Maximum Temperature for Indoor Workplaces

Lord Vaux of Harrowden Excerpts

Wednesday 15th July 2026 Lords Chamber

[Baroness Smith of Malvern (Lab)]

I know that this is something that my noble friend has raised on numerous occasions, quite rightly. That is the reason why the Health and Safety Executive is and will be engaged in a consultation on improving guidance. Guidance, of course, already exists for employers on how they should be taking action with respect to excessive heat. It is important, on the wide range of different things that employers could do to support their workforce, that the additional guidance that the Health and Safety Executive produces is done in consultation with the representatives of both workers and employers, so that these are practical and proportionate ways in which we can achieve the objective that I think we all share, which is that people are able to go to work, be productive and be safe even when temperatures are excessive.

[Lord Vaux of Harrowden (CB)]

My Lords, under the boiler upgrade scheme, air-to-water heat pumps are eligible for a £7,500 discount. Air-to-air heat pumps, which can be used for cooling as well as heating, are eligible for only £2,500. Why the difference?

[Baroness Smith of Malvern (Lab)]

Having learned more than I thought I was going to know about workplaces and excessive heat, I am afraid that that was not one of the bits of revision: so, if it is okay, I will write to the noble Lord on that question.

Pension Schemes Bill

Lord Vaux of Harrowden Excerpts

Consideration of Commons amendments and / or reasons
Wednesday 22nd April 2026 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, I support the noble Baroness, Lady Bowles, in insisting on the omission of mandation in Motion A1. The proposal has made the Government unpopular in the City and, as an ex-businesswoman and ex-pension trustee, I urge Ministers to think more radically and get rid of the power altogether, even in its constrained form.

Moving on, I thank the Minister and the Minister of State, Torsten Bell, for Amendments 85C, 85D and 85E in Motion D, which respond positively to my proposal for a review of public sector pensions. The work promised by the Government Actuary’s Department should provide the transparent analysis of this complex area that I have been calling for, with the support of the Centre for Policy Studies, the economist Neil Record, my noble friends Lady Noakes and Lord Moynihan of Chelsea, and the coverage in the Times and the Telegraph. It was reassuring to know from the Minister that the important complementary work responding to the Public Accounts Committee’s concerns about the whole of government accounts 2023-24 will be published within the one-year timeframe in the amendment.

I have been addressing not just a technical matter but serious problems, such as intergenerational unfairness and the long-term affordability of our important public service pensions. I trust that, as a result of the new work, we will be able to tackle the issues better and in a much more informed way.

[Lord Vaux of Harrowden (CB)]

My Lords, I will briefly add my support to Motion A1 from the noble Baroness, Lady Bowles, to remove the mandation reserved power. On Monday, the Minister told us:

“On the question on fiduciary duty, nothing in the Bill disapplies trustees’ existing duties of loyalty, prudence and acting in members’ best interests”.


Her argument was that

“the savers’ interest test allows a scheme to seek an exemption if it can show that compliance would cause material financial detriment to members”.—[Official Report, 20/4/26; col. 591.]

I hope that noble Lords can see the rather fundamental flaw in that argument. Not causing “material financial detriment” is very different from acting in members’ best interests. Would the Minister put her pension savings into a fund that promised only that it would not cause material financial detriment? Of course she would not, but that, as she has said, is the standard to which the mandated asset allocation will be held. So, contrary to what she keeps claiming, the power to mandate asset allocation, even with the latest proposed constraints, quite clearly undermines the fiduciary duty of trustees to act in members’ best interests, and it has no place in pension scheme regulation.

[Lord Davies of Brixton (Lab)]

I will make just two points. First, on the issue of mandation, we need to be clear. I am really concerned about the absolutist no mandation point. There is, of course, an issue to discuss as to how effective these measures would be and what effect they would have on trustees’ responsibilities, but it is important to remember that we are talking about tax advantage provisions, where there is a substantial cost to the Exchequer, so it is entirely reasonable, in principle, for the Government and the legislation to lay responsibilities on those tax advantage arrangements. Saying that mandation is wrong in and of itself is clearly incorrect. As a matter of public policy, it is entirely right that we should legislate to place requirements on tax-advantaged investment arrangements. People can invest their own money in any way they wish but, in return for the tax advantages, there are equal responsibilities.

The second point I want to make is that we need to be clear—it may be of some comfort to my noble friends—that Amendment 77 does not produce a review of public service pensions. It just requires important information to be published within a one-year timescale. I said in Committee that I would welcome a review of public service pensions, but this is not a review of public service pensions. It is just a requirement on the Government Actuary to produce a report.

Pension Schemes Bill

Lord Vaux of Harrowden Excerpts

Consideration of Commons amendments and / or reasons
Monday 20th April 2026 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, Motion J1 reintroduces my proposal for a review of the long-term affordability, intergenerational unfairness, fiscal sustainability and accounting treatment of public service pension schemes. I am trying to help the Government to fill a lacuna in their important work on pensions, so I was taken aback by the Commons’ reason for rejecting it—namely,

“that it is not necessary to duplicate existing information regarding public sector pension schemes”.

The presentation of the liability represented by public sector pensions is widely seen as inadequate, and the PAC itself has expressed concerns—in particular that pension liabilities are not being presented in a way that allows Parliament properly to understand their real costs in the long term.

I will highlight four reasons why a review is needed. First, the cost is huge. As we have heard repeatedly, unfunded pension liabilities represent the second-largest government liability after gilts. Currently, we commit future taxpayers to about £60 billion of new expenditure every year, in the form of a stream of index-linked new expenditure. According to the OBR, the long-term liability is £1.4 trillion, but it may be more as a lot depends on the assumptions made.

Secondly, it is an unfunded pay-as-you-go scheme. The problem with that is that the current generation of older and former public sector workers are taking money from younger generations of workers already weighed down by trying to finance housing, young families and, in some cases, repaying student loans. This is unfair, and it is why I put intergenerational unfairness at the heart of the review.

Thirdly, the coalition did well to reform some public sector pensions following the Hutton review, as the Minister acknowledged, but the new arrangements have turned out to be more costly than expected. Sadly, growth, which helps to ease things, has been modest. Moreover, substantial increases in the pay and size of the public sector make things look better in the short term, as employer and employee contributions increase. However, this is a mirage, as it stores up even more trouble for the future, as greater payouts on higher salaries will be needed as those people in the system retire.

