Pension Schemes Bill

Baroness Watkins of Tavistock Excerpts

Committee stage
Monday 12th January 2026 Grand Committee

[Lord in Waiting/Government Whip (Lord Katz) (Lab)]

My Lords, I am grateful to noble Lords for these amendments in the names of the noble Viscount, Lord Younger, and the noble Baronesses, Lady Stedman-Scott, Lady Bowles of Berkhamsted and Lady Altmann. Before I proceed, as we have had a bout of putting things on the record and making declarations, I should say that I served for a mercifully short time as a councillor in the London Borough of Camden from 2010 to 2014 and, as a consequence, am a member of that council’s pension scheme, but I think that has pretty scant bearing on our discussions this afternoon.

On Amendments 2 and 6, I recognise the intention to preserve the independence of the Local Government Pension Scheme administering authorities and to reduce the burden of regulation on their function. I will say now, so that I do not forget, that I appreciate that the noble Viscount, Lord Younger, asked a great deal of questions on amendments not just in this group but in groups to come. It was very helpful to have his explanation about degrouping; we are very happy to debate the Bill in the way the Committee sees best. I also put on record the welcome recognition by many Members who spoke on this group, particularly the noble Lords, Lord Davies and Lord Fuller—although in slightly different ways—of the importance and success of the LGPS. It is worth being clear that the Government are determined to make sure that success continues.

[The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)]

There is a Division in the House. The Committee will adjourn and resume after 10 minutes.

The Division has been cancelled. If noble Lords are content that everybody is back who needs to be, the Committee stands resumed.

[Lord Katz (Lab)]

My Lords, the Government share the noble Viscount’s aim of ensuring that administering authorities can continue to comply with their fiduciary duty to act in LGPS members’ best interests. I assure the Committee that the Government are not seeking to undermine the fiduciary duty of local pension funds in any way. The responsibility to set an investment strategy, which is the key driver of investment returns, will remain with funds.

As part of the reforms, we are consolidating all assets under the management of the LGPS asset pools; internal advisory capability is a key benefit of that scale. Integrated models in which strategic advice and investment management are both delivered by the same fiduciary manager are commonly used both in private sector schemes and internationally. These models can deliver greater value for money and economies of scale, and can reduce conflicts of interest. The Government recognise that there will be situations where administering authorities may feel that the advice of pools needs to be supplemented with or tested against advice from other sources. However, the Government are clear that such cases should be exceptional rather than routine.

This is probably a good point to address a couple of questions. The noble Viscount, Lord Younger, asked about cross-subsidising. It is fair to say that asset pooling does not lead to one administering authority subsidising the surplus of another. Administering authorities will remain responsible for the surplus or deficit of the fund that they manage, and each fund will continue to be valued separately.

The noble Lord, Lord Fuller, asked about the scale of the pools disincentivising investment in smaller British businesses and creating bubbles; he used the example of AI. Pools will be able to invest in small companies, including small and growing businesses that contribute to the economy. This could be achieved at scale by using actively managed funds, which aggregate opportunities. As set out in the Pensions Investment Review: Final Report, there is

“clear evidence that, in general, larger schemes are better able to invest in productive asset classes”.

This includes investment in private markets, which are key to financing fast-growing British companies. So I believe that the new pooling model will see more money invested in small British companies.

The Government are pleased that decisions about which of the six continuing asset pool companies LGPS funds wish to work with have been made on a voluntary basis and at a local level, and certainly do not intend to intervene in these decisions. However, the Bill provides for regulations to include powers to direct which asset pool a pension fund participates in, so as to be able to safeguard the scheme in future in the unlikely event that satisfactory arrangements cannot be agreed at the local level; this may include where relationships have broken down within a pool or where an administering authority finds itself without a pool willing to accept it.

The noble Viscount, Lord Younger, asked about consultation on the powers; basically, he asked why we are introducing a power to direct which asset pool an administering authority participates in. The Government’s strong preference is for decisions on pool membership to be made on a voluntary basis and at a local level. However, the Government need to be able to safeguard the scheme in the unlikely event that satisfactory arrangements cannot be agreed at a local level, such as if an administering authority were to find itself without a pool willing to accept it or, as I said, if relationships break down. Regulations are expected to require consultation; that is carried out prior to using the power, of course.

