Spring Budget 2024

Baroness Sheehan Excerpts

Monday 18th March 2024 Lords Chamber

[Baroness Sheehan (LD)]

My Lords, my contribution to this debate will be from the perspective of my role as chair of the Environment and Climate Change Committee and will ask whether the measures in the Spring Budget demonstrate that this Government accept the need for action today if we are to avert far greater costs tomorrow, both to mitigate against climate change and to put in place measures to reduce its impact.

Just yesterday, I received in my inbox the FT “Climate Capital” newsletter, titled: “Are we the boiling frog?” The opening paragraph says:

“Since March 2023 oceans have begun to warm to previously unseen levels and now we’ve hit 365 days of consecutive daily highs. Every day of the past 12 months has set a global record. Let that sink in. The global average sea surface temperature tipped to the 21.2C record this week. While the cyclical El Niño warming effect of the Pacific Ocean is starting to show signs of weakening, global ocean temperatures remain unusually high”.


Jim Skea, chair of the UN body of scientists known as the Intergovernmental Panel on Climate Change—IPCC—said recently that the rise in the average global temperature over the past year meant that the world was in “unknown territory”.

Just as new heat records are reached, it is ironic that companies are taking a step back in terms of corporate accountability for global warming. The FT “Lex” column said a few days ago on 15 March:

“Corporate backsliding … can’t be justified”.


Companies, however, argue that Governments have not created the policy frameworks needed to achieve the emissions reductions. Do they have a point? Judging by the lack of ambition on green matters demonstrated by this Budget, I would say that they do.

Given the incontrovertible real-life data, not modelled forecasts, on ocean warming—to take just one key indicator of global warming—one would have thought that the opportunity presented by the Budget would work to deliver a financial environment that would grab the challenge of transforming our economy to make it fit for purpose to meet our statutory green commitments.

Why is this not the case? Economically it makes sense. The UK has already demonstrated that growth and decarbonisation can go hand in hand. We have reduced our greenhouse gas emissions by nearly half since 1990, while our GDP has increased by around 70%. More recent analysis by the Energy and Climate Change Intelligence Unit and CBI Economics found that the net-zero economy saw 9% growth in 2023 and that the economic opportunities created by the net-zero economy are benefitting all UK regions. Net-zero jobs are also more productive—around 1.6 times higher than the UK average.

The latest Climate Change Committee progress report warns that game-changing interventions from the US and Europe are leaving the UK behind. Global investment in clean energy alone is estimated to have risen to $1.7 trillion in 2023. The Government’s announced increase in the green industries growth accelerator of £120 million—taking the total to £1.1 billion—is just not in the same ballpark. A report by the UK Sustainable Investment and Finance Association found that 87% of businesses agree that policy changes to planning rules, grid capacity and energy price mechanisms could unlock £115 billion of investment and allow the UK to compete globally for green investment.

Let us not forget the risk of not protecting our natural capital. The Government’s third national adaptation programme outlined that, without early action to adapt to physical climate risks, the costs to England’s economy could be between 1% and 1.5% of GDP per annum by 2045. However, acting now to adapt to climate impacts could deliver up to £10 in net economic benefits for every £1 invested.

This Budget is a missed opportunity to lay the framework needed to invest in our future. The tax system is an important tool, alongside clear policy, regulation and spending, for supporting the transition to a low-carbon and nature-positive economy.

In conclusion, I have three questions for the Minister. First, will the Government reconsider producing a tax road map to make it clear to business and consumers that the fiscal trajectory supports net zero, allowing an adjustment period for where there will likely be greater tax costs? Secondly, how do the Government measure and evaluate the effect that taxes have on their environmental objectives? Thirdly, in the net-zero growth plan of March 2023, the Government said:

“HMRC will explore options to further strengthen the analytical approach to monitoring, evaluating, and quantifying the environmental impacts of tax measures, including their wider impacts”.


Can the Minister provide an update on this commitment?

Climate Risk Models

Baroness Sheehan Excerpts

Thursday 25th January 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

I am well aware of the Government’s work on forest risk commodities, which is under way, as it falls within my portfolio. I cannot give the noble Lord any further timings at this moment, but suffice it to say that we are working on it.

[Baroness Sheehan (LD)]

My Lords, I think I heard the Minister say that the next round of the climate biennial exploratory scenarios needs to accommodate disruptive climate events in the 2020s and take account of the revised scientific consensus about the speed—that is the key word—with which adverse climatic events are being observed and new emerging evidence since the 2021 report. Will the Government ask the PRA to do this as a matter of urgency, with a real emphasis on urgency?

[Baroness Vere of Norbiton (Con)]

No, the Government will not ask the PRA—or indeed anybody else—to do that as a matter of urgency. It is up to those independent regulators to decide the next stage at which CBES may be rerun. However, an important learning experience came out of CBES, which was that many of the capabilities needed to be embedded in the system. It is pointless running a scenario if the underlying information and the risk scenarios and outcomes coming from firms have not been updated to reflect the new scenarios. The independent regulators are very seized of the issue. Obviously, CBES will be run in due course if the Bank of England decides that the results of its previous running have been embedded in the system.

King’s Speech

Baroness Sheehan Excerpts

Monday 13th November 2023 Lords Chamber

[Baroness Sheehan (LD)]

My Lords, it is a pleasure to open day three of the debate on the gracious Speech from these Benches. I will be concentrating the bulk of my remarks on energy measures and will address the environment to some extent—climate change and nature being two sides of the same coin. I will restrict my remarks in the comfort and knowledge that noble friends following me are far better qualified than I am to cover the remaining topics.

I wanted to preface my disappointment with the gracious Speech by congratulating the Government on at least one item in it, so I scoured the mighty tome and found one that I approve of—the animal welfare (livestock exports) Bill. It is late, but welcome nevertheless.

I and many others were relieved that the dastardly plan to criminalise homeless people sleeping in tents and make it an offence for charities to help them had not found its way into the gracious Speech, and on that I congratulate the Government. The Home Secretary was adept at finding new ways to cast herself as a cartoon villain. She will not be missed. I am sorry that I digress a bit from the subject of today’s topics.

I jest, of course, when I refer to the gracious Speech as a “mighty tome”, because it was nothing of the sort: the legislative agenda with which we are presented is light and largely insubstantial. Before I move on to the bulk of my remarks, I express my disappointment that there was no reference to peat or the growing problem of disposable vapes. In particular, there had been hopes that the Government would address their promise to ban the sale of peat by the end of this Parliament. Implementing a comprehensive delivery mechanism to address degraded peatlands is a priority recommendation in the Climate Change Committee’s 2023 progress report, so it is a disappointment that the Government were silent on this.

Going forward, I hope that we can use the tobacco and vapes Bill to tackle disposable vapes. Aside from the damage they are doing to young people’s health, the amount of lithium that is piling high in landfills and not being recycled is criminal. The Green Alliance states that, in the past year, enough lithium to make 5,000 EV batteries was disposed of. I hope the Government will give my comments serious consideration.

