Pension Schemes Bill

Lord Katz Excerpts

Report stage
Monday 23rd March 2026 Lords Chamber

[Lord Davies of Brixton (Lab)]

Okay. This demonstrates the clear fact that I am still suffering from my cold, which is so bad that it kept me from attending the second day of Report.

There is an important issue that needs to be highlighted, and that is addressed in Amendment 165. I want to say a word on behalf of the members of a number of different schemes—NatWest is one, but there are others—who feel aggrieved because they were not properly informed of their rights under their scheme. Their major complaint is that when they reach state pension age, they suffer a diminution in their benefits. These rules were introduced in all good faith, and I participated in such negotiations myself, but it is the failure of the employer to ensure adequate information for members that has led to the complaint.

Do I have a different grouping from everyone else? I am speaking to Amendment 165, which is in the first group—is that correct?

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

Yes.

[Lord Davies of Brixton (Lab)]

Okay; good. As I say, I am still suffering from my cold, and I hope the House will indulge me. But I think it is important to make the point on those members’ behalf.

Pension Schemes Bill

Lord Katz Excerpts

Report stage
Monday 16th March 2026 Lords Chamber

The amendment would insert a clear restriction stating that regulations made under Clause 2 may not include provisions requiring investment in specific assets, asset classes or geographical locations. Pension assets exist to secure the retirement income of members, not to serve as instruments of industrial policy. Those responsible for managing these funds are bound by fiduciary duties to act in the best interests of their members, and Governments are not. For that reason, this amendment is extremely important, and we will support my noble friend Lady Noakes if she decides to test the opinion of the House—she said in her opening remarks that she was minded to do so.

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

My Lords, I am grateful for our discussion on this first group. I am indebted to the noble Lord, Lord Palmer of Childs Hill, for reminding me too that I should declare my membership, as a former Camden councillor, of its members’ pension scheme—although I defer to him in terms of seniority in years of service: I did a paltry one term, as opposed to his gazillion, I think it was, in the neighbouring council in Barnet.

I share the interest raised in this discussion in fostering greater collaboration and sharing of expertise across the LGPS and ensuring that there are appropriate safeguards in the Bill. On Amendment 1, tabled by the noble Lord, Lord Fuller, it is right that we ensure that appropriate safeguards are in place on the use of direction powers. To reiterate, these are included in the Bill as backstops to ensure that the Government can fulfil their role as stewards of the scheme, but let me be clear that the direction powers in the Bill are not designed to allow the Government to direct investment into specific assets or asset classes, and the Government are satisfied that they cannot be used in this way.

The Bill already requires the Secretary of State to consult the asset pool company, its participating partner authorities, the FCA and any other body that the Secretary of State considers appropriate, prior to the exercise of the direction powers. I do not believe that the Pensions Regulator is an appropriate body for this list. Asset pool companies will be regulated by the FCA and do not fall under the remit of the Pensions Regulator.

In moving his amendment, the noble Lord, Lord Fuller, took issue with the closure of the access pool. To be clear, access went through the same process as all the pools. Outsourcing all its investing was not value for money. The pools that access funds are going to are all FCA regulated. I hope this provides reassurance not just for the noble Lord, Lord Fuller, but for your Lordships’ House.

The Ministry of Housing, Communities and Local Government will work closely with the Government Actuary’s Department to provide actuarial advice to the department on the LGPS. It can be expected that the department would seek advice from it prior to issuing a direction wherever it was relevant to do so. Furthermore, the Secretary of State has a duty to consult anyone whom they consider appropriate under Clause 1(5)(d), which could include the Government Actuary’s Department. This may not always be appropriate, however, depending on the type of direction being issued. Overly burdensome and formal consultation requirements can slow decision-making. It would therefore seem potentially onerous to have the Government Actuary as a compulsory consultee under these direction powers.

The noble Lord, Lord Fuller, also talked about the impact of local government reorganisation on pooling in the LGPS. Many administering authorities are forming new pool partnerships to deliver the standards of pooling which we have set. I know that authorities have taken the impact of local government reorganisation into account when deciding which pool to join. The Government stand ready to support authorities with any concerns that they may have about the impact of local government reorganisation on the administration of the LGPS in their area. For the avoidance of doubt, and to address the point made by the noble Baroness, Lady Bowles, there is nothing in the legislation that says that the Government underwrite the liabilities of the LGPS. These are locally managed schemes, which includes responsibility for liabilities.

Amendment 2 seeks to encourage collaboration and competition across the LGPS by permitting administering authorities to participate in more than one asset pool company. This Government strongly believe that pools should work together wherever this can improve outcomes for members, employers and taxpayers. Asset pools becoming centres of excellence in specialist asset classes would reduce duplication and enable investments at scale, both within pools and across the whole scheme. Joint ventures are already operating in the scheme—such as LPPI and Northern LGPS’s collaboration through the GLIL Infrastructure fund, which invests in assets ranging from upgraded rail rolling stock to green energy and water projects. These show how collective investment can unlock the scheme’s potential to invest in the UK.

To encourage further collaboration of this kind, Clause 4 removes procurement barriers so that pools can invest in one another’s vehicles without limitation. Nothing in this legislation prevents administering authorities benefiting from specialist expertise in other asset pools. It certainly does not impose an arbitrary north/south boundary or other such divisions, as the noble Lord, Lord Fuller, intimated. However, under the reformed system, this will appropriately be done via their own asset pool, because decisions to contract with, or invest alongside, another pool are a matter for the regulated pool company, not for individual authorities.

The Bill establishes a clear division of responsibilities. Administering authorities will set the investment strategy, while asset pools will implement that strategy. This places investment decisions with professional managers, enabling the scheme to achieve scale and deepen capability. This amendment would undermine those benefits by returning investment decisions to individual authorities, rather than the expertise developed at the pools. I therefore believe that the amendment is neither necessary nor an appropriate measure to enable collaboration across the scheme.

I should like to reassure the noble Baroness, Lady Altmann, on the points that she raised. First, pooling is not about limited choice. Pools will select managers on behalf of their funds under the fund’s direction. Secondly, the investment strategy will set funding objectives and an asset allocation. Thirdly, responsibility for setting the investment strategy will remain with funds. Nothing in the Bill allows the Government to tell funds what to invest in, nor will pools make that decision. It will be made by the LGPS funds for pools to deliver.

I turn to Amendment 5, also from the noble Lord, Lord Fuller, and the noble Baroness, Lady Altmann. I understand that the intention behind this amendment is to allow investment in opportunities created by other administering authorities and asset pools. As I have said, this is already possible under the legislation as drafted. What the amendment would actually do is to allow administering authorities to count as local any investment to the benefit of people living or working anywhere in England and Wales. This definition is relevant only when administering authorities are setting their approach to, and targets for, local investment in their investment strategy, and when reporting on the extent and impact of local investment.

Of course, the Government are all for UK investment. Indeed, as we have heard, the LGPS is the country’s largest UK pensions investor already. However, the purpose of requiring a specifically local, not national, investment objective in the investment strategy is to encourage investment into all regions of the UK, and directly into the communities in which scheme members have worked. Administering authorities can set any target they want for local investment, and asset pools are free to invest assets over and above this target in the UK or worldwide, as best fits the investment strategy. There is therefore nothing stopping administering authorities from benefiting from investments anywhere in the country, regardless of their geographic location.

I turn to Amendment 4 from the noble Baroness, Lady Noakes. Clause 2, specifically the provision in subsections (3)(b) and (4), allows the Government to make regulations specifying matters that administering authorities must or may cover in their investment strategy. It is not designed to permit government to dictate what that strategy says. The power that we removed from the Bill in the other place was equivalent to the powers that the Secretary of State has over funds, which the Government’s initial judgment was that it was appropriate to have over pools under the new system. We have heard feedback from stakeholders and feel that it is not necessary for the Secretary of State to have those powers.

This provision will be used to require that LGPS investment strategies include: an approach and target range for local investment; high-level funding objectives and an approach to responsible investment; and a strategic asset allocation completed to a standard template, to be included in guidance. In each case, it remains for LGPS administering authorities to determine what those objectives, approaches, asset allocations and target ranges will be. Some may be concerned about how a future Government might use this provision. I reassure them that the Government do not consider the clause to permit regulations compelling authorities to adopt any particular position in their investment strategy. I hope that the noble Baroness will therefore be reassured that the Bill does not enable what her amendment seeks to guard against.

The purpose of the government amendments to Clause 4, Amendments 6 to 8, is to ensure that changes made under the clause do not have any wider application than intended. Clause 4 amends the Procurement Act 2023 to create a new exemption for investment and fund management contracts between Local Government Pension Scheme managers and their LGPS asset pool companies. This is required because the existing exemption in the Procurement Act contains a turnover test that would cap the potential for LGPS asset pools to collaborate through joint ventures. Clause 4 addresses this by ensuring that LGPS pools are not subject to this turnover test where a pool is acting in the interests of Local Government Pension Scheme managers. However, it is appropriate that the effect of the clause does not go any wider than intended. The amendments therefore put it beyond doubt that these changes apply only when Local Government Pension Scheme managers are acting in their capacity as Local Government Pension Scheme managers, and not in any other scheme management capacity they might have.

