Universal Credit (Removal of Two Child Limit) Bill

Baroness Sherlock Excerpts

2nd reading & Committee negatived & 3rd reading
Thursday 12th March 2026 Lords Chamber

Moved by

[Baroness Sherlock]

That the Bill be now read a second time.

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

My Lords, this Government believe that the UK should be a country where every person has the opportunity to fulfil their potential. That is why we are so committed to removing the barriers that stop people thriving and becoming all that they can be. Doing this will benefit not just the individuals, it will benefit our country. So I am delighted to be here today to move Second Reading of the Universal Credit (Removal of Two Child Limit) Bill. It makes a major contribution to tackling the poverty that limits children’s chances in life, and often for life.

There are now four and a half million children in poverty—900,000 more than there were in 2010. To put that in context, if we picture a classroom of 30 children, at the moment around 10 of them will be living in poverty. Some 2 million of our children are in deep material poverty, lacking the basic essentials such as a warm home or healthy food—things without which no child should be growing up. It is shocking enough that so many of our children have to live through childhood like that, but it is even more shocking when we consider the hugely detrimental consequences that growing up in poverty has on children’s health, education and future employment prospects.

Just one in four children in families with the lowest incomes gets good GCSEs. As adults, those who grew up in poverty are more likely to be unemployed or to find themselves in low-skilled, lower-paid jobs. Those who grow up poor clearly do not lack talent; what they lack is opportunity. As a result, our country is missing out on their gifts and their contributions. We are determined to break this link between children’s backgrounds and their future success. That is why, since coming into office, we have taken significant steps to help families tackle poverty and give every child the best start in life: increasing the minimum wage, expanding free school meals for over half a million children, investing in social and affordable housing, and funding more Best Start Family Hubs. We are now pulling the single most cost-effective lever available: removing the universal credit two-child limit, which will lift 450,000 children out of poverty.

This is the right move to extend opportunity, and it is right because our system should not be penalising so many of our children for the circumstances of their birth—circumstances their parents may not have chosen or expected. Life is unpredictable, and crisis can hit anyone regardless of the choices they have made or the size of their family. Marriages break up; parents lose their jobs or get sick, or injured, or die.

That unpredictability is reflected in the fact that half the families who will benefit from lifting the two-child limit were not on universal credit when they had any of their children. These are people who found themselves in need of help after decisions about family size had been taken. It simply is not right to draw dividing lines in the way the two-child limit sought to do, especially when over half the families affected by the two-child limit are already in work, and, of those who are not working, a significant number are affected by serious health conditions or caring responsibilities.

Illness, disability, bereavement, unemployment, becoming a carer—these things can hit any one of us, and have probably hit many of us in this Chamber already. Our welfare state exists to pool risk, to give all of us some protection from the impact of life’s slings and arrows. Some will look only at the cost, without looking at the cost of failing to offer support. We simply cannot afford to sit on our hands and wait for the costs of poverty to spiral. Without intervention, 150,000 more children will be pulled into poverty by 2030. That is 150,000 stories of missed opportunity, of deeper inequality, of lost productivity. But if tackling poverty is vital not just for the lives and opportunities of children, it is vital for our economy. Every pound we spend lifting children out of poverty saves so much more in future health, education and social security costs.

Few investments will reap rewards as great as investing in the next generation, in our future workforce. Failing to act on child poverty will cost Britain far more than investing now. That is why removing the two-child limit is part of our wider child poverty strategy. We committed in our manifesto to making good work the foundation of our approach to tackling poverty. Parents are doing all they can to support their children. Parental employment rates are already high but, with almost three-quarters of children in poverty being in a working family, too many parents find themselves in jobs where they are still struggling to support their families.

Meanwhile, too many of those who are not in work face barriers to entering the labour market, whether that is down to health, disability, a lack of childcare, poor skills, public transport not working in their area, or all kinds of other barriers. We want every parent who can work to feel the benefits of secure, rewarding jobs that enable them to get on in life, to support their families and to set an example to the next generation. That is why we will deliver a step change in employment and skills support for parents, helping them to balance work and caring responsibilities through high-quality, flexible jobs and improving access to affordable childcare.

The expansion of childcare comes alongside other measures in our child poverty strategy to drive down working poverty, including raising the minimum wage and creating more secure jobs by strengthening rights at work. The measures and the strategy will lift 550,000 children out of poverty. These interventions will lead to the largest expected reduction in child poverty over a Parliament since comparable records began. Together, all this represents a strong start. It kick-starts action and ambition over the next 10 years, responding to the immediate pressures families face now while delivering change to fix the structural drivers of child poverty.

But we do not underestimate the scale of the challenge: to build a society where every child grows up safe, warm and well fed, not held back by poverty but helped forward by government. So we will monitor our progress using two main metrics. First, we will use the internationally recognised and well-established “relative low income after housing costs” measure to monitor overall child poverty. Secondly, there will be a new measure of deep material poverty, which we have developed to assess families’ ability to afford the essentials. This takes account not just of their income but of the cost of essentials, their overall financial situation and the support they receive locally. It is not just the number of children in poverty that matters; it is the depth of that poverty too.

We are committed to ensuring that removing the two-child limit, along with other measures in the child poverty strategy, delivers the results children need and deserve. To support this, we have published a monitoring and evaluation framework alongside the strategy. That sets out how we will track our progress and the success of these policies, as part of an ongoing commitment to transparency, accountability and continued learning. This includes focused analysis to understand what drives child poverty and the impacts of the changes we are making, so that we can build on our successes and continue to make the case for further intervention. We will publish a baseline report in the summer setting out the latest statistics and evidence, with annual reports thereafter to monitor and evaluate progress.

This Government will not stand by while millions of children face the long-term harm that poverty brings. Families in poverty cannot afford to give their children what they need to grow and to achieve their potential. We will boost family incomes through employment and social security, drive down the cost of essentials and strengthen local support services. We are investing in the future of our children and will hold ourselves to account on delivering the impact we promised through this Parliament and beyond. We will remove this cruel policy, which has pushed 300,000 children into poverty.

I look forward very much to this debate and especially to the maiden speeches of my noble friends Lady Antrobus and Lord Walker of Broxton and the noble Baroness, Lady Teather. Between them they bring an amazing wealth and breadth of experience and knowledge to our House. I am delighted that they have chosen this extremely important Bill to make their first contribution to our proceedings. I beg to move.

--- Later in debate ---

[Baroness Sherlock (Lab)]

My Lords, I am so grateful to all noble Lords who have contributed to this debate. I love listening to maiden speeches, when we get an insight into the range and depth of experience coming into this House. Today we heard three magnificent examples. If anyone outside is listening, that exceptional richness of experience is what this House can bring to debates. We have heard about defence and air power; conflict and resolving conflict; climbing mountains, both literal and metaphorical; the importance of business; the compelling relational power of tea in the Long Room and learning to play dominoes—I may be better at one of those than the other, but maybe time will tell. I thank all noble Lords so much for coming in and contributing.

In developing our child poverty strategy, we engaged extensively with all kinds of people, including families, campaigners and experts. The aim was to try to work out what would have the greatest impact on the day-to-day lives of children living in poverty. The message was really clear: remove the two-child limit. I am grateful to my noble friend Lady Shah for pointing out the challenges we inherited and why it takes time for Governments to work through dealing with everything that comes out.

The Bill is supported by over 60 organisations, representing anti-poverty charities, which is perhaps not surprising, but also children’s doctors, teachers and health visitors—the people who know only too well the damaging effects of poverty and see its consequences every day. I remain very grateful for the work of the campaigning organisations, those professionals who support our children and all those who pushed for this change, including the Bishops’ Bench. I share the remembrance of the former right reverend Prelate the Bishop of Durham, who pushed for this in his time in this House.

The Bill is an investment to deliver a better future for children and for our country. Many noble Lords, including the noble Baroness, Lady Teather, and the right reverend Prelate the Bishop of Leicester, have set out the devastating impact that poverty has on children. Many, including my noble friend Lord Babudu, have pointed out that poverty is not evenly distributed.

Poverty imposes really significant costs on individuals and the country. Let me start with the Official Opposition, because they have set out clearly why they oppose this. It is my experience, in many years in and around politics, that, if you want to defend the indefensible, the first thing you do is set up some clearly false dichotomies. What have we listened to today? “It is children versus defence”. Of course it is not. If I were going to play politics, I would point out that, if the Conservatives felt that passionately about it when they were in government, maybe they should not have cut £12 billion from defence spending in their first term alone; maybe they should not have cut spending from the 2.5% the last Labour Government left, pushing us to raise it to 2.6% by next year; maybe they should have slashed child poverty. They were not choosing between the two things: they attacked both of them. Now, we could have that kind of conversation, or we could have a different kind of conversation. Let us take a step back and look at what actually happens with the policies.

What is the other false dichotomy? I think we fall into making a mistake if we try to set up social security versus work. I am not repeating the figure that 59% of families hit by the two-child limit are in work, in order to make a political point; I am pointing out that our social security system is there to help people in and out of work, and to help them get from being out of work into being in work. If the barriers get in the way of people being able to move into work, the system is not doing its job. Every time we start trying to pretend that this is contrasting people lying in bed all day with the blinds shut with those who go out to work, we do everyone a disservice. Please let us not have that conversation.

What we want to do is recognise that we have to enable work, encourage work and take away the barriers to work—that is really important—and that neither those in nor out of work are static populations: people move between those states, for a whole range of reasons. Our job is to make sure that, for those who can work, they stay in work as much as they can, for as long as they can, and, if they come out, to help them back into it when they can—but, if they cannot, to support them, because that is what we do by pooling risk.

The noble Lord, Lord Redwood, made some very interesting points. I parted company with him when he got to a certain point in his speech, but he made a really interesting point in saying that this policy is clearly not a panacea. The state cannot and should not pretend that it can solve all the problems families have, and the state does not raise children: families do.

The starting point, however, is that, if we want to tackle child poverty, as the noble Viscount, Lord Younger, said he does, the first thing we have to do is stop making it worse: stop tipping more children into poverty every year. The second step is to work out what the barriers are to people moving into work and developing in their lives. The noble Lord, Lord Redwood, mentioned some of those that are nothing to do with money, and the state can only do what it can to try to make it as easy as possible for families to do the right thing: investing in relationships education, supporting families —all kinds of education—and communities and relationships. What the state can do is tackle the things it can do something about. It is definitely not all about money, but it is not not about money: the statistics show really clearly, for example, the impact of poverty on family breakup and on parents struggling to do the right thing by their kids. We need to do both.

The next thing we need to do is create opportunities. I always hate disagreeing with the noble Lord, Lord Bird, because I know that he will come back at me, rightly, but we have to start to move not away from but beyond “handout versus hand up”. I absolutely agree with him that our job is to give people a hand up. He has done that in his time—as, indeed, has the noble Baroness, Lady Stedman-Scott—but I would not contrast that with any support the state gives to those who are struggling when they need it. A lot of what we do is on both those things. Like my noble friend Lord Walker, I have a real interest in how we use my department to help those who are struggling to get into work. Just this week, I was at a conference talking to businesses that are helping ex-offenders into work.

[Lord Bird (CB)]

My Lords—

[Baroness Sherlock (Lab)]

I knew I should not have mentioned him.

[Lord Bird (CB)]

Is it not wonderful that social security can be used as a hand up? That is the point I am trying to make. I am not trying to make the point of work versus social security. I am saying that a hand up is absolutely marvellous. The greatest hand up that I got was a probation officer.

[Baroness Sherlock (Lab)]

Indeed, and that probation officer clearly did a very good job: look where the noble Lord has ended up. Would that they were all that successful. I suppose that that is quite a high bar at which to set them, but I commend it. That is a really great point, and I am now violently agreeing with the noble Lord; but I will move on.

I want the social security system to do its job, and for most people its job is to support them into work, and in work, and to develop them in work. That is very much what this Government are seeking to do.

One of the challenges with universal credit is about assumptions. It was designed to move people into and out of work—to work in and out of work—and when it works it does so very well. All we are doing is making sure that the system works even better than it does. But the assumption that this Government are doing the wrong thing by spending money on tackling child poverty is fundamentally mistaken. My noble friend Lord Walker talked about the need to make sure we tackle NEETs, for example. We have one in eight of our young people not in employment, education or training. They did not start at 16.

[Baroness Stedman-Scott (Con)]

Will the Minister give way?

[Baroness Sherlock (Lab)]

Okay; it is going to be a long day.

[Baroness Stedman-Scott (Con)]

We are not saying that the Government should not spend money. It is about what you spend it on, and how it is spent to get the best outcome from what you are trying to do.

[Baroness Sherlock (Lab)]

My Lords, I understand that, but I have looked at what the last Government spent the money on and at the results, and I do not like them, so we are going to do something different.

My simple view is that if we will the end of tackling child poverty, we have to will the means. We believe that removing this barrier is fundamental. Those young people who were NEETs at 16 did not start at 16: they started without the opportunities, without the education, and without the start in life they should have had. The evidence shows quite clearly that children who grow up in poverty are likely to have poorer mental health, fewer opportunities and less chance to do all those things we want them to do. What we are doing is enabling those people to have opportunities, giving them the start they need. If we can get that in place, the whole country benefits. Instead of supporting people not to work, we are giving them the chance to flourish as individuals and to make the contribution to our society that they will not get the chance to make otherwise.

Before I get myself into any more flights of rhetoric, I should answer some of the questions that have been asked. My noble friend Lady Lister asked about council tax reduction. I think she knows this, but just for the record, local councils are of course responsible for designing and reviewing their own council tax reduction schemes. My department has been working with the MHCLG to communicate the change to local authorities, and they have been encouraged to consider the impact of their schemes in the light of the removal of the two-child limit. In 2029-30 an estimated 560,000 families will see an increase in their universal credit award, with these families gaining, on average, £440 a month. The impact of transitional protection is included in the impact assessment, but not on the numbers of households.

The benefit cap was raised by my noble friend Lady Lister, and by the noble Baronesses, Lady Teather and Lady Bennett, and by my noble friend Lord Davies and a few others. This Government want to preserve the fundamental principle that work is the best route out of poverty. We believe that leaving the overall benefit cap in place encourages personal responsibility while maintaining the incentive to work. Where possible, it is in the best interests of children to be in working households. Being in work substantially reduces the chance of poverty: the poverty rate of children living in households where all adults are in work is 17%, compared to 65% for children who live in households where no adults work. We will continue to protect the most vulnerable—those who are unable to work because of a disability or a caring responsibility are protected and exempted from that.

The noble Baroness, Lady Bennett, asked about numbers. When I answered her Written Question, the impact assessment had not been published at that point. I can say that among households in scope to gain from the removal of the two-child limit in 2029-2030, approximately 50,000 are estimated to be capped before the policy change, and a further 10,000 households will be capped afterwards. In contrast, 550,000 households in Great Britain will gain in full from the removal of the two-child limit in 2029-30, as will an estimated 2 million children in the United Kingdom.

The noble Baroness, Lady Janke, and my noble friend Lady Shah raised the impact of poverty on children and schools—

[Baroness Lister of Burtersett (Lab)]

I am sorry to interrupt my noble friend, but a number of us have made the point about the thresholds for the benefit cap and the fact that child benefit is taken into account. When we were in opposition, we said that child benefit should not be taken into account in the cap. Can she comment on that?

