the NHS has more pilots than British Airways. But the challenge is always the scale-up funding and, because that scale-up funding is not there, we then lose the best to America. The problem is that the AI budgets are all fragmented across hundreds of different hospitals. What are we doing to centralise those budgets so that we have the firepower to truly scale them and not lose our best British innovation to America?

[Baroness Lloyd of Effra (Lab)]

Building on both noble Lords’ recent questions, we need to look across the whole of the economy. There will be a great amount of private investment going in, as well as investment from our public financial institutions. We are also thinking about how we can harness the benefit of sovereign AI here in the UK, and we are making a particular effort to think about where our sovereign AI fund is going to invest, so that the UK can benefit British frontier AI companies, not seeking total self-reliance but to build and defend comparative advantage.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I am no AI expert, as my colleagues will tell you, but I do know something about environmental devastation, and AI growth is going to impact very strongly on environmental issues. So, as well as the huge AI Bill that my noble friend Lord Holmes is suggesting happens, is there going to be new legislation to actually make sure that we achieve our climate goals?

[Baroness Lloyd of Effra (Lab)]

The purpose of the AI growth lab is to provide a sandbox so that we can harness some of the novel uses. Those novel uses might for example be in energy efficiency, or water efficiency. There are many ways in which AI can be harnessed to minimise environmental impacts. We are cognisant of the potential sustainability challenges from the energy demands of data centres or other areas. That is why we have set up the AI energy council, co-chaired by the Secretaries of State for DSIT and DESNZ, bringing leaders together to think about how we move forward sustainably and take up the promise of AI, while keeping to our net-zero goals.

UK Steel Strategy

Baroness Lloyd of Effra Excerpts

Monday 23rd March 2026 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for the Statement and welcome that there is a strategy here, although, as the noble Lord, Lord Sharpe, said, we were expecting it for some time. However, given what is happening in the world, reading this document conjures the image of someone trying to put up a tent in a howling blizzard, and at the heart of the blizzard are the energy market ructions caused by the Iran conflict.

The UK’s industrial energy costs were already at least twice those of the EU and four times those of the USA. The noble Lord, Lord Sharpe, and I have different multiples, but they are all very large. It is not clear to me whether these distortions that are already there in the UK energy pricing system will increase the gap as a result of the Iran issue as it bites. I doubt the gaps will narrow.

As the strategy sets out, the British industry supercharger scheme helps those companies that benefit from it. However, the steel industry comprises very many businesses, large and small, that do not qualify for the supercharger, although some may qualify for the British industrial competitiveness scheme—BICS. Can the Minister say how many steel-related businesses will benefit from BICS? However, BICS does not kick in until 2027. Given what is happening internationally, will the Minister undertake to speak with her Treasury colleagues about bringing forward the implementation of BICS? In any case, we should note that while the supercharger scheme exempts recipients from network charges, BICS does not, and those network charges are set to increase by a staggering 60%.

These are just a few of the reasons why, unless the Government revisit the energy costs issue, the steel strategy will quite simply be blown away.

Among the more eye-catching and concerning parts of the strategy are the new trade measures to introduce tariff-rate quotas and the possibility of, in future, raising most favoured nation—MFN—applied tariffs to 50%. Late last year, the Trade Remedies Authority ran its rule over imports of rebar from Vietnam and made recommendations to the Secretary of State. This was an entirely appropriate use of that body; indeed, it is what the body was created to do. Having worked on the Trade Act, which established the TRA, at the start of this decade, I see that it clearly has an important role, particularly given the wider scope of the potential actions set out in the strategy. But I do not see any reference in the strategy to the role of the TRA. Have the Government asked the TRA for its recommendations? When could we expect its report? It seems inappropriate to act without that authority.

Next, in his answer to questions in the Commons, the Secretary of State confirmed that there has been discussion with his EU counterparts and that the discussion would continue when they meet at the WTO. Can the Minister confirm that for the purposes of these discussions, steel’s treatment in the TCA—the trade and co-operation agreement with the EU—is equivalent to its treatment in an FTA; in other words, from a WTO perspective, is the TCA equal to an FTA? Furthermore, can the Minister say how, for the purposes of these discussions, the Government are treating the MoU with the USA regarding steel? I assume it does not have the status of an FTA, so how will this modify what we can legally do under the WTO with the United States?

I turn to the local impact of this strategy, which means that there remain question marks for a lot of our communities. My honourable friend in the Commons, David Chadwick MP, spoke very forcefully about the importance of steel to Wales and its economy. He also reinforced the need for faster action in ensuring that the electricity used, for example, to power the arc furnaces is green energy. I strongly commend his comments.

In geographical terms, I would like to highlight the South Yorkshire area, including Sheffield, where there is a host of important steel businesses. It is not just down to the headline firms; there are many other important businesses further down the supply chain that make up this vital steel ecosystem. These kinds of ecosystems are echoed all over the country. The Statement says the defence growth deal will be established in five areas, including South Yorkshire, as part of the defence industrial strategy. Can the Minister tell us when full details will be published? When will a defence growth deal be operational?