Fourthly, there are serious accounting issues, as we know from the PAC. The scale of liabilities is not clearly visible from the public accounts. Moreover, as I have learned from my unique experience as a civil servant and a Cabinet Office Minister, the costs of future pensions are not properly taken into account in decision-making across the public sector—for example, on restructuring or adding to the workforce. In conclusion, there is a real need to establish whether the system is fair and sustainable, and whether anything could be done to improve things.

I emphasise that I support the work of public sector workers and that I am not making any recommendations. That is for the experts, who would look at the whole area objectively, and it is for the Government to decide what, if anything, needs to be done.

[Lord Vaux of Harrowden (CB)]

My Lords, I want very quickly to ask the Minister a question on Motions D and D1. I say at the outset that I agree with almost every word that the noble Baroness, Lady Altmann, said. I entirely agree that one year is too short. I have at least two pensions that have not been touched for that long, which would fall into the dormant category; I would not consider them dormant, but there we go.

My concern is that if we start moving people’s small pots around, potentially without their knowledge, we increase the problem of lost pots. The answer to that is the pension dashboard. So my question to the Minister is: will we have the pension dashboard in place, as a method of being able to retrace a lost pot, before we start moving people’s pots around?

[Viscount Thurso (LD)]

My Lords, I will speak on Motion K and my Motion K1. I have rehearsed the arguments around this question fully both in Committee and on Report, so will therefore not do so again. I listened very carefully to what the Minister said and I am extremely grateful to her for the engagement that I have had with her on several occasions, when her sympathy was obvious, even if her ability to do something about it was clearly limited.

When the time comes I will not move that amendment, but I will certainly take up the offer of a meeting. I hope I can move from the tea and sympathy that have been so evident to having a little power of persuasion over the Minister and demonstrating that this is a particularly exceptional case that needs to be dealt with. I thank the Minister and her team for their engagement, and I will not be moving my Motion when the time comes.

--- Later in debate ---

[Baroness Noakes (Con)]

My Lords, I tabled Motion G1 in this group. The Bill will consolidate today’s pensions market into a small number of large firms. It may well bring benefits, but it also carries the risk that the market will ossify around those large firms. Healthy markets need to be open to the challenge of new entrants, which can provide healthy competition to the incumbents. In turn, that has the potential to deliver for pension savers in the long run. At the end of the day, the only thing that matters is what is good for savers. I agree with the Minister on that.

In rejecting my Amendments 35 and 43, the other place said that

“it is not necessary to impose further requirements relating to innovation and competition”.

The Bill does not mention competition at all. It talks about restricting new entrants, and it mentions innovation only once. Innovation and competition are absolutely central to markets that work for consumers. My noble friend Lady Stedman-Scott’s Amendment 37B in lieu now incorporates innovation, so I have confined my Amendment 35B in lieu to the broader concept of competition. My amendment would require only that regulations have regard to competition among providers of pension schemes; it is no more onerous than that. It would apply to the several regulation-making powers of the Secretary of State attached to Clause 40 and to the powers of the regulators to make regulations under Clauses 42 and 44.

Regulations can create barriers to entry, which is why large firms love them. I believe that the Secretary of State and the regulators should use their powers to foster competition so that barriers to entry are not erected and new entrants are given a proper chance to flourish. If those making the regulations do not secure this for the benefit of pension savers, no one else will. My amendment in lieu would help to ensure that the scale provisions in the Bill deliver long-term benefits for pension savers.

[Lord Vaux of Harrowden (CB)]

My Lords, I offer Motion E1, in the name of the noble Baroness, Lady Bowles, my wholehearted support. I also say in passing that I wholeheartedly support Motion G1 in the name of the noble Baroness, Lady Noakes.

The Minister has once again explained that the mandation powers are intended to backstop the voluntary Mansion House agreement. She has tabled an amendment that simply limits the amount of assets the allocation of which may be mandated to no more than 10% by value and 5% in the UK, with the UK to be defined later. The Mansion House agreement is a voluntary agreement. If the Government have a mandation power, they are basically saying, “If you do not do this, we will force you”, which would mean that it is not, in reality, voluntary. The trustees would be forced to act against what they believe is in the best interests of scheme members. Why else would they not want to invest in these apparently fantastic assets?

Under the Bill—and the Minister’s amendment in lieu does not change this—the only exemption to that would be if the trustees could prove that the mandated asset allocation would cause,

“material financial detriment to members of the scheme”,

not just that it would not be in their best interests, but would cause material financial detriment. It cannot be right to force trustees to invest in a way that they would feel would cause any financial detriment, let alone material financial detriment, even if limited to just 10% by value.

The Minister’s amendment still does not put any restrictions around the type of assets or, indeed, specific assets that can be mandated. Here I very much disagree with what she said earlier. It does not limit it to the assets in the Mansion House agreement. Despite the proposed new subsection (5A), which requires the regulations to describe the examples that are listed in subsection (4), these remain just examples. Subsection (5) remains very clear that a qualifying asset does not have to be one of the examples. The Minister’s amendment does not change that in any way. I do not agree that the deletion of subsection (8) has any such effect. The Bill will now just be silent on the allocation of assets within the 10%. There is nothing here that stops mandation in a single asset type or class.

There is nothing here to prevent any future Government mandating any assets they please. While the Minister might point to the report that the Secretary of State must publish under subsection (12), which, among other things, sets out how the financial interests of members would be affected, it is important to note that that applies to only the first set of such regulations under this subsection. Any further future mandation, perhaps under a different Government, is subject to no such safeguard, just the negative process. Such assets could be mandated for any reason they wish to give. As an example, what if Nigel Farage were to find himself in a position of influence? He is a well-known enthusiast for and investor in cryptocurrencies. There is nothing in this Bill that would stop him mandating that the relevant funds should have 10% invested in cryptocurrency. Any Government could use this power to mandate whatever pet project they wanted. Let us be clear that the definition of assets in the Bill is sufficiently wide that it could be mandation into specific assets, specific projects, rather than a class, if that is what they wanted to do.

Even if it is to be used only as a backstop to the Mansion House agreement, is that such a good thing? Let us look at the example assets set out in the Bill. One is private debt. You do not have to be an avid reader of the financial pages to know that there are growing concerns about whether private debt may be the cause of the next big financial crisis. Many investors are trying to get out, which is why many large funds are now restricting redemptions. When someone like Jamie Dimon starts talking about cockroaches, we should take notice. Any sensible pension fund would be treating private credit with huge caution at the moment, but this is specifically one of the asset classes that the Government want to encourage and mandate. Government mandation of asset allocation has no place in the regulation of pensions. The fiduciary duty should remain sacrosanct. I urge all noble Lords to support the noble Baroness, Lady Bowles, in her amendment.

