Teesworks Joint Venture

Debate between Baroness Penn and Baroness Chapman of Darlington

Tuesday 30th January 2024 Lords Chamber

[Baroness Penn (Con)]

I agree with my noble friend that it is a matter of regret that those allegations were made, in the terms that they were made. It is incredibly serious to allege corruption and illegality. The findings of the review are absolutely clear on this; the review found no evidence of corruption or illegality.

[Baroness Chapman of Darlington (Lab)]

My Lords, I am afraid that allegations of illegality and corruption were not the only allegations that led to this review. There were also allegations of a lack of transparency and—as a taxpayer in Tees Valley myself; my family have lived there for generations—there is a great deal of concern about a lack of value for money for taxpayers. Those complaints have been upheld by this report. On various occasions in the run-up to this review, the Mayor of Tees Valley asserted that there could not have been any wrongdoing because an official from the Government was involved in the decisions that were found so lacking by this review. Would the Minister like to comment on that?

[Baroness Penn (Con)]

As I said in my original response, the Government welcome the recommendations on strengthening governance and transparency. We welcome the oversight that this review has provided in those terms. I think the noble Baroness might be referring to the fact that the government official is a member of the board of the development authority. When a government official is a member on a board, in examples such as this, their role is as an observer. In this case, however, the panel noted examples of questions being raised by that government member as part of that review.

--- Later in debate ---

[Baroness Penn (Con)]

I do not believe that there are any further plans to cover any further reviews.

[Baroness Chapman of Darlington (Lab)]

My Lords, the report says clearly that the measures in place

“do not meet the standards expected when managing public funds”.

I have read the recommendations and I look forward to the mayor’s response to them. Does the Minister think that, outside of the mayor’s response, the Government have a duty to ensure that this kind of practice does not continue and that there is training or perhaps some intervention from the Government? The Government have to take some of the responsibility here, because they have allowed a situation to evolve where the standards that we would expect for managing public funds have not been met. For all we know, because of the lack of transparency, this situation could be replicated in other areas.

[Baroness Penn (Con)]

I say to the noble Baroness that we have considered the panel’s findings against the draft best value guidance, which was published in July 2023, and concluded that they do not meet the test for urgent intervention. The panel makes a number of recommendations for the combined authority, the development corporation and other partners, and some for government. We are now giving the mayor and partners time to reflect on the panel’s report. We have asked him to write to us and set out his action plan for responding to the recommendations within six weeks. One of the recommendations for government was around the clarity of legislation in this area and oversight arrangements. We will take that away and look at it carefully, because that is an area, for example, that could have read- across to other development corporations or combined authorities.

Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2023

Debate between Baroness Penn and Baroness Chapman of Darlington

Wednesday 19th July 2023 Grand Committee

[Baroness Chapman of Darlington (Lab)]

My Lords, I am aware that we always follow the FATF’s recommendations but, given what we have just heard, it is just as well that we have this procedure as an opportunity to ask the Minister about some issues of concern that arise from the recommendations we are considering. I will not repeat everything that has already been said, because immediately following this we have another SI that took three and a half hours to consider in the Commons and, looking around the Room, I anticipate that it may take a little while this afternoon as well.

This instrument is perhaps relatively straightforward, but I will highlight a couple of the points that have been made in which we are especially interested. On the issue of reputation and our overseas territories, the fact is that Gibraltar and the Cayman Islands are on this list. Do the Government think that this has any reputational impact on the UK? What is the Government’s assessment of that? When this issue was considered in the Commons, providing some kind of support or input from the UK to Gibraltar to move things along was discussed. I do not think that the Minister there gave a particularly expansive response at that point so it might be helpful, if there is an opportunity, to hear from the Minister here today whether a request has been made by Gibraltar and whether any input has been forthcoming from the UK.

I will leave it there for today, given the next SI that we will consider and the fulsome contributions that have already been made by others, which I know the Minister will answer fully.

[Baroness Penn (Con)]

My Lords, I thank noble Lords for their contributions to this debate. I know that we have also touched on this issue in other Bills progressing through the House.

I will start with the FATF process. As I think I said in my opening speech, the UK is an active member of the FATF. We participate in mutual country evaluations, looking at its processes and rules, which we are fully supportive of. Indeed, we were a founding member of the FATF. The processes are agreed internationally and based on rigorous, detailed and robust technical assessment. The FATF also regularly co-ordinates with other major international organisations.

It is worth saying two further things on the FATF. First, as a member of the FATF, we will always look to improve its work and processes and we will always reflect on those. Secondly, it is an important piece of the picture on setting standards for international action on anti-money laundering and counterterrorist financing, but it is only one piece of the picture when it comes to the UK’s overall approach towards tackling economic crime more broadly and some of the issues raised in today’s debate.

Cambodia being delisted is within the scope of the SI. Cambodia has addressed key deficiencies relating to the legal framework for international co-operation and preventive measures, risk-based supervision, financial intelligence, investigation and prosecution of money laundering, asset confiscation and targeted financial sanctions for proliferation financing. By addressing those deficiencies, Cambodia met the criteria to be removed from the list.

The noble Lord, Lord Vaux, also raised Russia’s membership of the FATF. As he noted, in February 2023 the FATF suspended Russia from the organisation. It continues to call on all jurisdictions to remain vigilant to threats to integrity, safety and security of the international financial system arising from the Russian Federation’s aggression in Ukraine. We are absolutely clear that Russia’s actions run counter to the principles on which the FATF is based and we fully support the ongoing suspension of Russia’s membership of the FATF. We have taken a wide range of measures against Russia, including the most extensive sanctions regime that we have ever put in place. We will continue to bear down on the Russian state in that way.

The noble Lord, Lord Wallace, and the noble Baroness, Lady Chapman, asked about the overseas territories and Crown dependencies. The UK has engaged with both on this issue to share best practice, improve understanding of risks and increase compliance with the FATF standards. I went to the ministerial meeting of MONEYVAL, which is a regional organisation that feeds into the FATF process. Some of the Crown dependencies are members and I met the Ministers responsible for FATF compliance as part of that forum. We will continue doing that, as several of the Crown dependencies have assessments that are either ongoing or upcoming this year.

Gibraltar and the Cayman Islands were mentioned. Gibraltar continues to make good progress against its action plan with only one action remaining—for it to show that it can pursue more final asset confiscation judgments commensurate with its high-risk profile. When it comes to that action, judgments coming through can take time and that timing is not all within Gibraltar’s control.

I met representatives from the Cayman Islands this year and we touched on this area. They have made significant progress in addressing deficiencies since the Cayman Islands were listed in February 2021. In June 2023—just last month—the FATF made the initial determination that the Cayman Islands have substantially completed their action plan. On this basis, it plans to conduct an on-site visit in September to verify this, which is the final stage before delisting. We have a positive story to tell in both those areas.

Bank of England: Interest Rate Policy

Debate between Baroness Penn and Baroness Chapman of Darlington

Wednesday 12th July 2023 Lords Chamber

[Baroness Penn (Con)]

While I will not be tempted by my noble friend to comment on the conduct of monetary policy, I agree that, in the context of high inflation, fiscal responsibility and keeping government borrowing under control are absolutely essential. That is why the Government are committed to that.

[Baroness Chapman of Darlington (Lab)]

My Lords, what is it about the Government’s handling of the economy that means that, with near 0% growth, inflation is still high, despite the Prime Minister promising to halve it, and higher for longer in the UK than in many similar economies? How does the Minister think that 1 million households facing a £500 a month increase to their mortgage payments by the end of 2026 will cope? How concerned should we be at the Government’s voluntary agreement with the banks, which means that over 1 million households will miss out on the support that Labour’s mandatory scheme would have brought?

[Baroness Penn (Con)]

My Lords, growth is better this year than predicted and expected by some. The UK is not alone in facing high inflation. Core inflation in the UK is lower than in more than half of Europe, but we face particular underlying factors that interact with the global challenges causing inflation. The energy shock has been felt more keenly in the UK because of our historical dependence on gas, and we have labour market tightness, due in part to a rise in activity during the pandemic. That is why we are focused on measures to tackle these problems. I talked about the energy price guarantee, which brought down inflation by around two points, and our measures to address childcare. I say to the noble Baroness, reflecting the point from my noble friend, that fiscal responsibility and government borrowing have a part to play in this. That is why Labour’s plans to spend £28 billion a year of additional borrowing would be inflationary and make the problem worse.

Income Tax Threshold

Debate between Baroness Penn and Baroness Chapman of Darlington

Tuesday 4th July 2023 Lords Chamber

[Baroness Penn (Con)]

Since 2010, we have introduced additional allowances for people in certain circumstances to pass on up to £1 million to their direct descendants. Inheritance tax makes an important contribution to our public finances, so any changes in that area would need to be properly funded.

[Baroness Chapman of Darlington (Lab)]

My Lords, the former Chancellor and current Prime Minister says that he wants to cut people’s taxes, yet under his watch the tax burden has reached a 70-year high. As other noble Lords have observed, more people are paying more income tax, wiping out the benefits of previous changes to the personal allowance. Can the Minister understand the frustration of those who work hard and pay their taxes only to see non-doms and those with £2 million pension pots given preferential treatment by this Government?

[Baroness Penn (Con)]

My Lords, we have worked hard to put tax cuts in place for working people, which is why we have raised the personal allowance. The increase to the starting threshold for paying national insurance was raised last year by the largest single amount, helping people who are currently facing challenges with the cost of living. The noble Baroness mentioned the changes we have made to pensions tax. That is to try to keep experienced professionals in our public sector workforce, from doctors to head teachers and members of the military. Those changes were made for the right reasons and will have the right effect.

Financial Services and Markets Bill

Debate between Baroness Penn and Baroness Chapman of Darlington

Consideration of Commons amendments
Tuesday 27th June 2023 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

My Lords, we on these Benches supported all three of the amendments that we are discussing today when we looked at them last time, including Amendment 7, which would expand the regulatory principle on net-zero emissions to include conservation and nature. We also voted for Amendment 36, imposing a duty on those conducting regulated activity to conduct due diligence with the aim of preventing illegal deforestation.

We have listened carefully to what the Minister has said and will be listening to what she says in response to this debate, particularly to the questions asked by the noble Baroness, Lady Boycott. However, I thank the Minister for her openness in engaging with these issues and for the amendments in lieu, which demonstrate an agreement with your Lordships that these are issues that the Government need to address urgently. They may not be doing so in a way that we would have preferred today, but it is right that we acknowledge the moves that the Government have made.

Amendment 10 in my name would require the FCA to take financial inclusion into account when advancing its consumer protection objective of securing an appropriate degree of protection for consumers. The Government disagree with that amendment, saying they consider that the FCA is already able to tackle issues of financial inclusion within its remit. We argue that the problem is that the Government have failed to address our key concern in tabling the amendment, which is about the poverty premium—that is, the extra costs that poorer people pay for essential services such as insurance, loans or credit cards.

We see this Bill as something of a missed opportunity to build a strong future for our financial services and rethink financial resilience, including how some of the wider well-being issues are tackled by the regulator in the future. Everybody should be able to access the financial services they need, regardless of their income or circumstances. Although we do not intend to push this to another vote today, I can assure noble Lords that we will be returning to this subject at every opportunity—especially if that opportunity arrives in the form of a Labour Government.

For now, I place on the record our sincere thanks, particularly to the noble Baronesses, Lady Hayman and Lady Boycott, who have been highly effective in raising nature and deforestation issues. I also thank my noble friends Lord Livermore and Lord Tunnicliffe for their work on this Bill. We are probably at the end of it now. I note what the noble Lord, Lord Leigh, said about the need to get this Bill through and on to the statute books for the benefit of this important sector.