The star announcement was the Offshore Petroleum Licensing Bill, to

“support the future licensing of new oil and gas fields”,

but the more than 100 new licences granted this year did not require new legislation, nor did those in previous years, so I am a little perplexed by the Government’s inclusion of this measure in the gracious Speech. Why did the Government feel it necessary to legislate for something that already happens? Surely, in this instance, they could have spared His Majesty the embarrassment.

Unless the Minister can give us evidence to the contrary, the Bill is both an unnecessary measure and an abuse of parliamentary time. Moreover, it flouts our international commitment to curb our carbon emissions. Is it not the case that, if the UK were to extract oil and gas from all the fields currently in production, we would exceed our nationally determined contribution commitments as per the Paris Agreement? If the Minister does not have the answer to hand, I hope he will write to me.

Not only will this Bill trash our reputation abroad, but it will have zero impact on easing the burden on people struggling to pay their energy bills. Shockingly, the Secretary of State is on record as saying there is nothing in the King’s Speech to help people struggling with their energy bills today. She inexplicably went on to speak of future tax receipts funding future investment in renewables, which will bring cheaper energy bills at some point in the future. What do the Government say to people suffering from the cost of living crisis today? “Not enough” is the answer. The damage that the Government have done is so great that the measures the Minister outlined at the outset are not enough for the poorest households.

The Bill and the gracious Speech are silent on where this future investment in renewables will be deployed. Can the Minister tell us? Can he assure your Lordships’ House that that investment will be in proven, cheap renewable sources, such as wind and solar, rather than unproven sources of energy that will not come online in time, until sometime in the distant future, if at all, by which time this sorry Government will, we hope, be history? If the Government are referring to carbon capture and storage and small modular nuclear reactors then they are betting the country’s energy security and energy affordability on technologies that are unproven at scale, with no guarantee that they will ever be deliverable safely and in the required timeframe.

In her Commons speech on the gracious Speech, the Secretary of State was less than ingenuous when she said:

“Even the Climate Change Committee acknowledges that oil and gas will be part of our energy mix when we reach net zero in 2050. So if we will need it, it is common sense that we produce as much of our own of it here.”—[Official Report, Commons, 9/11/23; col. 282.]


What assessment have the Government made of our requirements for oil and gas in 2050? What are the assumptions that dictate we will need annual granting of oil and gas licences? The Secretary of State’s comments are in direct conflict with the International Energy Agency and the Climate Change Committee, which both state that no new oil and gas fields are necessary to achieve net zero by 2050. Indeed, if we are to keep within a 1.5 degree centigrade rise in global temperature, it is essential that we reduce emissions with immediate effect. Currently, global emissions continue to rise.

The Offshore Petroleum Licensing Bill is wrong on so many fronts. It flies in the face of our international agreements, is on the wrong side of history and will not bring the price of oil down. That oil will first go to the international markets via the Netherlands for refining, as we no longer have the refining capacity here in the UK—or are we going to take the retrograde step of bringing that industry back?

The oil and gas we produce will necessarily be placed on the international commodities market, where it will be available for us to buy back at the global fixed price. It is no use the Minister saying it will help global supply and therefore bring the price down, because it will not. It is a fact that

“UK production isn't large enough to … impact the global price of gas”.

Those are not my words, but the words of former Energy Minister, and now former chair of the Conservative Party, Greg Hands. I am very glad I look at my Twitter feed quite regularly, because otherwise I could not keep up with who is current and who is not. It has really messed up my speech.

We need more energy from renewables that are indigenous and ours in a way that oil and gas can no longer ever be. So why, I ask myself, are the Government doing this? They are doing this to create what they term a wedge issue in the next general election—how cynical. Nothing, it seems, is off bounds. Winning, whatever the cost, seems to be the only thing that matters. But they are mistaken if they think broadening the ULEZ issue in the Uxbridge and South Ruislip by-election, and doubling down on climate change measures, will translate into a winning message at next year’s general election. “Bring it on”, I say.

The Government’s actions fly in the face of scientific consensus, advice from our own globally respected Climate Change Committee and statements by the world authority on global energy requirements, the International Energy Agency. They stretch our international credibility to incredulity and will increase the cost of living for people struggling to pay their bills. If the Government truly want to help the poorest and most vulnerable in our society, then my advice to them is the following.

First, they should get a national awareness campaign off the ground, with consumer advice on how to save energy. Secondly, they should put in place a well-resourced national energy conservation programme, to bring every possible dwelling and business premises to EPC standard C, including reversing the decision to exempt private landlords. Thirdly, they should get heat pumps—ground source or air source—installed in every home, where possible, and as quickly as possible. Fourthly, they should decouple the artificially high price of electricity from costly gas. Fifthly, they should lift the ban on onshore wind, the fastest and cheapest form of energy—it is still easier to put up an incinerator or open a new coal mine. Sixthly, they should sort out the national grid and bring it to a point where it is fit for purpose, both in updating its infrastructure and freeing it so that ready-to-go renewable projects are not held back.

In conclusion, we need leadership that recognises that the green transformation needs a Government that have the confidence to put in place the necessary building blocks now, not sometime in the future.

Financial Services and Markets Bill

Baroness Sheehan Excerpts

Report stage
Tuesday 6th June 2023 Lords Chamber

[Lord Randall of Uxbridge (Con)]

My Lords, I strongly support Amendment 15, so ably introduced and supported by others. I will speak principally to Amendment 91, to which I added my name. I tabled a similar amendment in Committee, but unfortunately ill health prevented me speaking then. I was grateful to the noble Baroness, Lady Boycott, for taking over the reins then and I am very happy to support her now.

I support the Government’s amendment in as far as it goes. As we have heard, the Government have made a lot of strides in this area through public finance commitments. Only last month the Prime Minister met with the President of Brazil, pledging £80 million to the Amazon Fund to help stop deforestation. There is more money coming through; at least £3 billion of our international climate finance is devoted to nature protection and restoration.

The question we must ask ourselves is: are we turning a blind eye to the private finance undoing all this good? Preventing private finance doing harm is just as important as the aid we provide. As we have heard, the Government have endorsed this conclusion by pioneering the Glasgow declaration on forests and land use, which includes a commitment to:

“Facilitate the alignment of financial flows with international goals to reverse forest loss and degradation”.


Now is the very time to make good on this pledge and get our own house in order.

This is a sensible proposal rooted in Schedule 17 to the Environment Act and limited to illegal deforestation for that very reason. The amendment itself has been publicly endorsed, as we have heard, by Sir Ian Cheshire, as well as financial institutions representing more than £1 trillion in assets under management and advice, including Rathbone Greenbank Investments, Federated Hermes Ltd and the Local Government Pension Scheme Central Ltd—so it is not just the usual suspects.