[Baroness Altmann (Non-Afl)]

My Lords, I agree with every word that the noble Lord, Lord Vaux, has just said. I declare my interests as a non-executive director of a pension administration company and a board adviser to a master trust. I support all the amendments in this group, but I shall speak particularly to Motion E1 so ably moved by the noble Baroness, Lady Bowles.

A fiduciary obligation is one of the highest standards of duty in common law, yet this Bill would override the best judgment of trustees. Although the 5% and 10% amendment laid by the Government is welcome, it does not deal with issues such as those outlined by the noble Baroness, Lady Bowles, and the noble Lord, Lord Vaux. If trustees do not believe that the case for, for example, private assets is strong enough, they will still have to buy them or they will not be able to participate in auto-enrolment. This is not incentivisation. Incentivising financially, perhaps via tax reliefs, would change the calculation of the potential outcomes, but mandation does not do that.

The dangers of mistiming are clear. A McKinsey study published in February shows that, for example, private equity is under structural strain with constrained liquidity, valuation uncertainty and returns that have been weaker. As the noble Lord, Lord Vaux, outlined, the same applies to private credit, particularly that held in open-ended fund structures. In infrastructure, we have recently seen the returns offered for solar power degraded from in line with RPI to in line with CPI, which has put international investors off some of the infrastructure opportunities in the UK.

If the Government persist in their idea that closed-end funds, which are much more appropriate and have their own diversified, expertly managed portfolios of qualifying assets cannot qualify, that simply further reinforces the idea that the Government does not know best and that it is not safe for this House to authorise the Government to mandate these investments. Not all pension funds have the in-house capability to manage alternative or illiquid assets. Just being large does not give them instant expertise. Australian and Canadian funds have taken decades to build up this kind of ability. A strict time limit simply does not and cannot fit with the requirements that the Government seek to impose on pension schemes. I hope that noble Lords will stand firm in the resolve to send this back to the other place.

Pension Schemes Bill

Lord Vaux of Harrowden Excerpts

Report stage
Thursday 19th March 2026 Lords Chamber

[Lord Vaux of Harrowden (CB)]

My Lords, when you are trying to solve a problem, it is best to try to understand the root causes of the problem and then resolve those causes—diagnose and treat the disease, not the symptoms. That is why I have repeatedly asked the Minister why she believes UK pension funds have been so reluctant to invest in so-called UK productive assets. I know she gets frustrated with me asking this question regularly, but she has never answered it. She always responds, as she did again on 11 March, by explaining what the symptom is: that UK pension funds invest a much lower proportion in UK productive assets than international comparators. She is right, and, as noble the noble Baroness, Lady Altmann, just pointed out, I do not think any of us disagree with that, but that does not answer the fundamental question. Why are UK assets apparently so unattractive to UK pension funds? What are the barriers to investment that we need to remove?

The Minister has often told us that the mandation power is just a backstop to the voluntary Mansion House agreement and probably will not be used. That is precisely the problem. It does not need to be used; its very existence is, in effect, mandation. As the Times pointed out so clearly on Saturday:

“A voluntary agreement … ceases to be voluntary … if it is underwritten by the promise of compulsion”.


Even if the power is not used, it still creates a fiduciary duty problem: the trustees are still, in effect, being forced to act in a way that they might not believe to be in the best interests of members, but they will not even have the defence of ,“We were only following orders”, if it turns out badly. The Minister has never given an adequate response to the question of who should bear the risk if the government-mandated assets result in poor performance.

On 11 March, the Minister said:

“This power does not direct schemes into specific assets or projects. What it does is set a broad framework aligned with the industry’s own voluntary commitments under the Mansion House Accord. Trustees retain full discretion over individual investment selection and the balance between asset classes”.—[Official Report, 11/3/26; col. 279.]


But that is not what the Bill says. What it actually does is give the Government power to require that an undefined and unlimited percentage is invested in qualifying assets, which are defined as

“an asset of a prescribed description”.

I stress that it says “an asset”, not just a class of assets.

There is no limit in the Bill on what those assets can be, except that they cannot be listed on a recognised exchange. Contrary to what the Minister has told us, specific assets or projects can be prescribed. Nor does the Bill require them to be in the UK; they can be anywhere in the world. The first regulations to define the asset allocation are subject to the affirmative procedure, but after that, any future Government can prescribe any asset, anywhere in the world, on any percentage, under the negative procedure.

As the noble Baroness, Lady Bowles, pointed out, a scheme can apply for an exemption, but it is an incredibly high hurdle. A scheme must prove that the asset allocation requirement would cause

“material financial detriment to members”.

That is extraordinary—not just that it is “not in members’ interests”, but “material financial detriment”.

Contrary to the Minister’s assurances, this unlimited mandation power can be used to direct trustees to invest in classes of assets or specific assets. It fundamentally undermines the fiduciary duty of pension trustees. This dangerous power must be removed from the Bill. Instead, the Government should, as I said at the beginning, focus their efforts on identifying and removing the underlying barriers to UK investment.

[Lord Johnson of Lainston (Con)]

My Lords, I speak in this mini-debate in full support of this amendment. I am extremely concerned about the principle of government directing any form of investment. I do not think any Government have a strong record on making investments, and to compel pension funds to make such investments would be incredibly dangerous. As the noble Lord, Lord Vaux of Harrowden, has so wisely said, we are setting ourselves a very dangerous precedent here that we will all—as people who want to retire at some point—live to regret.

My second point is a technical one, which the noble Lord, Lord Vaux, touched on but is worth exploring slightly further: namely, the description of what a directed investment is. What is a UK investment—the sort of thing we would be told we have to invest in? Is it a company where the headquarters is domiciled in London, or that employs a certain number of people, or that does a certain thing in the UK specifically related to certain asset classes?

The reality is that you will have enormous problems if you try to force money into certain parts of the economy. You will get crowding out and excess price. An example could be to force these pension funds to invest in infrastructure. You would have a crowding out of other investments into infrastructure projects that would be mispriced, and that would create problems when it came to trying to generate returns. We should be very careful about that. Prescription over investment is one of the worst things a Government can possibly do, and I think we should acknowledge that in this House.

As has been mentioned, why are we talking about forcing people to buy things that other people do not wish to buy when we should be trying to create an economy that people want to invest in? I call upon the Minister to put that as the priority, rather than trying to force people to do things they do not wish to do, which will cause enormous problems in the long term.

