Pension Schemes Bill

Baroness Coffey Excerpts

Tuesday 3rd February 2026 Grand Committee

[Baroness Neville-Rolfe (Con)]

My Lords, I have three very simple questions. First, why in some areas is the delegated legislation by negative resolution and in some cases by affirmative resolution? In Clause 49, regulations under subsections (1)(b) and (6)(a) are by negative resolution, as are some in Clause 50. I would just like to understand why.

Secondly, I am very aware that people will differ, as has been said. Some will want to take their money earlier than others, perhaps because they are using their pension as some sort of early day fund, or perhaps because they have a serious illness and do not expect to last long. Is that variation provided for? I would like that assurance.

Thirdly, if somebody has two pensions—perhaps one saved under auto-enrolment, which is what we are talking about, and another, perhaps because they worked in the public sector, a defined benefit scheme—how is the pension provider covered by these clauses going to allow for that difference of need?

[Baroness Coffey (Con)]

My Lords, Clause 49 is quite interesting. Clearly, we have been on a journey for some time. Going back 35 years, Maxwell raided his pension fund, completely screwing over his employees at the time, which led to the 1995 Act as a consequence. There were other items in there as well, but that brought in a much more controlling approach to aspects of pensions.

One of the liberations that happened in the previous pensions Acts a decade ago was that people did not have to do a particular thing with their money. I know this is money that was topped up by aspects of tax relief and the like but, ultimately, instead of being forced in a particular direction with an annuity in a different way, people had a choice. I am conscious that various scams happened when people were transferred from one to another. I hope those people will find a special place in hell; they have deprived people of the money that they had rightly gathered over the years and scammed them out of it. But ultimately this did give a choice to people, with all that money, about how they wanted to spend their retirement—instead of somebody else telling them what to do.

I am concerned that this clause, in effect, requires a guaranteed solution. I appreciate that my noble friend Lady Noakes has talked particularly about removing the need for there to be a regular income as part of this solution, but if benefit solutions are going to be required by this legislation, there should not just be a choice of a minimum of one. There should be at least two, so that people can still have that choice. That is why in Clause 49(1)(a), I think that “one or more” should be “a minimum of two”, if that is going to be the way that we go.

The other thing that is not clear to me—perhaps I just have not spent enough time reading this—is what happens if people do not want the default pension. What choice do they have? It does not feel as though they have any choice at all. I am trying to understand something: what is the real problem that Ministers and the Government are trying to address here? Do not get me wrong—we want to make pensions as simple as possible for people. I know that my former employer used to set up a particular approach, saying that it was easy and that you could buy into it, but it was your choice what you did. That is why I am concerned about Clause 49 in particular. I hope that, by the time we get to Report, the Minister will have reconsidered whether ripping away freedoms is the right way for the people whom the Bill is intended to support.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to the noble Viscount, Lord Younger, for introducing this debate, and to all noble Lords.

Let me briefly outline the problems that the chapter on guided retirement is seeking to address. The landscape is changing. I will not get into the detail of how we have gotten to where we are with my noble friend Lord Davies, but the reality is that we are now in a position where fewer than a million people in the private sector are saving into a DB pension, whereas more than 15 million are saving into DC schemes. Of course, unlike in DB schemes, DC members carry the risk themselves; what you get out depends entirely on what you put in and how it performs. The result is that DC savers face risks: the risk of savings not lasting through later life; the risk of market fluctuations; and the risk of inflation eroding purchasing power. They also face decision‑making risks, as retirement choices can be complex and poor decisions can have lasting effects. Clause 49 enables the Government to respond to those risks, putting savers first. Our objective is the vast majority of DC savers no longer having to make complex decisions about how to secure a sustainable income in later life, although—I say this in response to the noble Baroness, Lady Coffey—the freedom to choose absolutely will remain.

Let me explain how we envisage this happening. When DC members approach their scheme to access their savings, they will be presented with the default pension solution; in acknowledgement of my noble friend Lord Davies, let us call them “default plans” from this point onwards. At this point, the member will have the option to say yes to the default plan or say, “No, I want to choose a different way to use my assets”; that could be an alternative in their own scheme or elsewhere. We will explore this, including how schemes can give appropriate support, in our consultation. The interaction should not be a surprise to members at this point because we will ensure that, through appropriate communications, members hear about the concept of a default plan from very early on in their pension journey.

Clause 49 will require pension schemes to design and develop pension plans based on the generality of their membership, by which we mean gaining insight of what the vast majority of their members want from their pension assets. The noble Viscount, Lord Younger, wanted to know how they are meant to do this. We know that many schemes already have member panels; we expect these, as well as other channels to obtain member insight, to continue. The Government will not specify unless necessary but the regulator will work with schemes, through guidance, on how to identify the needs of their members. The Government will also consult on whether there should be minimum standards for gathering information so that the solutions reflect the generality of the scheme membership.

We anticipate that the evidence from scheme members will indicate that there is no one common set of aspirations, so we are giving the scheme the ability to introduce more than one default plan. Where there is more than one default plan, there will be a simple triage to determine which one the member is offered. Again, the benefit of this approach is that no member will have to make a complex decision on how to take their pension payments, except to request that they want to start receiving payment. As has been mentioned, the default plans must provide a regular income during retirement. We will consult on the detail, but it will be for trustees to determine exactly how they achieve this; there is scope for product innovation.

The clause also makes provision, as has been noted, for exemption where that would not be appropriate. I will turn to Amendment 178, which relates to this, in just a moment but, crucially, savers will retain the choice to access their pension another way. We know that retirement is not a linear experience and that circumstances change both at and after retirement. Life events such as deciding to work part-time, health conditions and bereavement can all factor in and have an impact on household incomes. That means that gathering insights and engagement with members will be important, alongside well-designed and flexible plans.

--- Later in debate ---

Moved by

[Baroness Coffey]

180A: After Clause 57, insert the following new Clause—
“Review: transfer of the Financial Conduct Authority’s pension regulation functions to the Pensions Regulator(1) Within six months of the day on which this Act is passed, the Secretary of State must publish a review to assess the viability of transferring the Financial Conduct Authority’s pension regulation functions to the Pensions Regulator.(2) The review under subsection (1) must include an assessment of whether the Pensions Regulator should take on responsibility for the regulation of defined contribution pensions, except for self-invested personal pensions, in place of the Financial Conduct Authority.(3) The Secretary of State must lay the report under subsection (1) before Parliament.”Member’s explanatory statement
This probing amendment explores moving to one regulator, the Pension Regulator, for all pensions (both defined contribution and defined benefit) that are not self-invested private pensions (which would stay with the Financial Conduct Authority).

[Baroness Coffey (Con)]

My Lords, noble Lords may want to consider Amendment 180A an amuse-bouche before we get back into the real meat and honey, as it were. I am grateful to the noble Baroness, Lady Altmann, for having also signed this amendment. We have already made it clear that the Pensions Act 2008 set out the requirements for auto-enrolment into pension schemes, which was commenced and brought into effect in 2012. As such, all employers are now required to provide a workplace pension scheme and to make contributions.

The question I pose in this amendment is not whether pensions should be well regulated—that is a given—but whether the current regulatory architecture best supports effective supervision, good member outcomes and long-term system stability in this emerging ecosystem of pensions. I contend that it would do so only if occupational pensions, though not self-invested pensions, were regulated solely by the Pensions Regulator without the overlapping or parallel oversight of the Financial Conduct Authority. This is fundamentally an issue of regulatory design.

The Pensions Regulator was established with a clear statutory mandate: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund; and to promote the good administration of work-based pension schemes. Its regulatory approach is deliberately scheme-centric, focusing on governance, funding, the employer covenant, trustee capability and long-term risk management. By contrast, the Financial Conduct Authority’s framework is product and transaction centric. It is designed around the regulation of firms that either make, distribute or advise on financial products, with a particular emphasis on conduct at the point of sale, disclosure and consumer choice.

The FCA’s tools, culture and regulatory philosophy—whether that is speed, competition, disclosure or transactional fairness—are shaped, in effect, by retail finance. That approach is fine, but I suggest to the Committee that it is not so well suited to not only the current pensions world but the evolving world of pensions that this Bill, in particular, is accelerating. Let us be clear: the FCA’s consumer duty is to the individual. That is not what we see with workplace pensions more broadly, where we have the trust-based approach.

The ongoing involvement of the FCA in pensions risks creating, if it has not done so already, regulatory overlap without regulatory coherence. I am aware that there are statements of co-operation but, particularly with the evolution of the pensions world for employees through the Bill, this should lead us to consider a change in the regulatory approach. The contract-based approach is evolving and, as we have already debated, will now be able to be overridden. For that reason, I come back to the question of whether we should think about the Pensions Regulator being the sole regulator, apart from for self-invested personal pensions; I can see that the consumer duty element under those individual schemes is well suited to the FCA.

The danger of dual regulation is real, costly and can be confusing. The uncertainty is evident. In having two different ways, there are some conflicts over how certain assets or schemes can be treated. There is the risk of misclassifying pensions as short-term financial products, rather than what could be really long-term social contracts. We know that people often remain disengaged from their pensions. Their outcomes therefore depend far more on scheme design, trustee competence and the long-term investment strategy.

I think that the Pensions Regulator understands this reality much better. It recognises that good outcomes come from strong governance, clear fiduciary duties and long-term risk management in not only defined benefit schemes but defined contribution schemes. As I have already mentioned, I am conscious that, although there is collaboration, the risk of regulatory drift is still real. This would be solved by moving, in essence, to having one regulator for all occupational pension schemes.

The Pensions Regulator has already shown that it can evolve. It has strengthened its focus on value for money, professional trustee standards, consolidation and other elements on which it is doing well. A single regulator would deliver clarity, coherence and confidence, which is why I have tabled this amendment seeking a review. More specifically, in subsection (1) of the proposed new clause, I suggest

“a review to assess the viability”.

I say “viability” deliberately but then, in subsection (2), I offer a little leeway on that review, including whether the Pensions Regulator should take it on. This may feel to many like dancing on the head of the pin but, actually, we are seeing these two regimes in parallel. In effect, we are starting to see almost the removal of the contract-based approach. As a consequence, we should grab the challenge and make this change.

I am conscious that the Minister may ask, “Why did you not do this when you were in power?”, which is a fair question. But as my noble friend Lady Stedman-Scott will know from the time we were doing the 2021 pension scheme, when we were bringing in certain measures, including dashboards, once the Treasury gets hold of something it does not want to let go. Let us not pretend otherwise.