The noble Viscount, Lord Younger, also asked about the transition of assets that are held or managed. The guidance allows room for pools’ discretion where transfer of ownership is not reasonably practical, so there will not be any need for authorities to make such unnecessary losses in the process of pooling.

More generally, the noble Viscount and other noble Lords asked about the fiduciary duty and it being undermined. This provision is not a new power. It replicates a provision in the existing Local Government Pension Scheme (Management and Investment of Funds) Regulations 2016, which will be repealed when the new Local Government Pension Scheme (Pooling, Management and Investment of Funds) Regulations come into force.

I do not want to single out anyone in particular, but the noble Lord, Lord Fuller, talked about meddling. To be clear, this power is a backstop power that would be used only as a last resort to safeguard the scheme, following, as I said, consultation with the relevant administering authority.

On Amendment 4, I recognise that the noble Viscount’s intention is to test why transitional arrangements for LGPS administering authorities are not set out in the Bill. There is more than 50 years’ precedent for the rules of the Local Government Pension Scheme being set out in secondary legislation, going back to the Superannuation Act 1972. We therefore consider that it is more appropriate to change what may and must be included in the rules of the Local Government Pension Scheme through the use of secondary legislation created using existing powers and, where necessary, new powers provided in the Bill, rather than using primary legislation to amend existing secondary legislation. Moreover, given the range of circumstances faced by administering authorities and asset pool companies, the Government will retain some flexibility by setting out transitional arrangements in regulations and can work with the sector to ensure that new requirements are workable and agreeable.

My noble friend Lord Davies of Brixton raised the spectre of this introducing uncertainty. We collectively have a duty to ensure that every penny of members’ hard-earned money is well invested and that the LGPS’s extraordinary scale is harnessed. That includes making the best use of some of the excellent capabilities that exist in the LGPS, rather than building from scratch, which is why we are moving to fewer pools. We recognise that implementing these reforms may cause significant upheaval and require resources, but the reward is enabling a bigger and better LGPS to fulfil its potential as an engine for growth. The Government are considering responses on the proposed transitional arrangements included in the recent technical consultation on the pooling, management and investment of funds regulations and will set out their response in due course.

Regarding Amendment 5 in the name of the noble Viscount, Lord Younger, I recognise the intention to examine the practicalities of co-operation between administering authorities and strategic authorities, especially in the light of the English Devolution and Community Empowerment Bill. The English Devolution White Paper published in December 2024 set out our plan to rewire England by devolving power and funding from central government to local leaders who know their area best. A key aspect of this is the development of ambitious local growth plans by mayoral strategic authorities, including local investment opportunities for institutional investors, including the LGPS.

Clause 2 includes a requirement for LGPS administering authorities to co-operate with strategic authorities, including corporate joint committees in Wales, in order to identify and develop appropriate investment opportunities. This will mean that the investment potential and requirements for pension investments are factored into thinking on local strategic projects from the beginning. It will be for the asset pools, not politicians, to conduct due diligence and take the final decisions on whether to invest. I hope that that addresses the questions posed by the noble Viscount, Lord Younger, around ensuring that schemes are acting in their members’ interests and the interplay between strategic authorities and other authorities.

This high-level requirement to co-operate allows strategic pools and administering authorities to design the most effective ways of working. To ensure a clear, firm trajectory to consolidation and benefits of scales for the scheme as a whole, along with the assurances that I have provided, I think that it is important to understand that the intention behind the LGPS clauses that we have been discussing is to get a balance between retaining flexibility and introducing scale.

There is one remaining question that I have yet to respond to, which was from the noble Baroness, Lady Bowles, about using the power to direct asset pools as to the manner of their investments. The Government are introducing the backstop power to be used, as I said, as a last resort to protect the scheme in the unlikely event that a pool’s decision-making puts it or the underlying pension funds at risk. This power is consistent with existing powers that the Government have to direct administering authorities in specified circumstances, which include powers to give directions about how they should exercise their investment functions. To safeguard the scheme, these powers will need to apply to asset pools instead of administering authorities in future. The Government’s intention is that scheme regulations will require all LGPS asset pool companies to be authorised by the Financial Conduct Authority. It would not make sense for government direction to contradict any requirements of such authorisation.