--- Later in debate ---

[Baroness Sherlock (Lab)]

It depends on how the market is structured. The decision-makers here are employers. Let us look at what happened under the Mansion House Compact, the predecessor of the accord, brokered under the previous Government. The words were that

“‘too much focus on cost’ remains the key barrier”.

In other words, we have a market in the employment sector where the focus has been for too long on cost, not value. The noble Lord shakes his head, but we have heard this from around the House. Indeed, in Committee many people who do not agree with this power accepted the underlying diagnosis, and that is the basis on which the Government are proceeding.

The Government want the industry to invest in the full range of assets. One of the reasons, I suspect, that the Mansion House Accord is moving together is to make sure that it is clear that the market is going in that direction. That is the problem, we think: there is a risk of a failure of collective action. The accord is a commitment. The power gives providers assurance that the whole market will move so that they will not then be in a position where somebody faces a competitive advantage by reverting back to focusing on cost and not on value.

[Lord Vaux of Harrowden (CB)]

As I understand the noble Baroness’s argument, the focus on cost is the problem. This Bill solves that with the value-for-money framework, so why do we also need the mandation power?

[Baroness Sherlock (Lab)]

This all comes as a package. A lot of attention is focused on this particular reserve power, but in fact it is the combination of all the elements of the Bill that we discussed in some detail in Committee over recent weeks: the question of the investment in scale, the need for the value-for-money framework, the need for the option to consolidate small pots. All these things come together to create the conditions in which this will work. This reserve power is to address a particular question, the risk of collective failure. I fully accept that the noble Lord does not agree with it, but I want at least to have the opportunity to make the argument as to why the Government are proposing to do it in this way.

The Mansion House Accord represents a voluntary commitment by 17 of the UK’s largest DC pension providers to invest 10% of their default funds in private markets, at least half of that in the UK, by 2030. We continue to be encouraged by progress, but the risk of a collective action failure in this market has long been recognised. As I said, individual providers face strong commercial incentives to keep costs low and to defer action until others move first. The reserve power exists as a backstop to ensure that if voluntary progress stalls, the Government have the means to act. Its presence in the Bill sends a clear signal that the commitment to change is underpinned by more than good intentions, and it helps to give each provider confidence that the rest of the market will move too.

At earlier stages we discussed a range of issues around safeguards and other things, which I thought would come up in later groups but that will obviously depend on what happens next. First, the power is time limited. The noble Baroness, Lady Stedman-Scott, thinks this power will outlive us all. I hope it does not, because if it has not been used by the end of 2035 it falls away, so I very much hope that it will not outlive the noble Baroness and me, although obviously we are in the Lord’s hands: should we be called home, what can we do? If it has not been used by 2035, it falls away. If it has been used, any percentage requirements in place cannot be increased beyond that date.

Secondly, the Bill establishes a savers’ interest test. Pension providers will be able to apply for an exemption from the targets where they can show that meeting them would cause material financial detriment to their members. Thirdly, the Government must consult and publish a report on the expected impacts, both on savers and on growth, before exercising the power for the first time, and a post-implementation review must follow within five years. Finally, the regulations implementing any requirements will be subject to the affirmative procedure, so Parliament would have its say.

I will respond to some specific questions. There was a question about how to define UK assets. This would be done in regulations were the power ever to be used. Consideration would have to be given to the characteristics of different asset classes. The Mansion House Accord is accompanied by some high-level guidance on how a UK investment should be identified within each of the different asset classes. That asset class by asset class approach to establishing the location is also the one that the FCA has taken as it consults on the upcoming value-for-money disclosure requirements, which will require firms to provide UK overseas asset allocation split. If the Government ever came to exercise these powers, we would expect similarly to take an asset class by asset class approach.

Questions were raised about a future Government and how this might be used. The noble Baroness, Lady Coffey, prayed in aid the European Convention on Human Rights, and I commend her on that. First, on the question on property rights, this applies to default schemes and people can choose to opt out, but she raises a relevant point. Obviously I hope there will never be one, but if there ever were a Government of a different persuasion, were they to seek to use it in a way beyond what is here, I think they would run into problems. This Government have made it quite clear, in Committee in this House and in the other House, that the purpose of the power is to assure good outcomes for savers and the economy, recognising diversification benefits and the potential for higher returns. It is not an instrument for channelling investment into pet projects or specific companies.

The noble Lord, Lord Vaux, quoted me on this point. It was marvellous—“What he said” is what I would say. That is the Government’s view, and I have spoken about the various safeguards, but even if a future Government wanted to use these powers to do something either much broader or much more specific, of course they would have to abide by established principles of public law, including the requirement for Ministers to act rationally, ensuring procedural fairness and compatibility with ECHR rights when making secondary legislation.

The Government are under no illusions about the significance of this power. It is a substantial intervention and, if we ever found the need to use it, we would have to proceed with great care. I understand the strength of feeling on this. These powers, alongside the scale provisions, the value-for-money framework and the consolidation measures, are a package. Together, they are designed to deliver a step change in outcomes for millions of pension savers. If we remove the reserve power, we remove the mechanism that gives the rest of this framework its teeth when it comes to investment diversification.

For a long time, successive Governments have recognised the need to channel pension capital into productive assets. Auto-enrolment has brought millions more people into saving. We now have a responsibility to ensure that those savings are put to work properly to deliver better long-term returns. But the question before us is whether the Bill should contain the backstop at all. In the Government’s view, the answer is yes. Without it, the voluntary commitments made by the industry would rest on good faith alone. The experience of previous attempts to shift investment patterns in this market suggest that that, on its own, may not be enough. For those reasons, I respectfully ask the noble Baroness not to press her amendment.

Pension Schemes: Ministerial Powers

Lord Vaux of Harrowden Excerpts

Wednesday 11th March 2026 Lords Chamber

[Baroness Sherlock (Lab)]

There is a short and a long answer. The short answer is no. The long answer is that the Government have made it abundantly clear, because I have done it myself many times in Committee, what the purpose of the reserve power is: to backstop the Mansion House and trust commitments. My honourable friend the Pensions Minister and I have made it clear—he said it again this morning at a pensions conference—that we would make absolutely sure that the Government’s intention simply to backstop those agreements was there in the Bill. That is what the legislation is for, but I need to correct something in particular. This power does not direct schemes into specific assets or projects. What it does is set a broad framework aligned with the industry’s own voluntary commitments under the Mansion House Accord. Trustees retain full discretion over individual investment selection and the balance between asset classes. The role of a pension trustee has always been to exercise judgment, subject to constraints, and nothing in these provisions changes that.