To support the effectiveness of a growth deal, a colleague of mine from Sheffield Council, with a strong steel background, suggests that a defence manufacturing supply chain database be built to include the hundreds of thousands of smaller tier 2 and tier 3 suppliers that are critical to our sovereign capability. In this way, the whole sector can be explicitly brought into the realm of the defence growth deal. Noble Lords will be surprised, I think, to know that there is no such survey and no such data available.

I was able to see how the Aerospace Growth Partnership worked effectively with its supply chain, and perhaps the Minister might like to look at how that operated and try to put the same principles into practice for steel. We on these Benches share the Government’s ambitions for a robust and growing steel sector, and we believe that this strategy makes some steps in the right direction. However, the already significant headwinds just got a whole lot worse. That is why success will depend on further action on energy, clarity on tariffs and a truly inclusive growth strategy.

[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 noble Lords for their rich contributions. They have raised many matters that are covered in the steel strategy and are of vital importance to the future of steel-making and its centrality to the UK’s economic success.

This steel strategy is the first one to be set out. It explains the vision and sets out bold measures across the business environment, trade, electricity costs, carbon leakage and public procurement, and it is that which distinguishes it from what has gone before. We do not believe that, although the sector does face challenges, it is inevitable that it will decline. The steel strategy’s aim is to stabilise and rebuild our existing strategy, as the noble Lord opposite mentioned, with an aim to sustain 40% to 50% of domestic demand, which of course will be tracked over the coming years. We can see the benefit of moving with this vision to a greener, high-production steel model. Sheffield Forgemasters’ electric arc furnaces have the technical capability that we need to produce steel of the highest standards.

On the question of energy prices, businesses are naturally worried about the impact of the situation in the Middle East. The Prime Minister chaired a meeting of COBRA this afternoon and the Secretary of State is meeting business organisations to look at the impact on energy prices and the supply chain. We have a diverse and resilient energy system, but we are monitoring it extremely closely. If there is a lesson, it is that reducing dependence on externally produced fossil fuels and moving to clean, green, home-produced energy has to be the way of the future. That is exactly what we are doing with the clean energy mission to increase our energy security and reduce electricity bills over the long term.

However, as noble Lords have mentioned, there are measures in place right now, including the supercharger, the energy-intensive industries compensation scheme for steel producers and, as the noble Lord mentioned, the British industrial competitiveness scheme, which will reduce bills for other businesses in the sector more widely. As I mentioned, the Prime Minister, the Chancellor and the Secretary of State are looking very closely at what needs to be done in the current context so that our businesses can be supported through this tumultuous time.

On the question of the trade measure, it is designed to shield steel-making from the damaging effects of overcapacity. This is not something that is unique to the UK. The US, Canada and the EU all apply their own similar measures to tackle overcapacity. We want to do this so that the British steel industry contributes fully to Britain’s crucial national security and defence, and to shore up the UK’s resilience to global shocks. Without this action, the UK steel-making capability faces real jeopardy, leaving us reliant on overseas suppliers. We do not want to let that happen.

I stress that this measure follows the expiry of the UK steel safeguard measure on 30 June this year, but it is a different measure and it has been carefully calibrated, following engagement with downstream importers, to get the right balance between measures to support our domestic steel industry and ensuring that those who use steel in the national economy can manage their businesses well. Following engagement with those downstream importers, we are exploring a transitional arrangement under which the new tariff would not apply to goods under contracts agreed before 14 March and imported between 1 July and 30 September 2026. We are finalising those details to ensure it provides genuine support to firms facing unexpected costs, while still protecting the UK market from excessive imports. We will also review the measure after 12 months to ensure it remains effective.

On the question of how it fits with other international agreements, with regard to the TRA, this measure is distinct from the steel safeguard and is not a replacement. It is separate from trade remedies, such as the current safeguard, which it is the Trade Remedies Authority’s role to review, so the TRA does not have a role in reviewing the new measure. On the TCA, I say that the TCA is the same as an FTA in the eyes of the WTO. I fear I have not addressed all the questions, but I am sure I will come back to them shortly.

--- Later in debate ---

[Lord Jones (Lab)]

I ask, for Wales, if the Minister can help.

[Baroness Lloyd of Effra (Lab)]

My noble friend brings his experience and wisdom to the House. Welsh steel is expected to account for half of future UK steelmaking. As he will be aware, we have also invested £500 million in the electric arc furnace in Port Talbot. In addition to that, the Secretary of State for Wales will convene the National Wealth Fund and the private sector in a new initiative to help unlock investment in Welsh steel projects to help and support communities across Wales that rely on the industry.