As I said when I began responding to this group of amendments, there were a lot of questions. I hope that I have answered most of them, but we will of course revisit Hansard after the debate, and I undertake to write to anyone whose questions I have missed. Given that, I respectfully ask the noble Viscount to withdraw his amendment.

Special Educational Needs: Investment

Baroness Watkins of Tavistock Excerpts

Wednesday 17th December 2025 Lords Chamber

[Baroness Smith of Malvern (Lab)]

The noble Lord makes a very important point. This funding is an opportunity to support those pupils to remain in schools close to home and enable them to learn and thrive alongside their friends, in environments that support their learning, by developing safe and quiet spaces and improving the accessibility of mainstream schools. That is a large part of what we expect this additional funding to support, precisely so that children can learn and thrive alongside their friends in mainstream schools and be identified earlier in order to do that.

[Baroness Watkins of Tavistock (CB)]

My Lords, I fully support the strategy to increase the number of SEND pupils in mainstream schools, subject to adequate funding to provide relevant support and teaching staff. However, there remains a small proportion of pupils with very special needs who will need further help that cannot be provided in such schools. Can the Minister explain how these young people’s needs will be met in future?

Employment Gap for Blind and Sight-impaired People

Baroness Watkins of Tavistock Excerpts

Wednesday 17th December 2025 Lords Chamber

[Baroness Sherlock (Lab)]

I have always known the noble Lord as a good European—I am glad to hear him speaking up for the European Parliament today. To be honest, I am not sure we can use that as an excuse. We do not have to be made to do something to do it, and the House should look at it.

[Baroness Watkins of Tavistock (CB)]

My Lords, I had an aunt who was blind from birth, was funded to train as a physiotherapist—that was on careers advice at school—and worked for 43 years full-time. Is consideration being given to ensure that young people who have long-term permanent sight problems get the right career advice?

[Baroness Sherlock (Lab)]

I am grateful to the noble Baroness. Like her, I have had the benefit of a physio- therapist who is herself blind and is very good indeed. The noble Baroness makes an important point. We have been working really hard with our colleagues who work with the young people who come in. The reason we try to have tailored advice is to work out what works for that person. Just because it worked for the noble Baroness’s aunt, it might not work for her next-door neighbour in the same circumstances. It is about trying to find out what somebody is able to do, wants to do and has a passion for, and how we can give them skills and support.

One of the great joys of having my noble friend Lady Smith join us as Minister for Skills in the DWP as well as the DfE, getting the remit for adult skills, is that it is helpful to join up what we are doing to try to find opportunities for and support individuals, with them having the skills to enable them to follow through on that.

Free School Meals

Baroness Watkins of Tavistock Excerpts

Tuesday 16th December 2025 Lords Chamber

[Baroness Smith of Malvern (Lab)]

As I have outlined, the national funding formula already includes provision for the funding of free school meals. It quite rightly targets funding to schools on the basis of those with the greatest numbers of pupils with additional needs. I will investigate whether it is possible to provide those figures. I am not sure that it will be, given how school meals are funded, but I will have a look.

[Baroness Watkins of Tavistock (CB)]

Can the Minister explain further why the allocation is less in England than in Wales and Scotland, particularly the allowance for adolescents aged 14 to 18? There is clear evidence that secondary schools are supporting meals out of teaching budgets. If the numbers who are entitled increases, which I welcome, that subsidy will have to increase.

[Baroness Smith of Malvern (Lab)]

It is the nature of devolution that different Governments make different decisions on how they fund and how they distribute that funding. Since this Government came into power, we have seen a considerable increase in the core schools budget, which increased by £3.7 billion in 2025-26. That benefits the teaching and learning that noble Lords are concerned about, as well as general health and the provision of free school meals, as this specific Question is about.