[Baroness Sherlock (Lab)]

I have given the same answer about the levels a number of times. The cap has to be reviewed by 2027. The Secretary of State will review it at the appropriate time, certainly within the statutory deadline, and he will make the judgments he makes at the time. I am happy to convey the comments made on this to my colleagues in the department, but the Government have taken the view that they have on the cap. We will simply have to leave it at that, I am afraid.

On schools and education, it is striking that schools are using their stretched resources on services such as food banks and providing essentials to children. Research by the Joseph Rowntree Foundation shows that now one-third of primary schools run food banks, one-quarter are providing essentials, and 38% say staff provide for pupils and families out of their own pockets. We got the Children’s Commissioner’s office to do some research to support the development of the child poverty strategy. Children and young people spoke about how low income impacts their education and at times limits their career aspirations, including by restricting their access to extracurricular activities. This is an incredibly important point made by my noble friend Lord John, or possibly by my noble friend Lord Walker—I am sorry, I am getting very bad at names. We listened carefully to families when we did that, and the consistent message was that a whole range of benefits came from lifting the two-child limit. It is not just about money; it is about all the things that enables. This goes also to the points made by the noble Lord, Lord Redwood.

As for paying for this, the Government have always made clear how they will pay for things when they announce them. It was made clear that the removal of the two-child limit was fully funded by policies in the Budget, including reforming Motability tax relief, clamping down on fraud and error in tax and social security, and reforming the assessment process. Together, those measures will save £4.9 billion in 2030-31 versus the £3.2 billion cost of removing the two-child limit.

The noble Viscount, Lord Younger, raised the OBR and the welfare cap. The Government are committed to ensuring that social security spending remains on a sustainable path. We set a new welfare cap in the Autumn Budget 2024 to make sure that it remains under control for the course of this Parliament. The forecast for social security spending is virtually unchanged from the last OBR assessment, increasing by only 0.1% in 2029-30 in the forecast. Welfare spending is forecast to rise by less than half the amount it did under the previous Parliament—just over 0.3% of GDP by 2030-31 compared with 0.7% previously—and health and disability spending is expected to rise by only 0.3 percentage points compared with 0.5 under the previous Government. This Government inherited a system which did not do all the things the Opposition say they wanted it to do. In fact, we saw growing numbers of people economically inactive as a result of ill health and disability. That graph went up. We have been working hard to bend that graph by taking the steps needed to do it.

On employment, parental employment rates are already high, but if we want to get more parents into work, it is important that we remove the barriers to getting them there. One of the key barriers is childcare. That is why we have announced 30 hours of funded childcare for working parents, saving eligible families using all 30 hours up to £7,500 per eligible child per year. When we talk about the parents in larger families being in work, one of the challenges was childcare again. We are extending eligibility for universal credit upfront childcare costs to parents returning from parental leave to ease that transition back to work, and we are providing UC childcare support to help with the childcare costs of all children, instead of limiting it to two children, so that parents who have larger families can afford to go back to work. It clearly is not about work or social security; it is about social security enabling work and supporting it, as the noble Lord, Lord Bird, said so clearly. We know that there is more to do, which is why we are committing to a review led by the Department for Education across government about access to early education and childcare support and delivering a simpler system.

What is coming next? We have been clear that the child poverty strategy will not solve problems overnight. This is one step in a journey looking forward 10 years. We have already made a number of significant steps: investing heavily in expanding free school meals; introducing a fair repayment rate into universal credit; investing in support to help people with their energy bills; investing in support across the piece; raising the minimum wage; looking at what is happening with affordable housing; and investing in helping people to get into secure jobs.

The most important thing will be to monitor that, to make sure that we do it. There will be a comprehensive programme of analysis, making sure that we know the exact impact of the changes we are making. If the Opposition are worried, we will be monitoring the impact of what we do. This will enable us to work with government departments and the devolved Governments to consider what we do in future and to capture the data as we go.

This Government are determined to break down barriers to opportunity, to deliver economic growth and to raise living standards. Removing the two-child limit in universal credit remains the single fastest and most cost-effective lever we have to reduce the number of children growing up in poverty. It is at the heart of a wider strategy to drive down child poverty and set the next generation up for success. Far from being anti-work, this strategy includes our plan to make work pay, to improve job security and living standards, and to enable people to get on into work. We do not simply want to move people from being out of work into jobs from which they can never progress. If we want social mobility, we need to enable people to develop skills so that we can become a high-skilled, high-wage, high-investment economy, as we have been challenged to do. We have also announced increased universal credit support, getting people into work and into more hours because, above all, we believe in the value of every person and the contribution they can make.

The noble Baroness, Lady Teather, and the right reverend Prelate the Bishop of Leicester made some very interesting points. Part of what we have to do is to invest in communities and relationships. All we can do with money is remove barriers. What we need to do as a country is look at how we engage with our neighbours and our communities, and how we can support all those in our communities to develop and to fulfil their potential.

My noble friend Lord John said that a Labour Government are nothing if they do not do something to tackle poverty and inequality. That is exactly what we are doing here today. The Bill, along with the wider actions in the child poverty strategy, will help deliver the biggest reduction in child poverty over a Parliament since comparable records began in the 1990s. It is time to put this counterproductive and cruel policy into the dustbin of history, and to focus instead on building a system that gives children and their families the security and opportunities to build a better life, no matter their background. I commend the Bill to the House.

Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.

Pension Schemes: Ministerial Powers

Baroness Sherlock Excerpts

Wednesday 11th March 2026 Lords Chamber

[Baroness Altmann (Non-Afl)]

My Lords, in begging leave to ask a Question of which I have given private notice, I declare my interests as set out in the register.

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

My Lords, the Pension Schemes Bill contains a reserve power on asset allocation, designed as a backstop to the voluntary commitments made by the pensions industry under the Mansion House Accord. The Government do not currently expect to use this power. Were this power ever exercised, schemes that cannot meet the requirements without causing material financial detriment to their members would be able to apply for an exemption under the savers’ interest test. The power is time-limited and subject to consultation, parliamentary approval and robust safeguards.

[Baroness Altmann (Non-Afl)]

My Lords, I thank the Minister for that Answer, but I am afraid that if the Government’s main argument for including these powers is that they do not expect to need to use them, and will use them only if pension schemes themselves decide that they do not believe it is wise to achieve the allocations that the Government want them to, I have even greater concerns about those powers. I urge the Government to think again about overriding trustees’ decisions about what assets to invest in.

In particular, the Government are trying to take unlimited powers in the Bill to prescribe a percentage, but we do not know what that percentage might be, and to invest in assets, but we do not know which assets they will be. Even those who brokered the Mansion House Accord, such as Pensions UK and the ABI, are saying that they wish this to be reconsidered. Do the Government really believe that they know better than the investment industry how pension schemes should invest? Do they not consider that this is an example of the problems that the Government might have in excluding from the Bill some of the ideal vehicles which could be used to invest in the very assets that the Government say they want to support?

[Baroness Sherlock (Lab)]

As the noble Baroness well knows, we have been discussing this matter for some weeks now in Committee and will be discussing it again on Monday, when we come to the matter on Report. Let me give her a brief answer to the points she has made. I know that she agrees with the Government’s objectives, because she herself has advocated previously—indeed, in Committee—that we make pension tax relief contingent on 25% of new investment being allocated to UK assets. I know she wants the same thing that we do.

To be really clear, the power is being taken as a reserve power to back the voluntary, industry-led Mansion House Accord, which said that by 2030, 17 of the largest pension schemes in the private pensions sector would be investing 10% of their relevant default funds into private investment, with half of that in the UK. The expectation is that having done that, the industry will do it. The reason for taking a reserve power is, as the noble Baroness knows very well, that the challenge in the UK is too often schemes compete on cost and not on value. There is always a risk that for some small competitive advantage, somebody may want to try to separate off from that, so the reserve power is signalling clearly to the industry: this is the direction of travel, so let us stay with it. All we are doing is backstopping that.

[Baroness Stedman-Scott (Con)]

My Lords, the Government say that this power is merely a backstop to the Mansion House Accord but that is a gross misrepresentation. The Pension Schemes Bill goes far beyond that and gives Ministers sweeping authority to mandate pension investments to whatever level they choose. The state should not be directing the allocation of private pension assets. Those decisions must be taken by trustees in the best interests of their members, not by Labour Ministers pursuing political objectives. This policy risks undermining confidence in the entire auto-enrolment system, which was built on the promise that people’s savings would be invested in their interests, not the Government’s. I ask the Minister a simple question: will the Government remove this dangerous and unjustified power from the Bill?

[Baroness Sherlock (Lab)]

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

[Lord Vaux of Harrowden (CB)]

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

[Baroness Sherlock (Lab)]

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

[Baroness Bowles of Berkhamsted (LD)]

My Lords, what timeline are the Government following, given that the Mansion House Accord target is 2030? When will the Government commence consultation, as there has not been any yet, and what analysis has been done about the difficulties now reported daily of private credit funds, and others, not being able to make redemptions or exits? Would the effect be that the Government would be forcing workers’ pensions to be buyers of last resort, and is that fair when private sector workers do not have any guaranteed benefits?

[Baroness Sherlock (Lab)]

My Lords, the Government have not set out a timeline for using the power precisely because we have made it clear that we do not wish to use it, and do not expect to use it. The timeline for Mansion House is clear: the power expires if it is not used, and if any requirements are in place, they are capped at that level and cannot be raised thereafter. This will happen only if it becomes clear that the Mansion House Accord is not able to be delivered on. At that point the Government would consult, they would produce draft regulations, and the process would then happen. As I have made clear, since the only aim is to backstop the Mansion House Accord, the evidence should come from what companies are doing in that accord.

[Lord Davies of Brixton (Lab)]

My Lords, like my noble friend I am looking forward to discussing these issues at length on Report of the Pension Schemes Bill. Does the Minister agree with me that the real trick is not so much directing the investment as finding the suitable opportunities in which to invest? Her honourable friend the Pensions Minister has talked extensively about the failure of investment in reservoirs over the last 20 or 30 years. There is a failure there that has to be addressed.

[Baroness Sherlock (Lab)]

My noble friend is quite right; we have had many opportunities. It has been a joy to discuss the Pension Schemes Bill over many weeks, and that joy is set to extend for some weeks to come. My noble friend raises an important point: if the Government want to make sure that people are investing in good projects, they need to make sure that there are good projects to invest in. We also need to make sure that there are vehicles for doing that. The Government have done a great deal already, with the British Business Bank, looking at what has happened with Sterling 20 and at making sure that we work with industry to create the opportunities. But there is clearly money to be made here: if international pension funds are coming to our country and buying up chunks of our infrastructure and our private equity, we should be making sure that these are open to our own pension funds to make money on them. Nobody is making them do it; they are doing it because it is the right thing to do. We need to make sure, therefore, that we enable and encourage it, and the industry has taken the first steps itself. We are simply making sure that the backstop is there to make clear that this is the direction of travel.

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

My Lords, I declare my interest as chairman of the Scottish American Investment Company. I understand why the Government would want to take a reserve power, given the persistent failure of the City of London—one of the biggest global financial centres—to provide equity finance to British industry over 150 years. Equally, successive Governments’ record of direct investment, or indeed direct intervention, is, to put it charitably, poor. Does the Minister acknowledge that government intervention carries a price in terms of market confidence, and will the Government take that into account before exercising any reserve power?

[Baroness Sherlock (Lab)]

I thank the noble Lord for an excellent question; with his background I would expect no less. The simple answer is yes. To be clear, the power does not direct schemes into any specific assets or projects. What it does is set a broad framework. It talks about private investment as a whole, not about specific assets. Crucially, the safeguards are really clear. If the power ever comes to be used, a number of things have to happen. First, there has to be a report commissioned and published before the power is used, so as to make sure that the conditions are right, and to show the impact on savers’ interest and on growth. Secondly, there is a savers’ interest test. If the trustees believe that it would not be in the interests of their beneficiaries to follow the direction, not only can they, but one would expect their fiduciary duties to guide them to, make an application for an exemption under the savers’ interest test; that is there to do that job for them. There is also parliamentary scrutiny of any regulations. I hope that that reassures the noble Lord.

[Viscount Younger of Leckie (Con)]

As the Minister herself has just said, the signatories to the Mansion House Accord signed up to a voluntary agreement to invest in UK assets. Does she agree that they were not aware that the reserve power, the so-called mandation element, was going to be in the Bill? Does she therefore agree with me, with many of the signatories themselves, and with those in the pensions industry that mandation goes well beyond the Mansion House Accord?

[Baroness Sherlock (Lab)]

My Lords, to be clear, the Government designed this power specifically to backstop the Mansion House Accord, and that is our intention. I am always open to suggestions of ways to make that clearer than we have tried to do so far. I had a great opportunity to talk to many Members of the House about this and many other issues, and I am happy to carry on doing that. There is a very simple way for any of the Mansion House signatories to make sure that this power is never used: to keep to the voluntary commitments that they have already made. If that happens, there will be no need for the power ever to be used and the Government will not bring it in, so everybody will be happy. That is the simple way forward.

[Baroness Kramer (LD)]

My Lords, under the Mansion House Accord, and the mandation that now sits behind it, people on the lowest incomes will find 10% of their pensions put into high-risk illiquid assets. Given that that pool of assets is currently in very serious trouble thanks to illiquidity—this was prior to the Iran war, which is going to burst the bubble—will the Minister say that, if she forces this through, the Government will backstop the losses that will happen for those people on the lowest incomes, so that their pensions are not wrecked when they reach retirement?

[Baroness Sherlock (Lab)]

My Lords, first, as I have said before, the Government are very clear—and the Bill makes clear—that were the power ever to be used, the Government must commission a report that will look at the state of the market and the impact on savers’ interests, as well as wider impacts, before using the power. If what the noble Baroness is describing were to be the case, that would become evident, and it would of course affect the Government’s decision.

Secondly, and, again, just to be clear, it is because we want to look after the interests of savers that we want to tackle the fact that, by international standards, UK pension funds invest tiny amounts of money in private finance, and therefore, as a result of not investing in private assets, it is savers—those savers whom the noble Baroness specifically describes—who are losing out because they are not getting the returns that they need. These are the default funds, so savers who know lots about this, and who will want to make judgments on making sure that their assets are in the right place, are already doing that. It is not serving their interests if these default funds are being put simply into passive investing or things that will not bring the long-term returns.

Finally, this goes back to the fact that the trustees are not being directed to invest in any specific asset or particular project. If the power was ever to be brought in and they were asked to do this, and if they believed that it was not in their interests, then we would expect them to apply for an exemption to protect the interests of their members. If there was something about their members—in the way that the noble Baroness describes—that was relevant, they would simply have to provide that evidence. That is what the savers’ interest test is for.

Access to Work Fund

Baroness Sherlock Excerpts

Thursday 5th March 2026 Lords Chamber

[Lord Touhig (Lab)]

My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I declare an interest as a vice-president of the National Autistic Society, an honour I share with my noble friend Lady Browning opposite.