We are coming on to a debate shortly about superfunds. I am not going to reveal every battle that we had then; nevertheless, it was certainly a challenge. That is no disrespect to my other noble friend Lady Neville-Rolfe, because she was a great Treasury Minister. But it is a case of making sure that this Bill, in particular, is accelerating what is happening. It is going back, in effect, almost to a paternalistic or maternalistic approach, so it makes sense to at least review this change now. I hope the Minister will give it careful consideration. I beg to move.

[Lord Fuller (Con)]

My Lords, the advantage of Committee is that we can bat around some batty ideas without troubling the scorers too much. I am not going to violently disagree with either of my noble friends or the noble Baroness, Lady Altmann, in this respect, but it oversimplifies the pensions landscape. I totally endorse the idea that we need to have a fresh look at the regulatory environment within which pensions operate, because things have not gone right.

There has been a regulatory groupthink. The example of the LDI, the liability-driven investments disaster, is a case in point, because the LDIs anchor schemes that are in deficit and can never climb out of that. That is sort of how they work. The regulator has bamboozled and misdirected trustees over many years not to focus on maximising the returns, so that there is sufficient money in a scheme to pay the pensions as they fall due over its lifetime—that would be a good long-term objective. No, the regulator has forced them to look, three years at a time, at how they can focus on the deficit, not on the term. There has been a failure of regulation and that needs to be remedied.

The amendments in the names of my noble friends and the noble Baroness, Lady Altmann, focus on the Pensions Regulator, which we have heard is much more corporate-focused, and the FCA, which is much more individually aligned, but they fail to see the wider landscape. Any review, in my opinion, should consider the Bank of England because, ultimately, it directed the whole industry and the other regulators to go down the LDI route. That finished and grievously damaged so many private schemes on that false altar of deficit focus rather than asset maximisation.

Then there is a triumvirate. There is the Government Actuary’s Department, which I accept is not occupational; it is for public schemes, but it sets the tone. Then there is His Majesty’s Treasury, which has just been mentioned, and the Pension Protection Fund. I agree with the thrust of the amendments that have been tabled, and we are only in Committee, but I would widen the scope of the report to include those other actors—the Bank of England, the Government Actuary’s Department, the Pension Protection Fund and His Majesty’s Treasury—so that we can see regulation in the round, because unless we do so, we will not cover up those regulatory cracks that some schemes have fallen down.

--- Later in debate ---

[Lord Palmer of Childs Hill (LD)]

My Lords, what worries me is that the noble Baroness, Lady Coffey, says we should grab the challenge. I am not sure that I am ready to grab the challenge and not convinced that we should abandon, in any way, the Financial Conduct Authority. I wonder what representations have been made by the FCA on this. I would like to hear how the FCA feels about the Pensions Regulator taking over and what has happened in the past.

[Baroness Coffey (Con)]

I can assure the noble Lord that the FCA will not give anything up. In fact, it would probably rather swallow the Pensions Regulator.

[Lord Palmer of Childs Hill (LD)]

Maybe that would be a good thing. I am not convinced that the regulator pushing away from primary legislation to regulation is necessarily the way forward. I am not convinced that what has happened to date has failed. Therefore, I am not sure why we want to change this without adequate proof. The idea that the FCA wants to swallow up everything else is fairly normal in the gladiatorial forum that we have. I would like to see what the FCA and others have to say about this before we make a final decision.

--- Later in debate ---

[Baroness Sherlock (Lab)]

My Lords, I am grateful to the noble Lord, Lord Fuller, for clarifying his view and apologise if I misrepresented it. I will not respond at any length but will simply say that there is already considerable join-up between the actors in this space. I do not feel it is necessary to have a single review just to work that out.

[Baroness Coffey (Con)]

I thank noble Lords for contributing to this debate. Certainly, in speaking to pension providers that are regulated by both TPR and the FCA, this brings additional complexity, which is another reason for this to come in. I appreciate that my noble friend Lord Fuller suggested this could be a batty idea. It is not a new idea. The 2013 report by the Work and Pensions Select Committee chaired by Dame Anne Begg—its Labour chair—called for it then. It was linked to the fact that we were starting auto-enrolment. The whole landscape for people, particularly those new to pension contributions and the like—and indeed for existing people—was shifting to workplace occupation-based pensions, which are all regulated by TPR. So I think it was going for simplicity in that regard.

My noble friend is particularly cross about an aspect of the Pensions Act 2004. I would have invited him to perhaps table an amendment to the Bill with his objections to the statutory funding objective, which is the element that particularly irks him. It replaced the minimum funding requirement, but that is a debate for another day, rather than trying to resolve it all now. I thought the Minister did well, particularly in reading out her brief and keeping the Treasury happy. That is no bad thing for any Minister in a Government but, of course, I beg leave to withdraw my amendment.

Amendment 180A withdrawn.

--- Later in debate ---

[Baroness Bowles of Berkhamsted (LD)]

My Lords, everyone—apart from insurers, perhaps, who prefer buyout and the regulatory cash bonus it brings them—is in favour of superfunds. They should improve member benefit security. They can enhance members’ benefits, as the noble Baroness, Lady Noakes, just said. They can return cash to employers when appropriate, supporting UK businesses. They can also invest more in productive finance than a buyout or a DB scheme can.

However, numerous barriers make it difficult for superfunds and my Amendments 182 and 183 seek to address two of them. Amendment 182 seeks to remove gateway test 1, which is the test that prevents a scheme that can afford a buyout entering a superfund. The policy of pushing everything to buyout is intended to address risk, but it is not always in the members’ best interests; that could be considered more. Discretionary benefits, which can often include things on which expectations are based, may be lost. For example, spouses’ entitlements and increases in pensions are often discretionary; I know that that is the case in parliamentary schemes.

In a buyout, discretionary benefits are likely not to be paid, but a superfund could pay them. There seems to be some underlying assumption that superfunds do not serve risk reduction, but that does not reflect the extremely secure funding position that superfunds are held to by the regulations. Additionally, the test is unstable because funding levels vary. A scheme can start the process unable to afford buyout, and therefore be deemed able to go into a superfund, but if later on it could afford buyout part-way through, it would be required to reverse out and would be forced into a buyout. That can mean a lot of wastage of cost and time, as well as worse-off pensioners. Removing the test would give schemes more flexibility in the course they pursue, and may be better for the economy. If they chose a superfund, it would mean that more schemes could keep money invested in pensions and pay out more generously, rather than that extra money being lost in the insurance companies.

Amendment 183 is about the wind-up trigger and the protected liabilities threshold. This in, in essence, the point at which a superfund’s funding drops to such a level that it must close and enter the PPF. The recent PPF indexation means that the protected liabilities threshold is now above the low-risk trigger—that is, the technical provisions threshold—which is upside-down from the policy design, where the low-risk trigger is intended to be a less critical warning scenario than the wind-up trigger and is the point at which the scheme funds must be boosted by investor money.

This upside-down formulation will make it harder for superfunds to attract investor capital and will probably push pricing up closer to buyout levels, narrowing the slice of the market that superfunds can operate in. That is good if you are shareholders in insurance companies but, again, not for pensioners, who lose benefits. The amendment proposes a “lower of” formulation for the definition of the protected liabilities, which would set it at lower and more reasonable levels.

There could be other ways to fix this or remove the protected liabilities threshold entirely and rely on trustee powers in distressed situations, which is normal practice for regular DB schemes. But staying in the upside-down formulation does not seem right and risks stifling the nascent superfund model. I appreciate that this is a recent development because of the indexation and possibly one that the Government did not originally foresee, but it none the less needs tackling.

[Baroness Coffey (Con)]

My Lords, I support Amendment 182 tabled by the noble Baroness, Lady Bowles of Berkhamsted. Gosh, superfunds—that has been quite a journey. It must be about six years ago that I apparently received a letter from Andrew Bailey, who I think was running the Prudential Regulation Authority at the time. I never actually received it, but I read it in the FT and on Sky. It told me that it all seemed very unfair compared with the Solvency II reform, which is what insurers had to go by. That is why I am strongly concerned about Clause 65(2)(a) being in this Bill.

I think we are seeing the hand of the ABI again here, trying to basically squeeze out other activity when we should be focused on what is in the best interest of the pension scheme members. We also want to try to make sure that we do not have never-ending firms going into the PPF. The superfunds, which I recognise the Government have embraced through this, are definitely a good option but are different to having an insurer buyout, even with some of the changes that have happened away from Solvency II to whatever version of Solvency UK. There has been more reform with less risk around some of the margins in that regard.

So I encourage the Ministers to think again about whether subsection (2)(a) is really the right approach for the outcomes they seek. Otherwise, why bother? Why bother having a superfund if you can get only the equivalent of what it is to get the insurer buyout?

I could go further, but I am conscious that the dinner business break is bringing exciting business and that the Committee wishes to finish by a certain time. So I will leave superfunds for another time, perhaps in the Bishops’ Bar. But, with that, I support my noble friend in Amendment 182.

[Baroness Stedman-Scott (Con)]

I will speak to Amendment 181 tabled by my noble friends Lady Noakes and Lady Altmann, and Amendments 182 and 183, tabled by the noble Baroness, Lady Bowles of Berkhamsted, and my noble friend Lady Altmann. I will also address the broader issue of the role of superfunds within our defined benefit pensions landscape.

At the outset, I want to be clear that my understanding is that the Government remain committed to creating a thriving and credible superfund market. That ambition is welcome because superfunds have the potential to support two important public policy objectives. First, they support member outcomes; properly regulated superfunds can improve security for members and, in the case of a run-on superfund model, they offer the additional prospect of enhanced benefits over time through the sharing of surplus and investment upside.

Pension Schemes Bill

Baroness Coffey Excerpts

Committee stage
Thursday 22nd January 2026 Grand Committee

[Baroness Kramer (LD)]

My Lords, I will be exceedingly brief. I may participate on an occasional basis on this Bill, despite the fact that it is very important. However, we have many people with exceptional expertise in the Room, for which I am extraordinarily grateful.

I have Amendment 167 in a later group on its own, which has relevance to one of the issues raised by my noble friend Lady Bowles in Amendment 46A, in which she introduces the concept that value-for-money regulations must take account of certain factors. Proposed new paragraph (c) particularly interests me, on

“the characteristics of the members of the scheme”.

In all the discussions that I have heard in the Mansion House compact and in the Bill, very little attention is paid to the characteristics of the members of the schemes, because they differ widely. I am particularly concerned that people on low salaries, whose primary savings for pensions and then investment is through auto-enrolment and default funds, have a very different risk profile from those of many people who otherwise engage in pension savings.