[The Lord Bishop of Oxford]

My Lords, for seven years I was privileged to be the Bishop of Sheffield, and I am familiar with the complex ecology of south Yorkshire, articulated by the noble Lord, Lord Fox. For those seven years, each year I was the guest of the Cutlers Company, who would invite a Minister, always from London and normally the Chancellor. In those years it was the coalition and Conservative Governments. The script followed by the speakers from the Cutlers Company, who did not mince their words, was always the same. It was about the neglect of the manufacturing industry by government and, in particular, high energy costs. This seems to me to be the key to the next chapter in this strategy.

I would be very grateful if the Minister could expand further and give some assurance that, in five years’ time, the Cutlers Company in Sheffield will not be making the same comments about higher electricity costs than for their partners overseas. I would also be grateful if the Minister could say something about the connection between advanced manufacturing and research, and the revitalisation of the steel industry. It was said in my time in Sheffield that Sheffield still produced as much steel by volume, but employed a fraction of the number of people, and that was because of advanced manufacturing. Thirdly, I would be really grateful for an unpacking of the defence contingency, the importance of which I would underscore.

[Baroness Lloyd of Effra (Lab)]

The right reverend Prelate raises some important issues. There are two elements here in respect of energy prices. The first is the immediate action we are taking, including the supercharger, to support the steel industry now. The second is the investment we are making in renewable energy, clean power and nuclear energy that will set this country on the right track to low-carbon energy that has high energy security here in the United Kingdom.

The other point, on advanced manufacturing and R&D, goes to one of the particular strengths of the United Kingdom, which is our expertise and the types of firms we have. One benefit of the industrial strategy is linking the sectors we have set out there, which of course include defence, with the importance of high-quality manufactured low-carbon steel, which is what the UK excels in.

[Lord Harper (Con)]

My Lords, the Minister knows that tariffs are a tax paid by the consumers of the steel that will be introduced. I have looked carefully in the steel strategy, and I cannot see any analysis of the impact of those increased costs on either our domestic construction sector or our domestic manufacturing sector. I ask the Minister, did the Government conduct such an analysis of the impact those tariffs are going to have? If they did not, why not? If they did, can they publish it, so that Members of your Lordships’ House can see the detail of the impact those taxes are going to have on our domestic manufacturing?

--- Later in debate ---

[Baroness Lloyd of Effra (Lab)]

We engaged carefully with the industry in constructing these tariffs, and we will review the measure after 12 months to ensure it remains effective.

[Baroness Bennett of Manor Castle (GP)]

My Lords, the Statement says:

“Britain can recycle more steel. Making better use of scrap steel is fundamental to the sector’s future growth”.


However, I am sure the Minister is aware that, currently, four-fifths of the UK’s scrap steel is exported, primarily to non-OECD countries with far lower environmental standards than us. I looked carefully at the strategy, but I could not see any actions planned by the Government to ensure that scrap steel stays in the UK to be recycled. I also could not find a target for the level of recycling that we expect of that scrap steel; I hope that it will eventually be 100%. How long will that take? If I have missed any actions and targets, I would love to hear about them.

[Baroness Lloyd of Effra (Lab)]

The noble Baroness is right that there is a strong emphasis on the importance of scrap steel. The move to using some of the electric arc furnaces will increase the demand for that scrap steel in our supply chain. Our move towards the aim of getting the domestic market share back to 50% will drive much more demand for domestic scrap steel.

[Lord Mohammed of Tinsley (LD)]

My Lords, I add my voice to the comments that were made by the right reverend Prelate, the former Bishop of Sheffield—I remember him well and his commitment to the city—particularly on the issues around the Company of Cutlers. Its members are a tough bunch but they are fair—sometimes they speak truth to power, and often that is what is required. I will follow up on the points raised by my noble friend Lord Fox, particularly on the current turmoil in the energy market with the ongoing conflicts, first, in Ukraine and, more recently, in the Middle East. I suspect that he has been speaking to many people across the steel sector and not only in Sheffield, but I will stick to Sheffield and Stocksbridge.

There is a point to be made about the cost of energy. I understand that large energy-intensive businesses can hedge energy prices over a longer period, but a number of smaller businesses, including those with limited credit available to them, are really suffering now, leading to vulnerability and volatility as energy prices are paid either a day ahead or in the short term. I will give the Minister an example. I spoke to a steel contractor over the weekend which had an order that it was preparing for last week. All the materials and energy costs were factored in at the time and it was just about to make a profit, but after the Israeli attack on the Iranian gas field and then the Iranian attack on Qatar its gas price went up by 30%, because it did not have a great credit rating. From making a potential small profit, it is now going to incur a loss. These organisations are desperately looking for help right now—not in 2027. Can the Minister say what the Government are doing, particularly now, to help small and medium-sized businesses, or those with issues with their credit rating?