[Baroness Penn (Con)]

My Lords, I am grateful to noble Lords for the debate today, and I would like to address some of the points raised.

On the addition of the obligations under the Environment Act to the principle on climate change, I intended in my opening speech to clarify some of the language in that amendment. I am very happy to emphasise again the Government’s intention that the legal effect of the new provisions will be the same as the original climate principle, with the addition of the targets under the Environment Act. The intention is that it will be at least as strong as the provisions in the Financial Services Act 2021. I explained in opening the reasons for amending the language. It is not about diluting the principles or commitments, but further clarifying them, given that these are new areas.

I accept the noble Baroness’s point that often, these issues can be two sides of the same coin. We had the debate on whether the issues were sufficiently covered by just mentioning climate. Adding the explicit reference to the Environment Act targets led to a desire to be even clearer about the effect of that principle, but it has not changed in the wording of our amendment.

On Lords Amendment 36, there were questions on the timing of the provisions under Schedule 17 to the Environment Act. I am afraid that, as hard as I have tried, I cannot provide a definitive date, but I reassure noble Lords that I have met the Minister leading on this at Defra. Work is under way to bring forward those regulations, and we are seeking to do it at the earliest opportunity.

The noble Baroness, Lady Boycott, and my noble friend Lord Randall of Uxbridge asked what commodities those provisions will cover, and the noble Baroness mentioned a consultation on two forest risk commodities. My understanding is that the consultation and impact assessment covered a variety of policy options across three different turnover thresholds and seven different commodities. While I cannot pre-judge the outcome of the regulations under Schedule 17, our approach to this review will mirror the approach taken forward under Schedule 17.

On the point about the outcomes of this review, I am sure that the noble Baroness will understand that I cannot prejudge that, but I can say that it is not intended to duplicate work already being done; it should build on it. I am happy to make sure that noble Lords and other parliamentarians are involved in the progress of that review as we take it forward, so that they can see that it is heading in the right direction.

I thank the noble Baroness, Lady Chapman of Darlington, for the constructive way she has approach the Bill in its latter stages. She raised the issue of the poverty premium that can be placed in financial services. We are progressing work in areas where the poverty premium can occur. For example, we are working with Fair4All Finance, the organisation set up to use funding from dormant assets for financial inclusion, to improve access to affordable and appropriate financial products, including a package of tailored support to scale affordable credit in order to help the sector develop a sustainable model for serving people in vulnerable circumstances. We also looked at issues in the insurance industry in a number of areas, in terms of outcomes and access. We will continue to look at the areas where the poverty premium occurs, the factors that are driving it and the right levers we should think about to address it. It is different for different sectors, services and products, but that work will continue, despite our not being able to accept the noble Baroness’s amendment.

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

Financial Services and Markets Bill

Debate between Baroness Penn and Baroness Chapman of Darlington

3rd reading
Monday 19th June 2023 Lords Chamber

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

My Lords, this Bill helps to deliver the Government’s vision for an open, sustainable and technologically advanced financial services sector. I thank all noble Lords for their valuable scrutiny and input, which has led to some important enhancements to this Bill. I formally thank the Opposition Front Benches, particularly the noble Baroness, Lady Chapman of Darlington, and the noble Lords, Lord Livermore and Lord Tunnicliffe, for their positive engagement and overall support for the Bill and its important aims. I also thank the noble Baroness, Lady Kramer, from the Liberal Democrats, supported by the noble Lord, Lord Sharkey, and the noble Baroness, Lady Bowles, for their thorough scrutiny and constructive debate. Finally, I thank the noble Lord, Lord Fox, for bringing his considerable expertise to the scrutiny of this Bill.

The Bill delivers the outcomes of the future regulatory framework review, giving the regulators significant new rule-making responsibilities while balancing that additional responsibility with clear accountability, appropriate democratic input and transparent oversight. Thanks to the positive engagement of this House, we can now be more confident that we have got that balance right.

I also thank my noble friends Lord Forsyth of Drumlean, Lord Bridges of Headley, Lord Holmes of Richmond and Lady Noakes, in particular, for their constructive challenge of the Government’s approach to the important issues that the Bill deals with. I hope that the package of amendments brought forward by the Government on Report demonstrates the open and collaborative way in which we have engaged with the important matters raised in this House.

The level of scrutiny and debate on the Bill rightly demonstrates the vital importance of the financial services sector to the UK economy. Financial and related professional services employ more than 2.5 million people across regional hubs in all four nations of the UK, and create £1 in every £10 of the UK’s economic output. Building on the strengths of our financial services sector is fundamental to its continued growth and to the wider economy. I am therefore pleased to see the Bill progress towards becoming law. It will allow us to begin the process of revoking EU law and replacing it with an approach that is guided by what is best for the UK.

Before the Bill returns to the Commons, I extend my thanks to the significant number of Treasury officials, in the Bill team and beyond, for their work in preparing such a substantial Bill and for their support in engaging fully with your Lordships’ scrutiny. I also recognise the work of the Office of the Parliamentary Counsel in drafting the Bill, and of House staff.

While the Bill is the culmination of a large amount of work over a number of years, it is also the foundation of much work still to come, and I look forward to continuing to discuss these important issues with noble Lords in the future. I beg to move.

[Baroness Chapman of Darlington (Lab)]

My Lords, I thank the Minister for her kind words as she introduced this Third Reading. The Bill leaves the House in a much better condition than when it arrived. We have made changes to the Bill on the treatment of politically exposed people, financial inclusion and the FCA’s accountability to Parliament, and through measures that help to protect the environment. I thank all Members of the House who contributed to our consideration of the Bill, from both sides, and from the Liberal Democrats and Cross Benches, especially those from Peers for the Planet. I also thank the doorkeepers and House staff teams, and everyone who enables us to do our work.

I thank the Minister for her open and welcoming approach to our discussions. I particularly thank my noble friend Lord Livermore for doing more than his fair share of the work from Report onwards, and of course my noble friend Lord Tunnicliffe who led the Labour Party—he did not lead the Labour Party but led for the Labour Party; that was quite a thought experiment—throughout the long Committee stage. His advice and support have been invaluable. Lastly, I thank the outstanding Dan Stevens for his impeccable advice, preparedness and thoughtfulness.

We hope that the Government accept the Bill as amended and do not feel the need to bring it back to the House for further amendments.

Financial Services and Markets Bill

Debate between Baroness Penn and Baroness Chapman of Darlington

Report stage
Tuesday 13th June 2023 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

My Lords, I accept that we are politically exposed people—of course we are—and we can be bribed, so it is right that there are rules around this. This topic has attracted a lot of interest throughout the passage of the Bill, along with a number of questions and debates. I completely understand why that is.

While the enhanced checks faced by politically exposed persons are often onerous, as we have heard—all power to the elbow of the noble Viscount, Lord Trenchard; well done to him for finding the names of two actual human beings to speak to at American Express, and I hope he gets his situation resolved—it is vital that this country maintains strong anti-money laundering regulations and acts in a manner consistent with international standards. Unfortunately, to an extent that involves us, but I think the Government’s amendments in this group do what is needed in making the distinction, as do many other jurisdictions, between domestic PEPs and those from other countries, which is consistent with the Financial Action Task Force guidelines.

We welcome the support for the amendments from the noble Lord, Lord Forsyth, and my noble friend Lady Hayter of Kentish Town, both of whom have raised this issue consistently for some time. Most of all, though, it is right that we thank the Minister for bringing the amendments forward. She has worked hard to try to resolve colleagues’ concerns on this issue, and we hope that those will be dealt with by the upcoming changes to the regulations and the accompanying guidance.

[Baroness Penn (Con)]

My Lords, I reiterate what the noble Baroness, Lady Chapman, has just said: our approach in this area has always been guided by ensuring that the rules in place in the UK maintain the international standards that are set in this area. That has been the guiding principle in looking at resolving this issue. Nevertheless, we felt that it was right that action be taken. Examples such as that from the noble Baroness, Lady Kramer, demonstrate clearly that the approach taken by institutions is not always proportionate, and we need to address that.

I have heard from noble Lords, including my noble friends Lord Forsyth and Lord Moylan, questions about the timescale for the two pieces of work that are committed to in the amendments. I understand that feeling, but we have engaged closely with the FCA on the review that it is committed to undertaking through the government amendment, and it is clear that if there is to be a thorough assessment of the treatment of domestic PEPs at a systemic level—we have already raised individual issues or individual institutions in response to previous debates—then it must be given adequate time to be conducted.

The 12-month timeframe will allow the review to benefit from fuller engagement with industry and with affected PEPs, and it will ensure that the FCA is able to develop a full understanding of the scale and extent of this issue. I think it gives the FCA time to address issues such as those raised by the noble Baroness, Lady Kramer. Included in that timeframe is the fact that, if it deems it necessary to update its guidance, it will produce the draft within that timeframe.

The Government have 12 months to amend the money laundering regulations. As I said, the distinction between domestic and foreign PEPs does not currently exist in law, and we want to make sure that we get the drafting right to ensure that it achieves the intended outcomes without unintended consequences. That will require us to consult with industry to ensure that the language in the amendment has the desired outcome of altering firms’ behaviour in how they treat low-risk domestic PEPs. These points relate to the questions posed by the noble Lord, Lord Sharkey, because this definition will come in part through the amendment of the regulations but in part from looking at the FCA’s guidance, and what needs to be set out more fully there when it has done its review.

Acknowledging the interest from parliamentarians—perhaps we should all have declared our interest as we stood up to speak, in respect of PEPs—we have committed to updates on progress both from the FCA and the Government in delivering on these amendments.

My noble friend Lord Moylan and the noble Earl, Lord Erroll, raised the interaction with tipping-off requirements and communication to customers. We have asked the FCA to consider this as part of its review. The noble Baroness, Lady Hayter, and others, mentioned the impact on family members. Again, we have asked the FCA to consider this in its review.

My noble friend Lord Moylan also asked if we need to wait for 12 months for action. The FCA remains committed to taking action where it identifies non-compliance with its current guidance on PEPs and will do so throughout the course of the review. I encourage noble Lords to use the contacts provided in my letter on this issue in November, if they encounter difficulties while the Government amendments are being implemented. I am sure that those in the FCA responsible for this area will look at this debate carefully.

The noble Lord, Lord Eatwell, raised a question on Crown dependencies, and my noble friend Lord Naseby asked about overseas territories. I will write to noble Lords on that. If it is right or appropriate that this should extend that far, there is nothing in the amendments to prevent the Government doing that, but I would want to double-check the right interaction and the right locus for addressing those concerns. With that, I beg to move.

Amendment 96 agreed.

Amendment 97

--- Later in debate ---

[Baroness Penn (Con)]

My Lords, the Government welcome the further discussions that this debate has given us the opportunity to have on the issue of unlocking pensions capital for long-term, productive investment where it is in the best interests of pension scheme members. Indeed, as I set out in Committee, the Government have a wide range of work under way to deliver the objectives set out by this review. While I was a little disappointed not to hear those initiatives referenced in this debate—apart from, perhaps, by my noble friend Lady Altmann—I will give it another go and set out for the House the work that is already under way in this area.

As previously set out, high-growth sectors developing cutting-edge technologies need access to finance to start, scale and stay in the UK. The Government are clear that unlocking pension fund investment into the UK’s most innovative firms will help develop the next generation of globally competitive companies in the UK.