This is a group for whom the downside has far more serious consequences than for other groups. Many of us can afford to take a chance with parts of our pensions: if we lose some money, we are still going to be in relative comfort. That is essentially not true for this group. The upside benefit of taking risk and doing well from that risk is nice, but the consequences of taking risk and losing because of that risk are far more serious. I want to draw the Committee’s attention to that issue. As I said, I will pick it up again in Amendment 167, because to me it has been overlooked.

It is key that, when we devise pension arrangements, we recognise the very different risk profiles of members, so that what they are required to do—auto-enrolment and default schemes are in effect a requirement—matches their risk profile. I hope that we will begin to start to shift some of our thinking. There are amendments, in this group and in others, that could help very much with that issue.

[Baroness Coffey (Con)]

This group of amendments is quite interesting in starting to sketch out what is important in the value-for-money approach that is being adopted through the Bill. I did not know when the noble Lord, Lord Palmer of Childs Hill, would speak to Amendment 49 and I will be interested to hear what he has to say on this, because the only other form of occupational pension is, in effect, the defined benefit, where you know what you are getting. I was a bit surprised that he felt that that would need to go further, because that is a direct relationship between somebody and their employer. Nevertheless, I am sure he will explain further.

The noble Baroness, Lady Bowles of Berkhamsted, has tabled Amendments 55 and 56 to Clause 12, which are sensible, but one thing that concerns me at the start of that clause is the word “may”. We should be beyond that at this stage, which is why I also support my noble friends on the Front Bench in opposing Clause 13 standing part of the Bill. There are just too many ifs, buts and maybes, but when it comes to Clause 13 there is nothing at all. It is just a blank cheque for the future. I am conscious that things can vary over time, but we should be in a position where we are getting some clarity on what will be in these value-for-money assessments so that people can make choices. We should be getting that clarity now. If necessary, we can put down regulations for affirmative procedures but, candidly, I do not think it is good enough that we have this sort of approach to defining what is there for the future.

I say to the Minister that I appreciate that this is a real step forward and I welcome that. People put their money in, they are not exactly sure what return they are getting and they might look every now and again at where it is coming out. I appreciate that there is a whole journey to go on in pensions education, as well as for the trustees, in terms of what is really happening with their advisers who continue to do low-risk, low-reward. I encourage the Minister, however, to come back on Report with a much stronger sketching out of what will be in these assessments, as required by Clause 13. For example, instead of just having the word “may”, have some “must” in there and then open up the power later to adjust as necessary. It is also valuable to be able to repeal.

Amendment 74 concerns the “Duty to formalise the Value for Money framework”; I know that my Front Bench will speak to that shortly. It is a useful exercise to check whether it is working. There are other amendments which basically make comparisons with other pension providers. That gets trickier if it is done at such a detailed level because, again, people might want some basic information on what is happening with their money. To pick at random, they might want their money with Standard Life instead of Scottish Life; if there is some variation, they might want to make a change. It is those sorts of things that I encourage the Minister to have more detail on by the time we reach Report.

[Lord Palmer of Childs Hill (LD)]

My Lords, as has been expressed, this group establishes the foundation of the value-for-money framework. We welcome the ambition to improve outcomes for savers. However, the effectiveness of value for money will depend on how it is defined, measured and implemented, and I welcome the comments from the noble Baronesses, Lady Bowles, Lady Altmann and Lady Kramer, which elaborated on these points.

I shall concentrate on Amendments 49 and 54 and I hope I can persuade the noble Baroness, Lady Coffey, that they are of value. These amendments will extend the scope of the Bill’s value-for-money provisions. They ensure that they apply not only to defined contribution schemes but defined benefit occupational pension schemes as well.

The arrangements make it clear that regulations can make different provision for different types of scheme. Critically, however, all schemes must be covered by the value-for-money assessment, with a proper value-for-money rating. Members of DB schemes deserve the same transparency and assurance about value for money as members of DC schemes. DB schemes still represent a significant part of the pensions landscape. Excluding them risks creating an uneven playing field and less scrutiny where it is still needed.

A single, consistent framework across occupational pensions improves comparability, avoids regulatory gaps and ensures that all savers benefit from the same standards of accountability. The two amendments in my name would ensure that the Bill delivers on its promise of value for money across all pension schemes. The measure is simple: every saver in every scheme, whatever its type, deserves value for money. Other noble Lords have expressed this in detail.

The noble Baroness, Lady Altmann, spoke about pensions jargon. We are here in a very rarefied atmosphere, where people have some knowledge—I have less than many in the Room—of what pensions are about and what phrases such as “default pensions” mean. We need to make it clear to people who have no interest in pensions other than receiving a cheque at the end of the month at a certain age what it all means. Some people need to be clear about the choices they make, and we need to do as much as we can. These amendments, both those that have been spoken to already and the two in my name, seek to protect people’s interests.

--- Later in debate ---

[Baroness Altmann (Non-Afl)]

My Lords, I will speak to my Amendment 58. My remarks will apply to all the other amendments in this group, apart from Amendments 64 and 65, to which I will speak shortly, and Amendment 69 in the name of the noble Viscount, Lord Younger, which I also support.

My views on this group of amendments follow on from the comments I made earlier about jargon and trying to make pensions more member-friendly—more intelligible to the ordinary person. I believe that this is an extremely important area, having met so many members who simply do not understand what they are being told. The remarks from the noble Baroness, Lady Bowles, encapsulate some of that: if we cannot understand what we are being told in the communications, neither can members.

It was interesting to see that the original consultation suggestions of red, amber and green, which people would have at least a good chance of understanding, have instead been put into the Bill as “fully delivering”, “intermediate” and “not delivering”. Delivering what? We are talking about value; this is not Ocado or Amazon. The noble Baroness, Lady Warwick, in her remarks on the first group used the terms “good value” and “poor value” as if they were in the Bill—but they are not. My proposals in these amendments—to change the term “fully delivering” to “good value”, and “not delivering” to “poor value”—simply respond to what most people would expect this clause to tell them. I hope that the Minister understands that. Obviously, this is a probing amendment, so she may prefer other ways to express what we are trying to achieve here, but I hope that the intention behind these amendments will, in some way, feed into both the Bill and how the value-for-money framework will be considered when we develop it. It is a very sketchy framework at the moment.

I take the point about the consultation, but I have a related question. The critical players in moving away from the idea of cost to value, when assessing the merits of any particular scheme being used for the workforce in auto-enrolment, will be the employee benefit consultants. They advise the employers that they currently simply use cost as their major recommendation metric. They are not, in any way, properly scrutinised or regulated. Having done all this work to develop a value-for-money framework, will any attention be given to ensure that the people advising the employers on whether a scheme should be used will properly use the value-for-money framework that we will devise?

Amendments 64 and 65, which are also probing amendments, specifically address the “intermediate” rating, which is designed to have many levels or gradations. However, it seems that all of them could lead to scheme closure. They will all certainly lead to significant costs for a scheme rated “intermediate” due to the extensive reports and explanations that need to be given. My amendments simply seek to avoid significant extra costs, or the risk of scheme disclosure, for schemes that receive an “intermediate” rating on a shorter-term basis. It seems that it is almost possible that a “not delivering” rating will have a similar outcome to an “intermediate” rating because of how the Bill is phrased.

My suggestion is—and it is, as I said, probing and open for discussion and change—that you have to have an intermediate rating every year for, say, four years before the extensive requirements of this section kick in, so that in cases of up to five years you would need to notify the employer if you have changed from a good value to intermediate and the scheme would need to explain why this rating has been given and what plans it has for improvements. That would not be an extensive report, but it would obviously be helpful and would focus the minds of the scheme without the draconian implications that seem implied by the consequences of the intermediate rating as specified in the Bill. That brings me briefly to my support for Amendment 69, tabled by the noble Viscount, Lord Younger, and the noble Baroness, Lady Stedman-Scott, which probes what the penalties are, how they have been assessed and whether they are appropriate. I beg to move Amendment 58.

[Baroness Coffey (Con)]

My Lords, this is an interesting group of amendments. My noble friend has explained the importance of clarity in who decides whether something is fully delivering. I want to ask about the different assessments being made at this point. We are now, effectively, on Clause 15 onwards. We have the ratings coming through. My noble friends on the Front Bench will explain why they do not agree with certain elements. There is merit, however, in trying to work out whether something is taking a nosedive and whether it is it fixable, but we need to be more specific about a reasonable period, and then a prescribed number of VFM periods needs to be put in the Bill, which it is not at the moment.

Thinking through what has been suggested, I am trying to understand how this will work. Clause 13, which we have discussed briefly, has a certain amount of potential calculations. We then have the trustees doing their own assessment, and then we jump forward to Clause 18 and the Pensions Regulator may check. This is all feeling quite random. Normally when we do ratings, the CQC or Ofsted make that judgment, so I am trying to understand how this will work in practice. Are the guidelines going to be fixed—for example, the average or the benchmark across all pension schemes is this, or the FTSE 100 index has changed this much, or the costs are this percentage? It would be helpful to start to get a proper pitch. I appreciate that the consultation may have gone out, but there must be thinking in the Government’s mind, not just the regulator’s, on what “good” looks like. There are risks, as identified by my noble friends, that we may be overburdening to the point that the minutiae become an industry in their own right. I am surprised to see the penalties put in primary legislation, which is unusual nowadays, although I agree that we need a better sense of how that compliance element, as set out in Clause 18, will work alongside the other amendments. My noble friend is right to say that we need to keep this straightforward and simple for people to be able to understand.

[Lord Palmer of Childs Hill (LD)]

These are obviously probing amendments. They are all to do with the jargon: if we are arguing about the jargon, how much more confused will the normal punter be in trying to understand the jargon. This group focuses on how value for money is expressed, enforced and communicated.

We support the principle that members should be able to understand whether their scheme is performing well. However, value-for-money ratings also carry significant power. They will influence trustee behaviour, in particular, as well as employer decisions and market structure. That makes proportionality and precision essential.

I am particularly concerned about overreliance on short-term performance metrics. Saving for a pension is, or certainly should be, inherently long-term. Schemes should not be penalised for temporary underperformance driven by market cycles or responsible long-term investment strategies.

We also question whether compliance mechanisms become blunt instruments. Labelling schemes “poor value” without clear context may drive consolidation for the wrong reasons, reducing competition without improving outcomes. Clear language matters—I use the word “jargon” once again—but so does nuance. Members need information they can trust, not simplified labels about market complexity.

I have some questions for the Minister. How will this regime distinguish between persistent structural failure and short-term variation? How will it use this intermediate rating? How will it encourage genuine improvement rather than defensive behaviour by trustees? Trustees are meant to be very careful; they will be cognisant of the intermediate position. I will be interested to hear the Minister’s views on that.