[Lord Vaux of Harrowden (CB)]

My Lords, can the Minister perhaps tell us why she thinks pension funds are not currently investing, or have not been investing, in the types of assets that she would like them to? I ask that question because surely the better way forward is to understand what is stopping them doing so and fixing that problem, rather than telling them to do something they do not wish to do.

[Baroness Sherlock (Lab)]

My Lords, I have said this many times in Committee, as the noble Lord knows, but I am delighted to explain again for the benefit of the whole House. I have just explained what the Government believe the challenge is. By international standards, we are really very low in aiming for 10%. Canadian schemes invest 11% in infrastructure alone. The evidence is clear that investing a small proportion of funds in the context of a diversified portfolio brings better returns for savers over the long run. The aim is to get better returns for savers. There is too much short-termism in our markets at the moment, and the view of the Government—as well as the evidence that seems to be out there—is that this is because we are seen as competing on cost, rather than on return or value. It is much easier to pitch to an employer on that basis. If we make it clear that the whole industry is going in this direction, then we believe that that will be the case. The choices will still be there, the safeguards are still in place, and we believe that this will be in the interests of savers across the long term.

Pension Schemes Bill

Lord Vaux of Harrowden Excerpts

Committee stage
Tuesday 3rd February 2026 Grand Committee

[Baroness Kramer (LD)]

My Lords, my noble friend Lord Sharkey sends his apologies; he is at a funeral and will read Hansard with great attention. I thank the noble Lord, Lord Vaux, for supporting me on Amendment 167. I think it is the first time in 15 years that I have degrouped an amendment to stand by itself, but I can see no other way to ensure a clear answer from the Government: will they put their money where their mouth is?

The Committee has discussed qualified assets and, while I do not intend to repeat the discussion, I hope that everyone understands how high risk a portfolio of such assets is. The Financial Services Regulation Committee, in January, titled its look at the private equity markets as Private Markets: Unknown Unknowns. Some 75% of firms invested in by venture capital fail. Complex infrastructure is both high risk and illiquid; we can think HS2, the Elizabeth Line—four years delayed and £4 billion over budget—and Hinkley Point, which seems to run out of money time after time. If someone with a substantial pension wants to invest in such assets, that is fine with me, but the Mansion House Compact —or accord, I do not care which terminology is used—covers only auto-enrolment default fund pension schemes. These are vehicles for those with the narrowest shoulders, with low incomes, small pensions and little financial knowledge. The downside risk for them means poverty.

The Government have assured us, and those pension savers with the narrowest shoulders, that under the Mansion House Compact, and by putting 10% of their pensions into qualified assets, they will be winners—to quote the Minister on the first day in Committee:

“with an average earner potentially gaining up to £29,000 more by retirement”.—[Official Report, 12/1/26; col. GC 205.]

No warning of the downside was mentioned and clearly, to the Minister, the downside does not seriously exist. I challenge that. I am always very wary of promises of low-risk, high-return investments.

The Government have argued that the Mansion House Compact, combined with the provisions in this Bill, brings great benefits because risk can in effect be eliminated by the structures that have been introduced and the use of large providers. I want to challenge some of those shibboleths. Large providers have explained to me that they can enhance pensions and use qualified assets safely through lifestyle investing, where more is invested into high-risk assets early in the life of the pension, switching later to low-risk investments. If I lose £100 in the first year that I save in a pension, the loss is compounded through the life of the pension and I will have thousands less to get me through retirement. If I lose £100 the day before my pension matures, I lose £100. Early losses are never made up by later gains because they in no way enhance the performance of other assets in the portfolio. If you lose on A, there is no sudden guarantee that you will gain on B. Lifestyle investment is a marketing tool to sell schemes to the financially anxious.

The Government and the Minister argue that the risks in qualified assets can be mitigated away through diversification. For a fund fully invested in good-quality assets, such as the FTSE 100 or the S&P 500, I see the argument for diversification to manage risk, but diversification loses its effectiveness in high-risk portfolios, as everyone should have learned from the collateralised debt obligation scandal that triggered the financial crisis in 2008. Let me illustrate with an extreme example. I go to the casino, maybe several casinos. I play the slot machine, roulette and blackjack. I am beautifully diversified. But we all know that I will still lose my money.

The Government’s case that pensioners with the narrowest shoulders should be 10% invested in qualified assets really depends on assumptions that it makes about asset allocation. The argument is that the pension companies involved would employ the best experts to pick winners among those qualified assets. Some experts are better than others, though I note that they all will find statistics and present them to show that they have the Midas touch.

I note the analysis of the Government Actuary’s Department, which shows that over time and on average—that is a key word—virtually every model portfolio tested delivers similar results. But there is a catch, as the noble Lord, Lord Sharkey, pointed out last week—the GAD’s conclusion underscored its uncertainty. It said that

“there is considerable uncertainty, particularly with the assumptions for projected future investment returns”.

The noble Lord, Lord Sharkey, also quoted from the Institute and Faculty of Actuaries, which made the point even more forcefully. I could not work out what the mean looked like when I looked at that work done by the government department. Obviously, the mean really matters because an average can be made up of a few big winners and a lot of small losers. It is the losers in the high stakes game of qualified assets that worry me.

I am not attempting to stop the Mansion House Compact and the Government’s plan to put 10% of the assets of auto-enrolment default funds into qualified assets even though they are unlisted, opaque, high-risk and illiquid. My amendment would simply require the Government to provide a safety net for those who are in no position to live with the downside in these investments.

The noble Lord, Lord Davies of Brixton, last week said that

“the inevitable corollary of mandation”,

which is where he was focused,

“is responsibility for the outcome”.—[Official Report, 26/1/26; col. GC 284.]

But I regard the Mansion House Compact as very much a government-driven agreement designed by the industry to head off even more coercive action and so I think that the same principle applies: “responsibility for the outcome”.

My amendment is simple:

“Upon the individual becoming entitled to receive retirement benefits under the scheme, the trustees or managers must obtain an actuarial assessment of—


(a) the net investment return attributable to the qualifying assets held within the default arrangement over the period during which the individual’s rights were so invested, and


(b) the net investment return that would have been achieved over the same period had those assets instead been invested in a prescribed benchmark fund”.


In the amendment, benchmark fund

“means a diversified, low-cost equity index fund of a description specified in regulations”.