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

My Lords, Access to Work is a demand-led, personalised discretionary grant programme, which supports the recruitment and retention of disabled people in employment. As part of standard operational practice, the DWP continually reviews how the service has delivered to drive improvements. Access to Work has not substantially changed since its introduction in 1994. In our Pathways to Work Green Paper, this Government consulted on the future of Access to Work and how to improve the scheme so that it helps more disabled people in work.

[Lord Touhig (Lab)]

My Lords, last year I met a group of autistic youngsters who were in employment for the first time, thanks to the support of the Access to Work fund. But the fund, in truth, is in crisis. There is a backlog of 60,000 applications waiting to be processed, 33,000 people are waiting for payments, and the system is overwhelmed and struggling to cope. The National Audit Office recently produced a report making recommendations for major changes to how the fund operates. Will my noble friend the Minister use this report as the basis for a complete review, to prevent this fund failing completely?

[Baroness Sherlock (Lab)]

I share my noble friend’s view of the importance of supporting people into work; that is what Access to Work is there to do. The NAO report, published last month, is a really helpful contribution and highlighted a number of pressures that we already know about. It also noted that the demand on Access to Work has gone up dramatically. It began to escalate significantly coming out of the pandemic—application rates have doubled since 2019-20—and the Government are now spending a record amount, over £320 million, which is the highest ever and 22% more than the year before.

A range of changes have made a difference, partly about the scale and partly about complexity, so we are taking those steps now. We increased the number of staff working in this area by 29% last year and we have looked at operational improvements to speed up cases. We are getting more complex cases coming through, which is making a difference. We also need to reform Access to Work. It has not been looked at properly since it was introduced over 30 years ago; we need to make sure it is fit for the future.

[Lord Sterling of Plaistow (Con)]

My Lords, I totally agree with the points brought up by the noble Lord, Lord Touhig. We are very fortunate in having a Minister who cares so deeply about this subject, as we all know. One of the problems in getting a job, which is what I want to ask the Minister about, is that, in practice, the workforce in many small companies is very nervous indeed to have somebody who is disabled or has a problem of that type. How can we deal with that better and faster?

[Baroness Sherlock (Lab)]

I thank the noble Lord for his question and for his kind words. He raises a really important point. One of the things we have discovered, both through our general work with employers but also through the report we have done in this area, is that many employers really want to help, but some small and medium-sized businesses do not know how. They are nervous, and they worry about having the right conversations and how to help. We have a special service, developed with SME employers, called SEND, where we can work with employers and bridge conversations between employer and employee to help them work out what they should do and what help they can get elsewhere.

At the same time, we need to make sure that really big employers step up to the plate. We should not be in a situation where very large employers use Access to Work for small pieces of equipment, such as buying keyboards or chairs, which one would hope they could have managed in the normal run of things. Our job is to help employers to do the right thing, because most of them want to, but the noble Lord knows very much from his experience that this can be challenging. Yet, the rewards of having a really good workforce can make all the difference in the end.

[Lord Palmer of Childs Hill (LD)]

My Lords, I compliment the Minister on the work that is being done in this area. In my view, the aim of the Access to Work fund is to get people out of the house and into work. The fund also pays for improvements and developments in the home when people are working from home. I am sure it would be of great interest to the House to know what proportion of the fund is going to support people working from home rather than working in a place of employment, which is not quite the same in what it achieves for mobility.

[Baroness Sherlock (Lab)]

My Lords, the noble Lord makes an important point: the scheme helps people to get into and stay in work. It is incredibly wide-ranging, covering anything from a customer applying for a single one-off grant of £100 to buy a piece of equipment, which they might keep for the duration of their work in that particular role, through to the other end, of a cap of £69,260 for someone who needs large levels of personal support. There are people who buy a single piece of equipment, or have British Sign Language support to do a job, and right across the piece. I do not have the figures about location, but if we have them I would be very happy to write to the noble Lord.

[The Lord Bishop of Leicester]

My Lords, although I recognise that spending on Access to Work has increased in recent years and applaud the Government’s ambition to support more disabled people into work, this will most likely require more financial investment and more training of specialist staff. Therefore, have the Government assessed how their welfare reforms will affect demand for Access to Work and how the scheme can be strengthened to meet what may be an increased case load in coming years?

[Baroness Sherlock (Lab)]

The right reverend Prelate raises a very important point. The Government hope there will be more demand for support. In reviewing Access to Work, we also have to review the whole landscape to look at how well supported employers are to be able to do the things they can do, which was the point raised by the noble Lord, Lord Sterling. What is the right thing for an employer to do, what can the individual do themselves and what can the state do to help them directly?

One of the challenges in recent times is that, along with that growth, we are getting very different types of cases. Broadly speaking, when the scheme was much smaller, people traditionally applied for a piece of physical kit for a physical barrier. The biggest single case now is people needing help with mental health. There are also cases of people coming through with a range of learning conditions, which are quite complex to assess and need a lot more work. We are having to review that, alongside broader policies, but the right reverend Prelate makes an important point to connect them.

[Lord Holmes of Richmond (Con)]

My Lords, if you are blind or visually impaired in the UK you have only a 27% chance of being in employment. In the light of that, what changes does the Minister propose need to be made to Access to Work, connect to work and all job programmes to close this horrific employment gap?

[Baroness Sherlock (Lab)]

I commend the noble Lord for raising these issues. I am really grateful to him for having been in touch with me, and I look forward to discussing this more with him directly. The Government are increasingly looking at how we can personalise our support. The disability employment advisers in our jobcentres are well trained to make sure they work with individuals, but the next stage goes back to employers. We can get individuals job-ready, but we have to make sure that places of employment are disabled person-ready as well, so we are trying to do both.

In developing the future of Access to Work, we consulted generally and set up a collaboration committee, working closely with disabled people and people from representative organisations, as well as employers, to look at how we get the scheme right. Within that, we are trying to capture the full range of needs and make sure it carries on being personalised, but in a practical way.

[Baroness Stedman-Scott (Con)]

My Lords, the Minister and I suffer from the same condition: an obsession with getting people into work and keeping them there. I hope the whole House shares an obsession with the same outcome. Nothing makes my heart sing more than knowing how many people we get into work, how many stay in work—particularly after a year—how much a job costs and how we can make sure we measure what we are doing. How does the department keep these outcomes under review and how does it ensure that expenditure in this area is demonstrably helping people enter and stay in work?

[Baroness Sherlock (Lab)]

I commend the noble Baroness for the really interesting and innovative work she has done in the past, and for her commitment to this area. It is always a pleasure to debate these issues with her. On value for money and the results of Access to Work, she will remember from her time in the department that the previous Government tried to look at how you assess the impact of this scheme, only to find that it is very difficult, because you do not have a counterfactual: you cannot have a control group who get no help at all and struggle on their own, and compare to see how the two groups are doing. The NAO flagged these issues to the department and we are very aware of them. We are looking all the time at how we reform the scheme in a way that helps individuals, demonstrates additional value for money and is not a substitute for what employers should be doing, but which none the less is not so bureaucratic that you cannot get the money you need. To reassure her, all those things are being taken into account in the review process.

[Lord Harper (Con)]

My Lords, when I was in the Minister’s position and responsible for this scheme, one of the problems we had was getting enough people to take advantage of the scheme. I urge her, although it is challenging, to take as a win the fact that demand is very high and to make the argument with the Treasury that getting people into work is a net benefit to the public finances. I assure her that, if she makes that argument, she will get cross-party support for it. Access to Work is a fantastic scheme and I look forward to the changes she is able to make to enable it to get more people into work, whether they are in a workplace or working from home, where that may suit them best.

[Baroness Sherlock (Lab)]

I am grateful to the noble Lord both for the history lesson and for his support. Access to Work has many challenges, but getting people to apply for it is not chief among them. One of the challenges is that, although we are spending record amounts of money, we are still supporting only around 1% of the working disabled population, so this is also about identifying the best way to get the right amount of support to the highest number of people. The noble Lord was helpful in raising that issue; that is now our challenge, and I am grateful to him for reminding me of it.

Pension Schemes Bill

Baroness Sherlock Excerpts

Thursday 5th March 2026 Lords Chamber

Moved by

[Baroness Sherlock]

That the amendments for the Report stage be marshalled and considered in the following order:

Clauses 1 to 118, the Schedule, Clauses 119 to 123, Title.

Motion agreed.

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2026

Baroness Sherlock Excerpts

Thursday 5th March 2026 Lords Chamber

Moved by

[Baroness Sherlock]

That the draft Regulations laid before the House on 15 January be approved. Considered in Grand Committee on 2 March.

Motions agreed.

Rent Officers (Housing Benefit and Universal Credit Functions) (Modification) Order 2026

Baroness Sherlock Excerpts

Tuesday 3rd March 2026 Grand Committee

[Viscount Younger of Leckie (Con)]

My Lords, I thank the noble Baroness, Lady Thornhill, for opening this short debate. Let me say at the start that His Majesty’s Opposition support the principle behind the instrument before us. It reflects a careful exercise of the Government’s statutory powers. The order will ensure that local housing allowance rates, which determine the housing support paid to universal credit and housing benefit claimants, remain at the level set on 31 January 2024 for the 2026-27 period.

While we believe that the decision behind the order is sensible—and I would argue, the only way—we also recognise that concerns have been raised, including by the Secondary Legislation Scrutiny Committee, about the impact of freezing rates in a context of rising rents. Both noble Baronesses put that case very eloquently. According to figures from the DWP, rents have increased by 14% since the LHA was last increased in April 2024, and over 50% of people in receipt of either housing benefit or universal credit see a shortfall between the cost of their rent and housing support. I say again that the noble Baroness, Lady Thornhill, eloquently set out her case and the noble Baroness, Lady Pinnock, added her own facts and interesting anecdotes. She went on to say that we cannot carry on spending as much as we are, with which we all agree.

The question that we all come back to is what to do about this. I will refer later to the two-child limit, which is perhaps a black cloud hanging over us all, but can the Minister set out what other measures of help are available for households facing squeezed budgets? Can she explain, particularly for me, the thinking and the policy behind the crisis and resilience fund—the so-called CRF—which will, as I understand it, incorporate the old discretionary housing payments, though not in Wales? I would like to understand the difference here between the CRF and the DHPs, or how they interrelate. By what mechanism will those who are most in need be targeted from now on? What role is there for local authorities?

In her speech, the noble Baroness, Lady Thornhill, referred to houses and homes. She is quite right, because lowering rental levels is surely a priority to help with this particular issue. The Government have said that homes, and building more homes, are a priority. They have stated publicly and clearly that they need and wish to build 1.5 million homes by 2030. If that were the case, it would increase supply, which would, in turn, decrease rents. With that, comes decreased demand, and I suppose the theory is that each house will therefore demand less rent. Where are these new homes? We are more than 18 months into this Government. What progress is being made? This strikes me as being a vital element of this order. The evidence shows that fewer homes are being delivered per year now than the maximum that the last Government managed in a year, which I happen to know was 240,000. I look forward to the Minister’s response to these and other points outlined by the Committee.

This order must be seen in a wider context. We must bear in mind public spending and the welfare policy under this Labour Government. Since 2010, successive Conservative Governments have sought to reform and target welfare so that it acts as a genuine safety net and encourages people into work. With the introduction of universal credit, the central focus was ensuring that the welfare bill was affordable to the taxpayer. We have now set out a plan to deliver £47 billion-worth of savings over the next Parliament; around £23 billion of that will be from non-pensioner welfare reforms, reducing waste and tackling the rising debt. I must make it clear that we will and we must continue to protect those who are genuinely and most in need.

This Government’s approach has been rather different. They have dramatically increased welfare spending, including the breaking of fiscal promises and presiding over higher public debt and taxes. More worryingly, their decisions seem to have been shaped by short-term political pressures, rather than by clear and disciplined fiscal frameworks.

The most notable example of this is the Government’s decision to remove the two-child benefit cap—a policy against which they previously whipped their own MPs. As the Committee will be well aware, this cap was introduced by the previous Conservative Government in 2015 as part of a broader effort to ensure fairness in the welfare system. Indeed, Labour’s own leader initially refused to scrap it, even withdrawing the Whip from MPs who voted to end it and treating it at the time as a tough but necessary choice. Yet in an abrupt reversal, the current Chancellor and Prime Minister abolished the two-child limit in the 2025 Budget at an estimated cost of more than £3 billion, stating:

“We on the Labour Benches do not believe that the solution to a broken welfare system is to punish the most vulnerable”—[Official Report, Commons, 26/11/25; col. 397.]


children. Those are well-meaning words, but that is a stark departure from Labour’s earlier position and one that flies in the face of its own fiscal constraints.

The U-turn came at a time when the Prime Minister’s net favourability happened to be at its lowest. This is irresponsible decision-making. The Government’s expansion of welfare spending has led to higher taxes and long-term pressures on the public finances, with the UK continuing to borrow well over £100 billion per year to fund day-to-day spending. The noble Baroness, Lady Thornhill, might bear this figure in mind because reducing it is surely a massive challenge and a must do to make a real difference through massive savings, which will, ultimately, feed through into alleviating local pressures to help the least well-off. Surely this is one thing that must be looked at with more urgency.

To be clear, we do not believe it is fair to raise the two-child limit. This is because many families in work make the decision to live within their means, including making decisions about the size of their families. These same families lose out when additional funding is provided to those out of work who decide to have more than two children. I am aware that the Bill will soon come before the House and that we will have the opportunity to debate this matter all too soon—it might even be next week—and we will continue to press the Government to ensure that housing support, and welfare more broadly, are sustainable and fair. We must make every effort to support individuals and families into well-paid work and not increase dependence on benefits.

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

My Lords, I am grateful to the noble Baroness, Lady Thornhill, for introducing her Motion. If that was the first time she has done so, I commend her on how clearly she set out her case. I thank her for giving us the opportunity to debate the incredibly important subject of housing support. I also thank the other noble Lords who have contributed. For clarity, the order sets local housing allowance rates from April for 2026-27. In his Written Ministerial Statement on 26 November last year, the Secretary of State confirmed that LHA rates would not increase for 2026-27 but would be maintained at their current levels.

The noble Baroness, Lady Thornhill, and the noble Viscount, Lord Younger, have come at this from the perspective of fiscal inheritance. The fiscal inheritance is not a defence, but it is a reality. I remind the noble Viscount that this Government, when they arrived, were not immediately able to make choices to tackle many of the problems that had been left. Frankly, this was a target-rich environment; there were challenges right across the environment. Our public services were falling apart, our roads and houses had not been supported, and benefits had been frozen or put below inflation for many years, from the coalition Government all the way through until this Government took over. So there are some really significant challenges. That is at the heart of what the Government had to do: we had to make some very difficult choices across the piece on spending, and I will try to explain why.

A key driver of high rents is the lack of housing supply, which is an issue for the whole country, not just for those who get help for their housing from the social security system. The noble Baroness, Lady Pinnock, set out the challenge that we are all facing: a significant amount of money is being spent. The Government are prioritising action in the longer term; if we focus only on the short term, we will never be able to address this issue. I will come back later to some of the specifics that have been asked about.

We have therefore committed to build 1.5 million homes in England this Parliament, which includes the biggest increase in social and affordable housebuilding in a generation. We aim to build 300,000 social and affordable homes, and the whole programme is backed by a record £39 billion investment. We know that in many cases it takes a long time to build the homes we need, so we are committed to a whole-system approach to unblock the barriers to building and to address productivity in the housebuilding sector. The noble Baroness, Lady Thornhill, is right: people need housing support now.