--- Later in debate ---

In conclusion, I thank noble Lords for their constructive interest in these amendments and the development of the VFM framework. It is the Government’s view that the current provisions, including the detail in the consultation and that which I have set out, strike the right balance between flexibility and accountability and allow for sufficient consultation on the technical detail. These provisions are essential for delivering value for money and maintaining public confidence in our pension schemes. I therefore ask the Baroness to withdraw her amendment.

[Baroness Coffey (Con)]

I am keen to get a sense of what the Government think the current spread is between the different ratings. For example, what proportion might be red? Is there any sense of this at all?

[Baroness Sherlock (Lab)]

I am absolutely not going to answer that. If there is answer which is known to me, then I will be happy to share it with her, but it certainly not known to me.

--- Later in debate ---

I hope that the Minister will accept that the power should have some constraints on it in order to avoid the possibility that it could be used for what I will loosely call “improper purposes” at a later stage.

[Baroness Coffey (Con)]

My Lords, this is an interesting part. It recognises a lot of our labour market, where people are working with multiple employers over a variety of time periods. Even those young people who were on the Kickstart scheme will have got contributions to a pension scheme, which they may completely forget about once they go to their next, perhaps longer-term, job.

I remember a few years ago the lovely people over in the Department for Culture, Media and Sport. They have a “good purposes” fund where they go after dormant assets all over the place and take them away, with a general promise that the money will come back if somebody tries to get it. I seem to recall telling them to jog on when it came to pension funds, although some negotiation might have been arranged.

I am just trying to understand how all of this is going to fit together. That is why I think Amendment 83 is particularly helpful; basically, it says that the pensions dashboard must be in place. This is about making an informed choice. One of the things I am trying to understand is whether Clause 22(3)(b), which my noble friends on the Front Bench have suggested should be removed, is passive and non-engaged. Will the trustees running the scheme be required to make some effort to try to contact that person so that it does not just slide away without people even realising?

In terms of the other aspect, I assume, under Amendments 80 and 81, it is right to try to get into some more detail about prescribing, which could perhaps be further enhanced by just getting to understand in Clause 25 what the Minister is thinking at this point, especially when it suggests that the trustees or managers of a scheme can determine whether it is the best interests for this to transfer or not. Are we talking about, say, people who are in prison, people who have gone abroad or people who are on a career break? It would be helpful to have a sense of what Ministers are thinking in terms of having this variety of powers, first, to be able to do it, but then to say, “Actually, we’ll leave it to the managers or trustees of the scheme to determine whether it is that person’s best interests”. I would be grateful for some understanding, again, of how this might work in practice, but the solution will definitely be Amendment 83 and I hope that the Minister will give that consideration for Report.

[Lord Palmer of Childs Hill (LD)]

My Lords, this is an appropriate time to stand, because Amendment 83 is signed by the noble Lord, Lord Vaux, and by me. In the absence of the noble Lord, Lord Vaux, today, and having discussed the matter with him, I speak on my behalf and his to Amendment 83. As has been stated, it is intended to deal with the risk that consolidating small pots might worsen the problem of lost or forgotten pensions.

We are all aware of the problem of people losing track of small pension pots: a problem that has increased in recent years as people tend to move between jobs more frequently, and may therefore end up with several small pensions, perhaps from many years ago. Chapter 2 of the Bill allows the Government to make regulations to consolidate small, dormant pension pots. I, and indeed the noble Lord, Lord Vaux, and the noble Baroness, Lady Coffey, support this as we believe that providing additional scale to small, dormant pots should enable greater efficiencies and a reduction in costs.

However, a possible unintended consequence could be to make it more difficult for a person to trace a forgotten pot if it is moved to a consolidator without their knowledge: for example, if any notice is sent to an old address. The introduction of a pension dashboard, as enabled by the Pension Schemes Act 2021, was intended to make it easier for people to identify pensions that they have lost track of or even forgotten. This has been somewhat delayed, but progress does, at last, seem to be happening. The connection deadline is October 2026, so hopefully people may start to be able to access the dashboard in the not-too-distant future.

In order to avoid making the problem of lost pensions worse, Amendment 83, in the name of the noble Lord, Lord Vaux, and myself, simply says that the regulations that would mandate the consolidation of a dormant, small pot could not be made until the dashboard had been available for at least three months. The three months is designed to give a bit of time to ensure that it is actually working and that any teething issues have been resolved. I think it prudent to ensure that we do not cause unintended consequences from what is otherwise a good policy, I hope the Minister will be sympathetic to the intention of the course outlined in Amendment 83.

[Baroness Altmann (Non-Afl)]

My Lords, I support the amendments in this group, particularly Amendment 83, which has received wide support. I think it is really important, as is the idea of lengthening the 12-month period for so-called dormant pots, and Amendment 81 from the noble Baroness, Lady Bowles, where, for example, a woman may take time off to care for children or other loved ones and intends to return, but her pension will have been moved before she gets back. Those are distinct possibilities under this scheme. We are talking about moving somebody’s savings—or investments; I am doing it myself—from one place to another, just because they have not done anything with their pension for a while. The pension fund is not meant to have anything done with it when you are younger; it is meant to just sit there and stay there.

Of course, the big problem that needs to be solved here is the costs to providers of administering all these very small pots. But the aim of the dashboard itself is meant to be to help people move their pots from one place to another. It seems to me that this particular section of the legislation is trying to deal with something that is meant to be dealt with by a different policy area. The consolidators, of course, will be attractive to providers to establish, and the money saving from not administering these small pots will also be attractive to the providers. But have the Government given any consideration to the idea of making, for example, NEST the consolidator? That is a Government-sponsored scheme. It has obviously had to have reasonable charges. Any transfers do not incur an upfront fee. That would run less of a risk of having consolidators that end up perhaps not performing well.

[Baroness Coffey (Con)]

I understand what the noble Baroness is saying about NEST. It is a brilliant organisation. But my recollection is that it does charge 2% on the transfer of assets into it. That is not something we should be particularly encouraging.

[Baroness Altmann (Non-Afl)]

No. I was just saying, if you transfer assets in, that 2% charge does not apply and will not apply. Otherwise, obviously, it would be uneconomic. But I understand that the idea of NEST is that the transfer in of a pension from another provider does not incur the upfront charge of, I think, 1.8%. So that would not be an issue. It is just a 0.3% flat fee. I hope the Minister will be able to respond on that element. There is a residual risk to government in moving somebody’s long-term assets from one provider to another if the other provider eventually proves not to deliver good value.

Pension Schemes Bill

Baroness Coffey Excerpts

2nd reading
Thursday 18th December 2025 Lords Chamber

[Baroness Coffey (Con)]

My Lords, there is a lot in this Bill. Some of it is to be welcomed—there are quite a few crackers in it. However, there are also large elements of it that feel—dare I say it at this time of Christmas?—like a little bit of a turkey. It is such a skeleton Bill that it is more appropriate for Halloween than the time in which we find ourselves.

I am not the only person here who believes that. I must say that the report from the DPRRC is one of the most damning that I have seen on a piece of primary legislation coming to your Lordships’ House. Indeed, the committee says that

“we have found it exceedingly difficult to provide meaningful comment on the Bill precisely because it is so skeletal”.

This extent of delegated powers—there are nearly more delegated powers than there are clauses—does not feel like the right place to be. Of course, I know that trying to work with the pension industry and see the scope of what it is trying to achieve means that a bit of flexibility may be needed, but it is important that we do not just, candidly, hand things over to almost a ministerial diktat, which I am afraid that parts of this Bill do.

I was Secretary of State when the previous Pension Schemes Act was passed in Parliament, and my noble friend Lady Stedman-Scott took it through this House; in fact, it started in this House. It built on—and this Bill continues to build on—the idea that where consensus comes together, we can get a very good product. Indeed, that continuity of thought is important, not just for the pensions industry but for the current and future pensioners that we seek to serve.

It has been useful to see the variety of consultations there has been, going back even to 2015, including about local government funds, and the actions taken when consolidation started to happen. There was a consultation in 2022 about other aspects of small pot consolidation. The clause I probably welcome the most is about value for money. It is really important that we make sure that we address these issues. In particular, the power to effectively shut down underperforming funds is good because, regardless of how little or how much people put in, many people are putting into their pensions all the time but do not necessarily realise quite how little will come out at the end of it. We will see more communication with the pensions dashboard, but the value-for-money framework will be a critical part of that.

There has been quite a lot of talk about trustees, and I know that a number of bodies have been trying to see if we can move to having solely professional trustees. That would be a mistake. I appreciate that is not what the Bill is calling for, but one of the challenges is that trustees, driven by a certain type of asset adviser, have been attracted to low-cost and low-risk pension schemes, but too often that has led to low return. So many of the gradual changes we have seen and that will start to come through in response to some of this legislation will be able to address that. That is vital and I will support measures to achieve it.

However, there is an underlying issue here about the mandation clause. From my experience in government, I remember a meeting in Downing Street with a bunch of pension providers, which was mainly driven by insurers. People had been told that they could not raise the issue of Solvency II being a problem. One or two were brave and did so, and were later chastised by Treasury officials. Nevertheless, it was important that they did. I understand the frustration of Government Ministers at the very top of government. People saying “We need investment” is all well and good, but why do they not put some of their money into it? I include the Local Government Pension Scheme in that. Ultimately, our traditional approach is one of state pensions not being particularly generous and trying to incentivise people to put into the private pension market, as well as what has happened historically with the defined benefit industry. That is why we have the system that we do, which has grown to the extent that it has so far—so much so that, as has been recognised, trillions of pounds in assets could be deployed to greater use, but it still must be for the benefit of current, future and, indeed, deferred pensioners.

Further, there is a missed opportunity in this Bill. Having two different regulators for pensions is a wasted opportunity. I know that the two bodies, the FCA and the Pensions Regulator, have been working on joint strategies, but fundamentally we still have significantly different rules on what can or cannot happen with pension funds, depending on how they are regulated. That just does not make sense.

This is the moment to try to change that. Frankly, the FCA has enough to do. Under their different rules, TPR allows a particular investment but the FCA does not, although it may seem to be a very similar product. We should not leave that element of complexity to be solved via delegated powers but take the opportunity to fix it in this Bill. That will need primary legislation and I hope that, although she may not welcome it—and, as I am trying to get it all out of the Treasury and the FCA, they certainly will not welcome it—the Minister will try to get it into one regulator to make a difference for the prosperity of our pensioners.