If the benchmark fund would have performed better, the Government make up the difference to the pensioner. The calculation, despite what the Minister said, is very simple, requires no new data and can be crafted straightforwardly. Pension schemes would just code it into their normal reporting.

If the Minister and the Government are right, and investment in qualified assets, as structured under the Mansion House Compact and in this Bill, benefits and does not harm pensioners in auto-enrolment default schemes—those people I described at the beginning with the narrowest shoulders and least able to take risk—it costs the Government absolutely nothing to sign up to this protection provision. If the Government believe their own words, accepting my amendment means taking no risk at all for the Government or taxpayer. My amendment only costs the Government money if they are wrong in the promises that they are making. The amendment would certainly give peace of mind to the poorest pensioners and strengthen their confidence to save and to invest.

We all want auto-enrolment to better serve low earners, but that requires shaping policy around the capacity of low earners to take risk. I ask the Government to put their money where their mouth is and provide the pension value protection described in my amendment. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I apologise for not being able to be here last week for Amendment 142. I am grateful that the Minister responded to it regardless of that. I have added my name to Amendment 167. I will try to be very brief because the noble Baroness, Lady Kramer, has explained it with her usual clarity, and the amendment covers some of the same ground that we debated in the last group—although it attacks the problem from the other direction.

Pension Schemes Bill

Lord Vaux of Harrowden Excerpts

Committee stage
Thursday 22nd January 2026 Grand Committee

I look forward to the Minister’s response.

[Lord Vaux of Harrowden (CB)]

My Lords, before I start, I apologise to the Grand Committee for failing to be here to speak a previous amendment. It was unavoidable, unfortunately. I am very grateful to the noble Lord, Lord Palmer, for stepping into the breach. I have had an exciting afternoon moving from R&R to pension schemes. I apologise that I am afraid I am going to be in the same position next week, so it will not be me speaking to my Amendment 119. Anyway, there we go.

I speak in support of Amendments 111, 161 and 162, tabled by the noble Lord, Lord Sharkey, to which I have added my name. To be honest, I support all the amendments in this group that seek to remove the asset allocation mandation powers, which is probably the most controversial part of the Bill. The trustees or managers of pension schemes have an obligation to act in the best interests of scheme members. That is their fiduciary duty. It is not their job to carry out government policy and they should not be forced to act in a way that they may believe is not in the best interests of scheme members. That is the clear implication of mandation. If the assets that the Government wish to mandate are so suitable or attractive for the relevant scheme, the trustees would presumably already be investing in them. If mandation is required to force trustees to invest in such assets, it implies that they have decided that they are not suitable assets for the scheme. That drives a coach and horses through the whole fiduciary principle. As we will come to in a later group, personally I would feel very uncomfortable about taking up a trustee role in such circumstances.

It begs a range of questions. Who will be liable if the mandated assets perform poorly? The Bill is silent on this. Why should scheme members take a hit because of government policy? Are the trustees liable for any below-par performance? Why do the Government feel they know better than professional managers and trustees? I do not see any evidence at all that the Government are a better manager of investments. Who will decide on the asset allocation, and based on what criteria? There is nothing in Bill that sets out the purpose or criteria for the asset allocation: just some examples, including private equity, which the noble Lord, Lord Sharkey, mentioned, which will be looked at in a different group. All the Bill says specifically is that the allocation may not include securities listed on a recognised exchange. How will the impact be measured and reported? The Bill does require the Secretary of State to publish a report setting out the expected impacts on scheme members and UK economic growth, but there are no reporting requirements on the actual outcomes.

Surely it would be better to try to understand why pension schemes are not currently investing in these so-called productive assets. What are the barriers to them doing so? That is not a rhetorical question; I would very much like to hear why the Minister thinks this has not been happening. What is, or has been, stopping the pension schemes investing in those assets they believe are so desirable? Surely, the better answer must be to try to remove those barriers, to make the assets more investable, rather than mandating, perhaps by refining regulation or adjusting tax—Gordon Brown’s dividend tax raid has, I am sure, quite a lot to do with this—or taking whatever other actions may be required to remove or reduce the identified barriers. Mandation is, frankly, the lazy option. We should identify and deal with the root causes if we want a sustainable solution.

The Government say they do not intend to use the mandation powers and, in some ways, that is worse than using them. The powers are there as a stick in the background, to force trustees to invest as they want, but without giving the trustees any of the protections that might exist if they could at least show they were acting as required by law. In any case, as a matter of principle, Governments should never take powers that they have no intention of using. This mandation power drives a coach and horses through the fundamental fiduciary duties of trustees. The Government say they do not intend to use it; it should be removed.

[Baroness Altmann (Non-Afl)]

My Lords, I support all the amendments in this group. I echo the words of noble colleagues in the Committee about the dangers of the Government mandating any particular asset allocation, especially the concerns about mandating what is the highest risk and the highest cost end of the equity spectrum at a time when we are aware that pension schemes have probably been too risk-averse and are trying to row back from that.

What is interesting, in the context of the remarks made by the noble Lord, Lord Vaux, is that I was instrumental in setting up the Myners review in 1999, which reported in 2001, under the then Labour Administration. As Chancellor, Gordon Brown’s particular concern was about why pension funds do not invest much in private equity or venture capital. That was the remit of the review. The conclusions it reached were that we needed to remove the investment barriers, to change legislation, to encourage more asset diversification, to have more transparency and to address the short-term thinking driven by actuarial standards—at the time, it was the minimum funding requirement, which was far weaker than the regime established under the Pensions Regulator in 2004.

So this is not a new issue, but there was no consideration at that time of forcing pension schemes to invest in just this one asset class. The barriers still exist. In an environment where pension schemes have been encouraged, for many years, to think that the right way forward is to invest by reducing or controlling risk and to look for low cost, it is clear that the private equity situation would not fit with those categories. Therefore, I urge the Government to think again about mandating this one area of the investment market, when there are so many other areas that a diversified portfolio could benefit from, leaving the field open for the trustees to decide which area is best for their scheme.

I am particularly concerned that, as has been said in relation to previous groups, private equity and venture capital have had a really good run. We may be driving pension schemes to buy this particular asset class at a time when we know that private equity funds are trying to set up continuation vehicles—or continuation of continuation vehicles—because they cannot sell the underlying investments at reasonable or profitable prices and are desperately looking for pools of assets to support those investments, made some time ago, which would not necessarily be of benefit to members in the long run.