To illustrate the point made by the noble Baroness, Lady Pinnock, the DWP continues to spend around £37 billion a year on housing support, and over £13 billion of that is support in the private rented sector. She is right that these are huge sums, even in the context of the social security budget. The Committee may be aware that the last LHA increase in April 2024 cost £7 billion over five years. These are significant sums, so when the Government have to make choices, they have to look very carefully at each individual element of the choices in front of them.

LHA rates are reviewed every year by the Secretary of State, and a range of factors were considered before he decided not to increase rates. He looked at the rental markets across Great Britain. The noble Baroness, Lady Thornhill, is right that rental inflation is slowing: it was over 9% in November 2024 and, by last January, it was down to 3.5%. But the fact is that there are still housing affordability challenges, which are particularly acute in some areas of the country.

Given the challenging fiscal context, the Secretary of State also considered broader social security and wider cross-government priorities, including on homelessness, ahead of Budget decisions. He chose—and he was right—to prioritise certain measures that had a key impact on poverty and living standards. Reducing child poverty is a core manifesto pledge for this Government, and we intend to deliver on it. Removing the two-child limit—we will debate this in more detail next week, and I look forward to debating it with the noble Viscount—will lift 450,000 children out of poverty in the final year of this Parliament. That will rise to around 550,000 alongside other measures set out in the child poverty strategy, such as the expansion of free school meals.

I take the points made by both noble Baronesses about the challenges. If people have gaps in their rent, something else has to go. However, people’s incomes have to be seen in the round. Their incomes are formed not just by the amount of money being given for housing but the amount of money being given to support their children and whether they have to pay for all meals or can get free school meals. Therefore, the Government are making choices, and all these things have to be seen in the round.

--- Later in debate ---

[Baroness Thornhill (LD)]

Can the Minister clarify that this will be a different way to use what was previously DHP rather than additional new money?

[Baroness Sherlock (Lab)]

I will come on in a moment to try to answer the specific question. If the noble Baroness will give me one second, I move to that point, because I want to explain how it will work. I thank her for nudging me.

I will look at a number of the questions that were asked. The noble Baroness mentioned the Crisis report saying that only 2.7% of properties were affordable. For clarity and for the record, the Crisis report looked at newly advertised rents, which are typically higher than those for continued tenancies. Although the report highlights the cost challenge of moving to a new tenancy, we do not think it accurately represents the whole picture. LHA rates are based on confirmed rents for sitting tenants rather than the advertised rents. I am not challenging the broader issue; I just wanted to make that clear for the record.

The noble Baroness also mentioned the impact on homelessness. As we all know, the causes of homelessness are multifaceted and are driven by a range of factors, both personal and structural, but the relationship with social security is clearly one of those factors. The DWP has worked closely with the MHCLG on the national plan to end homelessness, which is driving sustainable change and addressing the root causes of homelessness. We explicitly considered LHA rates against homelessness goals. We are committed to working together with the MHCLG and the Treasury to keep LHA rates under review—I hope that gives the noble Baroness some reassurance.

However, we also know that too many people are living in temporary accommodation and that local authorities are under pressure, so we want to prevent homelessness in the first place. We are investing £3.6 billion in homelessness prevention and rough-sleeping services over the next three years, as well as the removal of the two-child benefit cap, increases in universal credit, and other measures. We are delivering the increase in supply of social and affordable housing.

On food poverty, which was mentioned by the noble Baroness, Lady Pinnock, we have announced action to transform our food system to ensure that it delivers access to affordable, healthy food. However, we are engaging routinely and regularly with stakeholders to understand the key priorities. We have also taken the step of expanding free school meals to all those on universal credit, which will in itself lift 100,000 children out of poverty by the end of this Parliament.

Briefly, before I come on to the crisis and resilience point, the Government have committed to building 1.5 million new homes. That is a stretching target, which is what we intended it to be. We are backing that up with a record £39 billion of investment to kick-start social and affordable housebuilding at scale across the country.

[Baroness Pinnock (LD)]

I am sorry to interrupt the Minister, but I feel very strongly about the use of the phrase “affordable housing”. Affordable housing is, by definition, not affordable. The broad definition of affordability for rent is 80% of the market rent, which, for most people, is not affordable—but social housing at social rents is. I would love the Government to erase “affordable” and just talk about 300,000 homes for social rent. That would make a difference; I hope the Minister will agree.

[Baroness Sherlock (Lab)]

The 300,000 target is for both social and affordable housing. I would be very happy to share the noble Baroness’s views with my colleagues at MHCLG to make sure that they reflect on them, if that is okay with her, as that policy is probably above my pay grade.

On the question asked by the noble Viscount, Lord Younger, the real challenge is that, if we do not get a whole-system approach on this, we are never going to unblock the barriers to building and addressing the productivity issues in the housebuilding sector. We are, therefore, working really closely with industry—including developers, housing associations and local authorities—to try to get a step change in this area. We have already taken some significant steps to address the planning issues that were holding back the supply of housing. Within months of coming into government, we published our revised National Planning Policy Framework, and, in December, we launched a consultation on further reforms to the framework to unlock additional housing supply.

The noble Viscount also asked about what will happen to vulnerable people. Let me explain what is happening there. At the moment, there is something called the household support fund, and, separately, there are discretionary housing payments. Both of these are short-term funds; the DWP gives the money to local authorities to pay them out. The household support fund was only ever done for six months at a time, and it was never clear that it would be done again for the following six months. DHPs, however, were set for a year at a time. There were, therefore, two separate, short-term discretionary schemes with different purposes and different sets of rules. Just to complicate things, they also often went to different tiers of local government.

Instead, we are creating the crisis and resilience fund, which is a single, multi-year, streamlined fund. It will eventually replace both the household support fund and DHPs in England from 1 April 2026. The key is that people can plan for crisis and resilience support longer down the line. To ensure that there is a transition from where we are now to where we are going, discretionary housing payments will be replaced by the housing payment strand of the crisis and resilience fund, which will, for the first two years, simply mimic what discretionary housing payments do now; it will carry on in the same way. In Wales, DHPs will continue to be maintained and delivered, while Scotland has developed its own alternative for that—as this is a devolved issue—which it launched in 2024. So our intention is that that is what will happen.

The £1 billion includes the element for the housing strand but we are working closely with local authorities so that, by the time we get to year 3, we can look at how that can be done. Also, they will be able to top this up if they want. I recognise, in the context of all the challenges they have faced, that some local authorities do this at the moment because they want to put more into housing.

I hope that that is helpful. I would be very happy to answer any other questions.

[Viscount Younger of Leckie (Con)]

Thank you; that was very helpful. May I have some further clarification? Will the CRF, therefore, combine the needs around housing with the needs around budget expenditure for those individuals who are targeted for help? I am thinking that local authorities—if it goes through them—will want to look at each case as it comes up. They will want to look at the housing issues and the expenditure issues and combine the two, which would make sense if that were the case.

[Baroness Sherlock (Lab)]

Of course, there are still issues about tiers and responsibility. One of the challenges is that local government reform is going on, which is one of the reasons why we need to make sure that we work with local authorities so that, by the time we get to that point, we have taken account of that. But this is the housing strand within the CRF—the CRF does other things too; it does not deal only with housing. The housing strand, however, is there to deal with support for those whose housing needs are supported through the social security system. I hope that is okay.

The noble Viscount also asked me who makes the decisions, and it is the local authorities. We believe they are best placed to make informed judgments about relative priorities and needs in their area, but we engage with them regularly through regular forums and we publish guidance on both schemes.

I hope that has picked up the questions that all noble Lords have asked. I am always very happy to be interrupted. If I have not, I will look through Hansard, and I will be happy to write if I have missed anything.

To conclude, we really must continue to provide support towards rent costs for those who need it, including the most vulnerable. However, we will have to balance that with challenges in other areas and with the needs of the taxpayer. In the current challenging fiscal environment, measures with the greatest impact on government goals in the area of poverty have been prioritised. That is why we are investing in social and affordable housing, as well as removing the two-child limit to lift children out of poverty—which, by the way, I do not regard as a cloud hanging over anyone; it is a wonderful opportunity to lift children out of poverty, and I am proud that the Government are doing it. That was a little parenthesis. We are also fixing the work disincentive for vulnerable people living in temporary accommodation and supported housing.

Once again, I thank the noble Baroness, Lady Thornhill, for giving us the chance to discuss this important issue, and I hope that she and the Committee can understand the reasons for the choices we made.

[Baroness Thornhill (LD)]

What I do understand is making difficult choices, and I often say it is a difficult position to be in—well, I would like to be in it, but I do not underestimate the difficulty of it.

I thank my noble friend Lady Pinnock who, as always, brings it slap down to reality and where we are; she is great at that. I also thank the noble Viscount, Lord Younger of Leckie—I never doubt his sincerity or the logical way in which he presents arguments and asks questions. He has today confirmed why I am at this end of the table and not that one—but hey ho.

I agree with the Minister that one of the issues today is short-termism; very often, it is from election to election, and it has absolutely been responsible for all the mess she has had to pick up. It has to be said that we are very much in tune with many of her aspirations and we wish them well. Unfortunately, however, we cannot see two, five, seven or 10 years into the future, so we do not know what will happen in the meantime.

It has been helpful to hear the Minister outline everything today, but I am still not convinced that this does more than move the money around. Let me put it this way: I wish the Government had made another choice. I just looked at the figures the Minister gave. She said it was £7 billion over five years, but if it is £1 billion a year for the new and old funds, that is £1.25 billion over a year, and it is £2.8 billion a year in temporary housing. So I am still not convinced that it all adds up, but I am sure that in a metaphorical smoke-filled room somewhere, the Minister has a sheet and she is saying, “Okay, that’s the right decision” because of whatever. I think we just have to hope that things improve in the future.

The Minister mentioned the reality of renting and keeping things in touch with what actual rents are. I therefore urge her to talk to her colleague, the noble Baroness, Lady Taylor, about the database that was promised in the Renters’ Rights Act, because rent levels are meant to be on that database, and that will be a very helpful part of it. During the passage of that Act, I was very pro the database, but it seems that a lot of things have been shoved into the long grass a bit. The database is a valuable tool. The proof of the pudding will be what happens in the future, and we hope for the sake of those tens of thousands of children and families that the Government are correct. I thank all noble Lords for their contributions.

Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2026

Baroness Sherlock Excerpts

Monday 2nd March 2026 Grand Committee

Moved by

[Baroness Sherlock]

That the Grand Committee do consider the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2026.

Motion agreed.

Child Poverty Strategy

Baroness Sherlock Excerpts

Monday 2nd March 2026 Lords Chamber

[Baroness Chakrabarti]

To ask His Majesty’s Government what progress they have made in relation to the (1) implementation, and (2) outcomes, of the Child Poverty Strategy.

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

My Lords, the Government are progressing urgent legislation to remove the two-child limit from April, which is expected to lift 450,000 children out of poverty by the final year of this Parliament. Our monitoring and evaluations framework sets out our plans to track progress as part of our 10-year strategy for delivering long-term change. This summer we will publish a baseline report setting out the latest statistics and evidence, with annual reporting thereafter.

[Baroness Chakrabarti (Lab)]

I am grateful, as always, to my noble friend the Minister, who I suspect is one of the finest advocates for the Government in either House. She will know that some critics of the Government crave a greater overarching vision or story; others complain that policies such as removing the two-child benefit cap somehow reward the feckless. Would she like to take this opportunity to explain where this strategy sits amongst government priorities and why it is so important?

[Baroness Sherlock (Lab)]

I am grateful to my noble friend and commend her on her great taste in Ministers, if I may say so. It is also a really great question. The Prime Minister made it clear very early on what a high priority it was for him, and for this Government, to tackle the horrors of child poverty. Some 900,000 more children were in poverty as a result of the previous Government. This Government are determined to stop that, so policies such as removing the two-child limit and others that we have already announced will lift around 550,000 children out of poverty by the end of this Parliament. Do we know why it matters? It is not just to those individual children while they are kids; poverty scars their life chances. Children who grow up in poverty are more likely to have mental health difficulties by age 11. When they are adults, they are more likely to be unemployed and likely to earn less. Our country cannot afford to do that to our children, and our country cannot afford our children to underachieve. That is why it matters.

[Lord Farmer (Con)]

My Lords, the better futures social outcomes fund was announced in the child poverty strategy, with government payments tied to the achievement of measurable improvements in people’s lives, such as increased family stability. Family breakdown can be a driver, as well as an effect, of poverty. Can the Minister explain how progress in this area will be measured and whether the funding structure will enable ongoing work, after milestones have been reached, to prevent families slipping back into difficulties again?

[Baroness Sherlock (Lab)]

My Lords, the noble Lord is absolutely right about the importance of family stability; it is extremely important for children to grow up in a stable family wherever possible. He is right that poverty is both a driver and a consequence. We know that poverty puts huge pressures on families. Lifting the two-child limit and giving families higher rewards than those that they have now will lift over half a million families out of poverty and help to take the pressure off.

The noble Lord mentioned the better futures fund. That will be a 10-year programme focused on a range of long-term measurable outcomes, including family stability. He asked about how it will be measured. It is currently in the design phase, but the funding will primarily be used for social outcome partnerships, and those bidding will be expected to show the sustainability of their proposed ideas. We absolutely take seriously the importance of family stability. We are going to address the questions of poverty that drive problems, but we also want to do what we can to support families.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for her normal diligence on this subject. Alongside new measures

“to increase incomes, reduce essential costs and strengthen local services”—

I take those words from the Government’s own document—between 2025 and 2026 there have been 11 strategy documents. They are very good reading, but they do not help the people with the problems that I have just outlined. Can we speed this up? Let us stop talking about 10 years and instead talk about what is happening this year and next year.

[Baroness Sherlock (Lab)]

I will say two things. Children did not fall into poverty overnight and they will not all come out of it overnight. Poverty has a range of drivers. We are determined not simply to address this problem now but to find a way of tackling it in the long term. However, since the noble Lord wants examples of action, I will give him some. What have we already done? As we have made clear, we are going to put £39 billion into social and affordable housing. We are expanding free school meals to all families on universal credit, putting £600 million into the holiday activities and food programme, extending the warm home discount scheme to an extra 2.7 million people, and removing the two-child limit to lift 450,000 children out of poverty in this Parliament. That is action, and this Government are taking it.

[Baroness Deech (CB)]

My Lords, may I ask the Minister what the definition of poverty is? If it is “below the average” then there is no hope of getting rid of poverty. Is it an absolute standard? Secondly, has she calculated the amount owed to the Child Maintenance Service by absent fathers? Why should the taxpayer fund maintenance for children that the father owes and is not paying?

[Baroness Sherlock (Lab)]

My Lords, the Government are using two metrics. We are using relative low income after housing costs, which is the international standard measure, but we are also using deep material poverty. That is a new measure that has been devised based on material deprivation, which reflects our commitment to addressing deeper child poverty. Material deprivation is traditionally calculated by asking the public what essentials they think families should have and getting a list of them. They are things such as warm homes, appropriate housing, enough food to eat, et cetera. The measure shows that if a family cannot afford at least four of those then they are in deep material deprivation. Having both those metrics helps us to measure what is going on in families.