I hope my response demonstrates that the Government have considered carefully the points raised through Amendments 1, 2, 4 and 5. To pick up on the comments made by the noble Lord, Lord Palmer, we understand the intentions behind the amendments—we just do not think that they are necessary. We understand the motivation behind them, and I hope that my explanation makes that clear. We are also responding to the wider point, which we discussed at some length in Committee. The nature of the Bill, called by some skeletal, is that this is how pensions and other financial management legislation is passed. A lot has to be done through regulation, because that is how one responds to changing marketplaces and sector demands. We make no apologies for that. However, the Government welcome collaboration across the scheme and, as I have explained, the provision in the Bill and our proposed regulations already allow for it. Amendments 2 and 5 would undermine the pooling and local investment reforms without promoting further collaboration.

This Government also recognise the desire to ensure that there are appropriate safeguards on the use of direction powers. I hope I have reassured your Lordships’ House that the consultation requirements in place are already sufficient and that it is not necessary to introduce additional references to the Government Actuary and the Pensions Regulator. Finally, I hope that I have reassured your Lordships’ House that the provisions in the Bill do not allow the Government to introduce mandation via regulation. I therefore ask the Lord, Lord Fuller, to withdraw Amendment 1.

[Lord Gove (Con)]

Before the Minister sits down, he said that Amendment 4 is unnecessary because the Bill does not do what the promoters of Amendment 4 argue that it does. He did not say that it would be malign, that it would frustrate the efforts of the Government, that it was wrong in any way; he merely said that the Bill already achieved what the promoters of the amendment want and therefore it would be superfluous. What damage would therefore be done if Amendment 4 were accepted? In what way would it damage the Government, damage pension fund trustees or damage pension fund members? It is not good enough to say simply that the noble Baronesses, Lady Altmann and Lady Bowles, and the noble Lord, Lord Palmer, are wrong, and for us to take it on trust. That is not what we should do.

[Lord Katz (Lab)]

I say simply that if we took that approach to all legislation, we would end up with Bills hundreds or thousands of pages long, because we might pile on more amendments simply because they are well-intentioned. It is important that we are clear about the legislation that we are drafting, so that people in the pensions sector, lawyers, et cetera, can properly interpret what we intend—by any legislation, not just this Bill. When we say that something is superfluous, we do not add it in: I think that is a perfectly decent criterion by which to legislate. The noble Lord, Lord Gove, shakes his head. I say to him gently that both this and the previous Government have had a lot of criticism for large Bills and there is always an onus on us to have slimmer legislation. We will not get slimmer legislation by accepting willy-nilly amendments that we think are superfluous.

[Lord Gove (Con)]

My Lords, I am afraid that that answer is completely inadequate.

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Moved by

[Lord Katz]

6: Clause 4, page 6, line 4, at end insert “acting in its capacity as a local government pension scheme manager”
Member's explanatory statement
This is a drafting amendment to clarify that only contracts made by a local government pension scheme manager acting in its capacity as such can be exempt contracts under clause 4.

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[Lord Palmer of Childs Hill (LD)]

My Lords, this group asks for greater transparency around Local Government Pension Scheme valuations by requiring benchmarking against insurer pricing and gilt-based discount rates, with clearer explanations where more prudent assumptions are used. There is value in greater openness and comparability, but there is also a risk in appearing to imply that one benchmark can neatly settle what is, in practice, a complex actuarial judgment.

I was taken by the contribution from the noble Lord, Lord Davies. He really killed off the amendment by saying that it would give more work for actuaries. The tendency is for the actuary then to say, “On the one hand this and on the other hand that”. Very often, the advice is not even that definite anyway, which is why actuaries are there to confuse the issue altogether.

We should be honest about two things at once. First, employers and scheme participants need clearer information. If valuation choices materially affect contribution rates, local authority budgets and, ultimately, local services then those choices should be explained in language that non-specialists can understand. Secondly, the Local Government Pension Scheme is not simply an insurer in another form; it is a long-term, open, public sector scheme with characteristics that very much differ from closed private arrangements. Although comparison can illuminate, it must not mislead, as is the danger. A benchmark should be a tool for understanding, not a back-door instruction about how every valuation ought to be done.

That is why we on these Benches are cautious. We are sympathetic to calls for clearer publication, accessible material and meaningful consultation. Sadly, we are less persuaded by any suggestion that the right answer can be derived by mechanically comparing one prudence basis with another. The real issue is whether assumptions are evidence-based, proportionate and properly explained. If the Government believe that the present system already secures that then they should show it—I hope the Minister will do that when he responds. If not, there is merit in considering reforms that improve transparency without oversimplifying a technical process.

On that basis, we on these Benches do not oppose the spirit of scrutiny here, but we are not convinced that the amendment, as drafted, is the full answer. Therefore, we are not against what the amendment says, but we would not support it if it were moved to a vote.

[Lord Katz (Lab)]

I thank the noble Viscount, Lord Younger of Leckie, for the amendment, moved very ably by the noble Baroness, Lady Stedman-Scott. It seeks to improve the transparency of the assumptions and level of prudence applied in LGPS actuarial variations, including through the introduction of additional benchmarks.

The 2025 triennial valuation will conclude on 1 April, and at present we do not have a complete picture of its outcomes across the 87 different funds and more than 20,000 employers in the scheme. The amendment seeks to prescribe remedies before any diagnosis has been made or, indeed, any maladies have been fully understood.

Many of the matters raised will be covered by the Government Actuary’s Department report under Section 13 of the Public Service Pensions Act 2013. The report will assess whether employer contributions have been set at levels appropriate to ensure solvency and long-term cost efficiency, whether funds’ valuations comply with the regulations and the degree of consistency between them. Recommendations will then be taken forward by the Ministry of Housing, Communities and Local Government and the scheme advisory board.

Officials are already engaging with the Government Actuary’s Department, which is targeting a publication date of spring 2027 for its report and recommendations. Your Lordships’ House will be pleased to hear that this is earlier than previous valuations, which I hope demonstrates the seriousness with which we are taking the issues raised by noble Lords in Committee. The Government Actuary’s Department will engage widely with funds, actuaries and advisers to develop a comprehensive understanding of the 2025 valuation.

It is appropriate for different funds and their advisers to use different discount rates, reflecting variations in risk appetite, employer profile and investment mix. It is helpful to understand how these approaches compare across the sector. The Section 13 review uses benchmarks to place local valuations on a comparable footing and may, in the first instance, provide useful insight into funds’ decision-making. There is a delicate balance to be struck. Members’ benefits are guaranteed in statute, but funds must ensure that they hold sufficient resources to pay those benefits over the long term through investment income and contributions.

My noble friend Lord Davies is right in his assertion that actuaries advise and funds decide. I salute, in making these contributions, his forbearance in not arguing for the interests of the national union of actuaries, of which I am sure is a founder member—at least he ought to be, if it does not exist.

We heard a fair amount on prudence, as we did in Committee, from the noble Lord, Lord Fuller, using his experience. In a locally managed scheme, it is for funds to work with their actuarial advisers and employers to set a contribution rate that supports the long-term viability of employers and the fund. The Section 13 report prepared by the GAD will consider questions of prudence—that is, how the discount rate is set and how stability is applied to contribution rates. Were the Government to set correct valuation assumptions, they would risk undermining the principle that funds and expert actuarial advisers are responsible for ensuring the long-term sustainability.

A push for greater intervention at the valuation risks moving from a locally managed scheme to a centrally managed scheme. We heard much about that in the discussion on the previous group of amendments. The implications are real and far reaching, decreasing rather than increasing the role for locally elected representatives.

On transparency, the amendment would require additional detail on assumptions and benchmarks in the funding strategy statements and these to be communicated in a more user-friendly way. I believe we are broadly aligned on the value of valuation reports and supporting material, such as funding strategy statements, being easier to understand for the lay reader. There is already transparency in the process. Administering authorities should consult all employers in the fund on their funding strategy statement. This statement should outline how surpluses and deficits will be managed, outline the approach to contribution stability and summarise the main actuarial assumptions used at the valuation.

To respond to the noble Lord, Lord Fuller, the funding strategy statement is consulted on, and the SAB guidance already says that the purpose of the FSS is to establish a “clear and transparent” strategy that explains how liabilities will be met and

“how the fund balances the interests of different employers”.

We must not jump to conclusions about how the valuation has played out for every fund and employer. There are already examples of good practice, including meaningful employer consultation and capable pension committees with the confidence to interrogate their actuary’s advice to fully understand the proposed contribution rates.