The Chancellor set out a number of initial measures in the Budget to signal a clear ambition in this area. These included: increasing support for the UK’s most innovative companies by extending the British Patient Capital programme by a further 10 years until 2033-34 and increasing its focus on R&D-intensive industries, providing at least £3 billion in investment in the UK’s key high-growth sectors, including life sciences, green industries and deep tech; spurring the creation of new vehicles for investment into science and tech companies, tailored to the needs of UK defined contribution pension schemes, by inviting industry to provide feedback on the design of a new long-term investment for technology and science initiative—noble Lords may have seen that the Government launched the LIFTS call for evidence on 26 May; and leading by example by pursuing accelerated transfer of the £364 billion Local Government Pension Scheme assets into pools to support increased investment in innovative companies and other productive assets. The Government will come forward shortly with a consultation on this issue that will challenge the Local Government Pension Scheme in England and Wales to move further and faster on consolidating assets.

At Budget, the Chancellor committed the Government to undertaking further work with industry and regulators to bring forward an ambitious package of measures in the autumn. I reassure the noble Baroness opposite that this package aims to incentivise pension funds to invest in high-growth firms, and the Government will, of course, seek to ensure that the safety and soundness of pension funds are protected in taking this work forward, as in proposed new subsection (2). Savers’ interests will be central to any future government measures, as they have been to past ones. The Government want to see higher returns for pension holders in the context of strong regulatory safeguards.

In addition, the Government are already working with a wide range of interested stakeholders, including the DWP, the DBT, the Pensions Regulator, the FCA, the PRA and the Pension Protection Fund, as well as pension trustees and relevant financial services stake- holders. Proposed new subsection (3) in the amendment seeks to set out this list in legislation. I reassure the House that this is not necessary as the Treasury is actively engaging with them already, as appropriate. The Government would also be happy to engage with other interested stakeholders, as raised by my noble friend Lord Naseby and the noble Lord, Lord Davies of Brixton.

I note the specific areas of review outlined in subsection (4) of the proposed new clause, and I reassure noble Lords that the Government are considering all these issues as part of their work. In particular, proposed new subsection (4)(a) references the existing value-for-money framework. As I set out in Grand Committee, one area of focus for the Government’s work in this area is consolidation. To accelerate this, the Government have been working with the Financial Conduct Authority and the Pensions Regulator on a proposed new value-for-money framework setting required metrics and standards in key areas such as investment performance, costs and charges, and the quality of service that schemes must meet.

As part of this new framework, if these metrics and standards were not met, the Department for Work and Pensions has proposed giving the Pensions Regulator powers to take direct action to wind up consistently underperforming schemes. A consultation took place earlier this year, and the Government plan to set out next steps before the summer.

Turning to proposed new subsection (4)(b), I have already set out the forthcoming consultation to support increased investment in innovative companies and other productive assets by the Local Government Pension Scheme. Noble Lords may also be aware that the levelling up White Paper in 2022 included a commitment to invest 5% in levelling up. This consultation will go into more detail on how that will be implemented.

I turn to proposed new subsection (4)(c). The Government are committed to delivering high-quality infrastructure to boost growth across the country. We heard references in the debate to the UK Infrastructure Bank, which we will work with. The Treasury has provided it with £22 billion of capital. Since its establishment in 2021, it has done 15 deals, invested £1.4 billion and unlocked more than £6 billion in private capital. Furthermore, we have published our green finance strategy and Powering Up Britain, setting out the mechanisms by which the Government are mobilising private investment in the UK green economy and green infrastructure.

The Government wholeheartedly share the ambition of the amendment to see more pension schemes investing effectively in the UK’s high-growth companies for the benefit of the economy and pension savers. We agree with noble Lords on the importance of this issue. Where we disagree with noble Lords is on how crucial this amendment is to delivering it. Indeed, the Government are currently developing policies to meet these objectives, so legislating a review would pre-empt the outcome and might delay the speed at which the Government can make the changes necessary to incentivise investment in high-growth companies. Therefore, given all the work under way, I hope the noble Baroness feels able to withdraw her amendment.

[Baroness Chapman of Darlington (Lab)]

My Lords, I am grateful to everyone who has taken part in this debate. The Minister’s response was not awful. It was encouraging to hear some of the things that she had to say, and we recognise the work the Government are leading on this issue. However, the benefit of taking the approach outlined in the amendment, notwithstanding some of the comments that have been made about it, is that it would give focus and prominence to this issue and would bring together some of the threads that the Minister referred to. It is an important piece of work that, given everything the Minister said, ought to be not too onerous and is something that the Government ought to be a little more enthusiastic about starting—because it needs to start. This is something we would like to see proceed quickly. I think there has been sufficient support for the amendment from all sides of the House, and I wish to test the opinion of the House.

--- Later in debate ---

[Baroness Chapman of Darlington (Lab)]

My Lords, we are grateful to the noble Lord, Lord Sharkey, for bringing back this amendment and for his persistence on this issue over many years. We are also grateful for the work of the APPG, particularly to Rachel Neale, who herself is a mortgage prisoner and has become a champion for those people who have been affected by this problem. I also want to mention my colleague in the Commons, Seema Malhotra, who is doing a lot of work on this issue.

We are hugely sympathetic towards mortgage prisoners, who have endured difficulties over so many years now, and wish that the Government had acted earlier to ease the burden on them. We were pleased to back this amendment during the passage of the Financial Services Bill in early 2021, when it passed by 273 votes to 235. However, we are mindful that at that point the House of Commons rejected that amendment, and did so at a time when a much larger proportion of the population was experiencing issues with mortgage affordability. In recent weeks, however, we have seen hundreds of mortgage products pulled and rates hiked on those that remain available. A number of major banks have even temporarily withdrawn offers for new customers, putting the brakes on the aspirations of many first-time buyers.

Of course, mortgage prisoners are in a different position, in that they have been facing problems for many years and are just not able to simply switch products in the way that others can. As the Minister will no doubt outline, while this amendment did not make it into the Financial Services Act 2021, it did prompt some new and welcome actions from the Treasury, regulators and banks. New advice was available and a number of lenders relaxed their criteria in certain cases. We know that the elected House has already rejected this proposal and, realistically, it is unlikely to reconsider in the current context, but more does need to be done. Can the Minister let us know whether the Government intend to respond to the recommendations that were made by the LSE in its report? If they are, when will that response be forthcoming? The Government urgently need to get a grip on the issues facing the mortgage market generally and, once that situation has calmed, we hope they will be able to do what they can to ease the difficulties faced by mortgage prisoners.

[Baroness Penn (Con)]

My Lords, I thank all noble Lords who have spoken in this debate, and in particular the noble Lord, Lord Sharkey, for tabling this amendment. I start by emphasising that the Government take this issue extremely seriously. We have a great deal of sympathy for affected mortgage borrowers and understand the stress they may be facing as a result of being unable to switch their mortgage. That is precisely why we, and the FCA, alongside the industry, have shown that we are willing to act, and have carried out so much work and analysis in this area, partly in response to prior interest from this House, as alluded to by the noble Baroness, Lady Chapman. This has included regulatory changes to enable customers who otherwise may have been unable to switch to access new products.

The Government remain committed to this issue and welcome the further input of stakeholders. For this reason, during Committee, the Government confirmed that they were carefully considering the proposals put forward in the latest report from the London School of Economics. Since then, as noted in the debate, I have met with the noble Lord and further members of the APPG and representatives of the Mortgage Prisoners Action Group to discuss the findings of the report and the issue of mortgage prisoners more widely.

The Economic Secretary to the Treasury has also written to the noble Lord, including to provide further clarity on the proceeds from the sale of UKAR assets. The LSE report recommends free comprehensive financial advice for all. That is why the Government have continued to maintain record levels of debt advice funding for the Money and Pensions Service, bringing its budget for free-to-client debt advice in England to £92.7 million this financial year.

The other proposals put forward by the London School of Economics are significant in scale and ambition. While the Treasury has been engaging with key stakeholders, including the LSE academics behind the report, for some time, including since Committee, we have concerns that these proposals may not be effective in addressing some of the major challenges that prevent mortgage prisoners being able to switch to an active lender. For example, the proposals would not assist those with an interest-only mortgage ultimately to pay off their balance at the end of their mortgage term.

We continue to examine the proposals against the criteria put forward originally by then Economic Secretary to the Treasury, John Glen, to establish whether there are further areas we can consider. I remind the House that those criteria are that any proposals must deliver value for money, be a fair use of taxpayer money and address any risk of moral hazard. This does not change the Government’s long-standing commitment to continue to examine this issue and what options there may be. However, it is important that we do not create false hope and that any further proposals deliver real benefit and are effective in enabling those affected to move to a new deal with an active lender, should they wish to.

I will not repeat the arguments against an SVR cap, as we discussed them at length previously in this House. An SVR cap would create an arbitrary division between different sets of consumers, and it would also have significant implications for the wider mortgage market that cannot be ignored. It is therefore not an appropriate solution, and I must be clear that there is no prospect of the Government changing this view in the near term. In the light of this, I ask the noble Lord to withdraw his amendment.

Financial Services and Markets Bill

Debate between Baroness Penn and Baroness Chapman of Darlington

Report stage
Thursday 8th June 2023 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

My Lords, I start by acknowledging the government amendments in this group, which make a number of changes that we think are sensible to ensure that the cost/benefit analysis panels have representatives from industry, to allow the Treasury to direct statutory panels to make annual reports and to make it the Treasury’s job to appoint the complaints commissioner. These all represent steps in the right direction—even if, as the noble Baroness, Lady Kramer, has just said, they are not necessarily the giant leaps that some would hope to see.

We tabled Amendment 39 in this group, which would require the FCA consumer panel to produce annual reports on the regulator’s fulfilment of its statutory consumer protection duties, and my noble friend Lady Hayter explained why we were backing this so firmly and spoke about the work with the British Steel pensioners, led by Nick Smith. She saved my blushes because Nick is my husband. I know that is not a declarable interest, but in the interests of transparency, I should probably let people know. We are pleased to see Amendment 50 and will not be pressing our Amendment 39 to a vote because of it. We believe that the government amendments go a significant way to addressing our concerns, so will not press our amendment, but that does not mean that we are convinced that consumer issues are by any means resolved, and we may have to revisit this topic in future.

The noble Baroness, Lady Bowles, helpfully introduced the amendments tabled by the noble Lord, Lord Bridges, and presented his proposal for an independent office for financial regulatory accountability. This is an interesting proposal but, when considering the Government’s numerous concessions on scrutiny and accountability, at this point we would not be minded to support it at a Division, because the creation of such a body needs significant work and amounts to a fundamental change in how we regulate the sector. We do not want to pre-empt what the Minister has to say, but it was not a core focus of the future regulatory framework review, the outcomes of which the Bill seeks to implement.

The amendments from the noble Lord, Lord Bridges, raise important questions about the capacity of parliamentary committees to scrutinise the regulators’ output, and this is something we have consistently raised with the Minister during our private discussions. When I say “we”, that is very much the royal “we”—I obviously mean my noble friend Lord Tunnicliffe. I am sure that he is grateful to the Minister for the time she has given to him, to my noble friend Lord Livermore and to me in recent weeks. While we understand that it is for Parliament to make its own arrangements, both now and in future, we hope that the Government will acknowledge the substantial workload that committees will have and remain open-minded about whether and how the regulators can better facilitate Parliament’s work.

I am especially grateful to my noble friend Lord Eatwell for his amendments to the OFRA texts, but I suppose this highlights in part the difficulties with supporting the detail of the proposal at a Division at this point. We see that many people agree with the principle, but there is probably a great deal more work to be done on the detail.

[Baroness Penn (Con)]

My Lords, let me respond briefly to the points raised in the debate. I take first the amendments from my noble friend Lord Bridges, well introduced by the noble Baroness, Lady Bowles: Amendments 64 to 66 and 68 to 71, which would establish an office for financial regulatory accountability. As I said in my opening remarks, the Government agree that the provision of accurate and impartial information is extremely important for assisting Parliament in its important scrutiny role—and, indeed, others.