Child Poverty Strategy

Baroness Watkins of Tavistock Excerpts

Wednesday 10th September 2025 Lords Chamber

[Baroness Sherlock (Lab)]

I am grateful to the right reverend Prelate. The task force has engaged astonishingly widely. The Children’s Commissioner was commissioned to do listening events directly with children, to hear their voices. A lot of work has gone on listening to organisations, families and parents, but listening to children describing their own experiences sometimes brings out things that the Government and even those organisations would not have thought of.

In terms of the wider groups, I have been able to do a little bit of this, even though it is not quite in my portfolio. However, the right reverend Prelate’s right reverend friend the Bishop of Derby very kindly invited me up to Derby to meet families at a family hub and to look at what the local authority and the faith groups were doing. Every time this happens, I am blown away by the resilience of individual families and the power of local communities, faith groups and local authorities to work together to make the lives of their communities better. The more we can engage with that and the more we can hear their voices, the better we are going to do this.

[Baroness Watkins of Tavistock (CB)]

My Lords, the recent Children’s Commissioner’s report identifies, through children as well as their parents, that one of the most difficult things that children in poverty have to put up with is temporary accommodation. Moving accommodation often disrupts their education, because they have to move school. Will the child poverty strategy look at this as seriously as it looks at income?

[Baroness Sherlock (Lab)]

I thank the noble Baroness for her question. The Children’s Commissioner’s report, as I am sure she knows, made pretty harrowing reading—as it should. If we are going to tackle these questions, we have to look at the reality of children’s lives nowadays. Her point was very well made. The Government are very aware that homelessness levels are far too high and temporary accommodation is not working. That is really clear. We are committed to delivering long-term solutions to ensure that temporary accommodation is sustainable for local authorities and delivers value for money, because a lot of money is going into something that is not doing a good job for the families using it. That is why the spending review made it clear that we want to encourage better investment in temporary accommodation stock up front and announced £950 million in the latest round of the local authority housing fund.

Welfare Reform

Baroness Watkins of Tavistock Excerpts

Wednesday 2nd July 2025 Lords Chamber

[Baroness Sherlock (Lab)]

I thank my noble friend, and I am really grateful to her for clarifying that. Those of us who spend a lot of time in the weeds of social security policy have to remember to be clear what we are talking about at different times. To be absolutely clear—I know that Members of this House will know—PIP is a non-means-tested, non-taxable benefit and will stay so, and it is claimable in and out of work. Roughly 17% of people who get it are in work, and we hope that more will do so in future.

My noble friend’s broader point is extremely important. To tackle the disability employment gap, we need to do a number of different things. One is to tackle the underlying conditions. For example, she mentioned mental health. We have seen growing challenges in mental health in this country, but the Government have invested very heavily—for example, with young people, in specialist mental health professionals in every school. Our youth guarantee for young people will improve access to mental health services. We are also investing heavily in the NHS to try to get waiting lists down and to support people into mental health services.

We also have to make sure that employers are able to do their bit. I am really excited and looking forward to the report that we will get soon from the former chair of John Lewis, which will look at how we can support employers, what more employers can do and what barriers there are to employers taking on sick and disabled people. We are going to tackle it on all fronts, but I am grateful to her for raising that.

[Baroness Watkins of Tavistock (CB)]

My Lords, I declare my interest as a current non-executive director of NHS England. Will the Minister explain whether it the Government intend to return to face-to-face PIP claims, including a biannual review for the majority of claimants? If not, what are the reasons behind that? The Timms review continues, and none of us wants people who are genuinely disabled to lose out, but we also know that the online system has resulted in a lot of inappropriate claimants who have been successful. We need to deal with that, rather than wait for the outcome of the Timms review. In addition, will the Government review the Motability scheme, which the majority of taxpayers, particularly the lower paid, consider unnecessarily expensive, as new vehicles are normally provided every three years?

[Baroness Sherlock (Lab)]

My Lords, the noble Baroness raises a very important point about face-to-face assessments. There used to be face-to-face assessments; they were stopped during Covid and restarted only slowly and at quite a low level. We have said publicly that we want to ramp those back up again, so she raises an important point. On the Motability scheme, just for clarity, nothing in the proposals in the Bill now or in earlier incarnations affects the mobility element of PIP, only the daily living allowance, but I take her broader point and I will be happy to have a look at that.

