Youth Guarantee Scheme: Evaluation

Lord Palmer of Childs Hill Excerpts

Tuesday 13th January 2026 Lords Chamber

[Baroness Smith of Malvern (Lab)]

The noble Lord is right that I have been able to speak to Make UK about the important role of apprenticeships in delivering engineering skills for young and older people. I understand the concerns raised about the funding rates for engineering apprenticeships. That is why, as I said when I met Make UK, we will continue to monitor that in order to ensure that they meet the costs of training. We will continue to find other ways to encourage people on to apprenticeships, such as removing some of the bureaucracy associated with them, supporting the reform of end-point assessment, and removing the requirement for separate maths and English qualifications for adults.

[Lord Palmer of Childs Hill (LD)]

My Lords, although we welcome the youth employment scheme, can the Minister say whether the Government will monitor the employment of 26 and 27 year-olds? If you are a small business and you can get someone at 24 for nothing, will that reduce your employment of 26 to 27 year-olds? We do not want to displace the unemployment from the 24 year-olds to the 26 year-olds.

[Baroness Smith of Malvern (Lab)]

Of course we do not want to displace the unemployment, but, as I suggested in responding to my noble friend, there is something particularly challenging and important about young people who do not even get the opportunity to get into the workforce and to have the chance of a successful future. That is why, although there will always need to be an age cut-off for a scheme, the youth guarantee, with its additional investment from the Budget and its focus on support from school onwards, will be effective in getting young people into the workplace, and keeping them there when they get to the age of 25 or 26 as well.

Pension Schemes Bill

Lord Palmer of Childs Hill Excerpts

Committee stage
Monday 12th January 2026 Grand Committee

[Viscount Trenchard (Con)]

My Lords, I support this amendment, which was so well introduced by my noble friend Lord Younger and so well spoken to by the noble Baroness, Lady Bowles of Berkhamsted. The Bill is very complicated. It is not absolutely clear to me what it means. It is also, as my noble friend Lord Younger explained, a skeletal Bill without a clear purpose to improve the outcomes for savers. In particular, looking at the value-for-money part of the Bill, it is not clear how this is going to work, what the metrics will be and how they will be assessed.

I think it is right to table this amendment in order to understand the purpose of the Bill. I am not clear that the Bill is primarily intended to improve the outcomes for pensioners or to find ways to fund government initiatives to make certain investments with pension savings that the trustees and managers might not have decided to make, which may require them to compromise on what should be their complete and clear duty to exercise their fiduciary responsibilities.

Can the Minister tell the Committee how the Bill is certain to improve outcomes for pensioners beyond what they would have been without government interference in the management of these funds? The Bill interferes with the trustees’ fiduciary duties not only with the mandation powers to direct investments, which apply only to very large DC schemes—the kind to which less well-off pensioners have contributed—but with the powers to require the 93 local government pension schemes to pool their funds together. How is this going to work if, at the same time, the Government are forcing many local authorities to merge or demerge under local government reorganisation?

I look forward to hearing the Minister’s response and approach to this amendment.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank everyone for their contributions. I do not intend to go on at length.

It is a novel view, is it not, that a Bill should have a purpose? This ought to be applied to many other Bills to show what their purposes are. This Bill has a wide range of powers affecting consolidation, investment, surplus extraction, defaults and retirement outcomes, but nowhere is a clear statement of purpose listed. I do not think that is symbolic; it is very useful. I have a simple question for the Minister: what is lost by clarity? We are looking here for a piece of clarity that does not undermine the Bill in any way but sets out what people are meant to see and expect from the Bill. It would set a pathway for other Bills to set out their purposes. From these Benches, I support this amendment.

[The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, I am grateful to the noble Viscount, Lord Younger, for introducing his amendment, and all noble Lords who have spoken. It is a particular delight to hear from so many colleagues so early in Committee.

I should begin by saying two things. First, I am a member of the parliamentary pension scheme, so I thank the noble Viscount, Lord Thurso, for his service and urge him to give the scheme even greater attentiveness in future; I would be very grateful for that. Secondly, I am about to disappoint most Members of the Committee, but I may as well start as I mean to go on. Many of the points made and questions asked will come up in subsequent Committee days—that is what Committee is for—so I hope that noble Lords will forgive me if I do not go into the detail of how surplus operates, how value for money operates or how asset allocation will work; I will come back to all of those. I should probably apologise to the noble Lord, Lord Fuller, because I cannot promise to go back to Star Wars figurines, but I will try to pick up most of the rest of the points at some stage.

The Bill delivers vital reforms to strengthen the UK pensions system, safeguarding the financial future of around 20 million savers while driving long-term economic growth. The Bill focuses on improving value and efficiency for workers’ pension savings, with an average earner potentially gaining up to £29,000 more by retirement. These measures will accelerate the shift towards a pensions landscape with fewer, larger and better-governed schemes that deliver for both members and the wider economy.

To support market consolidation, the Bill introduces superfunds, megafunds and Local Government Pension Scheme pools, creating scale and resilience. The value-for-money framework will ensure that schemes provide the best outcomes for savers, while guided retirement provisions will help members when accessing their savings. Other measures in the Bill will enable pension schemes to operate more effectively by streamlining governance, improving transparency and reducing unnecessary complexity. The reforms delivered through the Bill will create a more efficient, resilient pension landscape; they will also lay the foundation for the Pensions Commission to examine outcomes for pensioners and set out how to develop a fair and sustainable system, ultimately benefiting both individual savers and the UK economy.