In his evidence to the Committee on the Bill in the other place, Roger Phillips, chair of the LGPS advisory board, said about the treatment of surplus that

“we live in a very volatile situation, and circumstances can change. You have to be careful, because if you reduce contribution rates considerably, that is a great benefit at this moment in time, but if you then turn around and start to increase them again, that can be very difficult for all employers to deal with, including local government”.—[Official Report, Commons, Pension Schemes Bill Committee, 2/9/25; col. 41.]

Until the valuation has concluded, we cannot reach a definitive view on how the interpretation of regulations and guidance and the quality of employer consultation have shaped the results that will apply from 1 April. As part of their review, the Government will ask the Government Actuary’s Department to focus on methods for managing risk and reflecting the long-term funding objectives of the scheme including discount rates, application of stability mechanisms and buffers and the effectiveness of employer engagement. I have committed to additional work with the GAD on how discount rates and the application of stability mechanisms affect contribution rates and whether employer engagement processes are operating effectively.

Following the publication of the Section 13 report, the Ministry of Housing, Communities and Local Government will undertake a review of the regulations and guidance governing the triennial valuation ahead of the 2028 valuation. I appreciate that your Lordships’ House may wish for more immediate action, but we must ensure that we are in possession of the valuation results before we determine the right course of action. I therefore ask the noble Viscount, Lord Younger, or the noble Baroness, Lady Stedman-Scott, to withdraw the amendment.

[Baroness Stedman-Scott (Con)]

Your Lordships have got me.

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[Baroness Altmann (Non-Afl)]

My Lords, I support this amendment. This is an important time to talk about the contribution rates to the Local Government Pension Scheme. When funding has changed so substantially in a very short period of time, having an interim review clearly makes sense, for not only the local authority but the council tax payer.

As we heard in a previous debate, we are seeing councils with significant surpluses continuing to spend council tax income on pension contributions to schemes that do not need them because they are in significant surplus. Further, fixing contribution rates in a three-year cycle underestimates the timeframe that has gone into the setting of those rates, because the valuations on which those rates are based were done more than three years before the third year of the cycle. It takes about a year for the scheme valuation to be done and the contribution rates to be set, so they could easily be four years behind. A lot can happen, and has happened, in that timeframe.

I hope the Government will accept that this principle of allowing councils to be more flexible with the revenue that they receive from council taxes could benefit local authorities and the country. We know that councils have been forced to increase council tax due to their inability to meet their basic spending commitments. If the amount that councils spend on pension contributions could instead be spent on social care, or other local authority needs, they would require less money from local residents—which would improve the local economy, as tax rates would not be so high—and central government. The pressure on public spending could therefore be ameliorated.

I know that there is a principle of trying to achieve what is referred to as stability in contribution rates, so that they do not change too much from one year to the next. However, when there are significant changed circumstances, forcing schemes to fiddle the assumptions on which the scheme funding is based so that local authorities can somehow justify maintaining contributions to a fund that, in the private sector, would not need the money and would normally be having a contribution holiday, strikes me as not serving the best interests of either the local or the national economy. A review of how pension contribution rates are set at local authority level is probably long overdue, given the big changes that we have seen, and could help the Government with some of the funding strains that they have been feeling, and their desire to improve growth.

If a local authority is spending, say, 20% or more of its council tax revenue on putting money into a pension scheme that does not need it, and if that pension scheme is underwritten by the Government anyway, so its members’ benefits are not at risk, you have a very different scenario from that a private sector employer’s trustees might be facing: if the contributions stop and the employer gets into trouble, there is nothing much that can be done to ameliorate the position for members. That risk does not really exist in a local authority pension scheme. As I say, there is no contribution to the Pension Protection Fund and no underwriting; this is guaranteed by taxpayers.

Therefore, if you are raising taxpayer revenue from council tax, why not simply use it where it is needed, rather than putting it where it is not needed for now? You can always come back later and impose contributions when or if the funding position changes, but the scheme is not going to run out of money in any short-term period; that is not how pension schemes work. I therefore hope that the Government will appreciate the logic of this amendment, which was so ably moved by my noble friend on the Front Bench.

[Lord Katz (Lab)]

I thank the noble Viscount, Lord Younger of Leckie, for his amendment, and I share the interest in ensuring that interim valuations are accessible and transparent for all employers in this scheme.

Amendment 12 proposes changes to Regulation 64A of the Local Government Pension Scheme Regulations 2013, which concerns valuations carried out outside of the triennial valuation cycle. In Committee, I committed that the Government will consult on changes to Regulation 64A this year, and we will consider the matters raised as part of that consultation.

I reiterate the point I made in Committee: any changes to regulations need to be properly considered to avoid unforeseen consequences. The views of employers, funds and other sector groups are vital to this process, and amending legislation now would prevent them contributing to the policy design and therefore ensuring our ability to get the best possible outcome. There is clearly value in having a mechanism that allows employers to review contribution rates, especially where employer covenants or liabilities change significantly, but this must remain consistent with the triennial valuation and be workable for all participants across the sector.

Amendment 12 aims for additional transparency, in a similar vein to the other amendments we have discussed this afternoon. The noble Viscount should note that the policy on interim valuation contribution reviews is set out in the funding strategy statement, on which employers are consulted.

The noble Baroness, Lady Altmann, spoke in detail about the time lag of valuations and the impact of events in the financial cycle. As everyone will be aware from geopolitical events, markets can vary from one day to another. Simply requesting a valuation on the basis of a change in the day’s markets would be excessive, and indeed many funding strategy statements state this. The current regulations provide for interim valuations on the basis of changes in liabilities or covenant. The risk of liabilities not being met is that the burden goes up not for the Government but for the council tax payer, as a council that may not be in a good financial position, as the noble Baroness says, needs to increase council tax to cover liabilities. The Government do not underwrite the scheme. Your Lordships’ House should remember that 50% of LGPS employer contributions are not from local authorities, so we are not talking about a situation where it is exclusively local authorities that would cope with the change.

I said in Committee—and I could have said this in response to the previous group as well—that it is marvellous to see the Benches opposite show concern now about the funding of local authorities. We are concerned about it, and we were concerned about it for the previous 14 years when the Benches opposite were in government and had a differing view of imposing austerity on local government. I will say no more, and I apologise to your Lordships’ House—I could not help myself, having been very good on the previous group.

I hope my response demonstrates that the Government have considered the points raised through this amendment carefully. I therefore ask the noble Viscount, Lord Younger of Leckie, to withdraw Amendment 12.

[Viscount Younger of Leckie (Con)]

I am grateful to the Minister and to my noble friend Lady Altmann for her supportive remarks. This amendment raises a simple but important question: how do we ensure that the Local Government Pension Scheme remains responsive, transparent and accountable when the financial circumstances surrounding it change? It sounds to me very reasonable.

I have taken note of the remarks made by my noble friend Lady Altmann, from her long experience. It was interesting that she pointed out that the timeframe of three years could easily be four years for the delays that necessarily have to be there, and she made further powerful points. By accepting this amendment, the Government could have a greater chance of achieving their growth targets with a domino effect—they might like to take that point on board.

Across the country, as my noble friend Lady Stedman-Scott said in the previous debate, many local authorities and other participating employers are operating under immense financial pressure. We know that councils are already struggling to balance their books, and some are being forced to seek emergency support simply to maintain basic services. In that context, the ability to review contribution rates where circumstances have materially changed is surely a matter of responsible governance.

The amendment is simple. It would establish a clearer framework through which contribution rates could be reviewed when there is a good reason to do so. For those reasons, I believe this amendment represents a sensible, reasonable and proportionate improvement to the current framework. It would reinforce the principles of transparency, accountability and responsible stewardship of public funds. I therefore stick to what I said at the beginning: when my amendment is called, I will wish to test the opinion of the House.

Finally, I do not think that the Minister is correct. He said the policy should “remain consistent”, which shows a great lack of understanding of what many in the industry are actually saying and a great inflexibility from this Government. I wish to test the opinion of the House.

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Amendment 13 withdrawn.

[Lord Katz (Lab)]

My Lords, before we go any further, I am afraid we will need to adjourn during pleasure for a few minutes. There has been an incident which means we do not have full access to the areas of the House that are needed to get to the voting Lobbies. I suggest we adjourn during pleasure and keep an eye on the annunciator. It should be a few minutes, but I do not want to specify a time because we do not know quite how long it will take to clear up. Apologies for this inconvenience, but I think it is for the best.

Pension Schemes Bill

Lord Katz Excerpts

Committee stage
Tuesday 3rd February 2026 Grand Committee

Clauses 58 to 64 agreed.

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

My Lords, before the noble Baroness, Lady Noakes, introduces the next amendment, I remind the Committee that, although we have made fantastic progress today, we have a hard stop. We can probably stretch to about 8 pm. I do not want to constrain the debate but it would be preferable to finish this last group today rather than having to break it up, as we did on our previous day in Committee.