However, as the noble Baroness opposite acknowledged, creating a new body raises questions about how it would interact with the existing accountability structures and the balance of responsibilities between government, Parliament and independent regulators. As I noted in Grand Committee, the provisions for the establishment of the Office for Budget Responsibility referred to in this debate, on which OFRA is, at least in part, modelled, were brought forward in a stand-alone Bill after public consultation, where there was sufficient time to consider carefully its role and remit in advance. The Government therefore do not think that establishing such a body through amendment to this Bill is the right way forward at this time. We acknowledge the strength of feeling and degree of consensus from different parts of the House on this idea, and noble Lords can rest assured that my noble friend Lord Bridges has made it very clear to me that this is not the last that the Government will be hearing from him on this subject.

I turn to the series of amendments from my noble friend Lord Holmes. Amendments 42 and 45 seek to make specific provision for the regulators’ new CBA panels to be provided with the information required to perform their functions. The Government support the intention of these amendments but consider that the requirement in legislation to establish and maintain the panel already requires the regulator to ensure that the panel has the appropriate information and data to perform its functions.

My noble friend Lord Holmes asked how we could ensure high-quality cost-benefit analysis work. As he and the noble Lord, Lord Eatwell, noted, key to this is the composition of the panels. Panels with members who have diverse backgrounds, expertise and thought will be better placed to ensure that the FCA, the PRA and the PSR receive the most comprehensive appraisal of their policy. That is part of the reason why we have Clause 43, which requires the FCA and the PRA to set out a clear and transparent process for appointing members.

The FCA has also recognised the importance of improving diversity in the membership of its statutory panels and is undertaking a review to identify ways in which it can boost diversity so that the composition of panels appropriately reflects the range of practitioners and stakeholders in financial services. The Government welcome the work that is being done to move recruitment to the panels in this direction.

Amendments 41 and 45 seek to require the new CBA panels to make public their meeting materials and recommendations. The Government are not able to support this as it could undermine the confidentiality of the panels’ contributions, which is crucial to their role as a critical friend to the regulators. The panels and the regulator will already be able to make public their deliberations and materials when they consider it appropriate, without undermining that confidentiality. Through an amendment in this group, the Government are taking a power to oblige the panels to publish their annual reports on their work and lay them before Parliament; we think that this will deliver sufficiently.

If a panel feels that its work or conclusions are being ignored by the regulator, or where there are issues on which the regulator and the panel differ, the Government expect that these will generally be resolved in the course of regular engagement between the regulator and the panel. However, as I have said, panels are able to express their views publicly, including through their annual reports or by publishing responses to consultations. For example, as it currently operates, the FCA’s consumer panel regularly publishes its responses to the regulator’s consultations.

I turn to Amendment 39 in the name of the noble Baroness, Lady Chapman. I am glad that she and the noble Baroness, Lady Hayter, feel that government Amendment 50 seeks the same outcome and should help to deliver that, although I note that, as the noble Baroness said, this is not the last word on consumer issues. However, at least when it comes to this particular focus, we have, I hope, delivered on that.

I know that not all noble Lords are satisfied with all of what the Government have put forward, but this is a step forward in the right direction. I expect to hear more from noble Lords in future on how the new system that we are establishing through this Bill is operating. For now, I commend the amendment.

Financial Services and Markets Bill

Debate between Baroness Penn and Baroness Chapman of Darlington

Report stage
Tuesday 6th June 2023 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

My Lords, before I address the amendments, I want to acknowledge the work of my noble friend Lord Tunnicliffe, who had been leading for these Benches on this Bill until very recently, and thank him for his hard work and generosity in the way he has handed over custody of the Bill to me and my noble friend Lord Livermore. We are very grateful to my noble friend for everything he did, and he continues to advise and support—as noble Lords who know him can well imagine.

However, we are on Report, and this is the stage where we cut to the chase and pick our battles. I have been leading on the retained EU law Bill and am very familiar with the arguments raised in this debate, but we are treating this Bill slightly differently to the retained EU law Bill because our concerns on that Bill revolved around the lack of certainty created by the Government’s approach. There was no definitive list of the terms of retained EU law that would be revoked at the end of the year, and the absence of that list meant limited scope for meaningful engagement, scrutiny or consultation. That was our fundamental objection to that Bill.

The process set out in this Bill is different, with most of the retained law listed in the legislation and to be repealed and revoked only once replaced by regulations that are UK-specific. Fundamentally, we think that changing the process outlined in the Bill at this stage in a manner that the sector has not asked for—it is very different to the engagement that we had on the retained EU law Bill, where there was strong demand from various sectors for change—would introduce uncertainty.

The Lords were right to ask the Government to think again on the retained EU law Bill, but amendments to one Bill do not automatically work for another and, in any event— as I know from having worked on the retained EU law Bill—the version of the amendment we are considering today has already been convincingly overturned by the elected House and we have had to come back with another. As we need to pick our battles and to prioritise at this stage in our proceedings, we on these Benches will not be participating should the issue be put to a Division today.

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

My Lords, before turning to the amendments at hand, I add my thanks to those of the noble Baroness, Lady Chapman, for the contribution of the noble Lord, Lord Tunnicliffe, to this Bill and the Labour Front Bench on Treasury matters. The noble Baroness referred to the noble Lord’s generosity; I have definitely found that to be the case. He has always had a very constructive approach and approached his work with kindness and wisdom, which is a great combination to bring to this House.

The amendments before us from the noble Lord, Lord Sharkey, Amendments 1, 116 and 117, would introduce new parliamentary procedures when exercising the powers in the Bill. As noble Lords have noted, very similar amendments were proposed to the retained EU law Bill, passed and then reversed by the Commons. We have just had a debate this afternoon on a modified version of those amendments, to which I listened very carefully, although I am not as expert in the passage of that Bill as some other noble Lords in the Chamber.

Many of the arguments covered in that debate also apply here, so I do not intend to repeat them at length. I want to focus on some specific considerations in relation to this Bill, which, as the noble Baroness, Lady Chapman, noted, takes a different approach to repealing retained EU law for financial services. That is because it enables the Government to deliver fundamental structural reform to the way in which the financial services sector is regulated.

The Government are not asking for a blank cheque to rewrite EU law. This Bill repeals EU law and creates the necessary powers for it to be replaced in line with the UK’s existing Financial Services and Markets Act 2000—FSMA—model of regulation, which we are also enhancing through this Bill to ensure strong accountability and transparency. A list of retained EU law to be repealed in Schedule 1 was included in the Bill from its introduction in July 2022 to enable scrutiny of this proposal.

Going forward, our independent regulators will generally set the detailed provisions in their rulebooks instead of firms being required to follow EU law. The Bill includes a number of provisions to enable Parliament to scrutinise the regulators; the Government have brought forward amendments to go further on this, as we will discuss later on Report.

Amendments 1, 116 and 117 would introduce rare parliamentary procedures, including the super-affirmative procedure, and create a process to enable Parliament to amend SIs. As I said in Committee, those procedures are not justified by the limited role that secondary legislation will have in enabling the regulators to take up their new responsibilities. The Government have worked hard to ensure that every power in the Bill is appropriately scoped and justified. As I noted in Committee, the DPRRC praised the Treasury for a

“thorough and helpful delegated powers memorandum”.

It did not recommend any changes to the procedures governing the repeal of EU law or any other power in this Bill.

The powers over retained EU law are governed by a set of purposes that draw on the regulators’ statutory objectives. They are limited in scope and can be used only to modify or restate retained EU law relating to financial services or markets, as captured by Schedule 1. However, of course, the Government understand noble Lords’ interest in how they intend to use the powers in this Bill and are committed to being as open and collaborative as possible when delivering these reforms.

The Government have consulted extensively on their approach to retained EU law relating to financial services and there is a broad consensus in the sector behind the Government’s plans. As part of the Edinburgh reforms, the Government published a document, Building a Smarter Financial Services Framework for the UK, which describes the Government’s approach, including how they expect to exercise some of the powers in this Bill. It also sets out the key areas of retained EU law that are priorities for reform. Alongside this publication, the Government published three illustrative statutory instruments using the powers in this Bill to facilitate scrutiny.

When replacing retained EU law, the Government expect that there will be a combination of formal consultation, including on draft statutory instruments, and informal engagement in cases where there is a material impact or policy change, such as where activities that are currently taking place in the UK would no longer be subject to a broadly equivalent level of regulation. The Government will continue to be proportionate and consultative during this process, just as we have been up to this point.

Through the retained EU law Bill, the Government have also committed to providing regular updates to Parliament on progress in repealing and reforming retained EU law. I am happy to confirm that these reports will also cover the financial services retained EU law listed in Schedule 1 to this Bill.

I hope that I have satisfied noble Lords that the Government are committed to an open, transparent and consultative approach to implementing the reforms enabled by this Bill. I ask the noble Lord, Lord Sharkey, to withdraw his Amendment 1.

--- Later in debate ---

[Baroness Chapman of Darlington (Lab)]

My Lords, we are grateful to the noble Viscount, Lord Trenchard, for bringing these amendments forward and we ask him to pass on our very best wishes to the noble Baroness, Lady Noakes, and her husband. I am sure she will be impressed by the way he introduced her ideas this afternoon. I feel somewhat that we are intruding on a bit of a family squabble on the Government Benches with this group in that, in the retained EU law Bill, the amendment that she brought forward was as a consequence of her deeply felt disappointment—shared by the noble Baroness, Lady Lawlor, if I remember her speech at the time, and others—at the Government’s change of approach to that Bill. The change of approach was one that we had been calling for and very much welcomed, and we did not feel on that Bill and we do not feel on this Bill that there is an awful lot to be gained by these amendments. There is not a huge amount to be lost either, particularly with Amendment 3A. We are interested in what the Government have to say about them, but they are not amendments that we take a particularly firm view on either way because we think they are designed with a rather different purpose in mind, which is to hold the Government’s feet to the fire.

[Baroness Penn (Con)]

My Lords, I join noble Lords in wishing my noble friend Lady Noakes and her husband well, and I look forward to her return to this House. As my noble friend Lord Trenchard noted, she worked with our noble friend Lord Callanan on amendments to the retained EU law Bill to introduce similar reporting standards to those in Amendment 3A. I can confirm that the reporting requirements in the retained EU law Bill already apply to the retained EU law repealed through Schedule 1 to this Bill, so the reports that the Government prepare under that obligation will include the Treasury’s progress in repealing retained EU law in Schedule 1.

I reassure my noble friends that through the Bill the Government are asking Parliament to repeal all legislation in this area, and we expect to commence it fully. The revocation is subject to commencement, and each individual piece of legislation listed in the Bill will cease to have effect only once the Treasury makes an SI commencing the repeal. As I noted in Committee, this is being taken forward in a carefully phased and prioritised way to deal with retained EU law, splitting it into tranches and prioritising areas that will provide the most concrete benefits to the UK. The implementation will take place over a number of years, which means that we are prioritising those areas with the greatest potential benefits of reform. We have demonstrated intent and action in this area. We have conducted a number of reviews into parts of retained EU law, including the Solvency II review, the wholesale market review and the UK listings review by my noble friend Lord Hill of Oareford, which my noble friend Lord Trenchard referred to in his Amendment 3B. The whole- sale markets review reform in Schedule 2 demonstrates the Government’s pace and ambition for reforming retained EU law, and that is very much the case.