--- Later in debate ---

[Baroness Lloyd of Effra (Lab)]

The noble Lord also brings his extensive interest and expertise to this. I agree that businesses will be worried about the impacts of the situation in the Middle East. The example he gave is very good at showing the practical impacts of what people are encountering day to day. We are monitoring this extremely closely and working with industry—the Secretary of State will meet with businesses in the coming days—to get a full picture of those types of impacts. The consultation on the British industrial competitiveness scheme is currently closed, but we will set out what it means in the coming period.

[The Earl of Effingham (Con)]

My noble friend Lord Sharpe quite rightly said that open markets are good and, following on from my noble friend Lord Harper, it is quite correct that economists may say that the uncertainty of tariff policy is not favourable for employment or investment. So I ask the Minister: why exactly do the Government think tariffs are a good idea and when can we see the assessment of the cost—the knock-on effect that tariffs will have on consumers?

[Baroness Lloyd of Effra (Lab)]

Like many countries, we have applied tariffs to counteract the damaging effects of global overcapacity. Our action is not unique; the US, Canada and the EU all apply similar measures to tackle overcapacity. As I mentioned, it has followed engagement and we are looking at transitional measures to ensure that those contracts that have already been put into place can be taken forward. We will also review the measure after 12 months to ensure that it remains effective.

[Lord Wigley (PC)]

My Lords, with the indulgence of the House, I welcome the strategy and the Statement, as far as it goes. The Government previously announced that £500 million would come to Port Talbot. Will any of the newly announced £2.5 billion come to Wales? Did the Welsh Government ask for part of that and were they given a full answer? The Minister will be aware that the steel-utilising industries that currently still exist in Wales may require high-quality steel. Is it possible for the electric arc furnaces to produce high-quality steel from recycled scrap?

[Baroness Lloyd of Effra (Lab)]

I thank the noble Lord for his questions. On the effectiveness of electric arc furnaces, there are a couple of points. First, at Sheffield Forgemasters, we see the technical capability to produce steel to the highest quality, for the nuclear industry, aerospace and defence. Independent experts’ view is that any grade can be made by electric arc furnaces, so that addresses the question about the quality of steel that can be made by this technology. On the other point about the benefit to Wales, we have already invested £500 million in the electric arc furnace for Port Talbot. We are working with the Secretary of State for Wales and the private sector to see what investment can be unlocked under the £2.5 billion that the National Wealth Fund will have allocated for steel projects.

[Baroness Bennett of Manor Castle (GP)]

My Lords, since there is time, I note that the Statement talks, I am happy to say, about the shift to “greener, decarbonised steel production”. However, will the Minister acknowledge that there is a rather great irony that when the Statement comes to consider the potential markets for this British-made steel, it talks about the third runway at Heathrow requiring 400,000 tonnes of steel? This is the third runway that, according to the Government’s own figures, uncovered by Politico last year, will result in an addition 2.4 million tonnes of CO₂ equivalent being released into the atmosphere each year by 2050. This is at the same time as the Joint Intelligence Committee is warning what a great threat to our security the climate emergency is.

[Baroness Lloyd of Effra (Lab)]

The noble Baroness is right: there is a great market for green steel. Hatch estimates that over 90% of steel demand in the UK in 2050 will be steel produced with low emissions. The transition to net zero is across the entire economy, and we will take that forward across all sub-sectors.

[Lord Harper (Con)]

My Lords, since there is still time, can I just press the Minister on her attempted answer to my question? She did not confirm that there had been any kind of economic analysis. She said that there had been engagement with the sector. Can she tell us whether the customers of the steel industry—manufacturing and construction—support the introduction of 50% tariffs on their products, and that tax that they are going to have to pay?

[Baroness Lloyd of Effra (Lab)]

We are still in discussions with much of the sector, explaining what the precise tariffs mean across different sub-sectors, and we are gaining feedback following the publication. We continue to work across many sub-sectors and business areas on implementing the trade measure ahead of 1 July, and we will consider what information we further publish following those consultations.

[Lord Mohammed of Tinsley (LD)]

My Lords, given the extra time, can I just pose another question? Given that defence supply chains already receive special treatment in procurement and export controls, I wonder whether the Government would consider also extending that to energy policy.

I will give some examples: the right reverend Prelate will know exactly where I am going to come from. I live in Tinsley. Just down the road from me is the Meadowhall shopping centre, and just around the corner from there is Sheffield Forgemasters, where many members of my family worked from the 1970s and 1980s onwards. At the moment, when it comes to energy pricing, both those two—the commercial shopping centre and the steelworks—get priority in terms of the level. However, I want to push the Minister on whether the Government would consider prioritising defence, just as they do with other elements of defence, given that Sheffield Forgemasters and others will be working on that. If I was to speak to a couple of my steel contacts in the city, would the Minister consider an offer of a meeting, possibly on Zoom, to be able to go through some of these more technical issues with her and the department, rather than trying to do it from the Dispatch Box in your Lordships’ House?