To achieve these ambitions, the Bill makes a number of essential changes to the framework of law relating to private pension schemes and the LGPS, rather than pursuing a single overarching objective. To insert a purpose clause could cause legal uncertainty as a court could assume that a provision included in a Bill was intended to have some additional operative effect. The practical effect of the requirement to have regard to the purpose of the Bill, as expressed in this proposed new clause, is unclear.

The purposes of individual provisions are instead made clear through their drafting and the accompanying explanatory material, including the Explanatory Notes and the impact assessment. There is no need for an additional new clause at the start of the Bill setting out the purposes, as this is covered elsewhere more appropriately. This approach is in keeping with established practice; for example, the Financial Services and Markets Act 2023 was twice the size of the Pension Schemes Bill. Like the Bill, it deals with a complex legal landscape and made a number of separate and necessary changes to the law relating to financial services and markets. There is no purpose provision in that Act, just as no overarching purpose clause has been included in the Pension Schemes Bill. We will return to matters related to secondary legislation in the debate on a subsequent group of amendments tabled by the noble Lord, Lord Sharkey.

I will pick up the point made by the noble Viscount, Lord Younger, about this being a framework Bill; he used that as an argument for a purpose clause. I say to the noble Lord, Lord Palmer, that, if he has not seen a purpose clause debate, he has not been in many debates in the Chamber recently, because they have appeared; unfortunately and inadvertently, they mostly resulted in long Second Reading debates at the start of many other pieces of legislation. I stress that that was neither the purpose nor the result here, but many of those debates have happened.

We do not consider this to be a framework Bill. The noble Viscount mentioned the idea of setting legislation now and setting policy later. Manifestly, that is not what is happening. The Bill clearly sets out the policy decisions and the parameters within which delegated powers must operate. It brings together a broad package of reforms in pensions into a single piece of legislation. Many of those reforms build on long-established statutory regimes, where Parliament has historically set the policy in primary legislation and provided for detailed measures that will apply to schemes to be set out in regulations. The policy direction is clearly set out here.

As we all know, the successful implementation of pensions depends heavily on trustees, schemes, providers and regulators, which makes engagement and operational detail essential rather than optional. There has been extensive consultation and there will be further extensive consultation. I do not think that this matter will be solved any further by adding a purpose clause.

Finally, the Long Title of the Financial Services and Markets Act 2023 was also described in neutral terms—

“to make provision about the regulation of financial services and markets”—

rather than providing a practically unworkable narrative explanation of the purpose of that legislation. The same applies here.

While I welcome the comments and look forward to returning to many of them in our debates, I hope that I have made the case not only for the Bill as a whole but as to why it is unnecessary and unhelpful to add a purpose clause. I ask the noble Viscount to withdraw his amendment.

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[Baroness Altmann (Non-Afl)]

My Lords, I had basically finished—I just wanted to say that, if we are not going to turn the £400 billion or so into a sovereign wealth fund, it would be preferable if the Government did not try to direct the investments.

[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.

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[Baroness Altmann (Non-Afl)]

My Lords, in moving Amendment 8, I will speak also to Amendment 13, in my name. The aim of this amendment is to focus on the flow of money going into these schemes, rather than just the investment of the stock of assets that are already held, which has been the focus so far and is generally the focus of everything else in the Bill. Both are important.

Take, for example, value for money for taxpayers and members. With so much money going in each year—the latest estimates are £10 billion a year of employer contributions alone, let alone the members who are local workers—there seem to be strong reasons why we should expect targets to be set. If we are setting targets for other types of areas of investment, and for the investment of new contributions, we should have a local or national focus, or both.

This is obviously a probing amendment. As I declared at Second Reading, I support all private pension schemes also having an incentive to invest a certain percentage—I have suggested 25%—in UK growth assets. I have described UK growth assets in Amendment 13 as including listed and unlisted equities, infrastructure and property, as we have been discussing, all designed to boost long-term UK growth. I hope that the Minister will be able to explain whether the Government have specific objections to this idea and, if so, why?

If the Government are intent on mandating specific asset pools to invest in certain ways, why would they be reluctant to set certain aims or requirements for the new contributions of what are, in effect, publicly underwritten pension schemes? If we are intent on having mandation, requiring asset pools to invest in certain ways and requiring these funds to invest in them, and if we are not, as we will come to later, looking at ways of permitting employers to either significantly reduce their contributions or have a contribution holiday, would it not be sensible for the Government to look at directing those contributions—which are being paid into a scheme that does not need the money, as far as the actuarial certifications are concerned—to invest to boost long-term growth? I beg to move Amendment 8.

[Lord Palmer of Childs Hill (LD)]

This is an important, basic matter. Directing investment by asset types raises difficulties. If pension funds or individuals knew which assets were going to go up, there would be no problem, but there is no guarantee of that, so, my question to the Minister is: are pension funds primarily long-term investors acting for members or instruments of policy delivery? The answer matters a lot for confidence in Local Government Pension Scheme governance. I am all for productive investment, but it can be a slippery slope if you get it wrong. I wonder whether the Minister can give us some guidance on that.

[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.

--- Later in debate ---

[Lord Palmer of Childs Hill (LD)]

I have always reckoned that the duty of pension fund managers is to the members. What we are trying to do now is say that they have other duties; however, it is not very clear where the borderline is.

[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?