I turn to Amendment 3B. Of course the Government must think carefully before choosing to replace EU law, and understand the impact of any replacement. The Government have consulted extensively on their approach to retained EU law relating to financial services, and there is broad consensus in the sector behind the Government’s plans, as I have already noted. However, I do not believe that an explicit mandatory statutory obligation to consult impacted parties is required. The powers in the Bill to designate activities under the designated activities regime are closely modelled on the secondary powers which already exist in FiSMA, especially the power to specify regulated activities. This existing power does not have an explicit statutory obligation to consult. I think the Government have already demonstrated that they will always consult when appropriate and will always approach regulating a new activity carefully. We can see this in the Government’s consultation on the regulation of funeral plans in 2019, and in draft legislation related to “buy now, pay later” published in February.

My noble friend Lord Trenchard referred to the listings review and implementing its results but, again, the Government have already consulted extensively. They launched a consultation in July 2021 that ran until September this year, and the proposals on listing reforms received broad support across the industry. The Government have already published a draft statutory instrument to illustrate how the new powers in the Bill could be used to bring forward a new regime in this area, so I believe that the Government have already demonstrated that they will consult properly when using the regulated activities order power. Therefore further amendments in this area are not necessary, so I hope my noble friend is able to withdraw Amendment 3A and will not move Amendment 3B.

--- Later in debate ---

[Baroness Chapman of Darlington (Lab)]

My Lords, we commend the noble Lord, Lord Tyrie, on his amendment and on using it to raise important questions. We understand that concerns have been raised about the perceived watering down of the RDC’s role within the FCA. While we know that the Government respect the operational independence of the FCA, we hope that the Minister is able to say something about the regulator’s recent decisions on the RDC, which are causing substantial concern.

The FCA believes that the current balance of responsibilities is correct and that the recent reforms were necessary to ensure quicker decision-making. However, it would help if the Minister could outline what steps, if any, the Treasury might take in future, should it come to the view, if it has not today, that the system is not quite working in the way that it should.

[Baroness Penn (Con)]

My Lords, I am also grateful to the noble Lord, Lord Tyrie, for raising this important issue through Amendment 8. The Regulatory Decisions Committee, or RDC, takes contested enforcement decisions on behalf of the FCA where the FCA has not been able to settle a case with the relevant firm. The Government recognise that the RDC performs a critical function within the regulatory framework. FSMA requires that decision-makers are independent, and the design of the RDC reflects this.

It is important that the RDC makes decisions fairly and transparently. To ensure this, the members of the RDC are wholly independent of the FCA’s executive. The RDC also has its own team of support staff and legal advisers. This structure ensures that FCA personnel involved in the investigation of the enforcement case are not involved in supporting the RDC in its final decision-making.

As noble Lords noted, the FCA has recently made a number of operational changes to transfer decision-making responsibilities in certain cases from the RDC to the FCA executive, which will increase the speed of decision-making. However, decisions in contested enforcement cases continue to be made by the RDC.

In addition, should a firm or senior manager disagree with the final enforcement decision taken against them by the RDC, they generally have the right to refer the case to the Upper Tribunal. Where decisions fall to FCA executives, the relevant parties retain the right to make representations in writing. The FCA will also consider taking oral representations in exceptional circumstances, when not doing so would be detrimental to the fairness of decision-making. As set out above, the decisions made by FCA executives can also be referred to the Upper Tribunal should a firm disagree with them.

Any proposed legislative changes to the structure of the FCA’s supervision and enforcement framework should be subject to appropriate public consultation. As we have discussed previously during the passage of the Bill, the Government sought views from stakeholders on the operation of the future regulatory framework through a review. However, we concluded during that review that the case had not been made for changes to the FCA’s enforcement and supervision functions given that these responsibilities were not increasing as a result of the UK’s departure from the EU, unlike the significant increase in its rule-making responsibilities, which was the focus of the review and the subsequent enhancements made by the Bill.

Nevertheless, I am grateful to the noble Lord for bringing the importance of the FCA’s supervisory and enforcement framework to the Government’s attention. The Government do not see the need for legislative change in this area at this time. However, we support the noble Lord’s aim to ensure greater independent scrutiny of and accountability within the regulatory framework. The Economic Secretary and I will look at this issue further, outside the passage of this Bill, to ensure that the FCA’s supervisory and enforcement framework remains appropriate as it takes on new powers. We will continue to listen to the views of the noble Lord and other stakeholders as we do so.

I have also raised the issue with the FCA, and will pass on the response with further detail on the decisions and changes made to the operation of the RDC to this House. Therefore, I hope, for the reasons I have set out, that at this stage the noble Lord is content to withdraw his amendment and continue this conversation further outside the passage of the Bill.

Insider Dealing (Securities and Regulated Markets) Order 2023

Debate between Baroness Penn and Baroness Chapman of Darlington

Tuesday 16th May 2023 Grand Committee

[Baroness Chapman of Darlington (Lab)]

We agree with the Minister’s assertion that there should be serious consequences for those who break the law. We also agree with the comments from the Liberal Democrat Benches and echo the comments about the seriousness of insider dealing. We share the curiosity shown in the other place when this instrument was considered about the length of time it has taken to bring in this measure, given we understand that it came about as a result of a review that took place in 2015. I am not asking this to be facetious, but what assessment have the Government made of the number of criminal offences that would have been caught had this measure been in place sooner, which were treated under the civil regime because this instrument had not yet been brought? We want to highlight the consequences of leaving things quite this late, because we are concerned. That underscores our support for this measure. The Government are right to address this gap between the two regimes and we support this instrument.

[Baroness Penn (Con)]

My Lords, I thank both noble Lords for their support for this statutory instrument.

On the time it has taken to deliver this measure and the potential impact in the meantime of not having the criminal regime and the civil regime aligned, it is important to note that since the Fair and Effective Markets Review was published, considerable work has been undertaken to modernise the UK’s market abuse legislation. For example, the civil regime for market abuse was updated in 2016 by the EU market abuse regulation and the Government and UK regulators have implemented the majority of the recommendations from the Fair and Effective Markets Review, including making changes in the Financial Services Act 2021 to increase the maximum sentence for criminal market abuse from seven to 10 years, bringing it into line with comparable economic crimes such as fraud and bribery. The Government have also recently completed a broader review of the criminal market abuse regime as part of the 2019 to 2022 economic crime plan. While this measure has taken longer to implement, there has been other action in this space in the meantime, including delivering on other recommendations from that review.

On the impact of the length of time in which the scope of the criminal offences has been different from that of the civil offences, it is important to note that the FCA has a number of tools available to tackle market abuse, of which the criminal insider dealing offence is only one. In addition to prosecutions under the criminal regime, between 2013 and 2022 the FCA has had 36 regulatory outcomes relating to market abuse, with regulatory fines totalling more than £70 million in that period.

The Government do not have data on the number of criminal prosecutions that have not been pursued due to the difference in the scope of the regimes. The FCA does not routinely record and track cases that it cannot take forward. This includes cases taken forward under the civil regime that could have resulted in a criminal prosecution with the changes made by this SI. Moreover, it is important to remember that there are a number of reasons why the FCA may choose to pursue a civil rather than a criminal prosecution other than the scope of the two regimes. For example, the FCA will consider the severity of the offence in question and whether the evidence meets the higher legal threshold needed to secure a criminal conviction.

It is not possible to say with certainty whether the FCA’s decision not to pursue criminal proceedings in a particular case was due to the issues that this statutory instrument addresses or to other factors, and we do not believe that attempting to determine that retrospectively would be a good use of government legal resources. It is a perfectly legitimate question to ask but, given that other mechanisms were available to the FCA to tackle market abuse under the civil regime—and it has also continued to bring prosecutions under the criminal regime—we can be reassured that it has been able to take action in this period. The Government are confident that the FCA has a strong track record of identifying, investigating and prosecuting insider dealing.

The noble Lord, Lord Sharkey, asked why we include specific US and Swiss exchanges and why they are not covered under the more general definitions that have been used in this SI to avoid the need to update this list again as specific named instruments change. My understanding is that for the more general definitions there are commonly understood definitions used in the UK and EU markets that this can work for, but that when you are looking at other exchanges further afield outside that scope, there remains a need to name those trading venues. That is the difference between continuing to need to name some trading venues versus going for the more general definition-based approach that this SI has done.

As to why we have chosen to include specific US and Swiss exchanges in addition to the UK and EU exchanges that will be covered by this measure, the FCA has seen a persistent trend of organised crime groups recruiting UK insiders to disclose inside information relating to securities traded on those markets. While of course this abusive behaviour is also possible for other third-country venues, this SI includes the third-country markets where the FCA has observed the greatest risk of harm. With regard to other third-country trading venues, and indeed in respect of these ones too, you would expect the home regulator to take action to tackle market abuse in those cases.

I hope that with those remarks I have answered the questions put forward today.

Banks: Closures and Shared Banking Hubs

Debate between Baroness Penn and Baroness Chapman of Darlington

Thursday 27th April 2023 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

I do not think my children know what a cheque is, actually. The Social Market Foundation and the Treasury Select Committee in the other place have expressed some concern about the overreliance on post offices as a stopgap. Postal staff are wonderful, but they are not trained banking specialists. Does the Minister agree that we need that trusted expertise to be available on our high streets? Does she also agree that some post offices just are not suitable for many of the requirements of face-to-face banking, especially for more vulnerable customers, as they do not provide the privacy and dignity that many bank customers need?

[Baroness Penn (Con)]

I agree with the noble Baroness that the Post Office can play a really important role in ensuring ongoing provision, but it should not be the only provider of services. There are other services that are more appropriately delivered in other ways, including in person, which is part of where banking hubs come in. As I have said, we hope to see the delivery of those hubs accelerated this year. It is also reassuring to hear that several banks have committed that if their branch is the last in town, it will stay open until the relevant banking hub is up and running, to ensure continuity of service.

VAT: Building Repairs and Maintenance

Debate between Baroness Penn and Baroness Chapman of Darlington

Wednesday 19th April 2023 Lords Chamber

[Baroness Penn (Con)]

On the noble Baroness’s specific point, if I may I will write to her with the details because I do not have them to hand at the moment.

[Baroness Chapman of Darlington (Lab)]

My Lords, can the Minister confirm that around one-third of the money allocated by the Government to fund installation of heat pumps and home insulation has so far gone unspent? That is £2.1 billion that could have been spent on making British homes cheaper to keep warm. Do the Government have a plan to spend this money? For example, could it help to fund VAT reductions on improvements to energy efficiency, encouraging more people to upgrade their homes?

[Baroness Penn (Con)]

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

Carers in England

Debate between Baroness Penn and Baroness Chapman of Darlington

Monday 6th March 2023 Lords Chamber

[Baroness Penn (Con)]

My Lords, the Government have considered a number of aspects for the adult social care workforce, including the support for training that can be provided and proper recognition of the profession. Of course, the noble Lord makes a point about pay as well.

[Baroness Chapman of Darlington (Lab)]

My Lords, the Government have long promised an employment Bill, which would allow Ministers to address some of the specific issues faced by carers, as well as others who face barriers to full economic participation. Given the absence of the Bill from last year’s Queen’s Speech, does it remain the Government’s intention to bring it forward? If so, when will we see it and, if not, how else will these issues be addressed?

[Baroness Penn (Con)]

My Lords, perhaps I can pick up on the noble Baroness’s final point. The Government are supporting the carer’s leave Private Member’s Bill to provide an entitlement to employees of one week of unpaid leave per year. We also support the flexible working Private Member’s Bill, which will make requesting flexible working an employment right from day 1, also providing more flexibility for those seeking to balance work and care. We are seeking to take forward the policies and proposals that we have set out while we await the arrival of the employment Bill.