I completely agree with the noble Baroness about child maintenance. Everybody should pay for their children, whether they are still with the other partner or not. The Government have done a lot to drive up the rate of support for child maintenance. We are taking reform steps to make it even better, and we will keep doing that.

[Baroness Lister of Burtersett (Lab)]

My Lords, the strategy has been widely welcomed for the reasons given by my noble friend and because of its holistic cross-government approach, but there is considerable concern that Home Office policies on asylum, settlement and no recourse to public funds will undermine the strategy with regard to migrant children, who are already at disproportionate risk of poverty, especially deep poverty. Can my noble friend therefore confirm that the strategy includes migrant children and do what she can to encourage Home Office colleagues to do more to protect children in poverty from the impact of their policies?

[Baroness Sherlock (Lab)]

My Lords, my noble friend raises an important point. I assure her that the strategy, when it was being developed, looked at all children. We want to recognise the impact of poverty on children, whether or not they made any choices—because, as children, they do not make choices—contributing to their circumstances. It is clear that some of the measures we are taking, for example in relation to benefits, will benefit only those families who are eligible for those benefits. For example, the two-child limit affects only those on universal credit. Universal credit is available to families only in circumstances where their immigration status permits it. However, there are safety nets in the system to protect children, and I would be happy to share that view with colleagues across government.

[The Lord Bishop of Leicester]

My Lords, like many others, I warmly welcome the child poverty strategy; there is much to commend it, such as—to pick one particular aspect—the expansion of free school meals for children. However, I have a question about auto-enrolment of children for free school meals. There is much evidence to show that auto-enrolment not only lifts children out of poverty but increases educational attainment and allows schools to ensure that they get the pupil premium needed. Can the Minister therefore tell us what barriers remain for the introduction of auto-enrolment?

[Baroness Sherlock (Lab)]

My Lords, I am happy to raise that with colleagues in the DfE, but I reassure the right reverend Prelate that a lot of work has been and is going on in relation to free school meals for children on universal credit, making sure—whether it ends up being auto-enrolment or whether it is about communication or identification—that we get this out to all children. Free school meals are really important and are crucial to children: not only do they get to eat but hungry children struggle to learn, so it is a win-win all round. We think this is an incredibly important measure and we want to make sure that it works.

[Viscount Younger of Leckie (Con)]

My Lords, no child should grow up in poverty, and we agree that reducing child poverty must be an absolute priority for any Government. The surest answer to helping reduce child poverty is to ensure that more families can access the security and dignity of work, which I do not believe the noble Baroness mentioned. There are many young parents among the current high level of youth unemployment—16.1%—so what steps are the Government taking to engage directly and urgently with this cohort to enable them to secure work and optimise the chances of giving their children a better future?

[Baroness Sherlock (Lab)]

My Lords, I absolutely agree with the noble Viscount, and I have said many times from this Dispatch Box that, for many families, work is the best route out of poverty. Of course there will always be those who cannot work, and they deserve a welfare state that supports them, but this Government have invested considerable sums and will invest considerably more in supporting families to work. We already know that parents are actually more likely than average to be in employment. They want to work—they want to support their kids, they want to be a good role model and they want to show them that that is what adult life looks like—but many of them will need extra help, so we are investing heavily in those who have barriers to work. The noble Viscount mentioned young people. The Government have done so much on young people. He will know that Alan Milburn is doing a report for the Government looking at why so many of our young people—one in eight—are not in employment, education or training. That figure is a disgrace and we have to tackle that.

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2026

Baroness Sherlock Excerpts

Monday 2nd March 2026 Grand Committee

Moved by

[Baroness Sherlock]

That the Grand Committee do consider the Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2026.

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

My Lords, I will also be asking the Grand Committee to consider the draft Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2026.

The schemes we are debating provide vital support for sufferers of certain dust-related diseases, which are often caused by occupational exposure to asbestos and other harmful dusts. This includes diseases such as pneumoconiosis and mesothelioma. We all recognise the deep suffering that can be caused by diseases such as these. Having attended these debates in the past, I am always grateful for the opportunity to debate these schemes and discuss the wider support for people diagnosed with these terrible diseases.

I will begin by providing a brief overview of these two no-fault compensation schemes and what these regulations seek to amend. The Pneumoconiosis etc. (Workers’ Compensation) Act 1979—henceforth the 1979 Act scheme—provides a single lump-sum compensation payment to eligible individuals who suffer from one of the diseases covered by the scheme. They includes diffuse mesothelioma, pneumoconiosis and three other dust-related respiratory diseases. It was designed to compensate people who were unable to claim damages from former employers that had gone out of business and who had not brought any civil action against another party for damages. To be entitled to a lump-sum award, claimants must have an industrial injuries disablement benefit award for a disease covered by the 1979 Act scheme or would have an award but for their percentage disablement.

The mesothelioma lump-sum payments scheme—or the 2008 Act scheme—was introduced to provide compensation to people who contracted diffuse mesothelioma but were unable to claim compensation through the 1979 Act scheme because, for example, they were self-employed or their exposure to asbestos was not due to their work. The 2008 Act scheme provides support to people with diffuse mesothelioma quickly at their time of greatest need.

Although both schemes aim to provide compensation to sufferers within their lifetime, they also allow claims by dependants if the person suffering from the disease sadly dies before they are able to make a claim. This is in recognition of the suffering that these diseases can bring to whole families.

These regulations will increase the value of one-off lump-sum payments made under these schemes for those who first become entitled to a payment from 1 April 2026. While there is no statutory requirement to increase the rates of these payments in line with prices each year, we are maintaining the position taken by previous Governments and increasing the value of lump-sum awards by 3.8%, in line with the September 2025 consumer prices index. This also means that the increase will, once again, be in line with the proposed increases to industrial injuries disablement benefit as part of the main social security uprating provisions for 2026-27.

--- Later in debate ---

[Baroness Stedman-Scott (Con)]

My Lords, I think this is about the fifth anniversary of me taking part in these uprating instruments. This year, for me, they are completely different.

When I started my charity, Tomorrow’s People, more than 35 years ago, the first lady I employed was absolutely outstanding. Last year, I received a letter from a lawyer, saying that somebody who had been employed by my charity had contracted mesothelioma and they wanted to talk to me about the buildings that we occupied. I got in touch with them immediately and said, “Yes, of course I will help. Could you tell me who it is?” They went back to the person and then came back to me to say that it was this lady, the very first one I had ever employed, who had got mesothelioma. It suddenly hit home that this was a disease that affected somebody whom I rated highly and had great respect for. She came here to see me for lunch and told me her story, and I have kept in touch with her. I expect—and hope—that she is watching what we are doing today. I want to say that it made the whole thing pretty personal.

I am pleased to say that we on these Benches support these two sets of draft regulations, which provide for a 3.8% uprating of the lump sum payments available under the mesothelioma and pneumoconiosis compensation schemes from April this year. These schemes remain a vital, no-fault safety net for those suffering from some of the most devastating industrial diseases. Mesothelioma and pneumoconiosis are cruel conditions, often emerging decades after exposure and, in many cases, at a point when it is no longer possible to pursue former employers through the courts. The provision allowing dependants to claim when a sufferer dies before making an application reflects the harsh reality and rapid progression of these illnesses.

Maintaining an inflation link is essential if these payments are to retain their real-terms value, particularly given the debilitating nature of these diseases and the financial strain that they place on families. The long latency period associated with asbestos-related illnesses makes statutory compensation schemes not merely desirable but necessary. Although there is no statutory duty to uprate these payments each year, successive Governments have taken the view that that is the proper course. I agree. Uprating in line with inflation is the least that justice requires, ensuring that compensation continues to provide meaningful recognition and practical support.

These instruments may be technical in form, but they are significant in human terms. For those confronting terminal illness as a consequence of historic workplace exposure, this support represents fairness, dignity and the acknowledgement of a debt long owed. We on these Benches therefore fully support the regulations before the Committee.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to all noble Lords for their helpful contributions to this debate. I confess that I would miss it if we did not gather once a year to talk about the impact of this, but I will come on to that in a moment. It is always a moment, and I appreciate that, from around the House, we have all come here to demonstrate the strength of cross-party support for these two lump sum schemes.

It was good of my noble friend Lady Donaghy to acknowledge the work of the noble Lord, Lord Freud, and others, as well as that of my late and much-lamented noble friend Lord McKenzie, who did so much work in this space for many years. My noble friend Lord Jones showed very well that, when it comes to anything in this space, we are standing on the shoulders of giants. He talked about the history of all the great Labour figures who knew that they came to Parliament to speak up for those who did not have a voice and those who had suffered at the hands of people who, in many cases, should have known better but, in some cases, did not know better. We learn as time goes on.

I remember my noble friend Lord Mann from a very long time ago as well. It is incredibly moving to think that his very first piece of casework was somebody who went on to die that day from one of these terrible diseases. As noble Lords will know, I am a priest in the Church of England, so I know what it is to be with people when they are close to death. It is a privilege as well as a challenge. To be able to take that experience and use it to advocate for others is what so many people go into politics for, so I commend my noble friend for being here to tell that story and to speak up for those who are not here and are unable to do the same.

Let me pick up on my noble friend’s point about process. This is a debate that we have regularly. Most years, somebody will suggest that we should put this into the annual uprating and then somebody else will say that we should not and give reasons why. On the reasons given today, the thoughts on the opportunity to debate these regulations and the point made by my noble friend Lady Donaghy about wanting to keep the amounts under review are interesting.

One thing I should say to my noble friend Lord Mann is that, if these payments were uprated automatically in the way that, for example, social security benefits are—these are almost always affirmative—they would still require affirmative regulations that have to be debated in Parliament. They could theoretically be rolled into a general social security operating order, but that would do the exact opposite of what my noble friend wants by putting them in with benefits rather than separating them out from benefits. Today is an opportunity for us to be here and to discuss this; either way, it would not make a difference to the claimants.

My noble friend made a wider point about understanding that these are not benefits. Of course, these schemes are quite different. Technically, they come out of what is known as departmental expenditure, rather than, like most benefits, annual expenditure. They are not benefits; they are compensation for something that people suffered but should not have done. My department offers a range of other financial support to people, including the main industrial injuries disablement benefit. Many people who get these diseases may have other costs as a result of their disability and may get things such as personal independence payments, the attendance allowance or other state benefits to cover their income replacement needs. The department wants to provide all the appropriate support for people who really cannot work as a result of injuries, while wanting to make sure that those who are economically inactive or unemployed are supported to get back to work, where they should be. We can help them to do that, and we should be expecting them to do that.

The noble Lord, Lord Palmer, asked about the amount. One of the reasons it is labelled as a percentage is that the amount any individual gets depends on the scheme and the age of sufferer at the point of death, so the amounts that people are paid are different. I can tell him the average amounts: under the 1979 Act scheme, the average award to sufferers was £14,700 and to dependants it was £11,500. Under the 2008 scheme, the average award to sufferers was £26,600 and £8,500 to dependants. That would have included a range of figures for individuals.

My noble friend Lord Jones asked me for the number of awards. For the record, under the 1979 scheme, there were 2,540, and under the 2008 scheme, there were 610. Those statistics are from the latest financial year for which figures are available.

On the point made by my noble friend Lady Donaghy, I recognise that there are many who want those amounts to be larger. All I can say is that the Government keep this under review and will continue to do so.

In terms of the comment from the noble Baroness, Lady Stedman-Scott, there is nothing that brings this home like knowing somebody affected by this, and being asked about the building in which, presumably, she also worked as well as the person she hired.

My noble friend Lord Mann talked about asbestos gloves. Some noble Lords will remember, and I remember, some of the horrific stories that have been told. I remember one of my noble friends talking about what happened onboard ships, where ratings were basically playing with balls of asbestos. There were stories of people trundling trollies down corridors of hospitals, porters and all kinds of things. There were stories about schools and all kinds of public buildings. There are people who are suffering simply for doing their jobs. Most of these jobs were in public service, serving the community and caring. The very least we can do is to make sure that they get appropriate levels of support.

I think that I have addressed most of the specific questions I was asked. I just want to finish on a positive note. I mentioned the work of the HSE in relation to awareness of exposure, but I would like to put some of the work that has been done elsewhere in government on the record. Quite often we discuss research, and we know how important research is in supporting individuals with these diseases. It is still the case that the life expectancy is incredibly low, especially by the time that people are diagnosed with diffuse mesothelioma. DHSC invests over £1.6 billion each year on research through the National Institute for Health and Care Research, and cancer is a major area of NIHR spending at £141.6 million in 2024-25.

Respiratory disease is a clinical priority within the NHS long-term plan. The aim is to improve outcomes for people who have these respiratory diseases through early diagnosis and increased access to treatment. NHS England has established 13 respiratory clinical networks across the country. These have been vital in providing clinical leadership for respiratory services and supporting services in primary care. Indeed, that continued investment in cancer research and support for people with respiratory diseases is key to reducing the numbers of families affected in the future and providing better support following a diagnosis.

I think that I have addressed all the questions that were asked. Once again, it is always a privilege to participate in this debate. I acknowledge the position of those who suffer from these terrible diseases and their families. The least we can do is carry on providing support. In light of that, I beg to move.

Motion agreed.

Pension Schemes Bill

Baroness Sherlock Excerpts

Committee stage
Monday 23rd February 2026 Grand Committee

[Lord Palmer of Childs Hill (LD)]

My Lords, I say to the noble Lord, Lord Davies, that no apology is needed.

This is a wide-ranging set of review and process amendments. The noble Viscount, Lord Younger, explained what I think he described as his “modest” amendments—indeed, they are. The noble Lord, Lord Kirkhope, said that this was all set up for secondary legislation; we ought to take that point into account.

These amendments are linked by a common theme: whether the Government are willing to build a stronger evidence base for future pensions policy and to improve the basic safeguards for savers. Several of these amendments ask Ministers to review pension adequacy, contribution rules, labour market impacts and public understanding, while others seek an independent look at specific injustices or practical improvements to data accuracy.

These amendments are probing, but they raise real policy gaps. Taken together, they test whether Ministers are prepared to move beyond structural reform and address the practical foundations of trust in pensions, adequate incomes, fair treatment, accessible information and correct records. I hope that, in replying, the Minister will explain which of these issues the Government accept in principle and whether they believe that the existing powers, regulators and reviews are already sufficient. I expect that to happen. The Bill changes structures and powers, but savers also need fairness, clarity and accurate data. When Ministers resist new duties, they should set out a clear alternative route and timetable. I hope that the Minister will do so.

The noble Lord, Lord Davies of Brixton, made important points. We will disagree, but I shall pursue the amendments in my name. Amendment 214 in my name would establish a universal entitlement to free and impartial pension advice at key stages of life. It would ensure that everyone, not just the financially literate or well advised, can make informed decisions about retirement. Such advice would, I hope, be offered around the age of 40—a critical moment for mid-life planning and pension consolidation—and again within six years of expected retirement to support decisions on drawdown, annuities and retirement income options, which are a mystery to many people at that or any stage of life.