[Baroness Lloyd of Effra (Lab)]

I thank the noble Lord. I will be happy to meet with the industry representatives he talks about and to explore this in more detail. As he knows, we have changed the steel procurement guidance more generally, updating it to ensure that UK-made steel is regularly considered in public projects, and we are requiring procurers to consult a digital catalogue of UK-made steel products. But, specifically in the realm of defence, I would be very happy to take that further with the noble Lord.

[Lord Fox (LD)]

My Lords, the answer that the Minister gave me on the Trade Remedies Authority was a little confusing—or it confused me, anyway. Can she set out in some detail in writing why the TRA is not involved in this? When you look at the Vietnam case, it is exactly analogous, only much less significant than the case we are looking at now. If it was good for the Vietnam rebar, why is it not good for the much larger and more important issue that we are discussing here? Perhaps a detailed letter would be helpful.

[Baroness Lloyd of Effra (Lab)]

This measure is distinct from the steel safeguard. It is distinct from trade remedies, which is why it is not the role of the Trade Remedies Authority to review it, because the TRA does not have a role in reviewing this measure.

Companies: Online AGMs

Baroness Lloyd of Effra Excerpts

Monday 23rd March 2026 Lords Chamber

[Lord Lee of Trafford]

To ask His Majesty’s Government what assessment they have made of the effect of companies holding their annual general meetings solely online on individual shareholders’ ability to hold directors to account.

[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, the Government announced on 20 January that fully virtual annual general meetings would be included in the upcoming consultation on modernising corporate reporting. Officials are engaging with investors and businesses on the practicalities of this. We will ensure that fully virtual meetings take place only where shareholders agree and that any change is accompanied by appropriate shareholder safeguards, co-created with investors and business. A full assessment will be made following the consultation and engagement period.

[Lord Lee of Trafford (LD)]

My Lords, too often directors forget that it is shareholders who own the company. To hold AGMs entirely virtually, barring shareholders’ attendance, is in my view arrogant, unacceptable and sometimes, frankly, cowardly. Institutional shareholders have near-continuous access to boards, but the AGM is normally private shareholders’ only opportunity. It is not just the formal part of the meeting but the opportunity to meet and question directors in the margins of the meeting. Of course, sometimes only a handful of shareholders turn up, and, yes, there is a cost, but we are talking here of the principle of shareholders’ rights. Surely the way forward is hybrid AGMs, with a choice of either virtual or physical attendance.

[Baroness Lloyd of Effra (Lab)]

The Government are not mandating virtual AGMs and there will be nothing to stop companies holding hybrid AGMs. As the people best placed to make decisions about their businesses, we are giving companies and shareholders the legal certainty to undertake fully virtual AGMs if it is right for them. Many investor groups in favour of hybrid AGMs support fully virtual AGMs in extraordinary circumstances. This legal clarity will provide companies the certainty they need in those situations.

[Viscount Hailsham (Con)]

My Lords, may I suggest that members of the awkward squad are more readily controlled in virtual meetings, and that is thoroughly undesirable? It is much better to have open general meetings, when members of the awkward squad can speak out.

[Baroness Lloyd of Effra (Lab)]

What we are doing through the consultation on modernising corporate reporting is delivering on our commitment to provide legal clarity on the grey area of whether companies can hold fully virtual AGMs. It would be up to shareholders and businesses to decide whether to take that forward. The proposals that we put forward will be accompanied by appropriate shareholder safeguards.

[Lord Sikka (Lab)]

My Lords, there is nothing in the Companies Act to say that shareholders own companies. They may have controlling rights, but that is not the same as ownership. Besides, shareholders may have short-term interests in companies; therefore, is it somewhat foolish to leave them with the control to direct companies. It is workers and customers who have lifelong interests in companies, and it is time that the Government empowered those stakeholders to promote growth and the welfare of our whole society.

[Baroness Lloyd of Effra (Lab)]

If my noble friend is referring to Section 172 of the Companies Act, which already requires directors to have regard in their decision-making to employee interests and

“the impact of the company’s operations on the community and the environment”,

that is a very important principle.

[Lord Livingston of Parkhead (Non-Afl)]

My Lords, I have been a director, and not a cowardly one, at more than 50 AGMs over the last 30 years. Some AGMs have one attendee or none, some have a few tens, some have hundreds. The costs can often be thousands of pounds per attending shareholder. Given that shareholders can vote and ask questions remotely, should it not be up to the companies to decide—which shareholders can vote on—whether they wish to have in-person AGMs or to do it completely remotely, depending on the companies’ circumstances?

[Baroness Lloyd of Effra (Lab)]

The noble Lord sets out the rationale for why this will form part of the modernising corporate governance consultation. It will be in the hands of the shareholders and the businesses to decide. In fact, 85% of OECD Factbook countries, including the US, Germany and Japan, already allow virtual AGMs. So this is a proposal to bring the UK into line with other comparable countries, and to clarify the legal situation.