At the G7 last month, the UK committed to take steps to redirect finance away from activities causing biodiversity loss “without delay”. I am very grateful to the Minister. As we heard from my noble friend Lord Caithness, she has bent over backwards to try to help and is committed to this. She has not quite convinced me that the Government should not accept this sensible amendment. I hope that it will be accepted and that the Government will follow through here. As I have got older, I may have got mellower but I have got more impatient. I am fed up with hearing every time that it will be in the next Bill.

[Baroness Sheehan (LD)]

My Lords, I rise on behalf of our Benches in support of these amendments. In doing so, I declare my interest as a director of Peers for the Planet.

Before I move on to the bulk of the amendments in this group, I will address government Amendment 4. I agree with noble Lords across the House who have welcomed it but feel that it is deflective and a little weak. The policy statements required from the Treasury may be followed by the regulators, but it just does not go far enough. It certainly does not fulfil the spirit of Amendment 114 on SDRs, spoken to so ably by the noble Baroness, Lady Wheatcroft.

In the briefings I have received on this Bill to make provision about the regulation of financial services and markets, it struck me that the phrase “systemic risk” appears frequently. According to the Systemic Risk Centre, part of the London School of Economics and Political Science:

“Systemic risk refers to the risk of a breakdown of an entire system rather than simply the failure of individual parts. In a financial context, it captures the risk of a cascading failure in the financial sector, caused by interlinkages within the financial system, resulting in a severe economic downturn”.


I think we all recognise that scenario.

Therefore, the amendments in this group all aim to strengthen the Government’s hand either by aiming for better governance in financial services and markets or by pre-empting disastrous practices as financial services and markets transform and orientate towards a future that encompasses our net-zero ambitions. Deep change of this nature is a risky undertaking for the sector that the Government can act to mitigate. Indeed, the Government can act to enforce their own policy statements, as so many noble Lords across the Chamber have already mentioned.

I will briefly address the amendments to which I have added my name. Amendment 7 addresses an essential element of openness and transparency and would require the FCA to make rules to mandate fund managers and insurers to give information to clients and beneficiaries on the exercise of all voting rights on their behalf by appointed investment managers. The noble Baroness, Lady Wheatcroft, in whose name the amendment appears, has already given us chapter and verse on why this would be a sensible move by the Government. Currently, it is difficult for underlying fund managers and insurers to access information about how voting rights in investee companies are being exercised on their behalf in a consistent and comparable format. I will give just two examples and, I hope, not repeat too much of what the noble Baroness, Lady Wheatcroft, has already said. This is very important.

Reporting is currently voluntary and contained in a single dense report across the whole of the fund manager or insurer’s operations. That is problematic, because in practice it means that pension funds will find it difficult or impossible to identify whether their pension fund is invested in that share. They cannot get at the information they need. That is one shortcoming; the other is that the reporting is non-standardised. Many investment managers disclose votes in a non-standardised way in long PDF reports—sometimes up to 10,000 pages—which makes it extremely difficult for pension funds to extract the data they need out of it.

The aim of Amendment 7 is to rectify these shortcomings and others that have already been mentioned, and requires the FCA to make rules requiring information on the exercise of voting rights to be disclosed on request and in a standard format. The US Securities and Exchange Commission has a regularly updated standard reporting template which managers must follow. The FCA should achieve parity with the USA on voter reporting and enable consistent and comprehensive vote disclosure. Voting at AGMs is a key tool in ensuring good corporate governance, good long-term investor returns and good economic outcomes more broadly, and is key to government realising its policy ambitions, not least its net-zero ambitions. Indeed, HMT has publicly acknowledged that good voting and good vote reporting are crucial to meeting net zero. Finally, as the Aldersgate Group identifies in its 2022 report, it is critical that financial institutions engage with systemic risks via stewardship—such as exercising voting rights—rather than managing portfolios by divesting from high-carbon assets.

Amendment 15, which adds nature to the new regulatory principle on net-zero emissions, is in the name of the noble Baroness, Lady Hayman, and was spoken to ably by her. We have only to gaze and wonder at the efficiency of bees and other pollinators in their role in providing us with good food. Various estimates have put a figure verging on £1 billion to pollinators’ contribution to the UK economy in terms of worth of crops they produce. However, if one inputs human labour in their stead, we know that their value is far greater than that.

The Government’s own green finance strategy, published just a few weeks ago, stated:

“Nature sustains economies and livelihoods, and protecting and restoring nature is inseparable from addressing climate change”,


which completely echoes what the noble Baroness, Lady Young of Old Scone, said. The funny thing is that those are the Government’s own words, so why do the Government balk at this amendment? In their response to the seminal Dasgupta review, The Economics of Biodiversity, which has already been mentioned, the Government committed to delivering a nature-positive future by reversing nature loss, and to

“leave the environment in a better state than we found it”.

This amendment is urgently needed. Current investments are working against nature and driving nature’s depletion. We have heard these figures before but they are worth reiterating. In 2019, financial institutions provided $2.6 trillion in loans and underwriting services to sectors identified as primary drivers of biodiversity loss and ecosystem disruption. Globally, Governments spend $500 billion per year that is potentially harmful to biodiversity.

Nature loss can be massively detrimental to investments and must be considered in assessing risks. I will give a couple of examples. First, shareholders lost billions when the European pharmaceutical company Bayer lost near 40% of its market capitalisation in less than a year after acquiring an agrochemical company accused of adversely affecting honeybee populations. Secondly, company shares in the Canadian gold-mining company Infinito Gold fell 50% when in 2012 the Costa Rican Government denied permission to develop a mine due to potential impacts on forests and endangered species.

In conclusion, we need investment in nature restoration to be commensurate with investment in net zero—here I disagree a little with what the noble Earl, Lord Caithness, said. In having similar amounts and similar resources deployed on net zero and climate change, we are able to protect our natural capital, which we must do if we are to meet our net-zero targets. Nature and climate change are two sides of the same coin. I hope that when the time comes, noble Lords will give this worthy amendment their full support, as we will from these Benches.

--- Later in debate ---

[The Lord Privy Seal (Lord True) (Con)]

This has been a 13-minute speech on Report—

[Baroness Sheehan (LD)]

I am just about to conclude.

Global Witness, for example, recently launched a “Brazil Big Beef Watch” Twitter bot to show how simple and effective supply-chain traceability can be. Therefore, due diligence requirements are not an onerous ask and are long overdue. It is deplorable that indigenous people are on the front line in defending against deforestation. Some 40 people per week are killed in the process. This must stop. I think I speak for our Benches when I say that should the noble Baroness, Lady Boycott, seek the opinion of the House on her amendment—we hope that she will—we will give it our wholehearted support.

Amendments 93 and 113 on fiduciary duty have been covered extensively by the noble Baronesses, Lady Hayman and Lady Drake, and by other noble Lords across the House, so I need say very little other than that we are in full support of them.

[Lord Livermore (Lab)]

My Lords, this has been a fascinating if somewhat disheartening debate, and I have learned much listening to the contributions from noble Lords on all sides of the House.