Schools Bill [HL]

Debate between Baroness Penn and Baroness Chapman of Darlington

Report stage & Lords Hansard - Part 1
Monday 18th July 2022 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

I will not speak to the Tory leadership election.

We support the approach suggested in many of the amendments in this group. To pluck one out of the air at random, Amendment 81 tabled by my noble friends Lord Hunt and Lord Knight, suggesting a code of practice—which is really just another way of sharing best practice—is a positive suggestion. We recognise completely that poor attendance can be a symptom of a much deeper problem and that schools often take a holistic approach already. The amendment suggests that families and organisations with experience of overcoming barriers to attendance be included in the Government’s thinking. It is a very good idea and seems to be the right approach. Even if we do not divide the House on this today, it is a good suggestion for the Government to consider this code of practice further.

[Baroness Penn (Con)]

I thank the noble Lord, Lord Hunt of Kings Heath, for hotfooting it over here from the Grand Committee. I also thank him and my noble friend Lord Lucas for their Amendments 80, 82 and 83, which I will speak to together.

I mentioned earlier that the Government are already seeking the power for the Secretary of State to give local authorities in England statutory guidance that they must have regard to. Local authorities will not be able to diverge from it unless there is a coherent reason to do so.

Schools Bill [HL]

Debate between Baroness Penn and Baroness Chapman of Darlington

Committee stage
Wednesday 22nd June 2022 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

My Lords, we are respectful of the right of parents to educate their children at home, but we cannot agree that this clause should not be part of the Bill. There are clearly important measures that we support quite strongly and want to see enacted. We support the principle of a register. However, there have been some helpful suggestions for improvement—particularly on new Sections 436C and 436D(2), inserted by Clause 48—and the Minister has committed to go away and consider those further.

On the issues around data we raised in relation to Amendment 128 in an earlier group, having thought about what the Minister said and the issues raised by the noble Baroness, Lady Kennedy, and other noble Lords, I think it is worth some further consideration, because clearly there are risks and we would not want to rush into anything that would cause more problems. We hope that, with some improvements, this clause will be a helpful and necessary change that will safeguard children. It is not about forcing children back into school; it is about balance between freedom to decide and safeguarding.

On the comments that we have just heard from my noble friend, this Bill is not ready for Report. We do not think that the Government will have time to reconsider some of the issues that have been raised. It would seem appropriate, given everything that has been said, for us at least to wait for the regulatory review to be completed before we take this Bill to Report.

[Baroness Penn (Con)]

My Lords, I thank the noble Baroness, Lady Kennedy, for giving us the opportunity again to ensure that the tone we take when talking about this issue—as the noble Lord, Lord Storey, and many other noble Lords in this debate have said—is one of support, of explaining what the Government are seeking to achieve with these measures and of trying to allay some the concerns we have heard, while being clear that we do not lose sight of the importance of protecting a child’s right to education. In doing so, I can reassure the noble Baroness, Lady Kennedy, that the introduction of registers is not, in any way, intended to undermine or interfere with the parents’ right to educate their child how they choose. This clause includes no measures on monitoring or assessing the education that parents may be providing. Local authorities’ existing powers are already sufficient in this regard, and we have already provided guidance to support local authorities to determine whether education is suitable.

As many noble Lords have said, we know that many parents who home educate do it very well—often to a very high standard and in challenging circumstances. However, that is not the case for all. That is a key point I would like to emphasise: this Bill is about establishing registers so that we know who and where home-educated children are; it is not about forcing them back to school.

A school attendance order can be issued only if the local authority is not satisfied that the education provided for the child is suitable. The example raised by the noble Baroness, Lady Kennedy, of the little boy thriving at home with his new adopted family is clearly a case where the home education being provided is suitable and, if demonstrated as she described, the local authority could only agree with that. Similarly, on her example of a girl in year 1 who developed seizures, if the education being provided at home is suitable—and that is demonstrated to the local authority—the local authority could not reasonably issue a school attendance order. In addition, the current law, supported by guidance, already requires local authorities to take all relevant factors into account when taking a view on whether it is expedient for a child to attend school, including any medical grounds.

I turn now to the noble Baroness’s question about parents needing local authorities’ consent to home educate. I can reassure the noble Baroness that condition C in new Section 436B simply does not do that; it establishes that a home-educated child is eligible to be included on the local authority’s register. That is a statement of fact; there is nothing about consent involved in new Section 436B.

As we heard in an earlier debate, we must recognise that there are growing numbers of children not in school, particularly after the pandemic, and there are concerns that some of these children will not be receiving suitable education—and, in some cases, not at all. We need to be able to assure ourselves that they are receiving a suitable education, and that is what these provisions are all about. While parents of eligible children will be required to provide information to local authorities for inclusion on their registers, local authorities will be able to require only that information which is prescribed in legislation. Any additional information prescribed will be intended to support the promotion of the education, welfare or safety of children.

I have also heard the concerns about data sharing—which was raised not just in this group—and was sorry to hear about the specific situation the noble Baroness described; that absolutely should not have occurred. As my noble friend the Minister has explained, there will be protections in place: the clause allows local authorities to share information only with certain prescribed persons, to be set out in regulations, when they consider it appropriate for the purposes of ensuring the safety, welfare or education of a child—

[Baroness Chapman of Darlington (Lab)]

There is quite deep concern about this issue, and I wonder whether the regulations could be made available to us before Report.

[Baroness Penn (Con)]

I can absolutely take that point away and see whether it is possible. If that is not the mechanism by which we can provide further detail and assurance, I will look at what else we can do to explore, and reassure on, that issue further.

As my noble friend the Minister said, under UK GDPR, parents have the right to object to any processing where UK legislation requires such processing, which would include the sharing of information to prescribed persons. The organisation responsible for that processing would then need to review the request and decide whether the processing is in the best interest of the child or family, and either uphold the request in the specific circumstances or proceed with the processing. The parent also has a formal route of complaint with the Information Commissioner’s Office, which has a range of powers in this area. It is essential, however, for local authorities to be able to share information, if needed, to support multi-agency safeguarding and education efforts, with the appropriate safeguards in place.

On the question of statutory guidance, which the noble Baroness asked about also, this will help ensure the consistency of interpretation and implementation of duties across local authorities. As we said, we will ensure that it is created in close collaboration with local authorities and home educators, and includes advice on how local authorities can best promote positive engagement, as we have heard the concerns from parents where that has not been the case. We have also heard examples of best practice, and that is what we will seek to draw on in drafting the guidance.

There was a concern about financial penalties for tutors or childminders and home education groups. The duty on providers to share information on request will be important in helping to identify those children who are not—but should be—on registers, and those regulations will be used to set a threshold at which an education provider comes into the scope of the duty in Section 436E, ensuring the duty is only placed on providers that provide a substantial proportion of an eligible child’s education. There is also the power to make regulations to create specific exemptions to this duty, and we have indicated our intention to use that power to exclude informal groups of home-educating parents from the scope of this measure.

I thank the noble Baroness once again for the opportunity to reiterate some of those points, and I think we have heard the areas that the Government will take away and look at to ensure that we continue to have a message for support for home educators, but not lose sight of the importance of what we are trying to achieve with these registers.

Schools Bill [HL]

Debate between Baroness Penn and Baroness Chapman of Darlington

Committee stage & Lords Hansard - Part 1
Monday 20th June 2022 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

I looked at these amendments and what struck me is that there did not seem to be an awful lot of trust in the Government on this area. I think we are all very worried about this because we have all spoken to families. I commend the noble Baroness, Lady Brinton, on her speech, which was quite a difficult listen. The cases she described were harrowing in the extreme. However, reflecting on the conversations I know many of us here have had over the years with parents in not completely dissimilar situations, we recognise that sense of desperation. Reluctantly removing your child from school because you feel their needs are not being met is such a big thing to have to do as a parent. It should trouble us all that families are put in this situation.

It gets to a pretty fundamental issue about who is entitled to support, how much they get, what it is used for and how it varies so wildly across the country. We are obviously used to locally determined provision on various things, but this seems to be so fundamental to a child’s well-being that it should not be dependent to the extent that it is on where you happen to live.

When I looked further into this, I came across a report from the House of Commons Library, which explained that in January 2007 there were 1.6 million children with special educational needs in England, which grew to 1.7 million in 2010 before declining and reaching its lowest level of 1.2 million in 2016. This fluctuation suggests that something is going on here that is about not just the child’s need but assessment, local availability of support or some other change of approach. Clearly, we want children to be supported appropriately and consistently.

It would have been helpful to have had the benefit of the SEND review ahead of this Bill, because there is very little in the Bill on this. Amanda Spielman has said that the 2014 SEND reforms, which were some years ago now,

“had the right aspirations, but did not have the intended impact because insufficient attention was given to their implementation.”

She was absolutely right about that because, according to the National Audit Office, between 2014 and 2018—so after the last set of reforms—

“the Department increased high-needs block funding by £349 million (7.2%) in real terms. This rise was larger than the 2.3% real-terms increase in schools block funding for mainstream schools, meaning that the Department has shifted the balance of funding towards high needs. However, because of a 10.0% rise in the number of pupils in special schools and those with EHC plans in mainstream schools, high-needs funding per pupil fell by 2.6% in real terms”

over that period, after the last review. The NAO’s report continues:

“Per-pupil funding in the schools block also reduced over the same period, despite a £754 million real-terms increase in total funding”.


We are very concerned that this new review does not fail on its implementation in the way Amanda Spielman says the last one did—I know many people would agree with her. We wonder whether we will look back when we get the SEND review and think, “My goodness, if only there was a Bill coming before us.” It is not too late for the Government to set out the concrete steps they might want to take to get this provision right. To be positive with the Minister, we would very much welcome government amendments on this on Report or when the Bill enters the other place. These children are often our most vulnerable. They need our support as soon as possible. It is a shame that we are not getting the benefit of the consideration that will take place as part of the review before the Bill reaches Report.

[Baroness Penn (Con)]

My Lords, I welcome the opportunity to discuss further issues related to SEND on this Bill. As the noble Baroness, Lady Chapman, said, some of the individual examples and stories were quite harrowing. It is an issue that the Government take very seriously and, through the process of the SEND Green Paper, are committed to improving. I assure the noble Lord, Lord Hunt, my noble friend Lord Holmes and others that this Government are just as ambitious for children and young people with SEND as for every other child and young person.

Amendment 97 in the name of the noble Lord, Lord Hunt, highlights the importance of local authorities providing specialist educational support services for children and young people with sensory impairments, and there being sufficient funding to do so. As we have heard, local authorities have existing duties to ensure that appropriate support is available to meet their needs. To enable them to do this, they have flexibility on how they use high-needs funding, including to support those with sensory impairments. The budget has increased by £1 billion this year to a total of £9.1 billion. In a number of contributions, we heard about the pressures on the high-needs budget. This is something that the Government acknowledge and have tried to take action to improve. We have seen unprecedented increases in high needs funding. The SEND and alternative provision Green Paper proposals for changes are also intended to establish an improved system that is financially sustainable, as well as securing better outcomes for children and young people. We are really clear on the need to do that.

Within the current system, Ofsted and the CQC report that some areas, such as Barnsley and Hounslow, are highly successful in offering good provision for children and young people with sensory impairments. We want to spread good practice such as this to all areas and, as several noble Lords, including the noble Lord, Lord Storey, referred to, remove the postcode lottery that can be associated with special needs. That is why we are consulting on introducing national SEND standards as part of our Green Paper.