Clause 65: Approval of superfund transfers

Amendment 181

Moved by

Pension Schemes Bill

Lord Katz Excerpts

Committee stage
Monday 26th January 2026 Grand Committee

[Baroness Altmann (Non-Afl)]

I apologise, but I think that the noble Baroness’s characterisation of the impact of buying and selling, as she said, on listed companies—whether that puts money into the economy, to use her words—does not necessarily apply in the way she believes, particularly with closed-ended investment companies.

One of the problems with which they have had to deal, because of the regulatory constraints that we have been trying to help the Government address over the past two or three years, is that if people are selling these closed-ended investment companies but no one is buying them, they sink to a discount to their net asset value. At that point, they cannot invest in new opportunities; they cannot IPO or raise new capital. That has had a dramatic impact on the economy because these closed-ended companies, which were investing significantly in infrastructure across the country, have been unable to raise new money to invest in new opportunities.

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

If this is an intervention, it is quite a long one. I ask that interventions be kept brief; they should just be questions, really.

[Baroness Noakes (Con)]

The noble Baroness knows that she and I disagree on this subject. I hold to my view that the buying and selling of shares is simply the exchanging of financial assets.

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[Baroness Bowles of Berkhamsted (LD)]

I am not sure that “directly held” applies to an LTAF either. The fact is that you have wrappers and underlying assets. It is discriminatory, and that should be tested. I still do not see how, when you have the public policy laid out by the high-level working group set up to create LTAFs, you can then say, “A private negotiation overrides that”. I stand by that.

I know that the Pensions Minister received a letter from a past lord mayor, Alastair King, who is one of the architects of the Mansion House initiatives, on 22 October last year. He relayed that he had encountered both support for the investment trust market and concerns that the Bill did not acknowledge the potential of the investment company structure. That evidence—one of the architects asking, “What’s going on here?”—also seems to have been ignored.

I come to the same basic point: for me, the Government have not provided a clear, public or specific rationale for this exclusion. I would say that neither has the ABI, but I did not know that it runs the country. All of the evidence points the opposite way to what the Government have done. Officials have confirmed in meetings that no assessment of using listed investment companies has been carried out, despite the clear steer of the policy in the working group to do so. It seems that this Q&A from the ABI overrides a Bank of England/FCA/government working group. That cannot be so. The only explanation ever offered is that there are “suitably targeted guardrails”—a phrase that has never been defined, evidenced or justified. What do you have to guard from in a listed investment company? Competition? Transparency? That is a very strange thing to say; it is an instrument of division and discrimination, protecting secrets.

Let us remind ourselves of what we are dealing with: two collective investment vehicles, each of which is a wrapper holding protected assets of net asset value for the pension scheme. That is where they differ from an ordinary equity. An ordinary equity does not have any protection for the assets; if the company goes bust, it is bust. If the listed investment company goes back to the net asset value, the assets are still there for the pension fund. That is the difference, which is why a collective investment vehicle such as a listed investment company belongs with the LTAF; it does not belong with an equity.

I still do not see why they stick so closely to some Q&A but, whether by design or by accident, they have produced a proposal that I still say is without foundation, without evidence and, frankly, without integrity. It is irrational and procedurally unfair, and it fails to take account of relevant and public considerations, relying instead on things that have not been consulted on and that have been presented through private industry discussions. I have never seen anything like this before. There are simple ways to make it fair in various proposed amendments in the rest of this group, spoken to by the noble Baroness, Lady Altmann—

[Lord Katz (Lab)]

The noble Baroness has spoken for five and a half minutes now. Whether she is pressing or withdrawing her amendment, this should be brief.

[Baroness Bowles of Berkhamsted (LD)]

I have only two more lines. I will just remind noble Lords that there are simple ways to make this fair and reasonable, as spoken to by the noble Baroness, Lady Altmann. These give a free choice of instrument, with no compulsion—and yet there is still resistance, with no rational explanation. This is, of course, not the end, unless the Government see their error, but for now I beg leave to withdraw my amendment.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

My Lords, I will speak briefly on the other amendments in this group before turning to Amendment 145 in my name and that of my noble friend Lord Younger of Leckie. As noble Lords have already set out, Clause 40 represents a significant extension of regulatory influence over asset allocation in defined contribution default arrangements. Given the scale of that change, it is both reasonable and necessary that we consider carefully how risk, responsibility and accountability are apportioned within the framework the Bill creates.

The amendments in the name of my noble friend Lady McIntosh of Pickering, and the noble Baronesses, Lady Bowles of Berkhamsted and Lady Altmann, seek to introduce greater certainty and procedural fairness into the operation of the savers’ interest test. Removing an automatic time limit on exemptions, ensuring that schemes are not compelled to alter asset allocations while determinations or appeals are ongoing and requiring the authority to give reasons for its decisions are all, in my submission, entirely sensible propositions. They make the framework that the Bill creates more robust, transparent and defensible.

In a similar vein, allowing schemes to apply for the savers’ interest test over a limited number of consecutive years, while demonstrating a credible pathway to compliance, reflects a realistic understanding of how long-term investment strategies are developed and implemented. It recognises that good outcomes for savers are not always delivered by abrupt or mechanically imposed changes.

Several of the amendments in this group speak directly to the core point of fiduciary responsibility, which, as was powerfully reinforced during our debate on the final group last Thursday, is an absolutely central point to the approach being adopted by noble Lords across the Committee. The amendments reinforcing fiduciary duty and proposing a safe harbour for trustees acting in good faith on professional advice and in accordance with their duties are an attempt to clarify that nothing in this Bill should place trustees in an impossible position, caught between regulatory direction on the one hand and their fundamental obligation to act in the best financial interests of members on the other.

Related to this, the probing amendment from the noble Lords, Lord Vaux of Harrowden and Lord Palmer of Childs Hill, asks an important and unresolved question: where investment decisions are mandated by the state, in effect, where does liability sit if those investments underperform? Even if the Government do not accept the mechanism proposed, the question itself cannot simply be wished away; I hope that the Minister will address it directly.

I also wish to touch on the amendments that deal with systemic risk, structural neutrality and herding behaviour. Requiring trustees to have regard to long-term systemic risks, including economic resilience and climate change, is entirely consistent with existing best practice and does not mandate investment in any particular asset or vehicle. Ensuring that listed investment funds are not structurally disadvantaged helps preserve choice and diversification. The amendment on regulatory herding speaks to a well-understood risk: overly prescriptive frameworks can drive homogeneity of behaviour, amplifying systemic risk rather than mitigating it.

I hope, therefore, that the Minister will engage seriously with the questions these amendments ask around process, liability, fiduciary duty and risk. Even where the Government may not be minded to accept the amendments, as drafted, they highlight issues that, given the provisions in the Bill, deserve clear and careful answers.

As has been our consistent approach throughout these days in Committee, my own amendment seeks to probe the Government on a key question: why have they provided for a maximum civil penalty of £100,000 for failure to comply with the mandation requirements set out in this chapter? Given the nature of those requirements and the breadth of discretion that they confer on the authority, it is not at all clear in the Bill how the Government have arrived at that figure or why it is considered proportionate. We are dealing here with decisions around long-term asset allocation in pension default arrangements—areas where reasonable, professional judgment may legitimately differ and where the consequences of regulatory direction may not be apparent for many years. In that context, a six-figure penalty is not a trivial matter.

This amendment is designed to invite the Government to explain the rationale for the level of the penalty; how it is expected to be applied in practice; and whether sufficient regard has been had to scheme size, intent and the nature of any alleged breach. I hope that the Minister can set out clearly why £100,000 is the appropriate ceiling; how proportionality will be ensured; and what safeguards will exist to prevent penalties being applied in a blunt or mechanistic way.

[Lord Katz (Lab)]

We have to have a hard stop at 8 pm, I am afraid, so I move that the Committee do now adjourn.

Debate on Amendment 140 adjourned.

Pension Schemes Bill

Lord Katz Excerpts

Committee stage
Monday 12th January 2026 Grand Committee

[Lord Palmer of Childs Hill (LD)]

I simply ask the Minister to explain how local accountability will be preserved, how fiduciary duties will be protected in practice and why so much of this is not in the Bill.

[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.

[Lord Fuller (Con)]

May I gently invite the Minister to review the comment he made about the ACCESS pool voluntarily asking to disband itself and then, if necessary, write to me afterwards and make a correction on the record? My understanding is that the ACCESS pool did not wish to be disbanded and, in fact, the response to the fit-for-the-future consultation was that the ACCESS pool’s

“proposal does not meet the Government’s vision for the future of the LGPS”.

There was compulsion; it was not voluntary.

[Lord Katz (Lab)]

I had better write to the noble Lord. I am afraid I do not have the details of that particular case to hand, but it is our understanding that it was coming from a voluntary perspective. But rather than speculating—I do not have the details here—I am very happy to write to him with more detail.