We welcome the tabling of government Amendment 4, which brings forward new provisions relating to sustainability disclosure requirements, but we agree with the views expressed across the House, particularly as set out by the noble Baroness, Lady Hayman, arguing that the Bill simply does not go far enough in supporting the country’s green ambitions.

We support many of the amendments in principle but particularly Amendment 15 in the name of the noble Baroness, Lady Hayman, and Amendment 91 in the name of the noble Baroness, Lady Boycott, the latter having been signed by my noble friend Lady Chapman.

The financial services sector touches many more aspects of our lives then we may sometimes realise, with firms’ investment decisions having a direct impact on virtually all sectors of the economy. This activity can, and often does, do much that is good. For example, if we are to secure the green jobs of the future, businesses will need investment. But, as we see in some cases, such as investment activity that leads to deforestation, there can be severe negative environmental impacts. In a recent poll cited by Global Witness, 77% of UK savers said they would be unhappy to discover that their pension was funding deforestation and habitat loss, with 14 million people estimated to switch pension provider if they made such a discovery. However, as Amendment 7 highlights, there is currently no way for the public, nor indeed the Government, to tell if their money is invested in that way, and therefore no way for consumers to exercise choice. That surely cannot be right.

Amendment 91 would implement recommendations from the Government’s own Global Resource Initiative taskforce in relation to deforestation, a practice which causes significant harm to global climate ambitions, as well as to indigenous peoples who are evicted from their ancestral homes. We are told by the Government that they are serious about achieving net zero and protecting nature, yet, at present, the net-zero regulatory principle still fails to mention nature, which is what Amendment 15 would correct. Indeed, nature is not even mentioned in the Bill. As the WWF rightly points out, by excluding nature from this key financial services legislation, the UK will fail to secure opportunities that could make the UK a leading green finance centre, while exposing the country to nature-related risks.

We should also give serious weight to the intervention of Professor Sir Partha Dasgupta, who led the Government’s review of the economics of biodiversity, when he urges the Government to support the amendment. He says:

“We need to empower those in charge of regulating our financial system to support the sector to arrive at a nature-positive destination by recognising the value of natural capital and the significant social and economic benefits restoring nature presents”.


We are losing nature at an alarming rate, and these issues are only going to become more urgent. We have missed opportunities to act in the past, and we cannot continue to make the same mistakes. We therefore urge the Government to think again on these important areas, but if they are not willing to do so, we will support the noble Baronesses, Lady Hayman and Lady Boycott, should they choose to push their amendments to a vote.

Energy Profits Levy

Baroness Sheehan Excerpts

Tuesday 9th May 2023 Lords Chamber

[Baroness Penn (Con)]

On the noble Lord’s first point, he is right that the energy profits levy is applied to profits made in the UK or on the UK continental shelf. That is in line with other profit-based taxes on companies that operate in the UK and overseas. On the difference between the energy profits levy and the electricity generator levy, they are structured in completely different ways. The headline rates of those two taxes are also completely different. We have different programmes in place to ensure that we incentivise continuing investment in our renewables, which is why we have such a great track record on delivering renewable energy in the UK.

[Baroness Sheehan (LD)]

My Lords, one of the peculiarities between the energy profits levy and the electricity generator levy is the huge difference in tax relief—80% and 0% respectively, as the noble Lord, Lord McNicol, alluded to. So why this preferential treatment for the oil and gas sector? It is not as though we need new sources of fossil fuels for domestic use—or are the IEA, the IPCC, the vast bulk of UK scientists and the Government’s own net zero tsar, Chris Skidmore, wrong on this?

[Baroness Penn (Con)]

My Lords, I disagree with the noble Baroness that there is preferential treatment for the oil and gas sector, which faces a far higher tax rate based on the extraordinary profits it is benefiting from. That is entirely appropriate. On the investment incentive, we will continue to need oil and gas as we transition to net zero. We need to encourage investment into UK oil and gas fields to help meet that demand, and that is something the Government will continue to do.

Financial Services and Markets Bill

Baroness Sheehan Excerpts

Committee stage
Thursday 23rd March 2023 Grand Committee

The fact that we are able and willing to take new powers is evidenced in the Bill: Clause 65 gives His Majesty’s Treasury the power to regulate cryptocurrencies, as we have discussed, and recently HMT gave the FCA powers to regulate funeral plans, so we are not seeing a completely deregulatory agenda. Here, we are talking about a possible funeral plan for the whole planet: it is definitely appropriate to enable regulation in this market. A world-first, smart regulatory regime for voluntary offsets has the potential to bring investors to the UK and build confidence in a product that has all too often been perceived as the wild west of greenwashing. I am open to alternative drafting suggestions, but I ask the Minister to take note of the ask from insurers, pension funds, voluntary market participants and other financial operators and commit to taking a power to create a form of regulated market as a mark of robust quality. This could be a game-changer and the UK could lead in this area. I beg to move.

[Baroness Sheehan (LD)]

My Lords, I thank the noble Baroness, Lady Worthington, for tabling this amendment. I totally agree with its necessity, which is why I have added my name to it. If we are to meet our statutory net-zero targets, carbon offsetting will become ever more important as we decarbonise and reach those emissions that are so hard to abate and the residual emissions that the noble Baroness spoke about.

Let me say at the outset, however, that carbon offsetting is not a solution to climate change. There is only one way to avoid catastrophic climate change, and that is to stop adding to the blanket of greenhouse gases in the upper atmosphere that is already at a higher concentration than at any time since records began. Just for the record, the May peak of carbon dioxide in 2022 was a record 421 parts per million. The highest recorded over the previous 800,000 years for which we have records was just under 300 parts per million. This increase has happened in a blink of a geological eye, over just the last 150 years since the start of the Industrial Revolution. This Committee is not the time or place to go into the impact on our planet, save to say that catastrophic events are happening at a faster pace than even the most pessimistic predictions by scientists.

As we know, the biggest contributor to greenhouse gases is the burning of fossil fuels. The second biggest is deforestation. Putting an end to both these practices is well under way but is not going fast enough. I hope that more will be done through this Bill before it becomes an Act, because it deals with the money that fuels the release of those greenhouse gas emissions.

Until decarbonisation measures bite—and resistance to them is strong; we have seen that in some of the contributions to this Committee—carbon off-sets are one tool we have to mitigate the harm of climate chaos and the destruction of nature. The market demand for off-sets is exponential and the scope for fraud in the voluntary carbon market is massive. Greenwashing is rife. I will give one example: the recent chastisement of HSBC by the Advertising Standards Authority for misleading people with some of its claims to be carbon neutral. However, we need a functioning market to off-set hard-to-eliminate sources of greenhouse gases, which will leave residual emissions. It is the role of government to enable regulators to act, which is why this amendment is necessary and why I added my name to it.