Amendment 99 from the noble Lord, Lord Hunt, proposes a new requirement that all local authority “children not in school” registers must include information about any special educational need or disability that child may have. I know that we will speak in much more detail later in Committee about those registers, but I assure noble Lords that we plan to legislate via regulation to require local authorities to record information about any special educational needs and disabilities a child may have within their register.

Turning to the amendments from my noble friend Lord Holmes, Amendment 163 seeks clarity on the Government’s plan to improve outcomes for pupils with SEND and report on those pupils’ attainment in key examinations. The Government have plans to reduce the attainment gap and improve the SEND system in, as I said, both the SEND and alternative provision Green Paper and the schools White Paper. Taken together, these papers contain ambitious proposals to improve outcomes. Regarding my noble friend’s point on data, the Government already publish information on the attainment levels of children and young people with SEN.

I share my noble friend’s view, set out in Amendment 164, of the importance of ensuring that all students eligible for disabled students’ allowance are made aware of it. That is why existing legislation already requires local authorities to publish information about disabled students’ allowance in their local offer, which must be accessible to all those with SEND and their families. In addition, the Student Loans Company provides information about student finance to schools and colleges, actively engages with higher education providers about student finance, including disabled students’ allowance, and supports higher education institutions to publicise it through events.

On Amendment 165, on every child having access to the support they need and the role that the right documentation can play in this, which the Government would acknowledge, children and young people who require them will receive EHC plans, which are statutory documents describing their needs, and the educational, health and social care provision required to meet those needs. Mainstream schools may, when complying with their existing statutory requirement to deploy their “best endeavours” to secure special educational provision for children and young people with SEN, use appropriate documentation to do so.

Finally, my noble friend’s Amendment 166 would require the department to consult academics, including those who subscribe to the social model of disability. I assure him that one of the key principles underpinning the SEND system is the social model of disability. Where a child or young person needs additional support to access education, their educational setting must put in place appropriate support. The nature of that support is not contingent on any particular diagnosis.

Finally, Amendment 171V in the name of the noble Baroness, Lady Brinton, would require schools to follow medical advice provided by a pupil’s doctor. I assure the noble Baroness that the Government are committed to supporting pupils with medical conditions at school. That is why we already set expectations that schools consider the advice of healthcare professionals.

Schools Bill [HL]

Debate between Baroness Penn and Baroness Chapman of Darlington

Committee stage & Lords Hansard - Part 2
Wednesday 15th June 2022 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

It is pleasure to speak to Amendment 88 in particular. We are very pleased to see it. This is an important group of amendments. We believe that there is a need to do more in this area.

I am very proud that my party—a couple of years ago now or maybe it was last September in Brighton—set out a new NHS target ensuring that patients start receiving appropriate treatment, not simply an initial assessment of need, within a month of referral. We have committed to recruiting 8,000 new staff so that 1 million additional people can access treatment every year and we also think there should be open-access mental health hubs for children and young people in every community, providing early intervention and drop-in services to support pupils and solve problems before they escalate.

We would like to see a full-time mental health professional in every secondary school and a part-time professional in every primary school. The evidence base for this is good and there are some excellent projects and work happening in schools that I have visited. I will recommend one, Place2Be—the Minister is nodding and it is good that she is aware of this and she supports it too. It looks at the general well-being in the school and also supports staff in the school. We think that that is important too.

We are concerned about the patchy nature of the support that is available. In too many cases there is a lack of early intervention and prevention. The waits for children’s mental health services have been described as “agonising” by the chief executive of the YoungMinds charity, and a BBC freedom of information request revealed that 20% of children are waiting more than 12 weeks to be seen. By the time they get to that point of referral, the problems are usually already pretty severe and causing huge anxiety and stress to the child, as well as to the wider family. The Government could fund this in part by removing the VAT exemption from private schools—but I know we will come back to this at later stages; we will probably discuss it in more depth next time.

One of the most urgent needs of our time is mental health, and we must make sure that children and young people get early help, with specialist support in every school. It is urgent, and it is quite remarkable that the Bill does not mention mental health.

The noble Lord, Lord Woolley, is not here, and he will not be speaking to Amendment 171E. However, while I am on my feet, I point out that he is talking about extending the remit of Ofsted to consider the work being done. We are interested in this, but, if this idea was to be pursued at some stage, we would also be interested to make sure that Ofsted has the expertise and resources to do this work in the way that I am sure he would want to see happen.

[Baroness Penn (Con)]

My Lords, I am grateful to the noble Baroness, Lady Brinton, for Amendment 88 and for allowing the Committee to return to the question of mental health support in schools.

The Government believe that school leaders should have the freedom to make their own decisions and prioritise their spending to best support their staff and pupils, especially as they address the recovery needs of their children and young people from the pandemic. This support can include school-based counselling services, and we have provided guidance on how to do that safely and effectively. To provide this support, schools can use the additional £1 billion of new recovery premium announced in the autumn, on top of the pupil premium, as well as their overall core school budget—which has significantly increased—to support their pupils’ mental health and well-being. As I said, this can include counselling or other therapeutic services.

However, as the noble Baroness acknowledged, schools should not be the providers of specialist mental health support, and links to the NHS are vital. That is why we worked with the Department of Health and Social Care and NHS England to create mental health support teams—which the noble Baroness referred to—funded by NHS England, which are being established across the country. As the noble Baroness said, the teams, made up of education mental health practitioners and overseen by NHS clinicians, provide early clinical support and improve collaboration between schools and specialist services.

The Government believe that, rather than funding for specific types of support, we should continue to give schools the freedom to decide what pastoral support to offer their pupils. However, to support schools in directing that funding we have put funding in place, as the noble Baroness acknowledged, so that they can train a senior mental health lead in every school, who can then look at what approach is best for pupils in each school.

Schools Bill [HL]

Debate between Baroness Penn and Baroness Chapman of Darlington

Committee stage & Lords Hansard - Part 1
Wednesday 15th June 2022 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

I should perhaps declare an interest on the amendments moved by the right reverend Prelate the Bishop of Chichester on behalf of the right reverend Prelate the Bishop of Durham, given that my children attend academy schools in the area of that diocese.

We would like to put on record our appreciation for the contribution of the Church of England to education in the country. I think it was very well put that there needs to be a strategic approach. The amendments tabled by the right reverend prelate the Bishop of Durham would better able that to happen, so we are sympathetic to the case that was made.

We were already minded to support Amendment 60, and my noble friend Lady Morris made the case better than I could. The issues highlighted prove that the Bill would have benefitted from some pre-legislative scrutiny.

I was particularly pleased to hear comments about fair access and admissions. Should we be forming a government any time soon, we would probably want to explore that and push it still further.

Given the very solid case that was made by both the noble Duke, the Duke of Wellington, and my noble friend Lady Morris, we would want the Minister to be as sympathetic as she can be in response to these amendments at this stage.

[Baroness Penn (Con)]

My Lords, I will start by responding to Amendments 59, 64 to 67, and 71 to 74 in the name of the right reverend Prelate the Bishop of Durham. I thank the right reverend Prelate the Bishop of Chichester for moving these amendments on his behalf.

I acknowledge the very important role played by churches and other religious bodies in state education. As the right reverend Prelate has said, these amendments relate to powers to support schools to join multi-academy trusts, helping to fulfil the Government’s ambition to have all schools in or joining a strong trust by 2030. I welcome the right reverend Prelate’s support for that ambition. I understand that, as he said, the purpose of Amendment 59 is to make the language used in Clause 29 consistent with other legislation relating to maintained schools in a church context. However, the existing wording of the clause already captures these particular schools and so this amendment would have no material effect.

Amendment 64 relates to requirements for local authorities to obtain consents before applying for an academy order on behalf of a school with a foundation. The Government understand the desire for the appropriate diocesan authority, as the religious body for a church school, to be among the bodies whose consent is required for an application. However, as drafted, the amendment captures only the diocesan authorities and not religious bodies for other faiths, and the position should be fair for all religious bodies.

The remaining amendments tabled by the right reverend Prelate the Bishop of Durham seek to enable certain religious bodies to apply to the Secretary of State for academy orders in relation to schools for which they are responsible. As I have said, the Government want schools with a religious character to enjoy, like all others, the benefits of being part of a strong academy trust. The Government are sympathetic to the principle of these amendments but further consideration is needed to establish the scope of the religious bodies that could apply for an academy order and the types of maintained school to which it should apply. As drafted, the amendment may not adequately capture all the religious bodies involved in maintained schools with a religious character. It may also inadvertently include bodies which are responsible for schools without a religious character.

Although I have set out some concerns relating to Amendments 64, 65, 67 and 71 to 74, the Government understand the intentions behind them and will reflect further on the issues raised by those amendments and the right reverend Prelate.

Turning to Amendment 60A, first, I want to reassure the noble Duke, the Duke of Wellington, on a specific point—though this may be unnecessary, because he said that this was a probing amendment. He will know that music and dance schools are typically independent schools, and that 16 to 19 maths schools are already academies. As such, they will not be affected by this clause. However, it would be wrong to exclude any schools in the maintained sector with a music, dance or maths specialism from the benefits of being part of a strong trust. I recognise the importance of preserving the unique characteristics of specialist schools within a fully trust-led system, as we have heard from the Committee. I can confirm that, in the event that a local authority applied for an academy order in relation to a specialist school, the regional director would have regard to the capacity of the proposed trust to preserve and support that school’s specialism. But to be absolutely clear to the noble Duke and the Committee, there are no powers in the Bill that would force an existing academy to join a multi-academy trust, and that might be why he was struggling to amend the Bill to address his concerns.

[Baroness Chapman of Darlington (Lab)]

I am a little confused. In the White Paper, the Government’s intention around MATs is quite clear. I think the noble Duke is seeking some assurance that that will not apply to the schools that he is interested in.

[Baroness Penn (Con)]

I absolutely understand that point. I was simply reassuring the noble Duke that within this Bill there are no powers to compel anyone to join a multi-academy trust. It is the Government’s vision for every school to be part of a strong trust by 2030. The intention is for the Government to work with academies and to move people with the Government in pursuit of that vision. I was simply saying that there is nothing in the Bill that would compel an academy to join a multi-academy trust. That said, we have consistently seen that schools in multi-academy trusts are stronger together. The collective focus, vision and community creates opportunities, facilitates collaboration, enables resilience and improves educational outcomes.

--- Later in debate ---

[Baroness Penn (Con)]

To be clear, the undertaking I gave was around the Bill’s powers being used to compel an existing stand-alone academy—the noble Duke gave the example of a specialist maths school but it is not restricted to that—to join a multi-academy trust, not based on any further characteristics of the school. I hope that reassures the noble Lord.

[Baroness Chapman of Darlington (Lab)]

I think the noble Baroness knows what we are getting at here. She has said that she will endeavour to come back with something concrete for us, and that is appreciated. However, reflecting on this, this is not just about requiring these schools to join MATs. The noble Duke has highlighted for us that the powers contained in the Bill could get to the activities of these schools and undermine the essence of them, which my noble friend described. There is nothing in the Bill to protect those schools from that. Previously, my noble friend said that she would quite enjoy the ability to impose standards across all schools, but I do not think she was thinking of these schools when she said that. There is a bigger problem that we have come across here, which the Minister should also attend to.

[Baroness Penn (Con)]

The most successful multi-academy trusts build on the strengths of these types of schools. The intention is to build on the strengths that we see in all sorts of academies, including specialist academies, in building the school system that we want to build in future. That is what is set out in the schools White Paper and what we are trying to deliver and achieve. Looking at and building on the freedoms that those kinds of schools have used to strengthen our education system is the direction of the travel that the Government have set out. We certainly want to continue to support that. We believe that these schools do an excellent job and we want to protect them in future.