[Baroness Noakes (Con)]

I listened carefully to the Minister’s response, but I am not sure that he answered the question about why the Government need to take power to specify the sources of advice that scheme managers must take and whether that would result in a closed list of scheme advisers that had to be used in any event. Not only is that undesirable from a competition standpoint; it also seems likely to work against producing better returns longer term, because you will just ossify the situation as you find it at the point that the Government decide to make that decision.

[Lord Katz (Lab)]

I thank the noble Baroness for that question. I do not know whether this will give her complete satisfaction, but I understand that requiring funds to take advice from their pool could potentially be a conflict of interest. I would say that, first, asset pool companies will be required to have robust conflict of interest policies and procedures for identifying and managing those areas of conflict. As I said fairly early on in my remarks, integrated models—

[Baroness Noakes (Con)]

It has nothing to do with conflicts of interest; it is about whether the Government can specify a limited number of sources of advice that can be given to scheme managers, what the purpose of that is and whether that does not in fact work against achieving the best returns for members over time.

[Lord Katz (Lab)]

I am sorry; I probably misunderstood the direction of the noble Baroness’s questions. I had better write to her to set that out. I think it is fair to say that—this might help a little—in contrast to external advisers, because asset pools are solely owned by old GPS administering authorities, they exist to provide services of their interests and they do not stand to gain financially, even from partner funds taking their advice or providing poor-quality advice. I am not entirely sure that that gets at her question, but the point is that we do not feel that there will be that impact from limiting sources of advice. I will write to her to provide more detail on that point.

[Baroness Bowles of Berkhamsted (LD)]

I got a bit lost in the explanation, because the Minister also mentioned internal advisers. In replying, will he lay out where he thinks the advice is and what that power is doing? If it is providing a sort of override, as the noble Baroness, Lady Noakes, suggested, to a particular type of adviser, as I was trying to suggest it might, then that is unacceptable. Perhaps if the Minister just lays out exactly what is there, that might clarify it. I hope that he will tell us that he will not override anything.

[Lord Katz (Lab)]

That is very helpful. When I write to the noble Baroness, I will certainly make sure that we address the point around independent advisers. I appreciate the noble Baroness, Lady Bowles, asking for that kind of clarification, so my written remarks will address that point.

[Viscount Younger of Leckie (Con)]

My Lords, I am grateful to the Minister for his responses; I am also grateful for the debate we have had on this group of amendments.

I am grateful to all noble Lords beyond me who have asked further questions, particularly in the latter stage of this short debate. It is fair to say—I am saying this against myself—that, with so many questions having been directed originally to the noble Baroness, Lady Sherlock, but applying to both Ministers, it would be extremely helpful to have a full letter with the answers. This has been an important debate; some clear issues have been spoken to, and answers are required.

I will start by picking up some points made by the noble Lord, Lord Davies. He gave the impression—indeed, he said this; I cannot remember his expression—that I was being negative about the Local Government Pension Scheme. I reiterate the point made by my noble friend Lord Fuller: the Local Government Pension Scheme is efficient and is very much a British success story. In addition to that, my noble friend Lord Fuller set out—very eloquently, I thought—the concerns around both the complexities in the Bill and the unintended consequences. There are two clear sides to this. I agree with the noble Lord, Lord Davies, on the success aspect; I want to be quite clear that he knows my position on this.

What unites the amendments in this group is not opposition to reform, nor hostility to pooling local investment or good governance. Rather, it is a concern about how far the Bill reaches into areas that have traditionally, and rightly, been the responsibility of trustees exercising fiduciary judgment. The noble Lord, Lord Katz, said that intervention by government is very much a last resort. I accept what he says but, as the noble Baroness, Lady Altmann, asked—very tellingly—are the Government best placed to direct? Further, she made an interesting point on whether the £400 billion should be part of a sovereign wealth fund. That just shows that it is worth having this sort of debate on this important area of the Bill.

Across these clauses, the Bill moves from setting a framework to conferring powers of direction, compulsion and prescription; direction over participation in asset pools; compulsion towards a particular end state without a clear transition; duties to co-operate with strategic authorities without defined boundaries; and regulation-making powers that reach into advisory pathways and the content of investment strategies themselves. I feel from the debate that each of these elements raises the same underlying question: how will these powers be exercised in a way that is genuinely compatible with fiduciary duty, rather than merely being stated to be so?

With that, I beg leave to withdraw the amendment, but I also acknowledge that there is much work to be done in this area.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

My Lords, we come to another group of largely probing amendments, which I welcome. A good deal of the process on the Bill will be about unpacking what the Government intend, how these provisions will work in practice and what the industry can anticipate. Certainly, those are the questions that have been raised with me in my engagement with representatives.

I will speak briefly to the amendments in the names of other noble Lords, many of which are clearly probing in nature and raise important and legitimate questions about how Local Government Pension Scheme assets might be deployed to support wider economic and social objectives. We welcome that debate. It is right that Parliament explores how long-term patient capital can help support UK growth, infrastructure and social outcomes. I recognise the spirit in which these amendments have been brought forward.

However, from our side, we believe that it is important to be clear about a central principle: LGPS funds are, first and foremost, fiduciary vehicles. Scheme managers have a legal duty to act in the best financial interests of members and beneficiaries, and that duty must remain paramount. However, I note that the Local Government Pension Scheme’s advisory board has already warned that:

“New government regulations could ‘directly usurp’ the most fundamental duty of council pension funds”.


Could the Minister address that in his response?

Opportunities for investments in areas such as UK growth assets or social housing should therefore be presented, structured and made investable in a way that meets risk-adjusted return requirements and not mandated or directed through statute. There is a clear difference between creating a strong pipeline of investable opportunities and compelling capital allocation. Once we move from encouragement to prescription, we risk undermining trustee independence.

Many of the amendments in this group helpfully test where that boundary should sit, and I hope that the Minister can reassure the Committee that the Government’s approach is to enable, not to direct, in order to attract pension investment through quality and value, not through compulsion. If we keep fiduciary duty at the centre and focus on making UK opportunities genuinely competitive investments, growth and good pensions will go hand in hand. That is the balance that we are keen to see maintained.

I shall speak to my two amendments in this group, Amendments 9 and 11, which are intended to improve clarity, accountability and future-proofing in Clause 2, rather than to change the underlying investment powers of the scheme managers.

Amendment 9 would require scheme managers to publish an annual report on the local investments held within their asset pool companies, including both the extent of those investments and their financial performance. If local investment is to play an increasing role within LGPS portfolios, transparency is essential. Members, employers and taxpayers are entitled to understand not only where capital is being deployed but how it is performing. This amendment would not mandate local investment; nor would it direct decision-making. It simply asks that where such investments are made, they are visible, measurable and open to scrutiny. The question it poses to the Government is straightforward: is transparency, rather than compulsion, the right way to build confidence in local investment? We believe that it is.

I add at this point that a great many Bills are coming before your Lordships’ House in which the interaction with post-devolution structures is far from clear. The Government should be making more of an effort to provide clarity on the post-devolution picture when drafting legislation. I therefore ask the Minister—here come the exam questions—how do the Government intend to keep the definition of strategic authorities under review as devolution evolves? What assurances can be given that future legislation will align properly with the new devolved arrangements? Do the Government accept that there is a risk of confusion and overlap if these definitions are not regularly updated to reflect constitutional changes? More broadly, what steps are the Government taking to ensure a coherent and consistent approach to the interaction between the new powers and devolution settlements? Crucially, how will assets and liabilities be carved up post devolution, and can the Minister assure us that this will be done independently? I am very happy for the Minister to write, rather than bombarding him with a massive amount of work now—although maybe we should; I do not know.

Amendment 11 is probing in nature and concerns the definition of strategic authorities. Currently, the Bill hard-codes a specific list of bodies in primary legislation, yet the architecture of English devolution is changing rapidly, not least through the forthcoming English devolution Bill. This amendment therefore asks whether that definition is sufficiently agile and future-proofed or whether it risks becoming outdated almost as soon as it is enacted. It invites the Minister to explain how the Government intend to ensure that LGPS governance can adapt to evolving local and regional structures without requiring repeated primary legislation.

Taken together, these amendments seek to strengthen Clause 2 by reinforcing accountability on the one hand and flexibility on the other, while preserving the core principle that investment decisions must remain firmly rooted in fiduciary duty. I look forward to the Minister’s response to the questions the amendments raise and his reassurance that the Government’s approach is to enable good investment decisions through transparency and clarity rather than prescription.

[Lord Katz (Lab)]

My Lords, I am grateful to noble Lords for these amendments and for the probing and helpful debate that we have had on this group.