Pension Schemes Bill

Lord Palmer of Childs Hill Excerpts

2nd reading
Thursday 18th December 2025 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

Yes, my Lords, we are getting towards the end. I thank all noble Lords who have who have spoken. My particular thanks and congratulations go to the noble Baroness, Lady White of Tufnell Park, who made a marvellous first speech, which I am sure will be one of many.

There is much to welcome in the Bill; let us start positively. My noble friend Lady Kramer—as noble Lords know, she cannot participate today because she is at a funeral—is seeking the detail and the risk profile of the assets that will qualify under the Mansion House compact. Most people contributing through auto-enrolment into default funds have few resources and should not be in high-risk investments, certainly not without their permission.

My noble friend Lady Bowles, with great expertise, emphasised that fiduciary duty must remain the overriding principle of pension governance. She warned that mandating specific investment vehicles risks undermining trustees’ discretion, encouraging herding and discriminating against proven structures such as listed investment funds. Drawing on lessons from the LDI crisis, she argued that statutory preference cannot guarantee financial benefit and may expose pension members to unnecessary risk.

My noble friend further highlighted the Bill’s unjustified exclusion of listed investment companies and trusts, despite their track record in financing UK infrastructure and growth businesses. She also cautioned that lobbying pressures appear to have shaped the preference for long-term asset funds and urged that legislation should not be dictated by sectoral interests. Her message was clear: fiduciary duty must not be subordinated to lobbying or legislative preference, because it is pension members who will ultimately bear the cost.

My noble friend Lord Sharkey raised many important matters, many of which I will mention, including mandation, DB surpluses and DC master trusts. My noble friend Lord Thurso, who cannot be present—he is up in Inverness—was particularly keen to ensure proper guardrails and governance in relation to DB surplus release, mandation and adherence to the stewardship code, as well as seeking to improve the lot of pre-1997 pensioners who have not benefited from inflation uplifts. He will pursue these matters. Noble Lords can therefore see a lot of amendments lining up.

We will need to consider any action in the Bill to remedy pre-1997 pension erosion. The absence of discretionary increases for pre-1997 pensioners has clearly resulted in an erosion in the real value of their pensions. That is not the only injustice that has impacted on many pensioners. I draw attention to the AEA Technology Pensions Campaign’s work fighting for pensioners who were misinformed by the Government and ended up losing out as a result, as recognised by the Committee of Public Accounts in its June 2023 report on this issue. Although that is not the only example of injustice in our pensions system, it illustrates the challenges many pensioners have faced uniquely. Therefore, we will look to scrutinise these elements of the Bill in detail.

Legislation to formalise the framework around defined benefit superfunds is long overdue and is in the Bill. A main question is how the gateway test for DB funds—in other words, which DB schemes are allowed to enter them—compares with other options such as a buy-out. I hope the Minister can elaborate when she replies on when a new option is created, so that what might be considered the appropriate schemes use it and the wrong schemes do not.

The Bill provides for master trusts to have a default retirement solution so, having built up a pension pot, schemes need to assist in managing it. Can the Minister provide details on how the new advice or guidance will work in practice? The noble Baroness, Lady Stedman-Scott, made that point. Broadly speaking, extraction of surplus funds from DB schemes as if in surplus is mostly paid in by the employer. At present, it is difficult to access the surplus. Can the Minister elaborate on, and perhaps estimate, whether these new powers will be taken up? Will they just be there to be looked at?

Creating defined contribution megafunds sounds okay, but can the Minister elaborate on schemes being too big to fall, and whether new entrants will struggle to enter the market? We need to have the value-for-money framework elaborated on. In Australia, where there are league tables, there is evidence of investment herding, as mentioned in another context, where everyone invests in the same way. That is hardly a dynamic, competitive market, which is what seems to be one of the purposes of the Bill.

We will, I am sure, discuss mandation at length. Mandation is a reserve power to force pension schemes to invest at the whims of the Government, but I state clearly that I oppose this, as it crosses a dangerous line. It is fine saying that the Government do not plan to use the power, but we have to provide for the actions of future Governments: for instance, a Government who do not believe in climate change, a point made by the noble Baronesses, Lady Stedman-Scott and Lady Hayman.

The Bill’s idea of auto-consolidating small pots of less than £1,000 sounds good, but it is a big effort resulting in very little change and not much happening until 2030. Perhaps I have that wrong, but it was a point raised by the noble Lord, Lord Vaux, and I wanted to emphasise it.

The pensions system is evolving. We see what is happening; we are trying to let it evolve in the correct way. There are few easy solutions and, as noble Lords have mentioned, there will be a lot of scope for amendments to the Bill to make it absolutely right. I hope we can work collaboratively, throughout the House, on improving the Bill so that it can be built on and relied upon by pensioners, pension funds and everybody else.

Universal Credit: Two-child Limit

Lord Palmer of Childs Hill Excerpts

Wednesday 10th December 2025 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, my noble friend makes a really important point about the scarring effects of poverty. Our aim is to make sure that everyone who can work, does, with all the help they need to do that. That is what this Government have been doing. We are investing heavily in childcare to make it possible to work, making sure wages pay enough so that work is a good thing, and supporting children.

We know that when children grow up in poverty, things get worse for them. They are less likely to work as adults, and they earn 25% less at the age of 30. Even if some parts of the House are not persuaded on the grounds of the importance of the individual child, this is an investment in the future of our country. No other G7 country has a policy like this and there is a reason for it. We cannot compete on the world stage, grow our economy or create prosperous futures for our kids if we do not enable them to grow up thriving and healthy.