I think I have gone as far as I can in setting out my understanding of what the Bill does and in seeking to reassure noble Lords that I will go away, check this point and look at it in the context of the wider concerns about the powers in certain sections of the Bill.

We heard in the debate about the partnership model that these schools have and their important role in providing outreach to other schools in the local area; indeed, that is part of the model that they have. Although it is our view that they can be part of a successful multi-academy trust, I have none the less given an assurance about our intention behind these powers and an undertaking once again to go away and confirm that point for noble Lords. With that, I hope that the right reverend Prelate will withdraw the amendment for now.

Schools Bill [HL]

Debate between Baroness Penn and Baroness Chapman of Darlington

Committee stage & Lords Hansard - Part 1
Monday 13th June 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, Amendments 35A, 78, 160 and 162 in the names of the noble Lords, Lord Knight, Lord Shipley and Lord Storey, and the noble Baroness, Lady Chapman, seek to clarify the strategic role of the local authority in education, particularly on admissions. I welcome the opportunity to restate that this Government believe that local authorities should remain at the heart of the education system, as the noble Lord, Lord Knight, said, championing all children, particularly the most vulnerable.

Through existing legislation, local authorities are already responsible for ensuring that every child in their area has a school place; for co-ordinating applications for the main round of school places; for identifying children and young people in their area who have special educational needs or disabilities; and for working with other agencies to ensure that support is available. As we move to a fully trust-led system, local authorities will retain these roles, continuing to ensure there are enough school places and to play a central role in fair admissions, particularly for the most vulnerable. We plan to increase the levers that local authorities have to help them deliver these duties, while maintaining trust autonomy.

Like my noble friend Lord Nash, I must disagree with some of the sentiments expressed by some of the Committee on trust autonomy with regard to admissions. The best MATs and academies have a strong record of admitting pupils from disadvantaged backgrounds and achieving excellent outcomes. My noble friend the Minister will happily write to the Committee to set out more detail on this issue.

The noble Lord, Lord Addington, asked about how special educational needs will fit into the picture. In the SEND and alternative provision Green Paper, we proposed new powers to convene partners as part of a statutory framework for pupil movement, including for excluded children. To respond to the question from the noble Lord, Lord Shipley, we will also include consultation on a power for local authorities to direct trusts to admit individual children in limited circumstances. Consultation is ongoing on these proposals. In the schools White Paper, we proposed further strengthening local authority levers to deliver their duties with a new power to object to the schools adjudicator when a trust’s planned admission numbers threaten school place sufficiency and requiring local authorities to co-ordinate in-year applications. We will consult on these measures; it is important that we listen to the outcomes of that consultation. My noble friend Lady Berridge asked about the timing of that. Given the scale and complexity of the admissions system, it is important to get these decisions right, so we are working currently with the stakeholders to refine our proposals. We will consult in due course and seek a further legislative opportunity where needed.

I also agree with the noble Lord, Lord Knight, and others that close working between trusts and local authorities on these duties is essential. Through the proposed powers in Clause 1, we will create a new collaborative standard, which will require trusts to collaborate with local authorities and encourage better co-operation. Amendments 160 and 162, however, propose making the local authority the admission authority for all schools. This would prevent school leaders making decisions that are most appropriate to their community, including, as we heard from the right reverend Prelate the Bishop of Bristol, for voluntary aided schools, which have had long-standing control over their own admissions.

The proposal in Amendment 78 to allow a local authority to direct a physical expansion of any school would be very difficult to achieve, because in many cases neither the local authority nor the Secretary of State has control over a school’s land. Our White Paper proposal instead allows trusts to continue to determine how many places they will offer but gives local authorities an additional power to ensure that they can still meet their sufficiency duty.

Amendment 58A from my noble friend Lord Lucas rightly emphasises the importance of parents having access to the information that they need to support their children’s schooling and of schools having good links with their parent body. However, we do not believe that this amendment is necessary because existing regulations, which academies are required to follow via their funding agreements, already require academy schools to provide a range of information to parents on aspects such as exam performance, Ofsted outcomes and admission arrangements. Furthermore, the department’s governance handbook is clear that schools and academy trusts should have in place mechanisms to engage with parents and the broader community, and that should be able to demonstrate how those views have influenced their decision-making. These provisions will transfer to the academy standards in future.

Amendment 160, in the name of the noble Baroness, Lady Chapman, is rightly concerned with the best interests of looked-after children, some of the most vulnerable in our society. That is why the School Admissions Code already requires all schools to give the highest priority in their admissions criteria to looked-after and previously looked-after children. To respond to Amendment 169 in the name of the noble Lord, Lord Triesman, I am pleased to confirm that the admissions code was updated last year to require admissions authorities to provide children adopted from state care outside England equal highest priority for admission with those who are looked after and previously looked after by a local authority in England. That change is now in force. I join him in paying tribute to my right honourable friend Nick Gibb, the previous Schools Minister, but also noble Lords in this Chamber—the noble Baroness, Lady Walmsley, and the noble Lords, Lord Russell, Lord Watson and Lord Storey, as well as my noble friends Lord Agnew and Lord Nash, who, along with the noble Lord, Lord Triesman, have shown a commitment to advocating for this group of children. The Committee has my commitment that those children will continue to be prioritised in admissions criteria. As the noble Lord, Lord Triesman, noted, the Government are looking at including them in the school census from the 2022-23 academic year to gather the data that we need when we look at extending the pupil premium plus to that group of children too.

Finally, I turn to the amendment of the noble Lord, Lord Hunt, which seeks to remove Clause 28 from the Bill. As we have heard, grammar schools have a long history within the education system and, where they exist, they are popular and oversubscribed. However, they are concerned about surrendering their independence to a MAT if it does not share their views on selection by ability. Clause 28 will put the status of academy grammar schools on to a legislative footing by designating them as grammar schools in the same way as local authority-maintained grammar schools are designated as grammar schools. The Bill will not enable the opening of new grammar schools. These changes, at their heart, are about regularising, within legislation, the status of grammar schools.

[Baroness Chapman of Darlington (Lab)]

We completely accept that the Bill as it stands does not legislate for new grammar schools, but is it the Government’s position that, should such an amendment be forthcoming in the other place, they would oppose it?

[Baroness Penn (Con)]

The Bill does not provide for that, and it is not government policy to open further grammar schools. It is about regularising their status within the legislation, and the provision makes sure that only a parental ballot can trigger an end to selection, whether that grammar school is a local authority-maintained grammar school or an academy grammar school. It will remove one of the main perceived barriers to them joining a MAT, while retaining the right of parents to choose whether they should continue to select by ability. I therefore hope that the noble Lord, Lord Knight, will feel able to withdraw his amendment and that other noble Lords will not move theirs when they are reached.

Schools Bill [HL]

Debate between Baroness Penn and Baroness Chapman of Darlington

Committee stage
Wednesday 8th June 2022 Lords Chamber

[Baroness Chapman of Darlington (Lab)]

Is it? I would like to know the answer to that question, because it is not clear whether that is the Government’s intention or not. Were the Government to come forward to say that it is what they plan to do and that they want freedom such that there is no national curriculum as we would recognise it now, then we could have a really big argument about that. We would involve school leaders and parents and look back over the successes and failings of the national curriculum; I very much agree with what my noble friend Lady Morris said about an entitlement to education, particularly around music and literature.

The fact is that we do not know. The Government’s intention is not being shared with us. We may be imagining and fearing the worst, and fearing intentions that do not exist, but the Government are asking a hell of a lot for us to accept on trust an assurance from the Dispatch Box here that there is no current intention to do certain things. Really, what we ought to expect, and what families expect, is much more information about is going to happen on the ground and in the classroom. That is what people are really interested in.

I take it that the noble Lord, Lord Lucas, will not press his amendments, so we do not need to get into whether we would support them individually, but I just flag this issue about the lack of effort that the Government have made to engage with leaders in the sector. It is really damaging and is destroying some of the confidence that leaders have in the department at this point.

[Baroness Penn (Con)]

My Lords, it is probably worth my reiterating my noble friend the Minister’s comments that we have heard and understood noble Lords’ concerns about the breadth of the power we are discussing and the fears about the centralisation of power over academies with the Secretary of State, and I know that we have heard other concerns about the nature of the power. It is worth reflecting on what the noble Lord, Lord Knight, said in terms of how we use this Committee stage. While we have heard those overall concerns, it is useful to have a discussion on specific elements within those clauses where noble Lords have issues that they wish to raise or questions that they wish to discuss so that we can make the best use of the time that we have in Committee.

I shall deal directly with the amendments tabled by my noble friend. We share his desire in these amendments to protect academy freedoms. The first set of regulations made under these powers are intended to consolidate and reflect existing requirements on academies. They will not represent a change of requirements on academies. This includes those areas referenced in my noble friend’s amendments: curriculum, length of school day, leadership and admissions. It is important to bear in mind that some requirements exist in these areas for academies, such as the requirement to teach a broad and balanced curriculum, including English, maths and science, and the requirements of the Academy Trust Handbook in relation to management and governance. The Secretary of State needs to be able to set standards in these areas. As my noble friend the Minister previously said, it is important that there is a clear set of minimum standards for academies to ensure that we get the basics right. At this point, it is also worth repeating that the Government have no desire to intervene in the day-to-day management of individual academies other than in cases of failure.

I turn specifically to Amendment 29, which seeks to protect the provisions within existing funding agreements. My noble friend Lord Nash touched on this, as did others. As we move to a fully trust-led school system, it will become increasingly unwieldy and difficult to regulate thousands of schools on the basis of individual funding agreements with no consistent set of minimum standards that apply equally to all academies. That is why, alongside a more proportionate compliance regime, we want to move away from a largely contract-based regulatory regime to a simpler and more transparent statutory framework—one fit for a system where every school is an academy.

I just touch on the debate and scrutiny that we might need in that circumstance. Some of the requirements are in a handbook that is amended by Academies Ministers; in bringing what is currently in a handbook into a form of regulation, with consultation with the sector in advance, there was the intention of having an increased level of parliamentary involvement and scrutiny in that process compared with the status quo, reflecting the fact that we are aiming to move towards a system where every school is part of a multi-academy trust. I hope that helps to reinforce the Government’s intention behind what we are seeking to do here. It also ensures, as I have said, that academy trusts are subject to a set of requirements over which Parliament has oversight and to which they can be held to account by parents. My noble friend’s amendment would enable funding agreement provisions and academy standards to co-exist and potentially conflict, if the former are not rendered void where there is a corresponding academy standard.

Finally, I turn to Amendment 34, which seeks to prevent primary legislation relating to the curriculum being amended by regulation unless it relates specifically to the curriculum in academies. Academy trusts are already subject to many of the same requirements as maintained schools, as set out in numerous pieces of primary legislation. As I have said, the intention here is to consolidate these requirements on academy trusts as much as possible into the academy standards regulations. This will be a gradual process; we want to work with academy trusts on the implementation of the academy standards at a pace which is right for them. As my noble friend reassured the Committee in her previous contribution, for each and every change of those regulations, there would be consultation in advance.

As we move towards a school system in which all schools are academies within strong trusts, we will want to ensure that the legal framework is fit for purpose, including by removing requirements that should prove excessively onerous or unnecessary. Clause 3 enables the Secretary of State to make these adjustments, subject to the affirmative procedure, and to be responsive to the changing needs of the school system.

I recognise that the autonomy to decide on key aspects of running a school, including the curriculum it chooses to teach, enables academy trusts to deliver the best outcomes for their pupils, and we have no intention to undermine those freedoms. This Government and I share my noble friend’s commitments to the principles of academy freedom, and, with this reassurance, I hope that he will therefore withdraw his amendment at this stage.