Carer’s Allowance

Baroness Watkins of Tavistock Excerpts

Tuesday 21st May 2024 Lords Chamber

[Viscount Younger of Leckie (Con)]

The noble Baroness makes a very good point. Each carer has his or her own responsibilities, some of which are very great, involving permanent lack of sleep. However, it is very important that, if they can, they should lead for themselves fulfilling and rewarding lives. That is why we have a number of initiatives to encourage carers to do some work. We think that it is good for them, and they acknowledge that. Clearly, this is a very important part of what we do in our department.

[Baroness Watkins of Tavistock (CB)]

My Lords, we all acknowledge that caring is an extremely stressful occupation and that it is really good if carers can spend some time at external work. We know that it is good for their mental health. The responsibility of paying something like £1,500 back in a short period is more than stressful; it tips some people into becoming so mentally ill that they can no longer go to work. Can the Minister go back to the department and agree the number of people who should have their debt written off and that those not in that category should pay no more than £5 a week?

[Viscount Younger of Leckie (Con)]

We certainly do not agree with the idea that any of the debt should be written off; we think that the debt is there to be repaid. However, as I have said, we have a number of plans in place on a one-to-one basis to help each individual who has got into difficulty, to help them to repay that debt. That is a very important point.

Engineered Stone and Silicosis

Baroness Watkins of Tavistock Excerpts

Monday 15th January 2024 Lords Chamber

[Viscount Younger of Leckie (Con)]

I can reassure the House that, as mentioned before, most engineered stone in the UK is imported. There could be an issue where engineered stone is used for fitting kitchen worktops, where the importance of PPE and masks is understandably difficult to monitor. However, the HSE and COSHH have been looking at this over many years.

[Baroness Watkins of Tavistock (CB)]

My Lords, can the Minister explain what is behind the reluctance to make silicosis a recordable disease? If we did so, we would be able to monitor the size of the problem and put in place further preventative interventions and thus, in the long term, save the public purse in both the NHS and the benefits system.

[Viscount Younger of Leckie (Con)]

The Health and Safety Executive recently carried out a post-implementation review, or PIR, of RIDDOR, which, as the noble Baroness will know, deal with the reporting of injuries, diseases and dangerous occurrences, with a view to expanding that to include areas where HSE regulatory intervention can add value. HSE will start the process of reviewing the remaining recommendations—including the inclusion of pneumoconiosis, which is, in effect, silicosis—within the next business year.

Universal Credit

Baroness Watkins of Tavistock Excerpts

Tuesday 18th April 2023 Lords Chamber

[Baroness Watkins of Tavistock (CB)]

My Lords, I will ask the Minister about the Healthy Start vouchers for the under-fours. They are really important and have moved from vouchers to a card system. Many people lost those benefits in the transfer system, because it was not simplified. Could the Minister look at how we ensure that benefits are simplified so that people can actually get what they are entitled to?

[Viscount Younger of Leckie (Con)]

The very fact that we have been rolling out a universal credit system over the last few years since 2013 comes to the essence of what we have been trying to do, which is to simplify the system. The noble Baroness makes a very good point about putting children first, as I said previously. One example of that is what we have done with free school meals.

Carer’s Allowance

Baroness Watkins of Tavistock Excerpts

Thursday 17th November 2022 Lords Chamber

[Baroness Stedman-Scott (Con)]

I go back to my previous answer. We have done it for pension credit, and we have had quite some impact there. I cannot commit to doing the same for carer’s allowance, but I am sure that, when Carers UK meet the Minister for Disabled People, that should be if not number one then number two on the agenda. There are other ways people can know about those means-tested benefits, including GOV.UK and through citizens advice bureaux and other organisations such as Carers UK.

[Baroness Watkins of Tavistock (CB)]

My Lords, is the Minister prepared to talk to the Department of Health and Social Care to see whether there could be an additional allowance to carers immediately on a relative being discharged from hospital to try to reduce delayed transfers of care?

[Baroness Stedman-Scott (Con)]

I ask my noble friend Lord Markham, “Shall we talk?”. I am very happy to talk to anybody to make life better for people. Maybe my noble friend can follow that through in the next Question.