The advice would include essentials such as pension types—DB or DC schemes—investment strategies, charges and fees, consolidating multiple pension pots and retirement income choices, and would be practical, comprehensive and relevant. The advice would have to be qualified, independent and impartial. Trustees, managers and providers would have a role in facilitating access. Data sharing would be permitted, but with strong data protection safeguards.

This amendment in my name would also offer flexibility, in that responsibility could be placed with established bodies such as the Pensions Regulator, the Financial Conduct Authority and the Money and Pensions Service. It would be funded from prescribed sources to ensure sustainability. The regulations will be subject to the affirmative procedure, ensuring proper parliamentary scrutiny. Amendment 214 is designed to ensure that people have confidence in and clarity on their pensions, which, I assure noble Lords, many people do not have; to avoid poor decisions that undermine pension security, which many people make; and to make sure that everyone, not just those who can pay for private advice, gets the help they need.

The purpose of my Amendment 215 is to require the Secretary of State to commission an independent review into provisions in police pension schemes that result in the forfeiture, reduction or suspension of survivor pensions. It focuses on cases where survivor pensions are affected by remarriage—as mentioned by the noble Lord, Lord Davies—civil partnership or cohabitation.

Why is this review needed? These provisions can have significant financial, social and emotional impacts on survivors and their families. This would ensure fairness and consistency with other public sector pension schemes—the Armed Forces, the NHS and the Civil Service—and would address potential inequities or outdated rules that disproportionately affect survivors. This review would ensure an independent—that is the point—and transparent process, as well as stakeholder consultation, reporting and accountability. The review panel must publish its findings and recommendations within 12 months. The report must be laid before both Houses of Parliament, ensuring transparency and parliamentary oversight.

This amendment is designed to act to assess the fairness and impact of current survivor pension rules in police schemes and to identify practical reforms that protect survivors’ rights while maintaining scheme integrity, to ensure that the system is consistent, equitable and transparent. I look forward to hearing whether the Minister addresses my points about these amendments.

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

I am grateful to all noble Lords who introduced and spoke to these varied amendments. The range of subjects covered here shows the interest across the whole pensions landscape, but at heart is the objective that we all share of putting members first.

There was a theme around adequacy in Amendments 207 and 213 from the noble Viscount, Lord Younger of Leckie. Amendment 207 seeks to introduce a statutory requirement for the Secretary of State to conduct a review of the Bill’s impact on retirement incomes five years after it is passed, and to have subsequent reviews at intervals not exceeding five years from the first assessment. Amendment 213 wants a statutory requirement for the Secretary of State to conduct a review of the relationship between employment rates, earnings patterns and pension adequacy. Although both amendments raise key issues around pension adequacy and proper monitoring, the Government’s view is that the proposals risk the duplication of work already being undertaken. I shall explain why.

There are many different strands to this Bill, which will be implemented in phases over the next several years. For example, the first small-pots consolidation will not take place before 2030, so obviously any review in the next five years will not have allowed many of the reforms any time to take effect. It is for that reason that a comprehensive impact assessment was produced, setting out not only the potential impacts but also plans to evaluate the Bill in further detail, including developing new research projects to address evidence gaps.

The Government already carry out and publish analysis of projected future retirement incomes, which provides estimates of the number and proportion of working-age individuals aged 22 to state pension age who are undersaving for their retirement. The modelling that underpins that analysis uses a number of economic factors, including employment levels based on the OBR long-term forecasts, which are regularly reviewed and updated.

Separately, the Government have revived the Pensions Commission. I say to the noble Viscount, Lord Younger, that adequacy is absolutely not a secondary issue. As I have explained repeatedly in Committee, we are doing these things in the order that is appropriate to the matters. The Bill makes sure that steps are taken so that the market works well to make sure that increased savings will get appropriate returns for the savers.

The Pensions Commission’s legacy under the last Labour Government was of course to create a system of workplace pension saving via automatic enrolment, which has transformed workplace pension saving for millions of workers. There was cross-party support for this. But the Government recognise that millions are still not saving enough for their retirement, which is exactly why we revived the Pensions Commission to finish the job we started 20 years ago.

I will respond to the noble Viscount, Lord Younger. As indicated previously in Committee, the commission will produce an interim report this spring, setting out the evidence base and strategic direction for its work on assessing the UK’s pension system. It will set a direction based on the purpose that the Government have given it to identify remedies to address pension adequacy, fairness and risk before preparing its final recommendations in early 2027 for the Government to consider.

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[Viscount Younger of Leckie (Con)]

My Lords, I am very conscious that I spoke at some length in my opening speech, so I will be brief in closing and do not intend to question the Minister too much on the points that she made. I will say only that, as my noble friend Lord Kirkhope rightly said, pensions are complex and need to be well thought through. This is a skeleton Bill, which we have pointed out in many of the debates, but I understand that, as the Minister said, it is important to look long term.

I have only one question. I may not be the only one who is confused about the timings of the commission. I think the Minister said that an interim report is being produced by the commission this spring and leading through to early 2027 pensions adequacy will be included in that report and the commission will set out options for the Government to comment on. I am putting words into the Minister’s mouth. I wonder whether she can confirm exactly where we stand on pensions adequacy. It may be that that will be in the letter that is being written, which might come my way.

[Baroness Sherlock (Lab)]

A letter is being prepared and will be sent after Committee. I want to put on record the timings and to be very clear about them. The interim report will be published this spring, and the aim is for the final report to be in early 2027. I will put any further detail in the letter to the noble Viscount.

[Viscount Younger of Leckie (Con)]

I am sorry to labour this like a long-playing record, but will pensions adequacy be included in that report? Or are we looking for something further?

[Baroness Sherlock (Lab)]

The Pensions Commission is there to look at the adequacy and sustainability of the pension system; that is its job.

[Viscount Younger of Leckie (Con)]

I would be grateful if the Minister would let me look at the letter, anyway; it is important to see that in detail.

To conclude, I want to pick up on Amendment 214 in the name of the noble Lord, Lord Palmer, concerning a universal pension advice entitlement. The context for this amendment is certainly well understood. The structure of pension provision has altered fundamentally over recent decades, and most private sector workers are now members of defined contribution schemes rather than defined benefit schemes. As we know, defined benefit schemes provided a predictable income for life; by contrast, defined contribution schemes require individuals to determine contribution levels, investment choices, consolidation of pension pots and the manner and timing of drawing retirement income. The risks associated with investment performance and longevity now rest primarily with the saver rather than the sponsoring employer.

In that environment, the case for improved engagement is compelling. Without appropriate support, individuals might under-save, remain invested in default arrangements without appreciating the degree of risk involved or make irreversible decisions at retirement without a full understanding of the consequences. There are also wider public policy implications. Inadequate retirement provision can increase reliance on means-tested benefits, intensify pressure on the state pension and contribute to intergenerational fiscal strain. In that sense, the noble Lord, Lord Palmer, has identified a matter of genuine structural importance.

However—this chimes with the Minister and the noble Lord, Lord Davies—there are practical considerations that cannot be ignored. The amendment refers to free and impartial pension advice. In regulatory terms, advice is distinct from guidance. Regulated advice requires authorisation by the FCA, entails suitability obligations and carries legal liability. To extend personalised regulated advice as a universal entitlement would require significant capacity, funding and oversight, and it would not be a modest undertaking. I reiterate that I agree with the noble Lord, Lord Davies of Brixton, and the Minister. The complexity of the system is real but so too are the operational and financial implications of delivering such an entitlement at scale, although I appreciate the noble Lord, Lord Palmer, bringing this up; it has been a valuable debate.

With that, I will dwell on what has been said in this debate in Hansard to work out what we might bring back on Report but, for now, I beg leave to withdraw my amendment.

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[Lord Palmer of Childs Hill (LD)]

My Lords, I forgive the technicalities. This group—I will not speak at length on it—focuses on employer communications and decision-making. These are not peripheral issues. Poor communications, which there often are, and unclear boundaries between information, guidance and advice, can directly affect member outcomes. Amendment 208 asks for a review of the legislation and regulatory rules on marketing, financial promotion and member communications, while Amendment 210 would support employers through guidance and tools when choosing and operating workplace pension arrangements.

There is a legitimate policy question here around whether the current rules strike the right balance between consumer protection and practical communication that helps people make informed choices. I hope that the Minister will clarify whether the Government believe that there are avoidable barriers that prevent providers and employers from communicating useful non-advisory information to members and workers. They should be able to give that information easily and freely. Good pension outcomes depend on not only product design, on which we tend to focus, but understandable communications and workable employer support.

I hope that these amendments will try to improve the communications part of the scenario. I do not think that they are mind-bogglingly important, but they would, I believe, improve the system for pensioners, which is what we all, I hope, want to do.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to noble Lords who have spoken. I absolutely agree with the noble Lord, Lord Palmer, that these are important issues. I hope to persuade him that the right action either has been taken or is being taken.

I appreciate the purpose behind the new clause proposed in Amendment 208 from the noble Viscount, Lord Younger. It aims to ensure that pension providers can communicate effectively with their members and provide appropriate guidance. The new clause would require the Government to review legislation and rules that might restrict pension providers from communicating with their members about a range of topics. I should say at the start that there is good reason to protect people from unsolicited marketing in many circumstances. Not only can irrelevant marketing be a nuisance but of course there are people who would exploit an increase in legitimate marketing as an opportunity for fraud or scams. In 2019, the last Government banned companies from making unwanted and unsolicited phone calls to people about their pensions.

At the same time, I recognise the need for clarity to help pension providers navigate the regulatory framework when communicating with their members. That is particularly important given the increased emphasis on pension providers supporting members directly through both guided retirement and, as raised by the noble Viscount, Lord Younger, the targeted support regime. The targeted support, as I have explained previously, could include helping people to make decisions about their pension.

The FCA and the Information Commissioner’s Office published a statement in December to provide clarity on the interaction between direct marketing rules and targeted support. That statement details how firms can promote their targeted support service to those who have opted out of direct marketing, while still complying with the relevant regulations. The statement also emphasises that financial services providers can send neutral, non-promotional and factual messages about important financial matters to all customers, even if they have opted out of marketing communications. That includes warning a pension member that they are undersaving for retirement or drawing down on their pension unsustainably.

However, in developing targeted support, the Government identified some specific issues in how the direct marketing rules in place for workplace pensions would interact with the new regime. The Government will be taking forward secondary legislation to address this, enabling these providers to deliver targeted support communications which amount to direct marketing to members who have not opted out of receiving it. This reflects that workplace pension providers have fewer opportunities to obtain consent for direct marketing, limiting the level of engagement they have with their members.

Turning to value for money communications, I am confident that the Bill already empowers us to achieve these aims. The Government have carefully considered the necessary requirements under the VFM framework. Clause 14 enables the provision of detailed requirements for member communications and interaction, including ensuring that guidance can be tailored to meet the needs of all members. The Government have already engaged in the process of reviewing the legislation and the rules identified in the amendment where appropriate and will continue to do so in a transparent manner.

Amendment 210, which is also from the noble Viscount, Lord Younger, seeks to require the Secretary of State to consider what steps are needed to help employers make the decisions they must make in relation to workplace pensions. While this is a positive aim, I do not think the proposal is necessary. Reasonably extensive guidance is already available to employers to support them to fulfil their pension duties. New statutory requirements are not needed in order to maintain or improve that information as the market evolves.

The Pensions Regulator has published guidance on workplace pension scheme selection, with supporting resources on what to look for in a scheme, including matters such as cost, tax treatment and different ways of making contributions. The FCA has also made guidance available to employers about providing support for employees, which includes pensions among other relevant areas. The DWP has guidance on default fund investment options, which sets out best practice concerning scheme design, governance and member communications. In response to the comment from the noble Viscount, Lord Younger, about smaller employers, that was developed particularly with those employers, including SMEs, which have been newly brought into the pensions world following the rollout of automatic enrolment.

Pensions UK also has its own independent guidance for employers, including its pension quality mark accreditation for high-quality schemes. These sources provide a wealth of information for employers and are regularly supplemented as the market evolves. There is not a need for new statutory requirements.

Once again, I highlight the VFM proposals in the Bill, which will enable the Secretary of State to place duties on trustees and managers to publish standardised performance information. This will help members and employers make informed decisions when choosing a scheme. It will also increase competition across different schemes on quality, not just cost, and could remove poor performing schemes from the market entirely, helping employers avoid low-quality options automatically.

The Government are committed to supporting members and employers to make the best decisions about pensions, but this amendment is not needed to allow the Government to continue to do that, and it does not in fact require the Secretary of State to take any steps if they do not consider them necessary. Overall, we believe there are some cases where more advice and support are needed for members, which is why we are introducing guided retirement and targeted support. We will always consider the interaction of new policies with a wider regulatory framework, but equally it is important to keep guardrails against unsolicited marketing and scams. We also believe that sufficient support is already available for employers in their decision-making, and powers are already available should more be needed. I hope that has reassured the noble Viscount and that he can therefore withdraw his amendment.

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[Baroness Stedman-Scott (Con)]

My Lords, I am grateful to all noble Lords who have contributed to this debate. I recognise that these amendments are brought forward in a spirit of good will and genuine concern, and I thank all noble Lords for that. I turn first to Amendment 212 in the name of the noble Lord, Lord Sharkey, and to the amendment tabled by my noble friend Lady Coffey.

It is important that we approach this discussion with clarity about the framework that already governs occupational pension schemes. From my understanding, there is already a substantial and detailed regulatory architecture in place. First, schemes are required to maintain a statement of investment principles since the reforms introduced in 2019 and 2020. That statement must explicitly address financially material considerations, including environmental, social and governance factors. It must set out how climate change is taken into account, describe stewardship policies, including voting and engagement, and explain how such risks are integrated into investment decision-making. This is no longer optional; it is embedded in the core governance documents of the scheme.

Secondly, larger schemes are required to publish an annual implementation statement. This must explain how the policies set out in the statement of investment principles have in fact been followed. In other words, schemes must not merely declare their approach to environmental, social and governance matters but demonstrate how that approach has been put into practice. This has moved the framework from being purely policy-based to being demonstrably action-based.

Thirdly, schemes with £1 billion or more in assets, together with authorised master trusts, must comply with climate risk reporting aligned with the Task Force on Climate-related Financial Disclosures framework. This includes governance of climate-related risks, strategy for transition, scenario analysis, metrics and targets, such as carbon intensity, and annual public reporting. These are not light-touch obligations; they are detailed, prescriptive and public-facing requirements. Taken together, this represents a significant body of regulation. It requires trustees to consider financially material risks, including climate-related risks. It requires them to disclose how those risks are managed and to report publicly on progress and metrics.

Against that background, we should be cautious before layering additional statutory requirements on top of what is already a comprehensive regime. Trustees have fiduciary duties to act in the best interests of members, they must take into account financially material considerations, they are accountable to the Pensions Regulator and they operate within a framework that has been progressively more demanding in recent years. Trustees should retain the ability to determine, within that framework, which investments are in the best interest of their members.

Our task in this House is to ensure there is clarity, coherence and proportionality in regulation, and that we identify genuine gaps, rather than duplicate existing obligations. My aim in engaging on these amendments is precisely that: to ensure that we debate this matter with a clear understanding of the substantial framework that already exists, and to probe carefully whether there are specific technical deficiencies that require further legislative interventions. This is an important area, but it is equally important that we legislate with precision and with full awareness of the structure that is already in place.