[Lord Palmer of Childs Hill (LD)]

Does the Minister agree that this is not about getting people back to work; it is about improving living standards and making sure children are safe, and that this Question, which tries to link people getting into work with this benefit, is completely ridiculous?

[Baroness Sherlock (Lab)]

My Lords, I think I have made my views clear on the impact of this policy. It is, in essence, a failed social experiment which has been pushing 100 children a day into poverty. We simply cannot allow that to happen. We want to support families. Most parents want to work to support their kids. Already, 84% of parents are in work—that is what people do. I used to work with single parents, who would say, “Even when it’s really a struggle, I want my kids to see this is what you do when you grow up”, but many people face barriers to work, and it is our job to make that possible. If you cannot afford childcare, how can you get to work? If you are not paid enough to be able to make life even bearable, how can you do that? The social security system should be there to support those who cannot work, but for those who can, to make it possible and to help them have a decent standard of living when doing so.

Young People not in Work, Education or Training

Lord Palmer of Childs Hill Excerpts

Monday 8th December 2025 Lords Chamber

[Baroness Smith of Malvern (Lab)]

The noble Lord makes an important point. It is absolutely the case that children who are absent for periods of time, or who are in alternative provision by virtue of behavioural needs, are more likely not to be in education, employment or training. That is why, as part of this plan, we will have a particular focus on those children, to identify much earlier who is likely not to be able to find a college place or job, and to intervene at that point to prevent them becoming NEET in the first place.

[Lord Palmer of Childs Hill (LD)]

My Lords, I welcome the Minister’s comments, but this is very much a top-down approach to getting young people back into work. Can she give further assurance on how the Government will encourage tradespeople—the plumbers, electricians, brickies and others—to take on people as apprentices and trainees? This starts at the bottom. This does not start with all the courses that young people can do part-time; they have to be employed by a plumber, a builder or an electrician. What are the Government doing about it?

[Baroness Smith of Malvern (Lab)]

I am sure that the noble Lord will therefore welcome the announcement that we also made today of fully funding small and medium-sized businesses to take on apprentices. These are the businesses that are more likely to take on young people, including disadvantaged young people, and they are being supported by this Government. That will help to turn around the 40% decline in young people starting apprenticeships over the past 10 years.

Carer’s Allowance: Overpayments

Lord Palmer of Childs Hill Excerpts

Tuesday 2nd December 2025 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, what I said last time we discussed this is absolutely the Government’s position. For the reasons I explained then—I will not go back into them again—carer’s allowance is traditionally not a classic means-tested benefit, so we want to find ways to tackle this. It will take time, because everything about the system has been built in ways that were designed around a simple, non-means-tested benefit. However, we have already done significant things to make a difference; one of the most important of those was to raise the level at which people could earn by the largest cash amount since the benefit was created. This means that if you earn less than 16 hours a week at the national living wage, there is no problem at all. We have also gone through to make sure that most of the ways in which people have fallen foul of the system can be corrected. For example, we have taken action on guidance and communications, and we are now checking automatically all the data that comes in directly from HMRC. We are doing all the things that can be done in the short term.

Much as I do not want to say this, the noble Lord will have to be patient. To be able to remove a cliff edge, the first requirement is to automate earnings coming from HMRC, which cannot be done overnight. We have already begun the work and we are looking for all possible workarounds in the short term. This problem has been around for a long time and no one paid any attention. We spotted it, we are taking action and we will sort it.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for that. The Sayce review identified the problem. I am reminded, sadly, of Lewis Carroll’s “jam tomorrow”, a promised reward that is often postponed. I am not really encouraged by the point that it will be dealt with in 2026. I ask the Minister to be more definite and give us a date in 2026 when this will happen, so that it is not, in Lewis Carroll’s words, “jam tomorrow”.

[Baroness Sherlock (Lab)]

My Lords, if I could give the noble Lord a precise date on which all the computer systems and all the systems will have changed, I would be glad to do it. Let me put this in context: we estimate that about 15% of people who get a carer’s allowance payment are also in paid work and 90% of people who reported earnings did so without difficulty, so we are talking about a very important but specific subset of people, most of whom had fluctuating earnings, which this is designed to address. The biggest challenge in the short term is to make sure that we have clear guidance, we communicate with people, they know what to tell us and we are able to manage that. There is a big prize at the end as we modernise all DWP systems to get this right. A lot of the improvements will be made by really old-fashioned analogue systems—by making sure that we have the right information, communicate well with carers and make it as easy as possible to get the information. Those recommendations may not be exciting, but they actually make a lot of difference.

Carer’s Allowance: Overpayments Review

Lord Palmer of Childs Hill Excerpts

Tuesday 18th November 2025 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I am grateful for my noble friend’s patience; I am afraid that I must ask her to be patient for just a little longer. On the important question of earnings-related overpayments, we are very conscious that some carers found this extremely difficult—hence the need for the report. As I said, we have committed to keeping the weekly carer’s allowance earnings limit pegged to 16 hours of work a week at the national living wage level. That meant that, last April, there was a record jump in the earnings limit from £151 a week to £196 a week. We will announce the new earnings limit from next April in the next few weeks. I hope the House appreciates how difficult this has been but also that we are determined to get to the bottom of it. Carer’s allowance is an unusual benefit: if you earn £1 below the threshold, you get the lot; if you earn £1 over it, you get nothing. It has taken quite some work, but we hope the report will be out very soon.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for that reassurance, and we will of course wait for the independent review. In the meantime, what steps are the Government taking to ensure that carers are not unfairly penalised for minor or unintentional breaches of earnings rules? Will they consider writing off historical overpayments where department error is a significant factor?