[Baroness Bottomley of Nettlestone (Con)]

The AGM is a more than convenient opportunity for shareholders in this sector to express their views. Of course, they all wish that the awkward squad would stay at home, as we do in this place, but we have to put up with the awkward squad—and my noble friend is very effective at that. The Minister will know that ShareAction provides evidence that online-only meetings allow boards to

“manipulate the agenda, ignore questions and avoid scrutiny”.

Investor groups describe in-person shareholder interactions as the “cornerstone” of the financial system. Even the FRC says that the AGM provides shareholders with the opportunity to see the whites of the directors’ eyes. From my point of view, it would be a great error to discontinue face-to-face meetings. We know it in politics, we know it in charity, and it is the same in business—even if only one person shows up to your board.

[Baroness Lloyd of Effra (Lab)]

We are putting this forward in the modernising corporate reporting consultation to clarify the legal situation for fully virtual AGMs, as I mentioned, to bring the certainty into line with other international jurisdictions. We are engaging with investors on what those shareholder rights and safeguards might look like, so that if shareholders and businesses want to move to fully virtual AGMs, we will know what they might be. Examples could include five-year shareholder votes or best practice or guidance of that kind.

[Lord Fox (LD)]

My Lords, if it is the Minister’s prediction that it is left up to shareholders to make the decision, the institutional shareholders will always outvote the individual shareholders. That is why individual shareholders should have their day at an AGM. When I organised AGMs for the three FTSE companies that I worked for, the chairman and I worked very hard on preparing for the questions that the awkward squad would be coming up with at those AGMs. To remove the proximity of the shareholder from the chairman is to lose that important check. Will the Minister go back and make sure that this is a firm part of the consultation?

[Baroness Lloyd of Effra (Lab)]

All noble Lords and the noble Baroness have raised the importance of AGMs. They are incredibly important. They are important for engaging shareholders, large and small, but particularly, as has been mentioned, those who perhaps do not have an institutional voice. We are engaging with investors and the shareholder representative organisations on what the shareholder safeguards should be, so that will be taken into account in the consultation.

[Lord Hunt of Wirral (Con)]

My Lords, one of this country’s greatest strengths is our financial services sector and yet many of our firms face unnecessary regulatory and administrative burdens that make it so much harder to focus on their primary duty, which is to shareholders. In the light of the Government’s commitment to cut regulation by 25%, and given those additional pressures that businesses already face from higher employment costs and growing compliance demands, will the Government now set out what specific steps they will take to reduce the regulatory burden on financial services so that this vital and growing sector can deliver better value for shareholders, attracting investment and economic growth?

[Baroness Lloyd of Effra (Lab)]

As the noble Lord mentioned, getting the right regulation and reducing the administrative costs is a priority for the Government and in many areas we have already taken action to do that; for example, we no longer require certain companies to produce a strategic report. We will continue to work through the sectors and across all companies on reducing those administrative costs.

[Lord Leigh of Hurley (Con)]

To get back to the Question from the noble Lord, Lord Lee, who speaks as an investor, I speak as chairman of a public company and a senior partner of Cavendish plc. We welcome shareholders coming to our AGM. It is quite true that there are some shareholders who go from AGM to AGM with plastic bags, hoovering up the biscuits, but others have very valid points to make. I have been to the AGM of a company with which I disagreed vehemently on the action the directors were taking, and I was able to get my view across. If that meeting had been virtual, I would have been shut down by the PR.

[Baroness Lloyd of Effra (Lab)]

As I mentioned earlier, we are not mandating virtual AGMs and there will be nothing to stop companies continuing to hold hybrid AGMs. Through this consultation we are clarifying the legal grey area and providing certainty about the legitimacy of hybrid AGMs where certain shareholder safeguards are in place.

UK Space Economy

Baroness Lloyd of Effra Excerpts

Wednesday 11th March 2026 Lords Chamber

[Baroness Ashton of Upholland (Lab)]

My Lords, at the request of my noble friend Lord Stansgate, and with his permission, I beg leave to ask the Question standing in his name on the Order Paper.

[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, the space economy is a top priority for the Government, who have announced a £2.8 billion investment over the spending review for the UK Space Agency, including a £1.7 billion commitment at the last European Space Agency Ministerial Council. We are strategically investing to support sector growth through a new outcomes-based, targeted approach. Through a one-government philosophy, we will grow the space economy by focusing investment on enabling businesses to commercialise and scale.

[Baroness Ashton of Upholland (Lab)]

I thank my noble friend the Minister for that reply. Given that, in the space inquiry we conducted, The Space Economy: Act Now or Lose Out, we identified that the space sector is worth £18.6 billion to the economy, employs 55,000 people and is growing a rate of about 6% a year, can she tell us more about the priorities across government, as space impinges on every aspect of our lives?