[Baroness Sherlock (Lab)]

My Lords, I am very grateful to the noble Baronesses, Lady Hayman and Lady Coffey, and the noble Lord, Lord Sharkey, for introducing their amendments, and all noble Lords for contributing to a very interesting discussion. I will start with Amendment 212 from the noble Lord, Lord Sharkey.

While I recognise the aim behind this amendment, the Government believe that decisions about whether to invest, divest or engage must rest with trustees, who are already legally required to invest in the best financial interests of their members and to consider climate-related risks as part of that duty.

[Lord Sharkey (LD)]

My Lords—

[Baroness Sherlock (Lab)]

I cannot get two sentences in before I am interrupted.

[Lord Sharkey (LD)]

I am sorry, it will not happen again, but the Government are trying to do precisely what the Minister said they should not do: they are trying to mandate investments.

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[Baroness Sherlock (Lab)]

My Lords, I am simply not going to relitigate that all over again. Okay, I will give it two minutes, since the noble Lord has raised it. If he is referring to asset allocation mandation, as I made very clear during our debates on that subject, the trustees’ fiduciary duty should guide them, were those provisions ever to come into operation. If the trustees believe that they were not in the interest of their members, we would expect their duties to guide them to make representations and seek an exemption under the savings interest exemption test. That, along with all the other safeguards around it, deals with that question. Now, let me try and focus on climate for today; I have no doubt we will have plenty of other opportunities to discuss mandation, and I look forward to those.

Under the existing regulatory framework—I think that the noble Baroness, Lady Stedman-Scott, put it very well—trustees of UK pension schemes must already set out their policies on financially material environmental, social and governance factors, including climate change, within their statement of investment principles. They then have to publish annual implementation statements showing how those policies have been applied in practice. Since the Pension Schemes Act 2021, the larger schemes also have to publish annual reports aligned with the Task Force on Climate-related Financial Disclosures framework, the TCFD. Those disclosure requirements ensure that trustees have the information they need to make informed investment or divestment decisions.

The Government are strengthening these reporting frameworks to equip businesses and investors with the tools, standards and clarity they need to plan credible transitions and seize the opportunities of a net-zero economy. For example, last year DESNZ advanced an important manifesto commitment and consulted on transition plan requirements for UK financial institutions. Alongside that, DBT consulted last year on new UK sustainability reporting standards. My own department, DWP, working with the Pensions Regulator, is currently reviewing trustees’ TCFD requirements to assess the impact of the current climate disclosure regime, including a comprehensive stakeholder survey exploring the impact of TCFD requirements on governance, strategy, scenario analysis, risk management, member outcomes, engagement, reporting costs and future reporting. To support that, the regulator will present its findings on the practicalities of introducing transition plans for pension schemes to us this spring. These future reporting reforms are intended to modernise disclosures and provide schemes with critical insights into companies’ decarbonisation plans, which is information trustees can then use to judge whether investment or divestment is the appropriate course of action.

We should acknowledge the scale of the voluntary action that is already under way. Around two-thirds of UK pension funds now have net-zero commitments, many of them ahead of 2050. Funds are backing these commitments for significant investment: the London Pensions Fund Authority has allocated £250 million to its environmental opportunities fund; Border to Coast is investing in new UK wind and solar projects; and Nest has committed almost £1.3 billion to renewable energy infrastructure.

There is no single correct approach to managing climate-related risk. Trustees can, and do, divest where appropriate—for example, the Church of England Pensions Board announced its divestment from Shell plc and other remaining oil and gas holdings in 2023, following more than a decade of engagement. However, we recognise that some pension funds could, and should, be doing more. We will continue to support and challenge the sector in rising to that task. The right levers are better governance, better data and better transparency, not hard-wired requirements to decarbonise that remove trustee judgements and risk unintended harm to savers’ long-term outcomes.

Amendment 212 would prohibit schemes holding certain fossil fuel-related investments, even where companies have credible decarbonisation plans. The Government believe that such rigid prohibitions risk rushed divestment and would undermine trustees’ ability to exercise informed judgement. For those reasons, the Government cannot support this amendment.

[Baroness Bennett of Manor Castle (GP)]

It is very easy to cherry-pick individual schemes that have taken action but, as I said in my initial comments, the Financial Innovation Lab says that there are still more than £10 billion in thermal coal investments. Some industry research due to be published shortly by Corporate Adviser Intelligence shows that seven of the largest 19 schemes used for automatic enrolment, including Aviva, Royal London and Scottish Widows, remain invested, via their default fund, in one or more of thermal coal, tar sands and Arctic drilling. Another, SEI, reported that it has excluded these sectors but, last summer, it still had holdings in Glencore, which mines around 100 million tonnes of coal a year.

So, although there are these nice examples, such as those just provided by the Minister, surely the Government must look at this as an overall whole and see not just some good case studies but the norm and the rule right across the industry.

[Baroness Sherlock (Lab)]

It is probably worth me being really clear on the Government’s position. We recognise the high financial and climate risks associated with thermal coal investment. We support strong climate risk governance and expect trustees to integrate climate considerations into decision-making. We welcome industry-led reductions in coal exposure, as well as broader alignment with net-zero goals where we see them. However, we want to see more. As I have just said, we want specifically to challenge schemes to do more; I was offering examples of where things are going. Exposure is expected to decline over time, driven by market forces, global moves towards cleaner energy and evolving investment practices, but we still think that it is essential that trustees and managers retain the flexibility to make responsible long-term investment decisions in the best financial interests of their members.

I turn to Amendment 218A from the noble Baroness, Lady Hayman. I thank her for taking the time to come and discuss these issues with me; it was a very helpful meeting. The question of whether pension trustees may take long-term factors into account in their investment decisions is manifestly not a new one. I will not rehearse the full history, but we should acknowledge the considerable body of work that already exists in this space; in case I did not want to do so myself, the noble and learned Lord, Lord Thomas, helpfully reminded us of some of that. We had major contributions from the Law Commission in both 2014 and 2017. More recently, in 2024, as the noble and learned Lord said, the Financial Markets Law Committee produced its comprehensive report. Alongside these, there have been several respected legal opinions, including Eversheds’ work on behalf of NatWest Cushon and that of Sackers for ShareAction, which relates directly to this amendment.

Across all these analyses, one central principle emerges with complete consistency: a trustee’s primary duty is, and must remain, to invest in the best interests of scheme members. However, what is equally clear is that a degree of uncertainty persists, although I take the noble and learned Lord’s point on whether or not it should. Trustees can, and do, reach different interpretations of how their duties apply when considering factors that extend beyond immediate financial returns, such as climate risk, demographic pressures and impacts on members’ future living standards. Although these matters are often long term in nature, they can be financially material and are plainly relevant to both savers and the wider economy. We recognise the need to give trustees greater confidence in this area.

However, the Government do not agree that creating a new statutory duty in primary legislation is the right or necessary approach. The current legal framework already allows trustees to consider ESG factors, systemic risks and long-term impacts where they are financially material. That position has been consistently affirmed.

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[Baroness Sherlock (Lab)]

Let me explain. We are concerned that replicating the climate provisions of Sections 41A to 41C of the biodiversity Act 1995 on a separate statutory track risks creating overlapping or potentially inconsistent strategies, metrics, scenarios and governance. Trustees could find themselves operating parallel regimes that could cut across one another, generating unnecessary process burden without necessarily improving outcomes for savers.

Crucially, there is also a sequencing issue. Although the evidence base on nature-related financial risk is advancing rapidly, nature data remain less mature than climate data, and the international baseline is still being established. Last November, the ISSB announced the beginning of nature-related standard setting, with the intention that these will become the global baseline. More than 30 jurisdictions worldwide have already adopted, or are preparing to adopt, these sustainability standards. Introducing a UK-specific statutory duty ahead of those developments would risk locking schemes into a domestic framework that could quickly be superseded internationally.

As I noted in our earlier discussion on Amendment 212, the Government are progressing their commitment to credible transition plans, beginning with companies. We believe that it would be premature to legislate for a separate, pension-specific biodiversity regime in advance of those cross-economy frameworks and the ISSB’s nature baseline. Our approach is to sequence reforms so that pension disclosures plug into a consistent, interoperable flow of corporate information, rather than obliging trustees to build bespoke and potentially temporary architecture. As part of our forthcoming statutory guidance on trustee investment duties, we will consider including concrete, good-practice examples of how schemes can identify, assess and manage biodiversity and broader nature-related risks, including supply chain deforestation, nature dependency mapping, data sources and stewardship escalation, as well as how to treat nature-related impacts where they are financially material.

The Government’s role is to enable and accelerate this momentum with coherent, internationally aligned frameworks; it is not to create parallel statutory silos. For these reasons, although we fully share in the intent behind Amendment 218E—I acknowledge the work done by the noble Baroness, Lady Coffey—we do not believe that this approach is correct. This has been a very good debate but I hope that, in the light of my remarks, noble Lords will feel able to withdraw or not press their amendments.

[Lord Sharkey (LD)]

The fact is that some, though not all, pension funds are invested in climate-changing activities. We need to do something about that, and we need to do it soon.

The other point I ought to pick up is, again, to do with statutory guidance. I have frequently asked when we will see the guidance, but the only thing I know for certain is that it will not be before this Bill becomes law. Parliament seems to be being bypassed in all this—and in all the secondary legislation that will be necessary to make this mean anything at all. It is reasonable for guidance to explain how pension schemes should go about considering certain matters, but it is not reasonable for what those matters are to go unscrutinised by Parliament and to be changeable at the whim of a Minister. Parliament will be unable to hold the Government to account. Why is it that, in the face of such concerns about guidance and fiduciary duty, as well as the obvious inherent dangers to the proper exercise of fiduciary duty, the Government choose to exclude Parliament?

I beg leave to withdraw my amendment.

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[Baroness Sherlock (Lab)]

My Lords, I am grateful to the noble Lord, Lord Palmer, for introducing his Amendments 216 and 218. Amendment 216 would require the Secretary of State to establish an independent review into injustices experienced by members of occupational pension schemes due to the actions or omissions of employers, scheme sponsors or scheme administrators. Amendment 218 would require the Secretary of State to establish an independent review into pension losses former employees incurred when AEAT went into administration and their scheme entered the PPF.

Speaking to both amendments, the Government recognise the importance of pensions security in retirement, and member protections for those saving into pension schemes. We understand the hardship it can cause when people do not receive what they expect to receive in retirement. We also recognise the importance of strong member protections to ensure trust and confidence in our pensions system.

Amendment 216 refers to injustices, but it does not define these, so the remit for such a review is potentially very wide and would be difficult to achieve. The Minister for Pensions has met with a number of representatives from schemes to ensure that their issues are heard. This Government have listened and are taking action. For mineworkers, the Chancellor announced in the 2025 Budget that the investment reserve fund of the British Coal Staff Superannuation Scheme will be transferred to its members.

As covered in an earlier debate, the Government are also introducing increases in compensation payments from the PPF and the FAS that relate to pensions built up before 6 April 1997. This has been a concern for members of several schemes, including AEAT. I recognise the difficult position members have found themselves in and am pleased to say that members whose former schemes provided for these increases will benefit from these changes.

We also recognise the importance of members having a route to raise concerns or complaints with their scheme when things go wrong. Where a member has a concern about a scheme that cannot be resolved through the internal dispute resolution process, they can go to the Pensions Ombudsman. Where its remit allows, the Pensions Ombudsman provides an independent, impartial service to resolve pension complaints and disputes, offering a route to settle issues fairly and ensure that members’ rights are upheld.

The Pensions Regulator was set up to ensure that pension schemes and employers fulfil their duties to occupational pension scheme members. It makes sure that employers enrol their staff into a pension scheme and pay contributions into that scheme. It also makes sure that workplace pension schemes are run properly, so that people can save safely for their later years.

Central government and regulators are working actively with industry representatives to identify scam activity and put appropriate safeguards in place to prevent scams. To avoid members becoming victims of scams, pension schemes must carry out due diligence on transfers. All sides of the House agreed the introduction of the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021, introduced in November 2021. Those regulations limit a member’s statutory right to transfer if concerns are identified. In certain circumstances, the transfer will be paused, while in others, the transfer will not be able to proceed.

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[Baroness Stedman-Scott (Con)]

My Lords, I support Amendment 217, tabled by my noble friend Lady Neville-Rolfe. This amendment does not seek to diminish the value of public service, nor to undermine the pensions of those who dedicate their careers to the NHS, our schools, the civil service, the Armed Forces, the police or the fire service. Rather, it asks for something far more modest and necessary: transparency, long-term thinking and honesty about sustainability.

The amendment would require the Secretary of State to conduct and publish a review of the long-term affordability, intergenerational fairness, fiscal sustainability and accounting treatment of our major public service pension schemes, including the NHS pension scheme, the teachers’ pension scheme, the Civil Service Pension Scheme, the Armed Forces pension scheme, the police pension scheme and the firefighters’ pension scheme. My noble friend Lady Neville-Rolfe has outlined clearly and forensically the challenges of the concerns about the sustainability of unfunded public sector schemes. These are not new, but they are becoming more pressing. In 2023-24, total employer and employee contributions amounted to £49.9 billion. Total payments to pensioners were £55 billion. That left a shortfall of £5.1 billion, met directly from general taxation. In other words, today’s taxpayers are already topping up the system.

According to the Policy Exchange, unfunded public sector pension liabilities now stand at approximately £1.4 trillion: around 45% of GDP and approaching half the size, or more, of the official national debt. These are not hypothetical sums; they are long-term promises underwritten by future taxpayers. Unlike funded private sector schemes, most public sector pension contributions are not invested to generate returns; they are returned to the Treasury while current pensions are paid from current spending. This means future liabilities depend on future taxation. The burden is simply rolled forward. That may be sustainable—but it may not be. Surely this Committee is entitled to know which it is.

My noble friend Lady Noakes in her foreword to the Policy Exchange report set out clearly that transparency and realism are essential if we are to protect both pensioners and taxpayers. A mature system does not fear review; it welcomes it. I ask the Minister: do the Government believe the current trajectory of unfunded public service pension liabilities is sustainable over the next 20 or 30 years, what assessment has been made of the intergenerational fairness of asking younger taxpayers—many without access to defined benefit pensions themselves—to underwrite these commitments, how does the Treasury account for these liabilities in long-term fiscal planning, and are they fully reflected in measures of public sector net worth? Finally, if the Government are confident in the system’s sustainability, why resist a formal review that would provide clarity and reassurance?

This amendment would not prescribe reform; it simply asks for a comprehensive review and publication of the facts. If the costs are sustainable then let us demonstrate it, and if adjustments are needed then let us confront them honestly.

[Baroness Sherlock (Lab)]

My Lords, I thank the noble Baroness, Lady Neville-Rolfe, for introducing Amendment 217, which would require the Secretary of State to produce and publish a review of public service pension schemes, focusing on different aspects of the cost, affordability and accounting treatment of these schemes. I remind the Grand Committee that I am a member of the parliamentary pension scheme, and therefore of my appreciation of the work of the noble Viscount, Lord Thurso.

The noble Baroness is quite right to focus on the affordability of these schemes and what this means for intergenerational fairness, given that unfunded public service pension schemes pay out over £60 billion in pensions and lump sums each year and are often the single largest liability in the whole of government accounts.