[Baroness Sherlock (Lab)]

My Lords, I am afraid the noble Lord will also have to be patient for just a little longer to hear what the Government will do in response to this. It was a very detailed report of over 100 pages, with lots of detailed recommendations; we have been through it in an equally detailed manner and will publish a proper response very shortly. In the meantime, the Government have done a number of things to make a difference. For example, we have already improved guidance to help staff make judgments about the way they treat overpayments in earnings. The crucial thing, which my noble friend just asked about, is that increasing the earnings limit by so much will mean that a lot of people will not be caught by this issue at all and, by the end of this decade, another 60,000 people will be able to claim carer’s allowance. We have already taken significant steps to improve things and will do more in the months ahead, but for the details I am afraid he must wait for the response to the report.

Jobs Market

Lord Palmer of Childs Hill Excerpts

Thursday 13th November 2025 Lords Chamber

[Baroness Sherlock (Lab)]

This is a really great question that is obsessing most government departments and most employers, as the noble Lord will know. I think the impact depends on the sector and on the individual job, but the evidence is quite clear, which is that, across the piece, it is better for businesses to embrace AI than not to. The biggest risk to our country is in not embracing artificial intelligence—if we do not take the opportunities it offers.

The World Economic Forum has forecast that AI will create 170 million new jobs globally over the next five years and displace 90 million. We will find that there are jobs out there, but they will be different. In our country, we have to make sure that we get those good jobs in the UK. What we are doing as a Government is analysing that very carefully and supporting businesses and individuals to make sure they have the skills they need to move on to the next area. We have reformed skills; we are bringing skills into DWP for many young people; we have a brand-new skills academy; we are looking at developing apprenticeships and we are focusing on supporting education to give young people the skills they need. There will be jobs there in the future; we just want to make sure our people get them.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for her statistics, but the latest ONS figures show unemployment has risen from 4.8% to 5%—the highest level for four years. On that basis, can the Minister share concern that the UK’s sluggish productivity growth and skills shortages are still holding back economic recovery? What further measures are being considered to invest in adult skills and retraining? We will keep coming back to this. I thank the Minister for what she has said, but I would like a bit more information.

[Baroness Sherlock (Lab)]

On the unemployment figures, different things are going on under the surface if one digs down into the figures, which I am sure the noble Lord has done. For example, he may be aware that two things are going on. On the quarter increases and on the unemployment level, a chunk of that is driven by young people aged 16 to 24, including those in full-time education. Crucially, falling inactivity has contributed to increase in unemployment. We are tackling people who are economically inactive, but as people return to the labour market, they move from the figures of economic inactivity into the figures for unemployment. One thing that has happened is that the significant rise in economic inactivity down to ill health has been flattened, and that is really significant.

I would love to talk to the noble Lord at a greater length about skills. As he now knows, I have the great joy that my noble friend Lady Smith, who is now a Minister not only in DfE but in DWP, because she is the Minister for Skills, is joining up the two departments.

Public Authorities (Fraud, Error and Recovery) Bill

Lord Palmer of Childs Hill Excerpts

Consideration of Commons amendments and / or reasons
Tuesday 11th November 2025 Lords Chamber

[Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)]

My Lords, I beg to move Motion A and will speak also to Motions B and D. I want to start by thanking this House once again for the constructive debates and meticulous scrutiny that the Public Authorities (Fraud, Error and Recovery) Bill has received throughout its passage. It has undoubtedly been strengthened, and I am grateful for the time noble Lords have put into engaging with the Government.

I believe that the Bill, as agreed by the House of Commons, makes a significant step in delivering this Government’s manifesto commitment to safeguard public money and ensure that every pound is wisely spent. At the same time, the Bill now contains further significant safeguards on the use of the new powers for the DWP and PSFA, strengthened by the scrutiny and insights of your Lordships’ House.

In moving Motion A, I will, with leave of the House, speak also to Motions B and D, which are grouped together. I turn first to Amendment 1 and the government amendments in lieu, Amendments 1A and 1B. As I said on Report in the Lords, the Government were unable to accept the original drafting of this amendment. However, we have listened to the desire of your Lordships’ House and, with some technical changes, are happy to propose these alternatives. I am grateful for the constructive discussions on these with the noble Baroness, Lady Finn, and the noble Viscount, Lord Younger—to whom I wish a remote happy birthday.

The amendments will give the Minister for the Cabinet Office the power to initiate an investigation when they consider it necessary in the public interest. As my colleague, the Minister for Transformation, set out when proposing this amendment in the other place, the Government believe it will almost never be necessary for the Minister to exercise this new power, due to the collaborative approach of the normal working of government, but it will be available if there is genuine necessity. It is the Government’s intention to create a fraud investigation service and this amendment is compatible with that continued intention.

Our amendments in lieu also make some consequential changes to Clause 2 to preserve the intention that the PSFA should not take on matters assigned to the Secretary of State with responsibility for Social Security, or His Majesty’s Revenue & Customs, for the reason which has remained unchanged throughout the passage of the Bill: that those departments already have considerable resources and powers to tackle tax and social security fraud.