I am conscious that this is a missed opportunity in how pensions can help our planet. I strongly promoted the concept of planet, prosperity and people. These are mutually beneficial and there is no doubt that investment by the industry can play a part. That is why we put in place world-leading, pioneering regulations making the link to the TCFD and net zero. However, crucially, they did not mandate how investments were to be made or the drawing from a variety of assets but, basically, put a much greater duty of transparency on what was happening in the long term. The same needs to happen with nature and the TNFD. I will explore that in Committee.

In terms of what we want to achieve from this, I think your Lordships will share with the Government the outcome of having a good, robust and fully functioning pensions industry that generates prosperity, but let us not go down this tricky route of mandation. In particular, the DPRRC singles out that Ministers keep saying, “We don’t intend to use it”. In that case, let us not legislate for it. Let us make sure that we keep that blunt instrument away and continue to have a productive pensions industry. Nest, which was originally provided for in legislation prior to 2010 and came into effect within the last decade or so, has been a fantastic source to drive and make sure that we have private asset allocations. Let us celebrate that, work out why it worked so well and, as I have already suggested, make sure that we get rid of the stuff that is massively underperforming when prospective pensioners do not realise it.

It is going to be an interesting time in Grand Committee. I am afraid there will be a lot of amendments—this is not the only Bill I will be tabling amendments to—but I hope the Government will think again on the themes we will get into. If a lot of this is just about getting investment in Britain, the Government will need to answer why they scrapped the British ISA, which was a ready-made model. It is almost because it was not invented here. Fortunately, on the pensions journey, there is normally good cross-party consensus, but I fear that mandation has blown that out of the water. Nevertheless, let us see if we can try to fix it.

Children’s Wellbeing and Schools Bill

Baroness Coffey Excerpts

Thursday 18th September 2025 Lords Chamber

[Lord Hampton (CB)]

My Lords, I am standing up to make a speech absolutely on the fly now. I have taken some legal advice and the noble Lord, Lord Meston, says there would be no adverse impact from this. So I add my support to Amendments 469, 470 and 502F. As a teacher, I think the history of education in this country is that it has gradually dawned on us that children have rights. If I may give a bit of hope to the noble and learned Baroness, Lady Butler-Sloss, I think we do listen to children much more now.

The noble Lord, Lord Banner, touched on the idea that we are very good at setting up conventions—we are extremely diligent signatories and very good penholders—but we are not usually very good at following our own advice. The Children’s Charity Coalition has said that the Bill currently lacks explicit measures to ensure that children’s rights are systematically considered in law and policy-making. That is a lot of children’s charities that think that. We have heard from Team Cross Bench, which I thought put some extraordinary power behind these amendments, but perhaps I may quote my legal adviser, the noble Lord, Lord Meston, on this one: these are appropriate and overdue.

[Baroness Coffey (Con)]

My Lords, this has been a fascinating debate. I have not particularly participated in this Bill, but I am always interested when noble Lords seek to incorporate various treaties we have signed into domestic law. The reason I say that is because of my experience in a variety of ways of having been a Minister. Paragraph 1.6 of the Ministerial Code, which is not a new obligation on Ministers, states that Ministers have to comply with the international agreements into which Governments and previous Governments have entered and which have usually been ratified by Parliament. The need to think about these sorts of issues, particularly around children, is already embedded into how policy framework strategies are deployed.

“From the mouths of children”


is in the Psalms and in the Gospels. That element of truth comes through: it is absolutely vital that children’s voices are heard. This is why things such as the Children Act 1989 was really important, about aspects of that.

However, I am really concerned, and I share the concerns that my noble friend Lady Spielman expressed, about whether these need to be incorporated as a whole into domestic law. Only a handful of other countries have done this: Iceland, Sweden, Norway, Spain and, to some extent, or to the full extent of its devolved powers, the Scottish Parliament has decided to do the same—although noble Lords may be aware of the rulings after there was a referral to the Supreme Court which removed certain aspects of that legislation, partly because it counteracted the primacy of this Parliament in legislation and other matters.

However, as regards thinking through, I fully respect the long connection with education of the noble Baroness, Lady Blower. Both my parents are teachers. I do not have children, so I do not have the same experiences there, but I am aware, from when I was Secretary of State for Work and Pensions, of absolutely how much, just from the DNA, in effect, of being normal human beings, we would consider aspects of impacts on children.

The noble Baroness, Lady Longfield, said the difficulty about the conversations is that they get legalistic. Well, that is the whole point. We are talking about the law. If I think of Amendment 502G, perhaps there would have been a different ruling with the Michaela academy recently on whether somebody could pray at school or not. I think also of keeping schools open. I know there is an element of it being discussed in Amendment 502M. I encourage the people who have been distinguished general secretaries of unions to think of parents perhaps starting to sue schools for not staying open when there is some snow. The snow may not be stopping the children getting to school, but it might be stopping a couple of the teachers, so the decision is then to close down education for a whole day or more, not on behalf of the children but because they cannot get some teachers there. I referred to “legalistic” because that is where you start getting into disputes, going to court, trying to settle outside—all these other issues.

That is why I completely understand why ratifying that treaty was so important. That becomes guidance, a framework and an actual way of doing things, but it does not then become necessarily—I believe we have incorporated certain parts of the convention into domestic law—a straitjacket in effect on how we kind of evolve in terms of policy. There are risks, and I know that there has been another Supreme Court ruling trying to discourage judges and indeed people from bringing judicial reviews trying to change policy. But that is exactly where we get into issues that we can see in other legal cases that are often in the courts.

Obviously, I respect the distinguished legal experience of the noble Lord, Lord Carter of Haslemere, but I would have thought that the public sector equality duty, which recognises religion and belief, would already capture perhaps some of what he is trying to incorporate in his amendment.

I do not want to delay the Committee too much longer, but I think this is a case of “Be careful what you wish for”. What has happened for children that now makes it necessary to do this? The children were ignored when they were being groomed and when they went to the police. Children have been ignored in other situations. That grooming is still ongoing; I hope the police and the CPS are more alert as well. But going back to the substance, I hope that the way that the UNCRC has been effectively incorporated into how we go about our affairs as Ministers, as Parliament and as public servants should be sufficient. However, I will continue to try to understand the deficiency that we are trying to address by this wholesale incorporation of this into our domestic law when I genuinely do not believe it is needed.

[Lord Russell of Liverpool (CB)]

I will just swiftly respond to the noble Baroness. During the 14 years that her party was in office—I witnessed this first hand, because I am a retread, as I got re-elected back in in 2014—there was a series of Bills, some of which I mentioned I have been involved with, where children are directly involved and affected. Repeatedly, those Bills arrive here after—as per usual—minimal scrutiny down the Corridor, by design. It is manifestly clear that the detailed needs, requirements and rights of children have not systematically been thought through and embedded in the legislation, which is why we have had to go through lengthy debates to try to tease that out. I am proud to say that, in the majority of cases, faced with strong cross-party arguments in favour, the Front Bench of the noble Baroness’s party, repeatedly in different Bills, acceded to the strength of those arguments and amended the legislation to put children’s rights in there. Whatever the Ministerial Code may say, unfortunately that was not filtering its way down into the way that Bills were being drafted. Your Lordships’ House did its work very well, but what some of us are hoping and asking for is a situation where that requirement becomes less frequent and is abnormal rather than, I am afraid, substantively normal.

[Baroness Coffey (Con)]

I would say in return— I was trying to keep my speech brief—that I hear what the noble Lord said. He talked about being unsuccessful in keeping it brief. That is because we have had a lot of stuff about legalism. I am giving direct experience of government—I appreciate what the noble Lord said. I can give more examples. One reason why children get the flu vaccine every year is primarily to protect adults—the teachers and school workers—to stop the spread of flu. It is not really to help the kid. All sorts of things happen today that are actively encouraged to be done to the child in a way that should not be harmful.

I come back to the legislation and the point that is relevant. The Secretary of State for Education has the leading responsibility in government to have that horizon-scanning of every bit of legislation that affects children. If there have been deficiencies, I recognise them. I am not convinced that the incorporation of more law into domestic law is going to be the way to achieve that. I encourage the Minister in her reply to give confidence. Even if the noble Lord feels that the last Administration were deficient, I am sure that the current Administration will say that they are very much on top of it.

Frankly, it is a bit like when I was at DWP. I had primary responsibility for disabilities, so it was my job, working with my officials, to keep scanning legislation for how it would impact people with disabilities. That was not always very popular with other departments, which kept telling us to keep our noses out, but that is what we did. I am sure that that is what the Department for Education is intending to do. That said, I know that my noble friend Lady Barran was assiduous in her support of children, and I am sure that the Minister for this Government has continued to be so as well.

[Lord Carter of Haslemere (CB)]

I quickly respond to a point that the noble Baroness, Lady Coffey, made. The wording in my amendment is not my wording; it is already in the convention. I am not trying to incorporate it into our law, because it is already incorporated. That ship has sailed, really. All I am doing is pointing out its relevance to a Bill that I perceive as seeking to restrict parental choice in various ways. To pick up on one point that the noble Lord, Lord Russell, made, I entirely respect what he said about the importance of being aware that parents may make wrong choices. The assumption built into this provision of the convention is that they are entitled to make what they consider to be good choices. Otherwise, you would take away all rights of parents altogether, if you make the assumption that they are not. On children’s rights in respect of schools, it is their parents who have chosen to send them there. That was the parental choice.

--- Later in debate ---

[Lord Banner (Con)]

My Lords, I want to come back on two points. First, I suggest that the analogy with the ECHR and the Human Rights Act is not a good one, because the Human Rights Act imposes duties of outcome. It requires adherence to the convention. The amendments before the Committee require “regard to”, which is a world apart from duties of outcome. Secondly, on administrative burdens, I pose this question: if it is too burdensome even to have regard to the convention, what is the point of us being a member of it?

[Baroness Coffey (Con)]

My Lords, I inferred from what the noble Baroness said that she thinks I do not believe children should have vaccines. I do. In fact, there is an active element in me that considers that we should prosecute parents who do not give their children the MMR vaccine because of the potential outcomes. I am not saying that is a policy I would adopt overnight, but it is worrying that so many children do not have the MMR. But on a broader point, I hear what the noble Baroness said, and of course that is what will be written in the HSA and in PHE, but I can assure her that I am aware that this is a primary element of trying to reduce the transmission of flu. I have no doubt that, if children get flu, it can be serious. It can be serious for any individual. That was one of the driving forces and why it is aimed in particular at children in primary schools. It is widely available and is significantly designed to reduce the transmission to adults.