I turn first to Amendment 7 in the name of my noble friend Lord Davies of Brixton, which explores how LGPS assets might be used to provide social housing. The Government aim to ensure that LGPS investments support the prosperity and well-being of their local communities, just as members did throughout their working lives—an aim that is certainly reflected in my noble friend’s amendment. However, the Government do not wish to direct asset pools as to the manner of their investments—to be fair to my noble friend, he said that this was not about mandation. To respect the independence of LGPS funds, it remains the responsibility of administering authorities to set their investment strategy.

The reforms will require administering authorities to co-operate with strategic authorities to identify and develop appropriate investment opportunities, which may include social housing-related investments. While social housing is a high priority for local areas and may provide suitable opportunities for investment, it should be for strategic authorities to consider and set priorities appropriate for their areas.

My noble friend asked whether the revised regulations might act as a barrier to investing in social housing. We would say that that is not the case; there will not be a barrier. Administering authorities will continue to set the investment strategy for their fund, including local investment priorities. They must have regard to local growth priorities in setting their investment strategy and can recommend opportunities to their pool. Local investments are not restricted to any asset classes. The Government see housing as one of as the investment sectors with the greatest potential for local government impact.

My noble friend Lady Warwick of Undercliffe spoke cogently and with some passion on the importance of increasing social housing. That is something the Government would align with. She asked whether we were confident that, without reference to social housing in the Bill, the LGPS will invest in it. I say to her—to be fair there was some acknowledgement of this in her comments and in those of my noble friend Lord Davies—that there is a long history of local investment by the LGPS. Cornwall Pension Fund, for example, has committed more than £100 million to a local impact fund with a focus on solar farms and affordable housing. Greater Manchester Pension Fund has backed major housing and regeneration projects in the north-west, to which it commits 5% of its total assets. The LPP pool is a major investor in the Haweswater Aqueduct Resilience Programme. The London and LPP pools have established the £250 million London fund, to which my noble friend Lord Davies referred. It invests in opportunities in London, including in residential property and affordable housing, as well as community regeneration, digital infrastructure and clean energy.

My noble friend Lady Warwick asked whether the Government would ensure that all LGPS have the right tools to provide the best returns for members. The Government’s expectation is that the reforms will deliver the wider benefits of professionalised asset management, including long-term savings and efficiency. We are also aiming to strengthen LGPS fund governance. Better governance ensures decisions are more effective, with decision-makers able to be agile, better at managing risk and able to pick up opportunities.

Amendment 11 was mentioned by a number of noble Lords and was tabled by the noble Baroness, Lady Stedman-Scott. I agree that the definition of strategic authority should be consistent across all relevant legislation. This Bill and the draft regulations that the Government have prepared will ensure that the authorities that are treated as strategic authorities in England for the purpose of the English Devolution and Community Empowerment Bill are treated as such for the purpose of LGPS investments. If any new authorities become strategic authorities, the Government will use the regulation-making powers to ensure that their treatment remains the same. I hope that addresses some of the concerns raised by the noble Baroness, Lady Stedman-Scott. She talked about her concerns about potential confusion over a changing and emerging landscape. I am happy to write to her with more details, as she was so kind in setting so few exam questions compared with her Front Bench colleague on my earlier group. Her restraint is commendable.

Regarding Amendment 12, I understand the noble Lord’s intention is to encourage greater domestic investment across the whole of the UK and, indeed, growth is the number on mission of this Government. The LGPS already invests approximately 30% of its assets in the UK. Greater consolidation will build on this success story as the pools will have greater capacity and expertise to invest domestically, including in infrastructure and unlisted assets.

The noble Lord, Lord Fuller, asked about the duty to co-operate and whether it would make it difficult for schemes to invest outside their locality. I reassure him that the proposals do not prevent investment outside the area of the funds or the pool. Administering authorities are free to set whatever local investment target they consider appropriate. While investment across the UK is strongly encouraged, the purpose of this requirement is to promote investment that has tangible benefits to the fund or its pool. Expanding the definition to the whole of the UK would go too far and local benefits would be diluted.

--- Later in debate ---

[Viscount Thurso (LD)]

Does the Minister agree that ESG and responsible investing is perhaps best summed up in the stewardship code, which most responsible investors use?

[Lord Katz (Lab)]

I could not have put it better myself. We have to be careful in regarding ESG as fashionable politics, inserting itself into a fashionable investment space. We have to be careful not to throw the baby out with the bathwater and to really appreciate that there are good reasons why certain investments are more popular and investments in other areas are being shunned. There are trends in industry and society as to what products and classes of investment are popular. Sometimes, we can overthink these things.

I am pleased that the noble Viscount, Lord Thurso, popped up because I was just about to address his question about the Bill preventing funds setting targets on local investment, on this theme. I hope this answers his question: they must set a target, but it can be any value that the fund considers appropriate. They retain that element of flexibility, which I hope is helpful.

Regarding Amendment 9, the Government will require some administering authorities to report on their local investments, including the total investment, and on the impact of investments, in their annual reports through guidance. We consider that Amendment 9 would be an unnecessary duplication of a requirement that was already set out in guidance and in regulations. We think that it would not add anything to the Bill, as that regulation is already good practice—it is already there.

Amendment 12, spoken to by noble Baronesses, Lady Bowles and Lady Altmann, seeks to expand the definition of local investments beyond stretching point: it could mean investments for the benefit of persons living or working in any of the administering authorities’ local areas. Our fear here is that the amendment would, in effect, break the definition of local investment, as it could mean any investment in England and Wales. We contend that local investment, as it stands, has a broad definition, as it can refer to investments that have measurable beneficial impact for people living or working in areas local to, or in the region of, the administering authority, or of its pool partner administering authorities. As a consequence, this is broad enough to capture an appropriately wide geographic range while ensuring that there are still benefits for the local area.

To ensure a clear and firm trajectory to consolidation and benefits at scale for the scheme as a whole, along with the assurance I hope I have provided to the noble Lords in discussing these amendments, I respectfully ask my noble friend Lord Davies to withdraw his amendment.

[Lord Davies of Brixton (Lab)]

I thank my noble friend the Minister for his reply. As I made clear, my amendment was not about mandation or compulsion but the ability for local authority funds to invest in ways which are seen as socially beneficial. There was general agreement about the synergy, as I put it, between investing in social housing and the investment needs of local authority funds. The Minister was clear that it should not be a barrier, but, as the regulations are still being discussed, and as the statutory guidance has not been agreed yet, this is a moving feast. I hope that, at some stage, we will be able to get a specific statement on the ability of funds to invest in housing, and in the other ways which have been suggested. I beg leave to withdraw the amendment.

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[Viscount Younger of Leckie (Con)]

My Lords, I thank the noble Baroness, Lady Altmann, for her two amendments in this group, for the remarkably brief discussion that has been prompted and for the opportunity that they provided for her and us to probe the Minister on these important issues. Noble Lords will be pleased to hear that I will not rehearse the arguments at length, as I touched on them in some detail earlier. However, I wish briefly to reiterate what I regard as a central and non-negotiable principle: the Local Government Pension Scheme exists first and foremost as a fiduciary vehicle. Scheme managers are under a clear legal duty to act in the best financial interests of members and beneficiaries, and that duty must remain paramount.

Against that background, Amendment 13 raises a particularly important question, one that has been put to us repeatedly by industry representatives from a wide range of backgrounds; namely, what type of assets do the Government have in mind in which funds should be directed to invest? I think this is the essential argument of the noble Baroness, Lady Altmann. Is the intention to focus on infrastructure, debt servicing or supporting new towns and similar developments? The noble Baroness also raised the point of what percentage should be invested in UK assets. As she pointed out, perhaps 25% should be invested in UK growth assets, and, therefore, what is the definition of growth? Lots of questions arise from the noble Baroness’s amendments.

I recognise, and I think the noble Baroness alluded to this, that we will return to this issue in greater detail when we come to consider the reserve power, but like the noble Baroness, I wish to flag this matter at this stage as it has been a theme this afternoon on this first day of Committee and a live and pressing question not only for us but, I reiterate, for the many third-party stakeholders with whom we have engaged.

[Lord Katz (Lab)]

My Lords, I, too, thank the noble Baroness, Lady Altmann, for tabling these amendments. I cannot speak on behalf of the whole Committee, but I would say that it is most people’s intention to encourage greater investment in UK assets. Growth is certainly the number one mission of this Government. If you did not realise that, you have probably been hiding under a rock these past few months and years.

These amendments would direct LGPS funds to make investments in certain UK asset classes. Supporting UK growth by making investments in such assets, in tandem with seeking appropriate returns, is a valuable function of the scheme and the noble Baroness is right to be interested in this important topic. As I have mentioned, the LGPS already invests around 30% of assets in the UK. Greater consolidation will build on this success story, as the pools will have greater capacity and expertise to invest domestically.