Pension Schemes Bill

Lord Vaux of Harrowden Excerpts

2nd reading
Thursday 18th December 2025 Lords Chamber

[Lord Vaux of Harrowden (CB)]

My Lords, it is about five years since we last saw a Pension Schemes Bill in this House, and it is good to see so many familiar faces, albeit sitting in different places in the Chamber. It is also good to be welcoming some new faces to our small band of pension enthusiasts, and I am particularly looking forward to hearing the maiden speech of my noble friend Lady White of Tufnell Park.

This is a big Bill, and there is a lot in it, much of which is to be welcomed and is not particularly controversial. I am going to restrict my comments to two areas of the Bill, one of which I think we will hear quite a lot about.

First, I understand and agree with the reasons and the desire to consolidate small dormant pension pots, but I have some concerns about the details. We are all aware of the problem of lost pensions, whereby a person has forgotten about a pension, perhaps from a long-ago short period of employment. This is one of the problems that the much-delayed pensions dashboard is designed to solve. Compulsorily moving a small pot from one provider to another risks increasing that problem: it will be much more difficult to track down a pension that you dimly remember if it has been moved, perhaps with any correspondence having been sent to an out-of-date address.

The definition of “dormant” is also slightly concerning: a pension pot will be considered dormant if no contributions have been made into the pot during the last 12 months and the individual has taken no steps to confirm or alter the way the pension pot is invested. I have a couple of pension pots that would be considered dormant under that definition, but that is simply because I am happy with the choices I made in the past; I would not consider them to be dormant. In the opposite direction, £1,000 seems a rather low definition of small, although I see it can be changed by regulation.

I am not clear when the Secretary of State intends to make the relevant regulations, but to avoid making the problem of lost pensions worse, I would suggest that it should not be done until the first pensions dashboard is fully operational and accessible to the public. As I understand it, that will not be until late 2027. Perhaps the Minister could provide a brief update on that. Also, there should be a clear requirement that any such transfer, carried out in a situation where no response has been received from the individual, should be clearly flagged on the dashboard to help people track them down.

The second issue I want to raise is more important. Here, I fear that a trend is beginning to emerge already—and that, most unusually, I am going to find myself in disagreement with the noble Baroness, Lady Altmann. This is the power for the Government to mandate the asset allocation of a master trust or group personal pension scheme. Pension schemes should be managed for the benefit of the beneficiaries. The trustees have a fiduciary duty to that effect. The Government mandating that a proportion—and there is no limit to this in the Bill—should be directed into types of assets and locations chosen by them rides a coach and horses through that principle. Who will be liable if such investments are not suitable or go badly wrong? I do not see any indemnification of trustees here. What makes the Government think that they know better than a professional qualified pension manager as to what is best for scheme members? The track record of government investing is not stellar, to say the least.

Of course, the reason for this is to push more pension funds into UK assets, often described as “productive assets”. Like the noble Lord, Lord Sharkey, I have that in inverted commas here, but even that makes little sense in this respect. Let us look at the sorts of assets that the Bill refers to. The first is private equity. Now, private equity may be a good place for a pension fund to put some of its money. Over time, returns have generally exceeded public markets and bonds, primarily because of the use of leverage, but I would love to understand why the Government think this would be a good thing for the country.

What private equity does is buy existing assets, then leverage them up with high levels of debt, thereby gearing up the possible returns that can be made on normal levels of growth. That reduces the corporation tax payable by the company because debt interest is tax-deductible, and the debt is often located in overseas low-tax jurisdictions. Typically, then, overheads and costs are reduced as far as they can be to make the company appear more profitable for sale after three to five years, and that often has the effect of reducing investment in the company and often leads to job reductions.

So where is the benefit to the country from this? If noble Lords do not believe me, I give them Thames Water, left underinvested and indebted by Macquarie, which took out billions in the process, or Debenhams, where the three private equity owners collected £1.2 billion of dividends financed by debt and property sales that left the company to go bust. Others we could mention would be Southern Cross Healthcare and Silentnight, where, ironically, pensioners also lost out, and we have the current anti-competitive situation with veterinary practices. Of course, this is a generalisation, and there are exceptions, but the idea that PE generates growth is doubtful at best—venture capital, development capital, growth capital, yes; PE, not so much. Why do the Government think it would be a good idea to force pension funds to invest in private equity?

Amazingly, the Bill does not actually set out that allocations must be made into UK assets. The wording is drafted so widely that the only assets globally that cannot be prescribed are assets listed on a recognised exchange; nor does it set any limits to what percentage should be allocated into the assets the Government prescribe. In theory, 100% could be allocated. The only safeguard in the Bill—contrary to the Minister’s comment that there are many safeguards—is that the Secretary of State must review the effects of any such regulation within five years of the regulations coming into force. We should note that this is not an independent review; it is a review by the Secretary of State, the very person who made the regulations. That does not fill me with huge confidence. Anyway, if things have gone wrong after five years, what can be done? Is the Secretary of State to be liable for the losses that scheme members have incurred because of the Government overriding the fiduciary duty?

We are an outlier in terms of our pension funds investing in their own country’s productive assets, especially when compared with countries such as Canada and Australia, so I understand why the Government wish to change that, but the way to achieve that is first to understand why it is not happening now. I would be interested to hear from the Minister why she thinks that is. I suspect it is down to a number of issues, including demographic issues, the attractiveness of our markets versus others, regulation, taxation—Gordon Brown’s dividend stealth tax has a lot to answer for—and, I am sure, others. The better solution, surely, is to identify and deal with the barriers that exist to make UK productive assets a more attractive investment prospect, not to take the frankly lazy and inefficient route of mandating without addressing the underlying reasons. Neither Canada nor Australia mandates. Rather, they promote domestic investment in infrastructure and projects through collaboration, not by forcing specific allocations. We should learn from those examples.

The Minister has been clear that the Government do not expect to use this mandation power. This raises a wider point of principle, one that the Minister and I have debated in other contexts in the past, which is that the Government should not give themselves powers that they do not intend to use. As the noble Baroness, Lady Stedman-Scott, said, there is a tendency to use them regardless at some point, even if it is another Government who use them. This is becoming a bit of a trend, and one that I feel should be strongly resisted. There are two potential solutions to this part of the Bill. Either we need to clarify the whole fiduciary duty principle and improve safeguards, or we should remove the power altogether, and I must say that I favour the latter.

With that, I look forward to working with Members from all around the House, as ever, and the Minister on the Bill. In the meantime, I wish everyone a very happy Christmas.