[Lord Storey (LD)]

This has been an important debate on these amendments. I want to start by saying that the noble Baroness, Lady Walmsley, is not able to be present. Her husband is not at all well. She added her name to Amendments 469 and 470. I am going to keep my comments brief. The noble Lord, Lord Russell, is right: I can almost see Baroness Massey on my shoulders. When I first arrived here, although she was of a different party, she immediately collared me, along with the noble Baroness, Lady Walmsley, and gave me a briefing on children’s rights. That was the first time I met Doreen Massey. At some stage, when we come to our senses on this, her importance on this issue will come to mind.

I also wanted to mention the point made by the noble and learned Baroness, Lady Butler-Sloss, about the importance of the child being heard. For far too long, we had the old adage that children should be seen and not heard. Sadly, that filters through the whole of society in all sorts of ways. It is not just parents and public bodies. I remember my wife being heartbroken when a black boy in her secondary school was fostered by white parents. At the time it was quite rightly thought to be the case that culturally it is better if foster parents have the same heritage as the child. The boy, who was 12 or 13, was adamant that he wanted to stay with his white foster parents. Nobody listened to that boy. Nobody in the local authority, in the school or in social services listened to that boy. If we say we want to hear the voice of the child, it is a nice phrase to use, but we have to make it work in practice and it has to filter through the whole of what we do.

On the convention on human rights, I just do not understand this, and I would like a detailed letter from the Minister. It is 12 years since my noble friend Lady Walmsley and Baroness Massey talked to me about this. Why can we not follow Wales and Scotland? Let us do an impact assessment. Do we just not want to do it? Well, then let us have the honesty to say that. Or, if we do want to do it, what are the reasons why we cannot? I would like to know. Perhaps the Minister, when she replies, could tell us.

I do not have anything else to add to what has been a wide-ranging discussion. This issue is crucial, of course. The clue is in the Bill’s title, is it not? If we are talking about the children’s well-being Bill, everything that we and the Government do in legislation should look at the impact on children. That is an eminently sensible move. So, I hope Government will support Amendments 469 and 470, either now or if they are brought back on Report.

I was tempted to, as we sometimes say, respond to the noble Baroness, Lady Spielman. I am afraid I just do not agree with her comments, but perhaps now is not the time to do that. Perhaps we can have a private conversation on some of the things that, to be honest, got me quite angsty.

--- Later in debate ---

[Baroness Coffey (Con)]

My Lords, the issue of apprenticeships is really relevant to improving the life opportunities of young people. I respect what the noble Lord, Lord Layard, has done in tabling this amendment, which is supported by many distinguished people. Noble Lords should recognise that the introduction of T-levels was intended to provide education in a more controlled atmosphere, as opposed to young people —children—going out to work, legally of course.

T-levels—which, by the way, required a ministerial direction issued by my right honourable friend Damian Hinds because they were against the advice of civil servants—are a good way of trying to make sure that young people get that opportunity without necessarily having to be forced into the world of work. I may be overinterpreting the noble Lord’s amendment.

The other issue employers face is the balance between how you treat children in your workforce and how you treat adults. In my experience at the Department for Work and Pensions, that was a key difficulty in considering how to encourage young people into work. I note that the amendment is very specific, referring to the ages of between 16 and 18.

On my noble friend Lord Lucas’s amendment, which would promote provision of places up to level 7, thought is being given to how young people can then qualify as solicitors and the like by embarking on this path. However, I somewhat agree with the noble Lord, Lord Storey: schemes were developed that effectively skewed away from the entry roles that we still need young people to get into. Regrettably, due to the Employment Rights Bill, we are seeing fewer and fewer such opportunities for young people. It is a real worry that, despite the Government’s best intentions, we will see NEETs going up rather than down.

I support the sentiment of the amendment from the noble Lord, Lord Layard. I fear it will be difficult fully to put into practice exactly what he wants, but I encourage the Government to continue to do whatever they can to make it as straightforward as possible for young people to get apprenticeships and, more importantly, for employers to take young people on as apprentices.

[Lord Hampton (CB)]

My Lords, I rise to speak as a design technology teacher, a veteran of the IfATE Act, an officer of the APPG on apprenticeships and a member of the House of Lords Social Mobility Policy Committee.

I think we all agree that apprenticeships are vital to this country. It is rather sad that this subject seems to have led to a general exit from the Chamber, but I think that is more because it is lunchtime. I welcome the defence industrial strategy and its new apprenticeship and graduate clearing system, which I know BAE Systems was heavily behind. We have seen Skills England start, and we hope upon hope that it is the answer. This is an incredibly important and nuanced subject, and I am afraid I do not think these amendments are the answer.

Welfare Reform

Baroness Coffey Excerpts

Wednesday 2nd July 2025 Lords Chamber

[Baroness Fraser of Craigmaddie (Con)]

My Lords—

[Baroness Coffey (Con)]

My Lords—

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

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

--- Later in debate ---

[Baroness Sherlock (Lab)]

I thank my noble friend for appreciating the decisions that we have taken. In terms of co-production, the Secretary of State and my colleague, the Minister for Social Security and Disability, have been very clear that this review will be led by Minister Timms and co-produced with disabled people, their representative organisations and other experts. Work has already begun on scoping. We have published the terms of reference. We are already beginning to engage and we will make sure that that is a genuine process.

We understand, if we are to have this level of reform, that we need to try to build a consensus around what a good PIP assessment process will look like. We also need to try to have popular public confidence in the system. If we are to sustain the level of investment that we have in our social security system, we need to make sure that people feel that it is being done well, appropriately and given to the right people.

On the universal credit review, which is looking at the way that universal credit operates, I can reassure my noble friend that we are doing focus groups with Changing Realities to look at specific aspects of the way the system works at the moment. I hope that that will reassure her.

[Baroness Coffey (Con)]

My Lords, I am very conscious, having run the DWP for three weeks—three years, rather; in some ways, it did go by in a flash—during Covid, of how challenging this was for the Government. The principles that the Minister set out are exactly the same ones that were there when the Conservative Government were in office.

I am trying to find one of the things that came through in the press release and the Written Statement; I cannot find the regulations for the right to work, because that is building on reforms that we introduced, or were starting to introduce, and some other matters. The key issue is about the increase in mental anxiety, depression and similar. I know that the IPS has been expanded, but I would be very grateful to know what the Minister is doing with Ministers in the Health Department to focus on mental health treatment in order to help people who really would be better off in work but need that extra support to get them there.

[Baroness Sherlock (Lab)]

I am grateful to the noble Baroness and obviously respect her experience. I can assure her that the last week has felt like a year, so I can understand her confusion. She raises two very important points. First, the regulations will be published. We are absolutely committed to regulations guaranteeing that trying a job will never in and of itself be a reason for being reassessed for a benefit. That feels important, because we must do everything possible to help people. People must not be in a position where they get twice as much money for not being able to work and then are afraid of trying out a job because of what would happen if does not work out. She has hit on an important thing. I hope that she will be assured when she sees the regulations that they are doing what she wants.

On the question of mental health support, we are working very closely with Health Ministers. This week, we are launching our 10-year health plan, which sets out very ambitious plans. Patients will get better access to support, including, for example, self-referral for talking therapies without needing a GP appointment. There will be 85 new dedicated mental health emergency departments and, as I mentioned earlier, significant extra support in schools—our youth guarantee of helping young people to get access to mental health support. We must find ways of supporting people. The noble Lord, Lord Shipley, made the point that, whatever their barrier is, we must help them overcome it. We cannot just tell them to go and work. That simply will not work. So I am grateful to the noble Baroness for raising two important points.

Public Authorities (Fraud, Error and Recovery) Bill

Baroness Coffey Excerpts

Committee stage
Wednesday 11th June 2025 Grand Committee

[Baroness Finn (Con)]

My Lords, our amendments in this group seek to strengthen the rights of the liable person in the review process, incorporate further consideration of the cost burden we are asking banks to shoulder and ensure that parliamentary scrutiny can be applied to any further changes the Minister makes by regulations to direct deduction orders. As has been the spirit of all our amendments, we have an ambition to work with the Government to make suggestions for improvement on the provisions they have set out. We believe that our amendments in this group are an effective way of ensuring that oversight, parliamentary accountability and collaboration with partners in the banking sector are made a firm part of the Bill, which will make it more effective in achieving our common aim.

Our Amendment 60A would leave out Clause 35(5). As noble Lords will know, Clause 35(5) as currently drafted restricts the ability of an applicant to request a review into the existence or value of the amount they are said to owe. This amendment seeks to remove that restriction and, in doing so, restore a basic principle of fairness and accountability in the administration of public funds.

It is an established principle of public law that individuals should have the right to challenge the basis of a financial demand made upon them by the state, not just how it is enforced but whether it is rightly due at all. Yet, as things stand, Clause 35(5) precludes that possibility. It denies the applicant the right to request a review of either the existence of the debt or the amount allegedly payable.

Let us consider the potential consequences of this. An individual could be told that they owe a significant sum without any meaningful opportunity to question the underlying calculation or whether the liability even exists. That is not the mark of a fair or just system. It may be argued that efficiency or administrative simplicity requires limits to review rights, but this must not come at the expense of natural justice.

In matters of financial liability, particularly when imposed by the state, a person must surely be entitled to ask, “Is this right? Is this fair? Can I see how this was calculated?” This amendment simply ensures that the door is not closed on those reasonable questions. Moreover, transparency and accountability benefit not only the individual but the public authority itself. The ability to request a review can act as a safeguard against error, build public trust and ensure that determinations are robust and evidence-based. It supports better administration, not weaker enforcement.

To summarise, this amendment does not seek to open the floodgates to frivolous challenges. It simply allows a person the right to question whether a debt exists and whether the amount is correct—rights that are fundamental in any fair system. I urge the Minister and noble colleagues to support this modest but important change.

Our Amendment 61A seeks to add proposed new subsection (2A) to Clause 37. The amendment is straightforward, modest in scope but essential in purpose. It would require that any regulations made by the Minister under subsections (1) and (2) which relate to the operation of direct deduction orders be accompanied by an impact assessment. This assessment would focus specifically on the projected cost and the operational capacity of the banks tasked with implementing these orders, and would require that this assessment be laid before Parliament.

The rationale for this amendment is simple: regulatory clarity, economic realism and operational accountability. When these powers are exercised through regulations, it is vital that that is done with clear regard for the third-party organisations that will be shouldering the cost. Banks and financial institutions play a crucial role in the administration of direct deduction orders, acting as the operational arm of the enforcement process. They must identify accounts, verify balances, execute deductions and respond to any errors or disputes. These are not trivial tasks. They involve significant back-office effort, compliance oversight, system changes and, crucially, legal liability.