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[Baroness Altmann (Non-Afl)]

I stress that the amendment is a “may” or “must”; the group does not require a “must”. This was intended to help the Government understand that there are merits in considering the flow and the stock. If there is new contribution flow of a particular size going into an area—this can be part of regulations; it is not required—that could well have a less damaging impact on the market than mandating or aiming. For example, Clause 2(4)(c) talks about “target ranges” for strategic asset allocation to growth assets and income assets. With a fund of this size, when talking about a target range for growth assets or any other assets, we might be moving the markets, because so much money would need to be shifted around. That is much less of an issue with the new contribution flow, but it could still achieve some of the objectives that the Government are seeking to attain.

[Lord Katz (Lab)]

I thank the noble Baroness for that intervention and clarification. I do not want to comment specifically on whether the scale of that investment would be market moving; I do not have the expertise to say that. I want to underline that, ultimately, we think it is for administering authorities and the pools to decide where these investments are made. That is right, because it is the way they fulfil their fiduciary duties. I am happy to look at her contribution again and, if I can add to that explanation, I will happily write to her.

The noble Lord, Lord Palmer of Childs Hill, asked whether pension funds are investments of policy delivery. As I stated earlier, the responsibility for setting investment strategy remains with the funds. The Government are not taking powers to direct asset pools to make or not make investments in specific projects. To be clear, it goes back to the fact that it is for those administering authorities and pools to make those decisions.

[Baroness Altmann (Non-Afl)]

I am so sorry, but this is a really important point. In Clause 2(4), paragraphs (a), (b) and (c)—in particular paragraph (c), to which my amendment seeks to add something—state that we are talking about

“strategic asset allocation or target ranges for growth and income”.

That absolutely sounds as though the Government could—it is “may”, not “must”, so it may not happen—leave the door open to directing investments in the way the Minister says the Government do not wish to do. I would be grateful for some clarification; I do not need it now, as I am happy either for the Minister to write or for us to meet to discuss it.

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[Baroness Stedman-Scott (Con)]

I know how frustrating it is when Members keep getting up to ask questions, but I have to do this. The Minister referred to a backstop. For what purpose? In what circumstances would it be used? Can the Minister help us understand that?

[Lord Katz (Lab)]

The backstop power relates to our earlier discussion on previous amendments. It would be used in extremis. The problem is that the noble Baroness is asking me to conject on what are hypothetical situations. Some of these issues will be set out in some of the regulations that will follow.

I am happy to go back a couple of interventions and pick up the point made by the noble Baroness, Lady Altmann. I would be happy to write to try to clarify the distinction that we are making. Of course we want to see good levels of investment in a range of different asset classes, but we are absolutely not saying that this is a slippery slope to taking powers of direction or mandation. We are very clear on that. Ultimately, this is the nature of pensions legislation: some of the clarity comes down stream. We are clear that the Government’s intention in the Bill is purely to provide the framework to ensure that we can harness the potential of these asset pools to make some meaningful investments.

[Baroness Stedman-Scott (Con)]

This is in the Bill. I know that the Minister cannot do this now—I accept that he can write to me—but can he please help us? If it is in the Bill, we need to know what it means before regulations come.

[Lord Katz (Lab)]

I am not sure whether I can provide much more clarity than I have done so far, so I would be very happy to write to the noble Baroness to spell that out.

I realise that I have not given the levels of satisfaction and clarity that Members perhaps wanted but, as these are probing amendments, we contend that they would have a minimal impact. On that basis, I ask the noble Baroness to withdraw her amendment.

[Baroness Altmann (Non-Afl)]

I thank the Minister for his answers; I feel for him in his position. I am happy to withdraw the amendment; we can have further interaction at a later stage.

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

My Lords, I was due to give a very short speech. It is still short, but it has got slightly longer in terms of the content of this debate. I am particularly grateful to the noble Baronesses, Lady Bowles of Berkhamsted and Lady Altmann, for tabling Amendment 10, which we welcome and which I understand to be a sensible and proportionate safeguarding measure. I want to go a bit further because there were two particularly powerful speeches, in particular that from the noble Baroness, Lady Bowles.

As we read it, the amendment seeks to ensure that investment strategies cannot be used to favour particular investment vehicles over comparable or competing alternatives. In doing so, it would help to guard against strategies becoming a back-door means of directing capital, rather than serving their proper purpose as high-level statements of investment policy.

That distinction matters. Investment strategies should guide objectives, risk appetite and approach and not hardwire specific vehicles or delivery mechanisms into statute or regulation. Preventing the embedding of such preferences also reduces the risk of political or regulatory pressure or—I will use the word—interference, being reflected in investment strategy documents and helps to preserve trustee independence and proper decision-making. Although it is a serious subject, the noble Baroness, Lady Bowles, gave us a succinct, well-argued speech with her bucket wrapper analogy. She gave a hard-hitting speech with some important questions which I hope the Minister will be able to answer.

One issue that has been made clear today, which has arisen in a number of debates, and was encapsulated in this short debate, is the opaqueness of “government direction”. I was very taken by the equally hard-hitting speech from my noble friend Lord Fuller. The confusion—by the way, the C is for confusion, just to add that in—is over the responsibility with the grey areas, notably in respect to the understandings, or not, from the Mansion House Accord and those who were the signatories.

One question to ask is whether those signatories now realise what they have got themselves into, or what their understanding was then and what it is now. I ask that as an open question, particularly in relation to the inclusion or exclusion of different types of investment. The noble Baroness, Lady Altmann, focused particularly on open-ended or close-ended. There is a lot of emphasis here. Most unusually, I was in total agreement with the noble Lord, Lord Davies. I am not sure that that has happened with me in the past.

To conclude, we therefore welcome the intent of Amendment 10. It would be very helpful if the Minister could indicate whether—and if so, how—the Bill as currently drafted already guards against this risk. It is a crucial question and relates to all the questions that have been asked. What assurances can be given that investment strategies will not be used to prescribe or favour particular investment vehicles in practice?

[Lord Katz (Lab)]

My Lords, I am grateful to the noble Baronesses, Lady Bowles of Berkhamsted and Lady Altmann, for this amendment. I agree with them that funds in the LGPS should not be specifying preferences between similar investment vehicles in their investment strategies. I fear that the rest of my response may well disappoint the noble Baroness, Lady Bowles, and—though perhaps not to such a great extent—the noble Baroness, Lady Altmann. I say in passing to the Committee that it is always good to hear consensus breaking out, even if it rather gets to the horseshoe theory of politics when it is my noble friend Lord Davies and the noble Lord, Lord Fuller. But let us try to end today’s Committee session on a positive note.

I will now go into the detail. Under our reforms, decisions on implementation of strategies, including selection of appropriate vehicles and managers, will be made by the LGPS pools, which will have the capacity and expertise to deliver the benefits of scale that we have discussed. It is the Government’s view that the draft regulations are already clear in that respect. This will be supported by guidance, setting out that investment manager selection is solely the responsibility of the pool. LGPS pools will make the decision on whether to invest through external managers and which managers to use, and there is nothing whatever to prevent them using investment trusts should they consider it beneficial.

This is where the space for disappointment potentially arises. I am aware of the concerns expressed in relation to the treatment of listed investment funds, notably investment companies and trusts, under the reserve asset allocation powers, which are relevant to DC pension schemes. That was set out very powerfully by the noble Baroness, Lady Bowles. The Committee will have the chance to debate these concerns when we reach Clause 40 and discuss Chapter 3, which deals with asset allocation for DC schemes.

To get to the heart of it, the noble Baroness, Lady Altmann, asked about the impact on the LGPS. To give reassurance, we are not excluding closed-ended investment funds from the LGPS. I can be absolutely clear that that is the case. We are not excluding them, and neither will local authorities be directed to exclude them. I hope that provides clarity as we discuss the LGPS elements of the Bill.

Having said that, we have had comments around investment and asset types, particularly from my noble friend Lord Davies, as well as others, on this group of amendments. We will take what has been said and consider it in time for the debate on this issue when we get to it in greater detail. In anticipation of that day—which we are all looking forward to, particularly at two minutes to Committee rising—I ask the noble Baroness, Lady Bowles, to withdraw her amendment.

[Baroness Bowles of Berkhamsted (LD)]

I will be as brief as I can. I thank all those who have spoken in the debate, particularly for the support that I have received. The noble Lord, Lord Davies, is to some extent correct in that this is a proxy for what comes later, but I wanted to give the Committee that reflection time over competition law issues, because it is not necessary: exactly the same will happen without defaming listed investment companies and doing them down. The channels of how the investments are going to go will be the same. But the Minister has still not answered the question. Who asked for the exclusion? It is not in the accord. We have been told that it is in the accord but, as I have explained, the wording gives the opposite direction.