I now turn to Lords Amendments 30 and 31. As I set out on Report, the Government support the principle behind these amendments. However, we could not accept the drafting as it stood. We agree that staff must be appropriately trained before they are able to use these powers and that robust oversight, both internal and external, is essential. I am therefore grateful for the constructive and rewarding discussions with the noble Baroness, Lady Finn, and the noble Viscount, Lord Younger—who is very young today—and propose the alternative government Amendments 31A, 31B and 31C. They have indicated their support and I hope that other noble Lords will also support them. The amendments mandate statutory guidance and a new reporting requirement and set internal recording requirements. They strike the right balance of ensuring strong ministerial and parliamentary oversight of the powers, without unnecessarily involving Ministers in operational decisions.

First, the statutory guidance will detail how the Minister will exercise the function of investigating suspected fraud against public authorities. It will outline governance arrangements, delegation of powers to authorised officers and authorised investigators, standards for the training and appointment of authorised officers and investigators and how the Minister will collaborate with an independent reviewer. Secondly, a report will be prepared following the end of each financial year and will be laid in Parliament by the Minister, stating how many times investigation and enforcement powers in Part 1 of the Bill have been used. This ensures regular ministerial and public visibility without compromising operational details. Lastly, there is now a requirement for the PSFA to keep internal written records of the exercise of the powers, which will be made available for scrutiny by an independent reviewer.

These records will specify the power exercised, date, reason for use and by whom, ensuring internal accountability. They will be made accessible to the independent reviewer, who will assess the use of the powers and produce a report which the Minister will publish and lay in Parliament. This addresses the need for a written record without public disclosure of sensitive information. Together, these amendments underscore our commitment to transparency, oversight and accountability, which we have maintained over the passage of this Bill.

We further committed during Committee in the Commons to adhering to the Cabinet Office governance code on public appointments, which is overseen by the Commissioner for Public Appointments; adding the independent reviewer to the Order in Council; following the established process for agreeing posts that should be subject to pre-appointment scrutiny by Select Committee without the need for legislative provision in the Bill; and compiling a list of all the concerns raised in both Houses to put before the independent reviewer, who will also meet with parliamentarians who have raised areas where they think their work should be focused.

I have also agreed with the noble Baroness, Lady Finn, that, because she really enjoys debating with me at the Dispatch Box, the initial statutory guidance will be subject to a take-note debate in Grand Committee after it is laid in Parliament. Together, the amendments ensure that Ministers are accountable for the use of the powers in Part 1 of the Bill and show how they are delegated. In places, they build on processes that would already have been in place but that we have brought forward into the Bill. I am grateful for the constructive discussions with the noble Baroness, Lady Finn, on these amendments and I am pleased to put in place these commitments. I hope this is sufficient to address the concerns of noble Lords and that they will agree to the Motions not to insist from the other place.

Finally, I turn to a minor and technical amendment the Government made to Lords Amendment 75 to Schedule 2. Amendment 75A simply ensures that authorised investigators are captured within the regulation-making power set out by Schedule 2, if or when the powers conferred under Part 1 of the Bill are transferred to another public authority that is not within the scope of the Ministers of the Crown Act 1975, or if the PSFA is set up as its own statutory body. It does not change the use of any powers laid out within the Bill. I hope noble Lords will support the Motion from the other place and I beg to move.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Government for listening to some of the points made by the noble Baroness, Lady Finn, myself and others. We are dealing here with Motions A, B and D, so let me deal with Motion A first. The Lords amendment aimed to give more powers to Ministers to take investigatory or enforcement action and we voted against it in the Lords due to it giving, in our view, too many powers to the Minister.

The Government have, to some extent, listened, and the amendment in lieu reaches what I would describe as a middle ground. That seems to be, as far as I know, acceptable to other people who will be speaking in this debate, I believe—coming first, I cannot be certain of that. On that basis, on these Benches, we are willing to accept the amendment in lieu in Motion A.

Turning to Motion B, Lords Amendments 30 and 31 relate to limiting the extent that powers can be used and ensuring that, when powers are used, they are properly reported. As noble Lords will know, we supported the amendments in the Lords and have noted again what the Government’s reaction has been. I am reasonably pleased at the reaction. The amendments reach, as I said on the other amendment, a middle ground, and from these Benches we are minded to accept the amendments in lieu.

Turning to Motion D, the powers to establish the PSFA and transfer functions, the Lords amendment created the Public Sector Fraud Authority. The amendment in lieu is a tidying-up amendment, as the noble Baroness said, and is uncontroversial. On these Benches, we accept that amendment in lieu. I look forward to the other amendments in due course.

[Baroness Finn (Con)]

My Lords, as we consider the amendments brought forward by the Government, I want to begin by recognising the diligent and constructive work undertaken across this House throughout the passage of this Bill. We have examined almost every clause in detail, identified weaknesses and proposed sensible, proportionate reforms. I think it is fair to say that, as a result, the Bill before us today is stronger, fairer and more workable. The Government have listened to many of the concerns raised, not least from these Benches and from the noble Lord, Lord Vaux of Harrowden. I want to put on record our appreciation for the collaborative spirit in which the Ministers, the noble Baronesses, Lady Sherlock and Lady Anderson, and their officials have engaged.

--- Later in debate ---

[Lord Vaux of Harrowden (CB)]

My Lords, as we have just heard, Motions C, E and F relate to amendments that I tabled on Report, and which the House very generously supported.

I will start with Motion C, which relates to Amendment 43. This would have broadened the scope of the independent review of the use of the eligibility verification notice process powers to consider the costs to the banking industry and the potential impact on vulnerable people. I regret that the Government did not feel able to accept that, and I am very grateful to those in the other place who supported the amendment so passionately, including quite a number on the Government’s own Benches.