Public Authorities (Fraud, Error and Recovery) Bill

Lord Vaux of Harrowden Excerpts

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

[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.

Public Authorities (Fraud, Error and Recovery) Bill

Lord Vaux of Harrowden Excerpts

3rd reading
Thursday 23rd October 2025 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, I thank the Minister for her remarks. I will make a short reflection on our discussions on Report and in Committee. I speak for my noble friend Lady Finn in so doing. Despite the technical title, this is an important Bill, as the noble Baroness said. It addresses one of the most serious problems that public authorities face. Based on the Public Sector Fraud Authority’s methodology, fraud and error cost the taxpayer £55 billion to £81 billion in 2023-24. The Bill has sought to address this problem, at least in part, through the provision of extensive powers to officials in the DWP and the Cabinet Office. It is largely these that we have discussed over the past few months.

I am proud of the work that this House has done in scrutinising the Bill, identifying issues and problems, and working in the genuine spirit of collaboration to make it better, fairer and more effective. I pay particular tribute to the noble Baronesses, Lady Anderson of Stoke-on-Trent and Lady Sherlock, for the way they have engaged with Members from across the House. They have listened to concerns, shown genuine willingness to make improvements and demonstrated what responsible government should look like. I firmly believe that the Bill before us is stronger and more balanced than the one first introduced to this House. There is more to be done and areas for further improvement, but we have reflected this in our amendments. The changes that have been made are indeed welcome, and we look forward to ping-pong when it comes. I am also grateful to the noble Baronesses for following up on commitments swiftly, not least for providing the now famous flow charts, which have been genuinely useful to us and, I hope, their departments.

I thank other noble Lords for their engagement with this Bill and their support of our amendments both in Committee and on Report. We have sought to address what we see to be serious shortcomings in the Bill on questions of oversight, accountability, proportionality and fairness. I am thankful to noble Lords who supported us in the Divisions that we called. The amendments we have passed in this place advocate for greater oversight, clearer lines of accountability and a PSFA that can actively pursue fraud. I believe that these are important changes that make the Bill more effective and fairer.

I particularly thank the noble Lord, Lord Vaux, and the noble Baroness, Lady Fox, for their support of our amendments, and I certainly do not forget the noble Lord, Lord Palmer, and the noble Baroness, Lady Kramer. I thank them for their support on some of our proposals. I look forward with interest to seeing how the arrangement with the PSFA, the DWP and the banks evolves and becomes effective. We accept that it is test and learn. It is vital that the legislation to seal the agreement becomes effective in combating fraud.

Finally, I thank the officials who have worked so hard from the government side to enable this process to happen. I know from my time as a Minister that we rely on our officials for a great deal; indeed, it is often to them who we turn for advice and support. I also know that their work is often not credited because they are not visible in the way that we are during debates. I therefore thank officials from the DWP, the Cabinet Office, the PSFA and the Ministers’ private offices who have worked hard to support them and, indirectly, all of us in the discussions we have had on the Bill. Noble Lords from across the House should recognise them and their work. I pay particular tribute to and thank my assistant, Oliver Bramley, for his sterling work during this period.

I urge the Government to meet this House on the amendments that it has added to the Bill, given the extensive discussions and strong cross-party support that they command from across the House. The Bill that we return to the Commons is a better one and I urge the Government to use this opportunity to make these changes permanent.

Finally, we all leave the Bill with certain expressions ringing in our ears, such as “test and learn”, which I alluded to earlier, but particularly the tongue-twister “eligibility verification measure”. I think I can just still say that.

[Lord Vaux of Harrowden (CB)]

My Lords, this Bill is important, creating a wide range of powers for the Cabinet Office and DWP to deal with fraud and error. Until recently, it received very little attention in this House, being in Grand Committee. A small group of noble Lords have worked on it as it has gone through the stages in this House and it has been a great pleasure to work with all of them, across all parties.

I want to repeat what I said before: first, that the Bill as introduced was a much better Bill than its previous incarnation under the last Government. I am extremely grateful to both Ministers for that; they listened and acted on the concerns raised at that time and reflected many of them in the Bill as it was tabled originally. The same is true of the opposition team; I think they also heard those concerns, and it has been a pleasure that they have been so supportive of many of the changes made to strengthen the safeguards around the powers.

Equally, the engagement from the Ministers and their officials has been exemplary throughout the passage of the Bill. It has been a very good example of how this House works best and I am very grateful to all of them. They have been not only extremely generous with their time but very constructive in their engagement. Documents, such as the draft code of practice, have been published in good time, which I think most noble Lords would agree is not always the case. The detailed document that showed how the Bill would work alongside other legislation was a lot of work for somebody but incredibly helpful in enabling all of us to understand this better. As the noble Viscount, Lord Younger, just said, special mention is merited for whoever produced the famous flowcharts.

I am also grateful to all those who supported me in my efforts to strengthen the safeguards around these new powers, in particular, the noble Baroness, Lady Finn, the noble Viscount, Lord Younger of Leckie, the noble Baroness, Lady Kramer, and the noble Lord, Lord Palmer of Childs Hill, as well as the noble Baroness, Lady Fox, and others. Having said that, we were not able to find agreement on everything, as we saw on Tuesday. I say to the noble Baroness, Lady Sherlock, that I remain keen to see whether we can find a constructive solution to those remaining issues that would work for us all. I stand ready to work with her and her team to that end before we get into ping-pong. I am not trying to thwart the intent of the Bill and have tried throughout to reflect as closely as possible what the Government say they really need. I really hope that we can find something mutually agreeable during the next stages.

[The Lord Bishop of Leicester]

My Lords, I support this Bill and add my thanks to all those who have engaged so thoroughly in its detail. It has been an important learning experience for me in the processes of your Lordships’ House, an experience that I hope I can bring to bear on other business in this place.

In addition, I want to speak briefly to the amendments brought forward on Report by the noble Lord, Lord Verdirame, the noble Baroness, Lady Lister, myself and the noble Baroness, Lady Finn. Unfortunately, neither the noble Lord nor the noble Baroness, Lady Lister, are in their place today; they have asked me to speak on their behalf. We did not push our amendment to a Division because of the assurances given to us by the Minister, and I thank her for those assurances given on Report with regard to overpayment, in particular the commitments to review communications with those with debts and to explore ways of improving the clarity and timing of those communications. Therefore, is the Minister prepared to either write to the whole House or commit to giving a Written Statement to Parliament, setting out the outcome of this review in due course?