Industry is also asking government to play its part. I will quote a substantial part of the recent report by Scottish Widows, Nature and Biodiversity: the Pensions Imperative, because it says it far better than I can:

“With companies potentially needing to put billions of pounds into offsets to meet their net zero commitments, the biggest barrier to date is the opacity of the voluntary carbon market. This breeds mistrust, particularly as a number of bad actors have been exposed in the past. What could really shift the dial here is the establishment of a UK regulator for carbon offsets. This could set quality standards that corporations looking to do the right thing could trust, enabling them to allocate money with confidence in these offsets having additionality and really delivering on those climate and nature goals”.


Finally, when I was a member of the Lords Select Committee on Science and Technology, we produced a report entitled Nature-Based Solutions. The committee heard evidence from a cross-section of practitioners in the carbon credits sector, from both the science and financial communities. As the noble Baroness, Lady Worthington, said, we heard from the science community how difficult it is to quantify and monetise nature-based solutions. From the financial community, we heard that it needs a regulatory framework so that everyone can work on a level playing field and so that the market is less like the wild west—which it currently is.

I will conclude by quoting a conclusion of that report:

“We recommend that the Government provides clear regulatory standards for emerging carbon markets to ensure that any off-sets that are claimed are genuine”.


However,

“these markets will only deliver the desired results if they are properly regulated and verified to prevent inaccurate claims of carbon off-setting. Carbon and nature credits must be for benefits that are additional, measurable, and permanent”.

For carbon credits to have the impact we all want, they must have good governance backed by government.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Baronesses, Lady Worthington and Lady Sheehan, and to offer Green support for this amendment, which is obviously urgently needed. I essentially agree with everything that the two noble Baronesses said, particularly the point made by the noble Baroness, Lady Sheehan, that off-sets are essentially a con that should not be used to trade off against continuing fossil fuel emissions. None the less, we are where we are and they are certainly going to happen.

The complexity is really well illustrated by a recent report by HSBC, which found that $246 billion-worth of hydroelectricity depends on water provided by threatened tropical cloud forests. We think about where the funding, support and credits should go, but to maintain that electricity supply, surely the people producing the electricity should fund that. This is also a carbon store. It is a real demonstration of the way that, as the Treasury’s own Dasgupta report illustrated, the economy is a complete subset of and entirely dependent on the environment, which we are fast trashing.

The problems with the current “wild west” system have been clearly demonstrated already. In a paper this week in the journal, Frontiers in Forests and Global Change, the Berkeley Carbon Trading Project presented a study of nearly 300 carbon off-set projects, representing nearly 11% of global carbon off-set projects to date. It found that the projects were systematically overcrediting their results and delivering extremely dubious carbon off-sets. Apparently respected registries did not follow standards to make sure that projects were having a real and tangible impact on carbon levels. A particular area of difficulty was whether the projects would have happened anyway, whether or not the extra carbon credit was claimed.

I will make one final point. The noble Baroness, Lady Worthington, sought ways in which the Government might see this as an advantage. In this wild west, there is a need for extensive due diligence for any financial body to be able to claim that it has genuine, honest carbon credits that will deliver over the long term—because the climate emergency is of course a long-term project and not just for one year or five years. There is a significant cost for any company going into this and wishing to protect its reputation. If it is a regulated sector, that will make it a great deal easier for people to do due diligence and to rely on it, and not to have to do the work themselves at considerable cost, facing considerable complexity and carrying considerable risk.

The need for this amendment is obvious. The problems with off-setting both carbon and biodiversity are very clear. We should not be where we are, but we are where we are, and the amendment offers one way forward that would be good for the financial sector as well as for the planet.

Financial Services and Markets Bill

Baroness Sheehan Excerpts

Committee stage
Monday 13th March 2023 Grand Committee

[Lord Sharkey (LD)]

My Lords, Amendment 213 addresses the provision of sharia-compliant student finance, of which there is currently none. This matters because Islam forbids interest-bearing loans and that prohibition can be a barrier to our Muslim students going on to attend our universities.

This is not a new problem, nor the first time the issue has been raised in this House. The problem became clear in 2012 when tuition fees were significantly increased and it became worse when maintenance grants were replaced by maintenance loans. In 2014, the Government published a report on the consultation they had undertaken. It attracted 20,000 responses, a record at the time. The Government acknowledged that the lack of an alternative finance product to the conventional interest-bearing student loan was a matter of major concern to many Muslims.

The report also identified a solution: a takaful, a well-known and frequently used non-interest-bearing, sharia-compliant financial product. The Government explicitly supported the introduction of such a product. That was nine years ago, and we still have no takaful. In 2013, Prime Minister Cameron promised action. He said:

“Never again should a Muslim in Britain feel unable to go to university because they cannot get a student loan—simply because of their religion.”


But nothing has changed. There is still no available sharia-compliant student finance. In fact, it now looks further away than ever.

The Muslim community and parliamentarians in both Houses have continued to press. Last September, the right honourable Sir Stephen Timms wrote to the then Secretary of State for Education to ask whether delivering sharia-compliant student finance was still a government commitment. He got a reply saying that it was. Sir Stephen wrote again in October to the new Secretary of State, the right honourable Gillian Keegan MP, asking whether government policy had changed—there was quite a lot of change around at the time.

Ms Keegan confirmed that the provision of a sharia-compliant student finance product remained a government commitment and that the Government were considering whether and how the ASF could be delivered as part of the lifelong learning entitlement. She noted that the consultation on the LLE had concluded last May and promised to provide a further update on ASF as part of the Government’s response to that consultation.

The Government published their response to the LLE consultation last Tuesday. The whole response runs to 71 pages, yet ASF gets no mention in the document’s ministerial foreword and only two substantive paragraphs right at the end of the response. This does not seem a proportionate reaction, either to the gravity of the issue or to the overwhelming number of individual respondents who asked for sharia-compliant student finance, by far the largest group of respondents. The question about sharia-compliant student finance attracted 851 unique individual responses; the average number of unique individual responses to all the other questions in the consultation was 30.

The first substantive paragraph confirms the Government’s commitment to the ASF but says, without any explanation, that it will not be delivered with the 2025-26 launch of the LLE. The second paragraph says:

“The Government is procuring advice from experts in Islamic finance and will be working with the Student Loans Company … to better understand timescales for delivery of an ASF product under the LLE. Our aim is that learners will be able to access ASF as part of the LLE as soon as possible after 2025. An update on ASF will be provided by late 2023.”


This is miserable stuff. It makes it clear that, in the past nine years, there has been no serious thinking or planning for ASF. It does not explain why ASF has to be linked to the LLE at all or why it cannot be launched simultaneously with it. It also makes no hint of an apology to the Muslim community for condemning at least four more cohorts of Muslim students to choose between faith and education.

If we interpret the Government’s vague timings generously, the ASF will arrive in the academic year 2026-27. That is four academic years away and means an additional 16,000 qualified Muslim students not going on to university. It will have taken 16 years for the Government’s firm, clear and repeated commitment to be realised. The problem remains as it was 11 years ago. This is deeply unsatisfactory and obviously has gravely disadvantaged our Muslim community. It is easy to see how the Government’s inaction over such a serious issue over such a very long timescale could look like discrimination against our Muslim community, especially since the Government seem not to have engaged with the community or explained the very long delay and lack of a target date.