However, I thank the Minister for the assurances she has given, especially in relation to the publication of a revised impact assessment, and her offer of the opportunity to meet with the independent reviewer once they have been appointed. I also take comfort from the point made by the Minister in the other place, repeated just now by the Minister, that the amendment the Government made on Report, which requires that the use of EVM powers be necessary and proportionate, will potentially allow the independent reviewer to consider impacts on vulnerable people if concerns arise. Therefore, while I would have preferred that my amendment be accepted, on the basis of these assurances I will not push it further.

Turning to Motion E, this Lords amendment would have made it clear that the existence of an eligibility indicator alone could not constitute reasonable suspicion, and that no action to suspend or change a benefit or utilise the extensive investigation powers that the Bill creates could be taken unless the information had first been reviewed by a suitably qualified person. This has been made even more important when we read about how HMRC has behaved recently in respect of child benefit. HMRC used incomplete travel information and stopped paying benefit solely on the basis of that information, unfairly impacting up to 23,500 people. That is a tangible example of how information used in isolation, without proper checks or review, can cause real and unfair harm. It is essential, therefore, that EVM information alone should not be used to take decisions that may have a serious impact on someone who may be entirely innocent, and that all decisions should be reviewed by a person so that we do not see something similar happening at DWP.

Although they do not accept the original amendment, the Government have tabled amendments 84A and 84B, which get us most of the way there. The authorised officer or the Secretary of State must have regard to all the information they have, including, importantly,

“information that is not EVM information”.

Some concerns have been raised in the other place and outside about what would happen if the only information the DWP had was EVM information. The Minister touched on that, but it would be helpful if she could comment a bit further when she winds up. Is there any situation where, because EVM information is the only information the department has, that could be the only basis for a decision?

Otherwise, these amendments in lieu substantially cover the concerns that were raised in this House, especially when we also take account of the Government amendments passed by this House on Report that restrict the use of the EVM process so that it may only be used to assist in identifying incorrect payments. I thank the Minister for her continuing constructive engagement in trying to meet the concerns raised by this House, and I urge noble Lords to accept Amendments 84A and 84B in lieu, and to support Motion E.

Finally, I turn to Motion F. The Bill grants a number of police powers to DWP officials, including the power to use reasonable force. The original Amendment 97 would have restricted the use of reasonable force by DWP officials to force against items and property—the example we have been given many times is breaking into a filing cabinet—rather than allowing force against people.

Again, I am grateful to the Minister for the Government amendments in lieu. These, in effect, turn the amendment around. Rather than taking the general power to use reasonable force but then restricting it to items and property, as the original amendment did, the amendments in lieu removed the general power to use reasonable force but introduce a bespoke power for DWP officials to use reasonable force only against items and property. Ultimately, that is very much the same thing.

I am pleased that the amendments in lieu retain the oversight of the Independent Office for Police Conduct, which is an important safeguard. With thanks to the Minister for her engagement on this, I urge noble Lords to accept the amendments in lieu and support Motion F.

With these amendments and the others that have been proposed, the safeguards around the use of the significant new powers that the Bill will give to the Cabinet Office and DWP have been strengthened. This is a very good example of how this House can improve legislation. I thank all noble Lords from all sides of the House who have been so supportive and constructive throughout the process, and particularly the Ministers, for their always constructive engagement throughout, which has allowed us to make real improvements to the Bill. It now achieves a better balance between achieving what is intended—to reduce fraud and error—while being fairer and better protecting vulnerable people.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for her constructive approach. It has not always answered all the questions but it has gone a long way towards that. I put on record our thanks to the noble Lord, Lord Vaux, for his constructive initiatives on which some of these amendments are based, and to the noble Baroness, Lady Finn, for all the informative stuff that has come from her.

I will speak first to Motion C. The Lords amendment was agreed upon by this Chamber to ensure that the impacts of this legislation on the most vulnerable in society are properly considered by the Secretary of State. While I stress that the Government have been forthcoming in offering compromise solutions, it is disappointing that they did not offer any real alternative solution. I was pleased to see the Liberal Democrat Benches in the other place push this issue to a vote and was disappointed that neither Labour nor the Conservatives supported this amendment. Disappointing as this is, I appreciate that the Government and Parliament have made their mind up on the issue and I am not going to break ranks and push a vote on it.

The Bill introduces an independent review on the use of eligibility verification powers. This Lords amendment expands the scope of the review to ensure that the costs are proportionate, to consider whether the exercise of the Secretary of State’s powers in Schedule 3B has had any adverse effect on vulnerable people, and to consider the ability of benefits claimants to access banking services. As noble Lords know, we on these Benches supported the Lords amendment. The Government have, sadly, disagreed, saying that it is not appropriate to make further provision about reviews relating to eligibility verification measures. While it is disappointing that the Government have not looked to be as constructive as we would like them to be, it is clear that we are unlikely to make further progress on this than that which we have reached. On that basis, I do not intend to challenge the Commons response.

I turn to Motion E. The use of reasonable force— a point I raised a lot at earlier stages—lies at the heart of guaranteeing civil liberties for all citizens and ensuring that no innocent party is treated unfairly and without cause. The original Lords amendment would have prevented authorised officers using force against a person during entry, search and seizure. I am pleased that the amendment in lieu continues this principle, while explicitly outlining that it is only constables who are trained in the proportional use of force who will be able to use reasonable force in respect of persons. We spoke about force on filing cabinets, but it is persons we are really concerned about.