[Baroness Lloyd of Effra (Lab)]

I share the enthusiasm of my noble friend, the committee and the report for the space economy. We responded in detail to the recommendations earlier this year. We are setting out our strategic priorities, which, as the committee and my noble friend highlighted, encompassed many aspects of our lives, including defence, economic growth and support for our farming communities. We will continue to focus our spend on the priorities of economic growth and national security outcomes.

[Lord Clement-Jones (LD)]

My Lords, on the Government’s space plan, will they formally adopt a policy of space debris neutrality, requiring all satellites launched from the UK to have what is called a “designed to demise” commitment to prevent further orbital congestion? With an active debris removal procurement worth some £75 million, how are the Government ensuring that UK-based SMEs are not being edged out by larger international companies for these critical domestic contracts?

[Baroness Lloyd of Effra (Lab)]

The noble Lord raises the important issue of space debris, which creates risks to our critical national infrastructure. We are strengthening UK space surveillance and investing in debris mitigation technologies. We are seen as a leader in space sustainability, including with the international community and His Majesty the King. We are supporting important UK companies such as Astroscale to understand the risks and costs of active debris removal. In fact, there are further announcements today on this important issue of space debris removal.

[Lord Cromwell (CB)]

Does the Minister agree that space still lacks an effective and enforceable legal framework, including liability for the space junk that has just been referred to, which is continuously being fly-tipped in space and is now blighting the few usable orbits around our planet? If so, what are HMG doing to ensure that UK expertise in law and in insurance play leading roles in making space a less lawless frontier?

[Baroness Lloyd of Effra (Lab)]

The UK has a great deal of expertise on space, including on regulatory issues. We continue to collaborate internationally— for example, at the UN Committee on the Peaceful Uses of Outer Space—to shape and uphold standards, regulations, norms and agreements on best practices to define the in-orbit regime across the globe.

[Baroness Mobarik (Con)]

The first vertical-launch spaceport to receive planning consent was at Sutherland, in the far north of Scotland. However, Orbex, the private entity in the equation, suspended construction of Sutherland’s spaceport in December 2024, with only six months to go until the infrastructure would have been completed. Given the announcement of £1.5 billion in funding for national space programmes, what progress has now been made towards supporting the completion of the spaceport, which has already attracted interest from a number of potential launch providers? At a time when sovereign launch capability is becoming increasingly important, this infrastructure is vital not only for job creation and regional regeneration but for strengthening the UK’s space and defence capabilities. Would the Minister be willing to meet with me and key stakeholders to discuss how this project might be taken forward and how the Government can support its timely delivery?

[Baroness Lloyd of Effra (Lab)]

As I set out in my speech last week, assured access to space is one of the four priorities of the Government’s space policy. As I also set out then, we are pursuing our ambition of assured access to space. Last week, I announced a further £20 million of investment over the spending review to accelerate launch from Scotland. I will be working with industry and international partners to ensure that the UK has assured launch options.

[Lord Lennie (Lab)]

My Lords, is my noble friend the Minister aware of the space department at Northumbria University? If not, would she accept an invitation to visit it and see its extraordinary, cutting-edge research?

[Baroness Lloyd of Effra (Lab)]

Absolutely. One of the great pleasures of covering civil space is the enormity of expertise in our universities and companies. Almost everybody you meet is doing something ground-breaking and impressive. I would be very happy to meet the people suggested by my noble friend.

[Viscount Camrose (Con)]

My Lords, events in Ukraine and Iran are showing the growing military defence importance of satellite communication, navigation and earth observation systems. Given our strengths here in the UK in satellite manufacture and space data services, does the Minister agree that the UK space sector is particularly well suited to dual-use applications that support both economic growth and defensive capability? If so, is now the moment for the Government to look for further ways to promote investment in our satellite manufacturing sector?

[Baroness Lloyd of Effra (Lab)]

The noble Viscount makes an important point. The two priorities of our space policy are economic growth and national security; they are priorities for the whole of government and are central to our approach to space. I co-chair the Space Ministerial Forum with my colleague from the Ministry of Defence, bringing that whole-of-government approach to this important issue. In the speech I made last week on our four priorities, satellite communication was one of them; it is a real priority for the Government.

[Lord Stirrup (CB)]

My Lords, following on from the previous question, there is a clear and urgent strategic demand for a robust, Europe-based polar satellite constellation. This is an area where the UK should be taking a lead, but at the moment it is not. This requires urgent action and sufficient investment. Will the Government undertake to give this area a real boost?

[Baroness Lloyd of Effra (Lab)]

I very much agree with the noble and gallant Lord that the UK’s geography can provide particular advantages to the whole of Europe and to NATO. We are very committed to supporting the development of spaceports. Last week, I announced a further £20 million to support the development of spaceports in Scotland, so that is something we are pursuing with vigour.

[Lord Harper (Con)]

My Lords, I strongly support what my noble friend said about SaxaVord. I was very pleased to consent to the CAA’s regulatory approval when I was the Transport Secretary. I want to press the Minister a little more on the market size that will potentially be available to the UK with that vertical launch capability at SaxaVord. What specific steps will the Government take to ensure that we have that capability in the years to come?