I and noble Lords across the Committee made our thoughts and concerns on this matter clear at the previous Committee day earlier this week, although I should reiterate that we are asking banks to dedicate serious resources to undertake functions on behalf of the public sector. If we are asking banks to do this, we must commit to working with them, not despite them. Yet, under the current drafting of Clause 37, the Government are empowered to make potentially significant changes to the rules around these orders without any obligation to assess or disclose the impact those changes may have on the very institutions expected to carry them out. This amendment does not block those powers; it merely introduces a duty to consider and explain the consequences. In doing so, it reflects good regulatory practice and ensures Parliament can properly scrutinise whether such changes are proportionate, practical and economically viable.

Let us remember that unintended consequences are often the product of insufficient consultation and opaque regulation. Requiring an impact assessment is not burdensome red tape; it is a basic tool of sound policy-making. It gives banks the foresight they need to prepare and adapt their systems responsibly, and it gives Parliament and the public confidence that the Government have weighed the risks and costs before acting. To summarise, Amendment 61A is not about resisting enforcement or shielding account holders. It is about ensuring that the infrastructure behind enforcement is fit for purpose, and that the decisions taken in Whitehall do not create avoidable burdens in the banking system, which could ultimately impact consumers as well.

Finally, our Amendment 61B proposes the insertion of a new subsection (6A), requiring that the outcome of the consultations carried out under subsection (6) be laid before Parliament prior to the coming into force of any regulations made under Clause 37. This amendment seeks to strengthen parliamentary oversight and transparency in the regulatory process. Currently, Clause 37 allows for regulations to be made following consultation but does not explicitly require that the results or finding of those consultations be presented to Parliament before the regulations take effect. This risks creating a situation whereby Parliament and, by extension, the public have limited visibility into the views expressed by stakeholders during consultation and how those views have influenced the final regulatory decisions. The amendment would ensure that Parliament is fully informed of the consultation outcomes before regulations are implemented.

This is vital for several reasons. First, it supports the principle of accountability. Parliament should have the opportunity to scrutinise not only the content of new regulations but the process by which they were developed, including the concerns, evidence and recommendations raised by those consulted. Secondly, it promotes transparency. Stakeholders, including financial institutions, consumers and civil society, can see how their input has been considered and can hold the Government to account if the consultation appears to have been perfunctory or to have ignored key issues. Thirdly, this measure will encourage better-quality consultations by ensuring that the Government give proper weight to responses before finalising regulations. In short, this amendment is a commonsense safeguard to enhance democratic oversight, improve policy-making and build trust in the regulatory process concerning these important financial regulations.

These amendments collectively serve to reinforce fairness, transparency and accountability at every stage of the process, from ensuring individuals have the fundamental right to challenge financial liabilities to safeguarding that banks are neither overburdened nor overlooked, and guarantee that Parliament exercises proper scrutiny over any regulatory changes. The amendments embody a commitment to responsible governance and collaboration with all parties involved and improve the Bill’s effectiveness in delivering its goals while protecting the rights of those affected. I respectfully urge all noble Lords to support these sensible and necessary amendments so that this legislation can proceed, strengthened by clarity, oversight and justice. I beg to move.

[Baroness Coffey (Con)]

My Lords, I support my noble friend Lady Finn, particularly on Amendment 60A, because as we go through this process it feels as though the Government are trying to be judge and jury on whether the existence of an order should apply at all. I am conscious that it is important that the Government be allowed to get on and have this more straightforward way of collecting money that they are due, but it strikes me as pretty draconian that the question of whether a debt exists cannot be challenged—it cannot go for review. I appreciate we are debating the amendment, but I say by the way, in reference to the Explanatory Notes for Clause 34 on the process for review, that the legislation does not point to the fact that it is supposed to go to a higher-grade person; I am sure that it will be set out in guidance, which I hope will have statutory standing. It strikes me as odd that, having not been able to even challenge whether the order should exist, you cannot go to a tribunal about it, either. Ministers will know that I wish that parts of the Bill would go further in trying to get money back from people in a variety of ways, but in this area I do not agree with the approach of the Government and certainly agree with that of my noble friend.

[Lord Vaux of Harrowden (CB)]

My Lords, I was not going to speak on this group, but, as the noble Baroness, Lady Anderson, proved the other day, Amendment 60A is not necessary because Clause 12 sets out clearly that these orders can be used only where there has been a final determination of the amount owing by the court or where it has been agreed.

However, I support Amendment 61A. Frankly, it is becoming a bit of a weakness in an awful lot of areas that the impact assessments that come with legislation are regularly quite poor. It is incredibly important that, when we make regulations that will have impacts on people, we understand what those impacts are.

I have one other question that I probably should have dealt with by means of an amendment, but I have only just spotted something. Why are regulations made under Clauses 37(2)(c) to (f) subject to the negative procedure and not the affirmative procedure?

--- Later in debate ---

[Lord Palmer of Childs Hill (LD)]

My Lords, Amendment 65 in my name would require the Minister for the Cabinet Office to,

“within six months of the passing of this Act, lay before Parliament a”

comprehensive

“report evaluating the extent of public sector fraud that occurred during the COVID-19 pandemic”.

The Liberal Democrats have long championed transparency, accountability and robust oversight of public funds. This amendment aligns with those values by ensuring that Parliament receives a clear, detailed assessment of how fraud had an impact on public resources during an unprecedented crisis. Without such transparency, we risk missing critical lessons that could inform future safeguards and improve the resilience of our public sector. The pandemic presented unique challenges that, unfortunately, created opportunities for fraud on a scale not previously seen. It is only right that we fully understand the scale and nature of the issue, not to assign blame but to strengthen our systems and protect taxpayers’ money.

This amendment reflects the Liberal Democrat commitment to evidence-based policy and open government. By requiring this report, we would promote accountability and ensure that future emergency responses are better equipped to prevent fraud, protecting public trust and ensuring that resources reach those who genuinely need them. There will be other events; we want to set the scene so that they can be dealt with. That is what this amendment seeks to do. I beg to move.

[Baroness Coffey (Con)]

My Lords, I rise to speak to this amendment because I was at the Cabinet table when Covid-19 hit this country. I am very conscious of the arduous activity that went on among brilliant civil servants but, of course, mistakes were made, as well as successes.

It is interesting to try to understand why the noble Lord, Lord Palmer of Childs Hill, wants to go into this matter further, recognising that, in Parliament, there have already been several Select Committee inquiries; one was specifically done on fraud. Of course, we also have the public inquiry that is under way, to which the Government are contributing. I am trying to understand the purpose of this amendment and this extra report, recognising that the Government will in no way make any comments until the inquiry has concluded.

My understanding is that the inquiry is still going to take evidence in 2026. For what it is worth, as I am sure the Ministers here will be relieved to know, I am absolutely convinced that this Bill will become an Act of Parliament well before the end of 2025. So there is something here of an odd overlap. I understand that this will continue to be a subject of interest.

This is quite a wide ranging-element. I know that fraud happened. There is no doubt of that. However, we also averted fraud in the DWP. We managed to stop £1.6 billion going out on one particular weekend by intervening. There were plenty of attempts at fraud and, unfortunately, there were successes. Some of those people who committed that fraud are now in jail, thanks to the endeavours of the Government.

The noble Lord, Lord Palmer of Childs Hill, talks about resources that the country may have been deprived of when addressing the issues of Covid. I can honestly say to your Lordships that no resources were set aside at all. This is one of the reasons why there have been considerable challenges on aspects of needing to repay the debt that may have been acquired due to spectacular extra financing, whether that was through businesses or about people who had never claimed benefits in their life before, making sure that they got the money that we believe they were entitled to. That was while recognising that some of the easements initially may have been subject to some fraud, but we also made every effort to try to stop it. I have already given an example of where, in one weekend, £1.6 billion was averted.

For that purpose, the amendment genuinely is unnecessary. The statutory inquiry, I hope, will not be the longest-running statutory inquiry because that is not what the country needs to consider. It would not be the best use of government resources to initiate their own further inquiry and honour this amendment.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I am slightly torn. Yes, we have the Covid inquiry but we also have a country that faces ongoing risk. I was, entirely coincidentally, speaking this morning to someone who was expressing concern about stocks of medical supplies that the Government were holding or not holding. They are being told that the Government were waiting for the Covid inquiry to report and then would look at what might happen. I am afraid that the reality is, of course, that we do not have an influenza virus out there saying, “Just wait until the Covid inquiry has reported and then we can think about attacking Britain”. I am not sure that this is the right way forward, but we need to hear from the Government more generally—I understand that that may not be within the Minister’s portfolio—and maybe the noble Baroness could write to me at a future date. However, we need to think about being ready, in this age of shocks, for all the threats that could potentially hit us—particularly health threats. We should learn from the mistakes that were undoubtedly made under the previous Government. That is an important issue. We need to see more urgency from the Government. The answer of waiting until the Covid inquiry reports really does not hack it in this age when we are facing so many threats.

[Baroness Coffey (Con)]

Before the noble Baroness sits down, it is important to stress, when thinking of prevention of issues and being ready for them, that I am quite confident that the Government have continued a lot of the activity of the previous Government. I will give an example. Although it was for a short time, when I was Secretary of State for Health and Social Care we were being asked to write off hundreds of millions of pounds on Covid vaccines because we had, in effect, anticipated what could have happened. In the end, thankfully that was not needed. That is not a case of fraud, but the noble Baroness was stretching us into preparedness for the future. That is still a key module of the statutory public inquiry now under way. But it would be worth looking at some of the Select Committee investigations that happened, perhaps much more quickly, and some of the government responses that had been provided to them.

[Baroness Bennett of Manor Castle]

I will stay sat down.

--- Later in debate ---

[Baroness Coffey (Con)]

Before the Minister sits down, let me say that Tom Hayhoe, is, I think, six months through his contract. Do the Government intend to extend it beyond the fixed one year, and when does the Minister anticipate that he might share reports—he may already do that with Ministers, but when they will be shared with Parliament?

[Baroness Anderson of Stoke-on-Trent (Lab)]

My Lords, this is what I can say currently, but if there is additional clarification, I will come back to the noble Baroness. Mr Tom Hayhoe’s appointment is a fixed one-year appointment. He will be required to provide a report to Parliament, which will present lessons and recommendations for procurement in future during a time of national crisis, so he will be reporting on his efforts outside and within the Treasury.

Public Authorities (Fraud, Error and Recovery) Bill

Baroness Coffey Excerpts

2nd reading
Thursday 15th May 2025 Lords Chamber

[Baroness Coffey (Con)]

My Lords, it is a huge privilege to follow my noble friend Lady Spielman after her exceptionally thoughtful, insightful speech to the House, indicating very clearly the experience she will bring.