We have been told by Ministers that it is the pension funds, or anybody except the Government. It is somebody’s fault that it is there. I regret that I think it is deliberate rather than accidental but never mind that as long as it goes because it is not necessary to defend what the Government want to defend. That would be fine by me. It is relevant to local government funds because they invest so much that way. Therefore, it was a genuine concern that a reserved power could begin to replicate the reserved power in new Section 28C. It was not a totally bogus proxy, if I could put it that way. I have elaborated the point; as I have said I can do much more yet. With that, I beg leave to withdraw my amendment.

Pension Schemes Bill

Lord Katz Excerpts

2nd reading
Thursday 18th December 2025 Lords Chamber

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

My Lords, I beg to move that the House do now adjourn and, in doing so, wish everyone in the House, and all those working in the House, chag sameach, a very happy Christmas, a restful break and a happy new year.

House adjourned at 5.34 pm.

Curriculum and Assessment Review

Lord Katz Excerpts

Monday 10th November 2025 Lords Chamber

[Baroness Coussins (CB)]

My Lords—

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

My Lords, I think it is the turn of the Conservative Benches, but we should have enough time for everybody to get in.

[Baroness Bottomley of Nettlestone (Con)]

I am really grateful for the noble Lord’s protection and championing. It is always an honour to give way to the future Archbishop of Canterbury.

Can the Minister say more about the new oracy framework? Of course, young people need to be able to speak as well as read and write. Can she give us an assurance that, in preparing the framework, her department will work closely with the experts in this field, the English Speaking Union, whose work this has been for the last 107 years?

Secondly, I welcome the focus on building media literacy. The number of young people who do not read a newspaper and do not listen to the broadcast media is alarming. Their information comes through social media, with its adjusted algorithms. Within that, can the Minister give an unequivocal assurance that the benchmark for independent, impartial broadcasting in this country—and, I would say, around the world—is the BBC? Whatever the short-term squall, the BBC is a huge jewel in Britain’s crown.

Children’s Wellbeing and Schools Bill

Lord Katz Excerpts

Thursday 18th September 2025 Lords Chamber

[Baroness Barran (Con)]

My Lords, I formally move the amendment in the name of my noble friend Lord Lucas and I will speak to it in my closing remarks.

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

I think we have yet to have a full discussion on Amendment 483, as well as Amendment 483A, so perhaps we could proceed to that discussion.

[Lord Macpherson of Earl’s Court (CB)]

My Lords, I will speak briefly in support of Amendment 483, which I have put my name to. The noble Lord, Lord Layard, has set out the arguments very eloquently. I would merely like to add the perspective of a former Treasury official.

Economic growth, or the lack of it, lies at the heart of the country’s problems. Without it, we simply will not be able to afford the costs of an ageing population. The Government will be forced to raise taxes even more than they already have and public services will deteriorate further, alienating an already alienated electorate. There is little the Government can do to promote growth in the short term. As an open economy, Britain is likely to grow only as fast as global demand permits, and we all know the effect of increased protectionism, but the Government can do something about the medium and long term.

We all know what drives growth: good infrastructure, competition, innovation, and a sensible tax system—but, above all, skills. Successive Governments have done a good job on education. Attainment in schools has improved and there has been a dramatic expansion in university education over the last 50 years, which, for the most part, has been reflected in the living standards of graduates. However, that still leaves 50% of school leavers who do not go to university who are poorly served by a vocational educational system that compares badly with our competitors’.

Technical and further education has never been prioritised sufficiently, and I can understand why. The media, the Government and the Civil Service are all dominated by graduates. Technical education is not sexy. The lags in the impact of any reform are long and variable. The plain fact is that there are not many votes in it, but sometimes Governments can do the right thing for future generations. I welcome recent announcements by the Government of a youth guarantee and the extra support for skills in the spending review, but they need to go further. An apprenticeship guarantee provides a golden opportunity to make a step change in provision and long-term economic performance.

I recognise that money is hard to come by, but the Treasury is an economics ministry as well as a finance ministry, and it needs some positive announcements to offset the inevitable gloom in the forthcoming Budget. I encourage the Minister and her department to engage actively with the Treasury. It should be possible to, for example, tweak the apprenticeship levy to give it a greater youth focus. If the money cannot be found now, the Government should at least set out a timetable, and if they cannot set out a timetable, they can at least sign up to the objective.

As the noble Lord, Lord Layard, said, a previous Government passed the Apprenticeships, Skills, Children and Learning Act 2009. It can be done, and I call on the Minister to act.

Children’s Wellbeing and Schools Bill

Lord Katz Excerpts

Tuesday 16th September 2025 Lords Chamber

[Baroness Blower (Lab)]

My Lords, given that my noble friend Lady Lister is unable to be here this evening, it is my pleasure, with her permission, to read her speech to move this amendment.

It is an honour to move Amendment 463, which would extend the provision of relationships and sex education to young people aged under 16, in post-16 institutions in England. It is an honour because it has been dubbed the Massey amendment as a tribute to our late friend and colleague Baroness Massey of Darwen. Had she still been with us, she would have been the ideal person to move this amendment, given her experience and commitment to young people’s social health and well-being. It was to honour Doreen that I agreed to table this amendment, even though I do not claim any expertise in this area.

Another reason that I agreed to table the amendment was that I was so impressed by how Faustine Petron, who approached me, founded the Make It Mandatory campaign and enlisted the support of many important bodies such as Brook—of which Lady Massey was a former president—the Sex Education Forum and the End Violence Against Women and Girls coalition. She has received the endorsement for this amendment of 50 organisations, and has collected over 105,000 signatures for her petition. She says, in her own words:

“I am a university student and young survivor of domestic abuse. As an older teenager, I would have benefited from being provided with RSE after year 11 and an adequate education surrounding the early warning signs of domestic abuse, the different forms abuse can take, and places to get help”.


The third reason is that Faustine Petron has such a strong case: she has identified a real gap in the mandatory provision of relationships and sex education, which does not cover 16 and 17 year-olds, yet, under the UN Convention on the Rights of the Child, these are still children.

Since RSE was made mandatory in schools, it has begun to make a real difference. The Office for Students is making it into a condition of registration for universities that they intend to prevent and address sexual violence. Filling the gap in FE and sixth-form colleges would contribute to a preventative strategy on sexual violence among young people.

This would also help address the concern voiced by the Public Accounts Committee that,

“to date, the approach to tackling violence against women and girls has not put enough emphasis on preventative measures that are necessary to achieve long-term change”.

The committee emphasised the key role that education can play in tackling this issue, including in preventing children from becoming perpetrators in the future. Among its recommendations was that the Department for Education should set out how it intends to work with children and young people to prevent violence against women and girls, including further changes to the relationships and sex education curriculum. Some 77% of young people surveyed—

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

My Lords, I apologise to the noble Baroness for interjecting relatively late into her remarks, but I am reminded that, in the Companion, it is fairly clear that Members should not seek to have their speeches read by other Members of the House. Perhaps she could rephrase her remarks in a way that makes it clear that she is speaking for herself, not on behalf of another Peer.

[Baroness Blower (Lab)]

I apologise to the Committee. Clearly, I and possibly the noble Baroness, Lady Lister, had misunderstood the rules relating to this.

As has been noted, national organisations backing the Make It Mandatory campaign, in addition to the Children’s Commissioner, all agree that the extension of relationships and sex education to this group would be important.

In conclusion, in a recent Commons debate on relationships education in schools, the Minister for School Standards emphasised the vital role that education plays in preventing violence and that the aim of relationships education is to support all young people to build positive relationships and to keep themselves safe. That education must equip them for adult life. It thus makes no sense that, just as they are at the cusp of adult life, they should not be assured access to relationships and sex education to help equip them. The Minister continued that, as part of the Government’s opportunity mission,

“we will equip our young people and children with the skills they need to form strong, positive relationships”.—[Official Report, Commons, 1/4/25; col. 112WH.]

Although she was talking about the school context, this is clearly important in terms of an extension to post-16.

Welfare Reform

Lord Katz Excerpts

Wednesday 2nd July 2025 Lords Chamber

[Baroness Coffey (Con)]

My Lords—

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

My Lords, we have 10 minutes left. We have plenty of time to get everybody in if we are orderly about it. Let us hear from the noble Baroness, Lady Fraser.

[Baroness Fraser of Craigmaddie (Con)]

Thank you very much. I declare my interest as chief executive of Cerebral Palsy Scotland. I want to continue in the tone of my noble friend Lady Stedman-Scott and support the Minister on the importance of supporting people to work. She will know, because she confirmed in a Written Question to me in April, that the average waiting time for applicants on Access to Work to receive a decision is 84.6 days, and 62,000 people are waiting for their applications to be processed. I will read the Minister an email I got from an adult with cerebral palsy this week, who said:

“The government has … cut Access to Work support … without any warning. All of a sudden they don’t fund things that they did until recently. So people are losing their jobs, purpose and ultimately their sanity. They will end up back on the benefits that are being cut”.


What is the Minister doing about Access to Work now, rather than waiting for all the various reviews?