We on the Liberal Democrat Benches will therefore support the Government’s amendments in lieu, but we will continue to make sure that the powers granted in this legislation relating to the use of force are used proportionately. We will carefully scrutinise the independent review that has been promised on the exercise of the functions, including the reasonable use of force, which the Secretary of State must commission and later publish. I hope the Minister will give us some idea of when that is going to be published. Any assurance the Minister can give the House on this independent review and when it will come will be very much appreciated.

On that basis, we welcome the constructive comments that the Government have made and the points that the noble Lord, Lord Vaux, made in introducing these amendments. We do not intend to press further on these issues.

[Baroness Finn (Con)]

My Lords, as we come to this final group of government amendments on the DWP section of the Bill, I begin by recognising the real progress that has been made on the DWP use of PACE powers and eligibility verification provisions—progress that has been driven by this House’s detailed scrutiny and the persistence of Members from all sides, not least the noble Lords, Lord Vaux of Harrowden and Lord Verdirame, and the noble Baroness, Lady Fox of Buckley. Throughout, we on these Benches have sought to ensure that the Bill strikes the right balance—strong on fraud prevention but fair, proportionate and mindful of its impact on vulnerable people. We therefore welcome the Government’s concessions in several areas, which have come about as a result of the sustained pressure applied by this House.

Amendment 43 concerns the eligibility verification mechanism. Our overriding concern has been the impact on vulnerable individuals and those at risk of financial exclusion. The system must not lead to people being debanked, subject to excessive deductions or left unable to access essential services. We are pleased that the Government have now committed to an assurance that Parliament will be able to engage with the independent reviewer after Royal Assent to explore these issues, and that the concerns that we have raised here and in the other place will be formally shared with the reviewer.

I am grateful that the Minister in the other place claimed the may/must change as a government initiative—imitation, after all, is the sincerest form of flattery—but it was in fact first proposed from these Conservative Benches. That is another example of the constructive scrutiny that has improved the Bill, and I am sure that the Minister will be keen to correct this on the record.

We welcome the Government’s concession in Amendments 84A and 84B. These make it clear that human decision-makers must have regard to all relevant information and ensure that human judgment remains embedded in the process. This protects against the risks of mechanistic or AI-driven decision-making, not only now but into the future as these technologies evolve and become more widespread. This is a sensible safeguard and a direct result of arguments advanced in your Lordships’ House.

Regarding PACE powers, I am pleased that the Government have finally accepted that DWP investigators should not be able to use reasonable force against individuals. This corrects a serious drafting flaw in the text of the Bill and aligns its provisions with the Government’s stated policy. It makes the law safer, clearer and more coherent. I really thank the Minister for her valiant efforts in this area. However, it is surprising, especially given that it protects the integrity of the Government’s stated policy, that it should have required so much persuasion from your Lordships’ House for the Government to get to this position.

As a result of the changes made to the Bill in this House, the Public Sector Fraud Authority and the DWP will be better equipped to act against frauds while operating within a framework of stronger safeguards. Because of efforts on these Benches and others, the PSFA will be proactive but also more accountable and transparent. As a result of the work of the noble Lord, Lord Vaux, and other noble Lords, vulnerable people will be better protected and represented in the independent review, and the use of artificial intelligence will be subject to clearer human oversight. Fundamentally, the use of PACE powers will be strictly limited to property, not people.

Having said all that, there are still gaps in the Bill. The Government have yet to engage seriously with the growing problem of sickfluencers, online figures who use their platforms to encourage and advise people to make fraudulent benefits claims. Unless the Government begin to analyse and address this issue, they risk falling behind and missing the opportunity to tackle a significant driver of future fraud risk. We welcome the progress achieved, but we will continue to raise the issues we have championed during the passage of this Bill and keep a watchful eye on how its provisions are enacted. The Bill now better reflects the need to protect the public purse from fraud and the duty to safeguard the public. It leaves your Lordships’ House in a far better place than when it arrived and demonstrates once again, as the noble Lord, Lord Vaux, has said, the constructive and vital work of this House.

People with Disabilities: Employment

Lord Palmer of Childs Hill Excerpts

Tuesday 28th October 2025 Lords Chamber

[Baroness Sherlock (Lab)]

I am grateful to the noble Lord, who makes a very important point. There has been an issue for some time—I am not telling him anything new; he knows it better than I do—around the transition between the support for young people when they are in school and the support when they get out of school. The bit that we can do something about is around funding to local authorities, which we are providing. A couple of weeks ago, we announced further funding of £167 million to roll out Connect to Work to nine further areas in England, and we expect all areas to be open by early next year. We are working with them to look at what they are providing, how they provide it, and how they tailor it to their local populations and job markets. If we can make a difference and get young people into work—I thought the example of Tom working in Waitrose, until things went wrong, was so interesting—then what is gained from them working is certainly money, but also self-respect, teamwork, a peer group and the chance to make a difference. If we can do that, it can be transformative.

[Lord Palmer of Childs Hill (LD)]

My Lords, can the Minister add to her comments by providing an update on the publication of the Charlie Mayfield report into employment for people with long-term sickness and disabilities? We have been waiting for that report for some months.

[Baroness Sherlock (Lab)]

We have indeed. Despite being a Minister, I have not yet completely calibrated the scale that runs from, at one end, “in due course”, to, at the other end, “very soon”, but it is very much not at the “in due course” end. Watch this space; it will be out very soon.