It is no surprise that somebody obviously very bright who did a mathematics degree at Cambridge University became a chartered accountant. I understand she is super-fabulous at XL spreadsheets, a skill I am sure we can use to interrogate all sorts of statistics coming out. After a successful career in finance, she saw that particular moment that called her to try to improve lives, particularly those of young people. She took on a master’s, I think it was at the University of London’s Institute of Education.

Most people will know my noble friend Lady Spielman from her role as the chief inspector at Ofsted, but she also spent five or six years as chair of Ofqual. Speaking to people who worked with her at that time, one of the things that they particularly valued about her was her ability to bring together a top-class board to try to help through some of the challenging times and to make sure that Ofqual continued to be there, focused on the quality of education and, importantly, the young people it was there to serve—substance and integrity coming through again, as we saw in her role at Ofsted. My noble friend said to me that, in essence, making sure that children got the best start in life was key, and she believed that the way to achieve that, as we saw, was substance and integrity in the education they had, so that they were well prepared for the future.

We saw this in a different way because, before then, my noble friend had been a founding member of the Ark Academy. Anybody who has been to an Ark Academy school will know how brilliant they are, so that is a lifelong legacy of which she should be rightly proud. Perhaps going to Ofsted may have seen a slightly different approach on perhaps the harder side of some aspects of education, but I think that experience of what could be done is why we have seen the number of schools that are now excellent rise significantly. We have seen the educational attainment of children rise, which is not solely due to my noble friend, but, as a previous colleague of hers said, nobody knows education better in the round than my noble friend Lady Spielman.

I think it is fair to say that I had limited interaction with my noble friend when I was a Minister. I remember a couple of discussions and all I will say is that she had certainly acquired the teacher’s look. My parents were both teachers. She had a warm smile, as we have seen today, but she knew her stuff and she also knew how to get her point across.

Outside this House, my noble friend is currently a trustee of the Victoria and Albert Museum. She is obviously a lady of culture, but there is another element that I appreciate. My former MP is in this House as my noble friend Lord Young of Cookham. He used to be known as “the Baronet on a bike”. Well, we now have a Baroness on a bike. There is almost nowhere that my noble friend will go without it involving two wheels rather than four.

We saw in the quality of the debate today how my noble friend will contribute to many issues, and it is now to that that I turn. This Bill is important and I welcome the fact that we finally have something to get going. I say that with genuine passion and I congratulate the Government on getting under way. I am conscious that, under my Government, while I set out a strategy three years ago in May 2022, it contained the classic phrase “when parliamentary time allows”, and it was a frustration of mine that we did not get it going until quite late on and, as I will explain, in my view some of the measures had changed since I was in office as Secretary of State for Work and Pensions. It felt somewhat, to be candid, as if they had been watered down. That might be in recognition of some of the issues raised across this House, but, as the tone of my speech I hope will show, I do not think this Bill goes far enough, and I will be encouraging the Minister to look again at what they could perhaps do.

Let us get some statistics right. It has been well said by the noble Baroness, Lady Fox of Buckley, that we should think about where the DWP has not made sure that people have the money they are entitled to. I think that is in the region of £1 billion per year, 0.4% of the £292 billion that DWP paid in the last financial year. The figures are stark. I congratulate all the people at DWP; I am sure Ministers will take credit for it, and that is okay, but I know there is a great legacy of activities that we got under way, recognising that it was simply unacceptable to have fraud in our system of well over £7 billion. The figures that came out this morning show that fraud is estimated to be £6.5 billion, of which claimant error is £1.9 billion and official error for overpayment £1 billion. That fraud has come down from the previous financial year, from £7.3 billion for fraud and £1.6 billion for claimant error, so, unfortunately, claimant error appears to have gone up, as indeed has official error, in cash terms.

It is easy to get into stats about percentages and similar, and I understand why, but cash is real. When I was at the department, I probably got some of the policies that were presented to us today and I said, “We have to go further, because this is real money”. It is the difference about whether you build a hospital or not. It is the difference about the policy that has now happened about winter fuel payments. It is the difference about aid overseas. It is the difference—call me a traditional Conservative—about actually not spending that money but reducing our debt mountain and therefore some of the interest that we pay. Of course, it could then lead to other uses of spending, but it is important that we recognise that this is real cash.

That is why I am keen to point out that I understand why people have concerns about the variety of powers. I do not intend to comment so much on PSFA, but I hope the Government will take the opportunity to make it a slightly better, snazzier snap, as it were, in terms of making sure that the public know that we are actually serious as a Parliament about recovering money from criminals. Some of the powers that I have heard about seem somewhat draconian. However, given what I am about to say, perhaps I will not be quite so sceptical when we go through Committee.

With regard to the other significant amount, that is where the proposals—as has already been caught by the noble Lord, Lord Rook, and the noble Baroness, Lady Fox of Buckley—are actually about trying to avoid claimants making errors in the first place, although the definition of claimant “error” can sometimes be a bit generous, rather than being “fraud”. Nevertheless, we should do whatever we can to prevent people not necessarily having the right claim and make it easier to make sure that their records are up to date, otherwise we end up with the uncomfortable situation with, for example, carer’s allowance overpayments and people being expected to pay back a lot of money for not realising some of the changes. If there are ways that we can do more of that, that will be helpful.

I know the DWP already has the powers to go into HMRC and PAYE, and that has helped to tackle some of this, but powers are necessary to go further. As I say, even just the debt owed at the end of the last financial year was nearly £10 billion, and that is still a substantial amount of money that is owed from benefits.

In terms of thinking through, I could go on about, frankly, callous criminals trying to use the welfare system as a cash machine rather than thinking of the most vulnerable, whom it is there for. We need to make sure that this money is well spent and reaches the people that it is supposed to.

I know that Covid was particularly difficult. I am not going to go back over Covid history, but I will point out that the DWP has been good at trying to absorb and use technology. For example, over just one weekend we managed to stop £1.9 billion going to organised criminals—money we would never have got back. The DWP successfully prosecuted a gang for fraud that involved only—sorry to sound glib about it—£68 million. Nevertheless, it is that sort of sophisticated approach that has led to the DWP upgrading its powers and use of technology to make sure that taxpayers’ money goes to the people Parliament has decided deserve, need and should have that money. It is vital we keep that in mind.

There are a variety of things that could be done to identify and stop abuse of the system through retrospective claims and similar. It is important we continue with that.

On some of the powers people may not be aware of, we—sorry, I mean the DWP; it is still in my heart and my DNA—have the powers to go after named individuals, but it is a very time-consuming process. This is approach is intended to be somewhat more comprehensive, and this is why we need to go further.

Government technology has evolved so much, but the same is true for the criminal. The banks have written to us with their concerns about potential conflicts. I can assure the banks that there is no conflict concerning a Government and a Parliament that want to stop criminals getting money to which they are not entitled—money that has the potential to improve people’s lives.

There is one thing I agree with the banks on. The risk with the legislation as it stands is that could be too easy for criminals to quickly find a workaround that may not necessarily be obvious. One of the gaps in the legislation is that it tends to go after the bank accounts that benefits such as universal credit are paid into. I do not know about other noble Lords, but I have at least four bank accounts, and I can move money between them within seconds. These are issues we were looking to address, and I am not sure if they are covered in the Bill. You would be surprised to learn how many people—British citizens and others—are getting benefits in this country but are not living here and spending that money abroad. The Government should have access to such approaches, so that they can deal with this issue comprehensively.

As the noble Baroness, Lady Anderson, said, this is not about presuming someone is guilty. The issue at the moment with getting these extra bits of information is that you have to demonstrably show that you think the person is guilty. There is a mixture of issues at hand. There may be concerns from the ICO but, as I say, this is about taxpayers’ money that could be used better.

There is also a gap. I do not know why the DWP is not being given arrest powers, like HMRC. A lot of this legislation is supposed to be aligning the powers available to everybody, so I hope we can address that.

I am probably out of step with many others in the Chamber in this regard, but let us think in a different way. The British Crime Survey is about how people perceive crime—how they feel that they have endured crime—and 40% of crime now is fraud. We have done something to address that by making banks pay back money that perhaps should not have gone out of people’s accounts. Nevertheless, do not be surprised that fraud happens, but be pleased to some extent that the figure for fraud and error is now 3.3%. I would like to see it a lot lower, and a cash figure put on it, but we should be careful. There is a lot of scaremongering, but I genuinely believe that the British public want to make sure that fraudsters and criminals do not get a penny, and that the money goes to the most vulnerable.

National Insurance Pension Underpayments

Baroness Coffey Excerpts

Thursday 13th March 2025 Lords Chamber

[Baroness Sherlock (Lab)]

I thank the noble Viscount; there have been good questions today. With the transition from the old state pension to the new state pension, it became more important that people had their own national contribution records in full, because that is what their pension will depend on in future. The previous Government set a deadline—originally April 2023, if memory serves me—by which people had to decide whether to apply to buy back missing years. That deadline was extended to April 2025, so it is coming up on 5 April. I can assure the noble Viscount that there is a surge of people wanting to buy years back; in fact, HMRC and the DWP are working together to ensure that everybody who wants to pay money to fill those gaps in their record can do so. Not only is there the online tool I mentioned earlier; customers can identify gaps and make payments automatically without even contacting the DWP or HMRC, or they can phone us. We have increased resources to about 480 people working across the Revenue and the DWP to manage the high volume of calls coming in.

To reassure not just the noble Viscount but anyone listening out there: as long as people contact the DWP ahead of the 5 April deadline, they will be able to fill gaps back to 2006. In addition, we have launched an online call-back form; people can simply register their interest and the DWP will call them back within eight weeks. Again, provided they register that interest before 6 April, they will be able to fill those gaps if they want to.

[Baroness Coffey (Con)]

My Lords, I welcome what the Minister has said. The Answers to some Parliamentary Questions I tabled to the noble Lord, Lord Livermore, suggested that HMRC did not hold these records centrally, so I am delighted to hear that work is ongoing. May I press the Minister further on what she just said? I am delighted to hear about the increased resources, but there is an intricate calculation to be made: for some people, it will not be worthwhile paying the extra voluntary national insurance contributions if they consequently miss out on pension credit. Recognising that the timeline is fast approaching, can the Minister assure me that sufficient resources are in place to help people make that calculation?

[Baroness Sherlock (Lab)]

The noble Baroness makes an excellent point; I would expect no less, since she has rather more experience in this field than I do. She is right that there will be some people, in limited circumstances, for whom this becomes a marginal issue. A significant amount of information is available online from the DWP about the different sets of criteria, but I will check on the points she made and see whether we need to do anything else to make sure that the information is out there.