--- Later in debate ---

[Baroness Lloyd of Effra (Lab)]

The noble Lord makes two important points. On the regulatory framework, the CAA has been doing some excellent work in supporting the development of a space regime that allows the UK to be a very attractive place for all sorts of space activity, including launch. The space indemnities Act is supportive of that, so I do agree with the noble Lord. As I mentioned, the £20 million that I announced last week was to accelerate the development of spaceports in Scotland for vertical launch.

EU Digital Services Act and Regulation

Baroness Lloyd of Effra Excerpts

Wednesday 11th March 2026 Lords Chamber

[Baroness Gill]

To ask His Majesty’s Government what discussions they have held with the European Union in relation to (1) alignment with the EU Digital Services Act, and (2) greater co-operation on digital services regulation.

[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 regularly engage with the EU on digital policy, including direct discussions on the Digital Services Act, which like the UK’s Online Safety Act requires companies to take proportionate steps to protect users online. While the UK has taken its own regulatory approach, we co-operate with the EU where it supports UK citizens and businesses. The new EU-UK digital dialogue will deepen co-operation on shared challenges, including AI and online child safety.

[Baroness Gill (Lab)]

I thank the Minister for her response. There would be several economic, regulatory and strategic benefits if the UK were to be part of the EU’s Digital Services Act. Scale matters when it comes to dealing with the powerful global tech companies, and it is quite clear from the US’s AI action plan that it will not limit their powers. The DSA is likely to become a global standard, like GDPR, so can the Minister confirm that this Government will include it as a matter of urgency on the agenda of ongoing reset discussions with the EU, with a view to becoming a member?

--- Later in debate ---

[Baroness Lloyd of Effra (Lab)]

We have reset our relations with European partners, improving diplomatic, economic and security co-operation, and we are committed to playing a role in shaping an open, trusted digital future with the EU and other partners. We have the Online Safety Act here. We have announced consultations on future measures, including on children’s well-being, and the EU’s digital omnibus is looking at lots of other aspects of reform. Our new UK-EU digital dialogue, announced as part of the reset, will provide a structured forum for ongoing engagement on digital policy.

[Lord Kirkhope of Harrogate (Con)]

My Lords, the EU’s digital governance for online platforms relies on certain basic principles—they should operate transparently, responsibly and in alignment with legal standards. That is a formal basis on which we should operate too. Instead of having new laws that align with the EU, why do we not simply codify the laws that we currently have and make them applicable to these new areas, which are innovative and ever developing?

[Baroness Lloyd of Effra (Lab)]

We have the Online Safety Act, which is enforced by Ofcom and other regulators and, as the noble Lord will know, we announced a consultation just recently on areas that we may seek to expand or take further measures on to enhance children’s well-being.

[Lord Clement-Jones (LD)]

My Lords, does the Minister accept that, as part of this dialogue, close co-operation on robust competition enforcement is essential to resist growing US pressure to weaken digital rules? As the EU actively enforces its Digital Markets Act, will the Government commit to aligning in practice with strong EU enforcement standards rather than allowing US corporate lobbying to dilute the UK’s digital markets competition regime?

[Baroness Lloyd of Effra (Lab)]

The UK has taken decisive action to strengthen competition and fairness in digital markets. In January 2025, Parliament equipped the CMA with new powers to boost competition and innovation in digital markets. In May, the Government issued a clear steer to the CMA to prioritise this work and align action with international jurisdictions, including the EU. The UK and CMA engage regularly with EU counterparts as both regimes begin operation to help maintain close alignment on emerging issues.

[Viscount Colville of Culross (CB)]

My Lords, the EU already has AI legislation. Do the Government intend to bring forward their own legislation on AI and how to regulate it?

[Baroness Lloyd of Effra (Lab)]

Our approach is to have regulators who are sector-specific and have the expertise to look at how AI is affecting the companies they regulate and its impact.

[Viscount Camrose (Con)]

My Lords, many digital harms such as disinformation and illegal or fraudulent content operate across borders. In that light, can the Minister enlarge on the practical measures the Government are pursuing with the European Union to assure effective cross-border enforcement of our respective digital regulations, particularly with respect to Ofcom’s work with those responsible for enforcing the Digital Services Act?

[Baroness Lloyd of Effra (Lab)]

Ofcom and the EU have an agreement and talk frequently about regulatory co-operation. Ofcom is also a member of a global network of regulators, so it can share best practice and welcome further co-operation.

Employment Rights Act 2025 (Investigatory Powers) (Consequential Amendments) Regulations 2026

Baroness Lloyd of Effra Excerpts

Wednesday 11th March 2026 Lords Chamber

Moved by

[Baroness Lloyd of Effra]

That the draft Regulations laid before the House on 27 January be approved.

Considered in Grand Committee on 9 March.

Motion agreed.