Before last Tuesday, Universities UK and 68 Muslim organisations and prominent individuals had written to the Minister, pressing for speedy action and a firm date for ASF. Since then, there has been widespread disappointment and dismay at the very long further delay and the continuing lack of a firm date. The Muslim Council of Britain, UUK, the CEO of Islamic Finance Guru, the NUS and others have all written to me expressing their disappointment at the Government’s response. It is deeply distressing and shameful that the Government, despite their firm promises, should continue to treat our Muslim community in this offhand, almost contemptuous way.

It is very hard to avoid the conclusion that the Government are making a fundamental error—moral, social and political—in putting Muslim students right at the back of the queue. Will the Minister talk to her colleagues in the Department for Education to ask them to arrange an urgent meeting with interested parliamentarians and Muslim community groups? This would allow explanation of the further delay and of the work programme, and an exploration of the possibility of setting an earlier and firmer date for the introduction of the ASF.

All this has gone on for far too long. I hope the Minister will be able to give a substantive and encouraging reply. I beg to move.

[Baroness Sheehan (LD)]

My Lords, I support my noble friend Lord Sharkey’s amendment. I should declare that, as a Muslim woman, I have a number of relatives who will be, and are being, affected by this. Not every Muslim feels unable to take out student loans as they are currently structured but there is a significant minority. It is usually women affected because they always come at the bottom of the list of who will be financed without a loan through private means. I urge the Minister, particularly given all the conversations we had last week about International Women’s Day, to consider this.

I will not detain the Committee long; my noble friend Lord Sharkey gave us chapter and verse on the Government’s position and prevarication on this issue, which, we are told, they have been able and willing to support for over a decade now. The Higher Education and Research Act 2017 allows the Government to introduce a student finance product consistent with Muslim beliefs regarding interest-bearing loans. However, as my noble friend said, the Government have yet to launch such a product. In February last year, as part of the conclusion of their review of post-18 education and funding, the Government said that they were still considering whether and how to deliver sharia-compliant alternative student finance and whether they would do so as part of the lifelong loan entitlement.

We have a situation where, not only are 18 and 19 year- old Muslims—predominantly girls—unable to access higher education but it now looks as though, with the LLE, they will not be able to access post-18 further education either. That will curtail their life chances, their ability to contribute to the life of this country and the financial contribution that they make to their families.

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Sheehan, who has highlighted the gender aspects of this debate, and the noble Lord, Lord Sharkey, who has been a consistent champion on this issue in your Lordships’ House. I wish to make a couple of comments additional to what has already been said, while offering support for this amendment to push the Government to take action.

It was Green Party conference at the weekend, and I found myself discussing again and again how the public, who once thought that when the Government announced something that meant it would happen, are increasingly aware of the legislative process, and even the role of your Lordships’ House, because it is taking so long between government announcements and something actually happening. That is true of the announcement of a bottle deposit scheme for England, but there has been an even longer stretch between the promise of sharia-compliant finance, particularly for student loans, and the delivery.

The last figures that I saw showed that 9% of higher education students in the UK were Muslim. Extending loans for lifelong learning into further education makes it very likely that the percentage of students affected by the lack of sharia-compliant loans will increase. It is not as though the Government have not been reminded of this again and again. I note, again, that it was in July 2021, during the passage of what became the Skills and Post-16 Education Act, that we debated this. We were promised, “Yes, it’s going to happen; it’ll come”, but, yet again, we have just had a report from the Government which shows that there has been no progress. That is simply not good enough.

We often debate in your Lordships’ House how to get trust in government and the system. One way is to deliver on your promises in a reasonable and timely manner, particularly the things that really should not be that difficult, of which sharia-compliant loans is a case in point.

Financial Services and Markets Bill

Baroness Sheehan Excerpts

Committee stage
Tuesday 7th March 2023 Grand Committee

[Baroness Sheehan (LD)]

I find the noble Lord’s contributions really very valuable. But on supply and demand, for him to label us people who just do not want fossil fuels is so incorrect. We need more energy, but it does not have to come from fossil fuels. The fossil fuel industry is supported to an extent.

[Lord Lilley (Con)]

By whom?

[Baroness Sheehan (LD)]

It has been supported by Governments, through subsidies, through tax breaks, through decommissioning tax reliefs—any number of routes for support exist. So I say to the noble Lord: please do not try to categorise the noble Baronesses who have spoken on this issue as people who do not like fossil fuels. What we do not want is for fossil fuels to be needlessly supported in the future when they are patently no longer able to support themselves.

[Lord Lilley (Con)]

I agree with the noble Baroness. I do not want to support fossil fuels. If she looked at the tax revenue levied on the production and consumption of fossil fuels, she would see that it is enormous. To describe that as a subsidy or support is very strange. But to the extent that there is anything that is a subsidy, I am with her: let us remove it, but that is not what these amendments do. They simply aim to make it more expensive to invest in fossil fuels. I do not know whether the noble Baroness, Lady Castle—whatever it is; bouncy castle—is upset at being described as being against fossil fuels. I would have thought that she would be positively flattered. I do not know whether the noble Baroness, Lady Drake, is offended at being told that she is trying to discourage the production of fossil fuels; I thought she was. I am simply saying let us stick to the CCC’s recommendations of phasing out demand and we can leave the supply side to look after itself. We should not pretend that we know better than the industry what is likely to prove excessive or insufficient.

[Baroness Sheehan (LD)]

Before the noble Lord sits down, perhaps I could say a little about stranded assets; I think we have had this exchange before. If stranded assets transpire—from where I am sitting, I think that is inevitable—what assurance can he give that the cost of those stranded assets will not be socialised?

[Lord Lilley (Con)]

Clearly, the Government ought to deal with that problem. These amendments do not deal with that problem. If there is a problem, if the noble Baroness thinks that BP or Shell will go bankrupt and be unable to pay for the liabilities it incurred, we should take steps to deal with that situation. I do not think it is likely but if she thinks it is that serious, she should table amendments that would deal with that, but these amendments do not. They simply make it more expensive to invest in things which we are going to continue consuming, according to the Government’s own plans and the CCC’s own projects and recommendations, in considerable quantities until 2050.

--- Later in debate ---

[Baroness Penn (Con)]

My Lords, I welcome this chance to continue this Committee’s important debate on amendments concerning green finance. As I stated in a previous Committee session, the Government are committed to fostering sustainable finance in the UK and will shortly publish an updated green finance strategy to that effect.

I will speak first to Amendment 168 from the noble Baroness, Lady Worthington. It is of course correct that all models have their limitations in depicting the real world but the Bank of England’s models have considered the views of experts in the field; they therefore do not need to be directed to do so. The scenarios used in the climate biennial exploratory scenario, or CBES, were formed by the Network for Greening the Financial System, an international network of central banks in which the Bank of England plays a prominent role. The scenarios have been produced in partnership with leading climate scientists, leveraging climate-economy models that have been widely used to inform policymakers—not to mention being used by and continuing to be used by the Intergovernmental Panel on Climate Change. These scenarios are updated continually by the Network for Greening the Financial System, which also ran a public survey welcoming feedback on its most recent iteration of climate scenarios.

It is also not the case that CBES is the PRA’s only tool to manage climate risk. It is actively using its position as a supervisor to ensure that firms are not materially undercapitalised for climate risks, setting out its expectations in its supervisory statement published in 2019. Furthermore, the PRA is an active member of two of the leading international standard setters: the Basel Committee on Banking Supervision and the International Association of Insurance Supervisors. The Bank is actively participating in both forums to ensure that the regulatory frameworks for the banking and insurance sectors address potential gaps in the management of climate-related financial risks. This work will flow through to our domestic framework and at the same time ensure international co-operation on what is fundamentally a global issue.

I now turn to Amendment 199 in the name of my noble friend Lord Randall of Uxbridge, which is supported by other noble Lords in this Committee. The Government agree that the financing of illegal deforestation is a serious global issue that must be tackled. However, this amendment would involve implementing a new and untested regulation that would impose a broad supply chain rule on all regulated financial services firms. It would currently be very difficult, time-consuming and expensive for UK financial services firms to ascertain whether firms or products that they invest in are exposed to forest risk commodities in compliance with local laws.

In introducing this amendment, the noble Baroness, Lady Boycott, referred to the provisions in the Environment Act 2021. These provisions will apply to the supply chains of large UK corporates. However, UK-based banks and fund managers engage in lending and investment activities with companies in jurisdictions across the globe, not just commercial activity in the UK. There are currently no consistent, equivalent disclosure requirements to those that will be set out under the Environment Act 2021 in jurisdictions across the globe. Given that, capturing the activity of all of their customers and supply chains would not be as simple as adding an extra stage of disclosure to the regime set out in the Environment Act 2021, as had been suggested. However, I assure noble Lords that the Government are committed to addressing this issue and will work with the financial services sector and those with expertise in tackling deforestation to consider how we can make further progress.

[Baroness Sheehan (LD)]

Before the Minister moves on to another amendment, I put a question to her on Amendment 199 on deforestation. I hope she is coming to answer it.

[Baroness Penn (Con)]

Not just yet. Was it about the letter?

[Baroness Sheehan (LD)]

The question was about the regulations under Section 17 of the Environment Act 2021 that are supposed to be forthcoming. I asked the Minister when she thought they might be ready.

[Baroness Penn (Con)]

I will have to get back to the Committee on that point. I had picked up the noble Baroness’s other point, which was also referenced by the noble Lord, Lord Tunnicliffe, on the letter from Sir Ian Cheshire on this issue. I looked closely at his report and the recommendations in it. I am happy to place a copy of that letter and my response to it in the Library so that all noble Lords have access to them.

I was going to add something about the importance, in seeking to address this issue, of co-ordinating action internationally. This is necessary to reduce the financing of illegal deforestation and not simply drive it into other jurisdictions.

The noble Lord, Lord Tunnicliffe, referenced the work by Sir Ian Cheshire’s task force and its references to the Taskforce on Nature-related Financial Disclosures, the TNFD. The Government accept that that will not solve this problem on its own but it is important to recognise it as an important building block in creating an international solution. As I have pointed out, other jurisdictions do not have disclosure regimes. The TNFD is an attempt to create a global standard on nature-related disclosures that could be an ingredient in making progress in this area. The UK is the largest financial backer of the TNFD. We support its work to develop a global framework for reporting on nature-related impacts, dependencies and risks, within which deforestation is being considered. Once the task force launches its final recommendations in September 2023, the Government will consider bringing these standards into the UK disclosure framework.

Finally, on deforestation, in response to Sir Ian and the noble Lords who raised it today, as I set out, we are looking at what we can do further in this area. If noble Lords would like to meet to take those discussions forward, I would be very happy to do that.

[Baroness Sheehan (LD)]

Before the Minister moves on, could I reiterate the strength of feeling across the Committee on deforestation? It is not just about the 12% of global carbon dioxide that is released by burning and cutting down forests; it is also about the destruction of the carbon sink. It is a double whammy. This is an issue that we can and must solve. We have a report by the Government’s own appointed head of the GRI, Sir Ian Cheshire, who clearly lays out how we move forward on this. I wonder why the Government will not accept the findings of their own reports.

[Baroness Penn (Con)]

I say to the noble Baroness that I absolutely agree. I appreciate the point that the issues concerning deforestation are about not just nature and biodiversity but our ability to tackle climate change. That is why we are such strong supporters of the TNFD’s work, for example. She mentioned Sir Ian Cheshire’s report. I said to the Committee that I have read that report and looked at it very carefully. I do not think that we are in disagreement in wanting to find solutions to this problem. Sir Ian’s report also sets out that work needs to be done to ensure that the solutions that we identify are effective. For example, he refers to ongoing work in other jurisdictions such as the EU and the US on disclosures that would be building blocks towards making the progress that we all want to make. The Government do want to make further progress on this issue and I understand the strength of feeling, so I commit to this Committee to take those discussions further and see where we can build consensus on it.

[Baroness Sheehan (LD)]

I thank the Minister. On behalf of the noble Lord, Lord Randall, I accept the meeting. I know that he cannot be with us today, sadly. The final point that I leave with the Minister is that Sir Ian Cheshire was very clear in his letter about why he thought the UK should be acting. It is because, as a financial sector, we really matter. We may have 1% of the global emissions footprint but, in terms of the deforestation footprint and the money that passes through London, it is substantial.

Financial Services and Markets Bill

Baroness Sheehan Excerpts

Committee stage
Wednesday 1st March 2023 Grand Committee

[Baroness Meacher (CB)]

My Lords, I wish to speak extremely briefly to support my noble friend Lady Boycott—I am sorry, I did not see the noble Baroness, Lady Sheehan.

[Baroness Sheehan (LD)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Wheatcroft. I am sorry that I kept bobbing up and down while she was speaking.

This is an essential group of amendments, several of which I have added my name to. They are important because billions to trillions of pounds will be invested over the near to medium term into an economy that is transforming with increasing rapidity into a low-carbon one. It is clear that climate risk is financial risk: returns on investments and the ability to pay back loans are exposed to the risks of rising temperatures, as evidenced by recent catastrophic climatic events, and action taken by policymakers to transition to a low-carbon economy, such as the US Inflation Reduction Act.

Businesses, big and small alike, are poised to pull the start trigger on investments but are held back in the UK by lack of clarity about the Government’s intentions. The Government have made the right noises but not followed through, leaving doubt and uncertainty in their wake. The situation is urgent. The US Inflation Reduction Act is a game-changer, and the EU will follow suit. Green investment is the future. Our businesses know that but are hesitating to commit, waiting for a clear signal from the Government that they are 100% behind the green revolution. Currently, the messages are rather mixed. 

For the sake of the debate’s flow, I will address the amendments to which I have added my name before addressing my Amendment 232. I start with Amendment 168, in the name of the noble Baroness, Lady Worthington. Climate risk is not specifically factored into either the regulatory capital risk requirements for banks or the solvency requirements for insurers. I support Amendment 168 and have added my name to it. I have pursued the theme of stranded assets for several years. I am concerned that the taxpayer is not left to pick up the cost, for example, of decommissioning oil and gas platforms in the North Sea abandoned after profits have been creamed off. How much better it would be if the Government clearly laid out a framework, via their regulator, that the risks in financing fossil fuel exploration, exploitation and production, as well as other climate risk-exposed sectors, must be taken into account prior to investment decisions being made.

I move on swiftly to Amendment 199 on deforestation. After fossil fuels, deforestation is—as the noble Baroness, Lady Boycott, pointed out—the second-largest contributor to global warming. It is responsible for 12% of all global greenhouse gas emissions. Scientists tell us that, to stand any chance of limiting global temperature rise to 1.5 degrees centigrade, commodity-driven deforestation must be ended by 2025.

What happens to rainforests matters to us all. In fact, although thousands of miles away, the UK has a large deforestation footprint. It is for this reason that, in July 2021, I and noble Peers from across the House tabled amendments on the issue to the Environment Bill, now the Environment Act 2021. I was pleased to see the noble Baroness, Lady Meacher, poised to add her contribution to this. I commend the Government for the action that they have already taken on this issue. Schedule 17 to the Environment Act was the first time that forest risk commodities have been addressed in legislation.

As already mentioned by the noble Baroness, Lady Boycott, Sir Ian Cheshire, the former chair of Barclays and head of the Government’s own Global Resource Initiative task force, tells us in an open letter dated 23 January and addressed to the Minister, the noble Baroness, Lady Penn; Andrew Griffith, the Economic Secretary to the Treasury; and all Members of the House of Lords:

“Under forthcoming secondary regulations, large companies will be required to establish a due diligence system to assess and mitigate the risk of importing commodities grown on illegally deforested land, reporting annually on their progress”.


When the Minister comes to reply, can she tell us when we may expect to see these regulations?

Sir Ian goes on to say that

“while this is an important step, regulating supply chains alone is not enough”.

It is therefore recommended that

“the Government should make it illegal for financial institutions to invest in or lend to supply chain companies that are unable to demonstrate forest risk commodities have been produced in compliance with ‘local laws’ (i.e. legally)”.

--- Later in debate ---

[Baroness Penn (Con)]

You should finish.

[Baroness Sheehan (LD)]

Thank you. I come to Amendment 232 in my name on green savings bonds. My reason for tabling this amendment is to draw attention to the success of the National Savings and Investments green savings bonds, which are an important part of the green finance landscape. Really it is a pat on the back for the Government—much-needed, maybe —so the Minister should view this as an opportunity for the Government to congratulate themselves. For me, it is an opportunity to ask them what more they can do to raise awareness of these bonds and promote them more aggressively. After all, the Climate Change Committee identified public engagement and behaviour change as major elements in the success of measures to keep the planet in a fit state for future generations, but many people complain that knowing what to do for the best is confusing. These bonds represent a safe way of putting their money to work for the benefit of all our futures.

Here is the background. The NS&I’s new green savings bonds became available from 22 October 2021, introduced by the then Chancellor, Rishi Sunak. They pay a fixed rate of interest over a three-year fixed term, and the current rate is 4.2%. The minimum deposit is £100 and the maximum is £100,000 per person. NS&I’s savings accounts are long-standing, recognisable and safe. They are hugely popular with UK savers, not least because investments are totally safe, being 100% backed by the Treasury. There is not the usual limit of £85,000 that there is with providers covered by the Financial Services Compensation Scheme. Many savers want to make green and ethical investment choices. Work by the Cambridge Institute for Sustainability Leadership found that the median saver would prefer a sustainable fund, even if they have to sacrifice up to 2.5% returns.

Money saved with NS&I’s green savings bonds is used to fund six types of green projects: making transport cleaner; switching to renewable energy; improving energy efficiency; pollution prevention and control; protecting living and natural resources; and adapting to climate change. These projects are publicised and clearly audited for climate and nature benefits. Another benefit is that raising funds through NS&I can actually give greater financial stability than raising funds on the financial markets. During the meltdown in borrowing costs following the botched “fiscal event” in September last year, investors in NS&I did not dump their bonds because they could not do so; there was no panic in NS&I’s offices in Blackpool, Glasgow, Birkenhead and Durham—please note, none in the south-east—because the bonds are not transferable. Further, when a larger amount of a Government’s debt is held by their citizens, it is less prone to volatility. There is lots to like about the products. There are few cash-based green savings products in the market, especially ones with such a high level of transparency about their use of proceeds.

My amendment is intended to put in the public domain at regular intervals the contribution made by the NS&I’s green bonds and the like towards UK green financing and the consequent reduction in targeted greenhouse gas emissions. It is worded in such a way as not to make proposals over the amount of government borrowing or how they should raise taxes, only to seek information on how the Government are raising funds for green investment. It would be helpful if the Minister could say how much has been raised through the Government’s green bonds to date, how much is forecast to be raised annually in future and what the Government’s ambition is for their future, including in relation to the promotion of these products.

Committee adjourned at 8.21 pm.

Energy Profits Levy

Baroness Sheehan Excerpts

Tuesday 7th February 2023 Lords Chamber

[Baroness Penn (Con)]

I am sure the noble Lord would not want to conflate the global profits of those firms with the profits they have derived from their UK oil and gas production. As I have said, those are subject to a tax of 75%. We expect the combined tax take from North Sea oil to be £80 billion over the coming years. We think it is right that we have the investment allowance. The sector is made up of many different players and supports 117,000 jobs, around a third of which are in Scotland—jobs I would have thought Labour would want to support.

[Baroness Sheehan (LD)]

My Lords, the US Inflation Reduction Act offers $216 billion of tax credits to green investments in energy and transport, and the EU will make a similar offering. In contrast, we now have an inexplicable regime, with 91% investment relief for oil and gas companies and zero investment relief for clean power generators. Why is UK green investment being shackled?

[Baroness Penn (Con)]

I simply cannot agree with the noble Baroness’s interpretation of things. Many renewable electricity generators generate their electricity under contracts for difference, to which that regime does not apply. It applies only to exceptional profits related to the price of gas, and is nothing to do with the cost of investing in renewables. I can agree with the noble Baroness on the importance of investing in renewables, something on which we have a consistent track record. We have the largest wind capacity in Europe, and we are the second-largest deployer globally, behind only China. We have a lot more to do, but we have a strong track record on which to build.