However, as has been indicated already, and as the noble Baroness will know only too well, her party conducted a major review during the coalition Government, in the form of my noble friend Lord Hutton’s Independent Public Service Pensions Commission. That led to major reforms, including the new schemes to which all active members of the main schemes are contributing today, with a move from final salary to career average design, higher pension ages and higher member contribution rates. Due to the McCloud judgment and the resulting choice exercise for affected members, those members may have been building up only since April 2022, meaning that these major reforms are only now fully bedding in for all members. As my noble friend Lord Davies noted, the then Government committed to the 25-year guarantee, in effect committing to no further major reforms to public service pension schemes until 2040.

The proposed review would be conducted by the Secretary of State for Work and Pensions. However, I note that statutory public service pension schemes are the responsibility of the Chancellor of the Exchequer, and I know that the Treasury works closely with the OBR and the NAO on this policy area already.

The centrality of the questions that the amendment would require the review to consider means that much of this information is regularly published already. For example, the OBR publishes a forecast of the cash-flow cost of public service pensions over the coming years as part of its forecast at every fiscal event, including spending on pensions and lump sums, income from pension contributions and the net balancing payment to or from the Exchequer. The OBR also publishes long-term projections of spending on public service pension schemes as a share of GDP as part of its fiscal risk and sustainability reports. As noted, the most recent forecast from September 2024 projects that spending will decline from 1.9% of GDP to 1.4% of GDP over the next 50 years.

Demographic changes as a result of longevity or migration are taken into account in the OBR’s long-term analysis. The sensitivity of scheme liabilities to longevity is central to the four-yearly valuation reports used to set employer contribution rates across schemes. Both the valuation reports and the whole of government accounts contain detail on different accounting treatments of scheme liabilities and how to interpret the resulting headline figures. Given that all this information is regularly published already, and the reforms to public service pension schemes that have already been implemented, a government review into the affordability of these schemes would merely collate existing information in one place.

Let me address some of the specific questions that were raised, turning first to the treatment of pensions and the whole of government accounts. In recent years, liability has decreased significantly, falling from £2.6 trillion in 2021-22 to £1.4 trillion in 2022-23 and £1.3 trillion in 2023-24. The whole of government accounts report is fully transparent in explaining that these changes were driven by an increase in the applicable discount rate rather than changes in the amount of pension being accrued by scheme members. The whole of government accounts reports present this liability in accordance with the international financial reporting standards. There are no plans to change that approach and nor do we think there should be.

However, I am aware that members of the PAC have asked whether this liability could be presented on a more permanent basis, to show how it would change in the absence of changes to the discount rate, to aid user understanding. The Treasury is currently exploring options to present pension liabilities on a constant basis. To be clear, any such presentation would be purely supplementary and would not affect the underlying pension liability calculations or the way those are presented in the financial statements.

The noble Baroness, Lady Neville-Rolfe, asked why the Government are funding the gap permanently. The answer is that current contributions reflect the cost of current employment—pensions to be paid in the future. Current contributions are not intended to be and do not relate to current pensions in payment, which were earned years or indeed decades ago. So current pension costs reflect pensions earned. This is therefore not an appropriate basis to consider affordability. Traditionally, the central measure for Governments has been pensions as a proportion of GDP.

On whether it is right to be paying these kinds of pensions, I am very grateful to the noble Viscount, Lord Thurso, for his stirring defence. It is really important to recognise that, sometimes, this is discussed as though all public sector employees are calling in huge salaries and doing little for them. He defended how so many people in the public sector are driven by vocation and a calling into public service: they do things to serve and often have lower salaries than they might have elsewhere. I pay tribute to all those who are in that position.

It is true that, compared with the private sector, remuneration in the public sector is weighted towards pension. This is why public service pension schemes are so central to the Government’s fiscal forecasts. However, the noble Viscount is quite right: public sector remuneration has to be considered in the round, across pay and pensions. That is why pension provision is specifically taken into account as part of the pay review body process across the major public service workforces.

It is also important to distinguish between the generosity and cost of the schemes and their DB design. My noble friend Lord Hutton noted in his review for the coalition Government that they are a large employer capable of bearing the risks inherent in a DB design. It is thus in a different position from other employers. In a sense, cutting public service remuneration, whether from pay or pensions, would allow any Government to score savings for the Exchequer, but the fact is that reward packages for each public sector workforce have to be designed to maintain the required levels of staffing and to deliver the required public services.

Finally, it is worth remembering that the changes made following the Hutton review were significant. As I said, the scheme design changed from final salary to career average; pension ages were increased to state pension age for most schemes and to 60 for the police, firefighters and the Armed Forces; member contribution rates were increased across schemes, except for non-contributory Armed Forces schemes; and other aspects of scheme design were modernised, for example, in supporting flexible retirement. At the time, it was estimated that those reforms would save £400 billion over 50 years. Separately from the Hutton reforms, the then Government also switched the indexation of the scheme from RPI to CPI, in line with other forms of spending.

This has been a very interesting debate but, as I have said, most of the information that has been sought in the review is out there already, so such a review is not currently worth while. I hope the noble Baroness can withdraw her amendment.

[Baroness Neville-Rolfe (Con)]

My Lords, I am grateful for the support I have received this evening, particularly from my noble friend Lady Stedman-Scott and the noble Baroness, Lady Bowles, who, like me, cares a lot about transparency and favours a review. I listened with care to what the Minister said, and will look carefully at Hansard, but I do not think that the arrangements are very easy to understand, nor do I think that the OBR or government accounts are easy to understand or transparent.

I tabled my amendment because I wanted to air the problem of the unsustainability of public sector pension schemes as I see them. My noble friend Lord Moynihan described the current schemes as a Ponzi scheme, which was very strong, but he is right that we have a sustainability issue. That is in part caused, as has been mentioned, by the happy fact that we all now live longer. We face this issue in all our pension discussions and we cannot hide from it.

The noble Lord, Lord Davies of Brixton, helpfully agreed that a debate on these issues is needed. He and I go back, and we debate these things, which is very useful, but I was surprised to hear that a 25-year guarantee can be given by any Government. However, as has been said and is true, contributions by employers and employees in the public sector have increased as a result of Hutton, but we still have an unsustainable situation, so we need new thinking and certainly a review. I have been careful not to make any recommendations today, but to highlight the issues as I see them. It is wrong that this important Bill sidesteps the issue that is storing up problems—for our children and our grandchildren—from the pay-as-you-go schemes that we have.

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[Baroness Sherlock (Lab)]

I am grateful to the noble Baroness, Lady Coffey, for introducing her Amendment 218D and drawing attention to pensions dashboards. The Government recognise the important role pensions dashboards will play in increasing people’s engagement with their pensions, and we note the purpose behind the amendment. Obviously in practice it would require the FCA to make rules within six months of the Bill receiving Royal Assent to enable private sector pension dashboards to receive data and operate. It would also repeal the requirement for the Secretary of State to give notice specifying the dashboards’ available point at least six months in advance of that point.

I know that many noble Lords here are supporters of pensions dashboards and are keen that they are launched as soon as possible, so it has been good to be able to update noble Lords on the progress that has been made. I know some noble Lords were able to come to the presentation, but for those who were not, I just say that over 700 of the largest pension providers and schemes are now connected to the dashboards ecosystem, and over 60 million records are now integrated into dashboards. That represents around three-quarters of the records in scope. The state pension has now connected, adding tens of millions of state pension records.

My noble friend Lord Davies is right to say that we need to get this right. It is important that pension dashboards are launched only when they are safe, are secure and have been properly user tested. When noble Lords attended the demonstration, they could see that pensions dashboards provide a great opportunity for consumers. In order to realise that opportunity fully, we need to make sure that the service offers them a positive experience and meets their needs. Consumers need to be able to understand the information a pensions dashboard is showing them and the limitations of that information. They need to be supported by broader pensions guidance to help them with any potential actions after viewing their information. User testing is key to getting this right.

I am pleased to be able to advise the Committee that user testing of the MoneyHelper Pensions Dashboard is under way. Low-volume testing began last year and will ramp up during the course of this year. Only once we have confidence from this testing that the service is ready for widespread public use will the Secretary of State give six months’ notice for launch. The Government have previously confirmed that the delivery of the MoneyHelper Pensions Dashboard will be prioritised, to be followed at a later date by the launch of private sector dashboards. That will allow the launch of private sector dashboards to be informed by learning from the launch of the MoneyHelper Pensions Dashboard—for example, on volumes of users.

The noble Baroness, Lady Coffey, is more or less saying, “Why is it taking so long and what has happened?” She is right that there was a reset between March 2023 and March 2024 and the programme is currently rated amber, but the fact is that delivering pensions dashboards is a very complex task. The digital architecture will facilitate the search of millions of pension records held by thousands of pension schemes and providers, each with a different IT system and different ways of calculating values. It is important we get it right. Dashboards have to be safe and secure and must meet the need of consumers before they are launched. While the scale of the task of making dashboards a reality is huge, the fact is that delivery partners are making good progress. The pensions dashboard programme is confident that schemes and providers in scope will be able to connect by the regulatory deadline on 31 October 2026.

In terms of private sector dashboards, I can reassure the noble Baroness, Lady Coffey, that the Government are fully committed to delivering private sector dashboards and that MaPS is working closely with potential dashboard providers, the DWP and regulators on a pathway for their development and implementation. The FCA has already consulted on and finalised the rules that will apply to dashboard providers after they are authorised and connected to the live environment. MaPS is also engaging actively with the industry and launched a call for input in January this year seeking feedback on how best to support the delivery of private sector dashboards. While the Government recognise the innovation that private sector dashboards will bring to the industry, the date for the dashboards’ available point cannot be specified at this stage. The decision to launch private sector dashboards must be subject to many factors, including securing a sufficient level of coverage, being assured of the safety, security and reliability of the service and testing the user experience.

The noble Viscount asked whether we can confirm a date. It is too early to confirm a launch date because it is vital that the foundation on which dashboards are built, the whole ecosystem, is safe and secure and works for both the pensions industry and individuals.

Once the service is secure, operationally reliable and thoroughly user tested, the Secretary of State will provide six months’ notice ahead of the launch of the MoneyHelper Pensions Dashboard for public use. The requirement to provide six months’ notice in each case through the dashboards available point is intended to provide the pensions industry with notice to provide for the launch of private sector dashboards, which will help support a positive user experience.

I understand that noble Lords want to get this done quickly, but I would say two things. Pursuing speed at the expense of security and user experience would be a mistake, one that Governments have learned over the years. We need to get this right. Secondly, the noble Baroness, Lady Coffey, wants something out there as soon as possible—so do I. Prioritising the public sector dashboard is the fastest way to get something out there. We are pursuing that. We all want this to be done as soon as possible, but we can do it only when we are confident it can be secure and meet users’ needs. I hope that is enough reassurance for her to withdraw her amendment.

[Baroness Coffey (Con)]

Of course I will withdraw the amendment, but I do not want to give the Minister any suggestion that I have any assurance from what I saw at that briefing, in terms of user testing. I do not want to go into detail, because that is not relevant for this Committee, and I am more than happy to meet to discuss.

What I will say is that it is clearly making certain amounts of progress, technically. But I am concerned about aspects of the user testing, which were laid out to us, because that is what is taking very long. This is something that the Government and MaPS are not very good at. I have plenty of experience of that from my time running DWP, in terms of aspects of its communications, particularly on something technical such as this. That is why I am concerned, and why I brought this to the attention of the Committee today. That said, I seek leave to withdraw the amendment.

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[Baroness Stedman-Scott (Con)]

My Lords, I shall speak to Amendment 219A, tabled by the noble Baroness, Lady Altmann, and moved by the noble Baroness, Lady Bowles. This amendment would ensure a more structured and joint approach between government departments and their related regulators, including the PRA, the FCA and the Pensions Regulator, so that their respective responsibilities for solvency, consumer interests, member protection and the promotion of growth are properly aligned.

I understand very clearly where the noble Baroness is coming from. Indeed, I am reminded of our earlier debate in Committee when I spoke to Amendment 206 alongside my noble friend Lady Coffey’s Amendment 180A. At that time, we touched on an issue that remains unresolved—the fact that very similar pension products could be treated differently, depending on whether they fall within the remit of the Pensions Regulator or the Financial Conduct Authority. That observation is not controversial—it is simply a reflection of how our current regulatory architecture has developed over time. Different bodies created at different moments for different purposes now oversee parts of what, to the saver, appears to be the same market. It is therefore entirely reasonable to ask whether greater alignment would improve clarity, consistency and outcomes. There may well be areas where closer co-ordination would be beneficial.

I shall not rehearse in full the arguments that I made previously, but I continue to believe that a formal co-ordination protocol offers three important virtues. First, it provides flexibility. A protocol can evolve as the regulatory landscape changes, allowing co-operation to deepen or adjust without the need for immediate structural overhaul. Secondly, it allows for escalation. If problems persist or new risks emerge, the framework for co-ordination could be tightened, strengthened or made more prescriptive. Thirdly, and perhaps most importantly, such a protocol can generate the evidence base for future reform. If, over time, it becomes clear that more fundamental consolidation of regulatory functions would better serve consumers and markets, the experience of structured co-ordination would provide the practical foundation of that decision. In that sense, this amendment is not about precipitating institutional change but about coherence; it is about ensuring that solvency, consumer protection, member outcomes and growth are pursued not in isolation but in a balanced and mutually reinforcing way.

For those reasons, I believe that the amendment from the noble Baroness, Lady Altmann, raises an important and constructive point for the Committee to consider.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to the noble Baroness, Lady Bowles, for introducing Amendment 219A on behalf of the noble Baroness, Lady Altmann. As we have heard, it would require regulations made under the Bill to be aligned with the technical actuarial standards.

I say at the start that I share the concern that governing bodies work together to ensure that members are protected and that schemes work to secure the best outcomes. It is also important that trustees have considered the range of options available to them before making decisions on their schemes’ direction of travel and committing funds to any particular option. However, I assure the Committee that there is already a lot of collaboration between the Government and regulators on a formal and informal basis. Trustees, in line with their duties, are considering the options for their schemes in the round.

This amendment would require trustees themselves to comply with the criteria for technical actuarial standards. These are intended for actuaries to comply with, who must operate according to the standards set by the Financial Reporting Council. Actuaries will then provide advice to trustees in response to trustee requests, highlighting the risks, assumptions and options available to them.

Actuarial analysis plays an important role in informing the process. It provides a clear assessment of the risks, underlying assumptions and range of options available for a given request. But it is advisory in nature and does not, in itself, determine the final decision. Trustees will then draw on this information to inform their decisions about the effective operation and governance of the scheme. It will be considered alongside other advice that trustees may consider appropriate to obtain, including investment, legal and covenant advice. But trustees are ultimately the decision-makers, and they remain fully accountable for the choices that they make on behalf of their members.

Trustees already consider the correct endgame for their schemes. The risks and opportunities facing schemes differ according to a range of factors, including the maturity of the scheme and the strength of the employer covenant. Under the funding code, trustees are required to set out their funding and investment strategy, describing how they intend to meet members’ benefits over the long term—their long-term objective. The funding code requires trustees to assess the key risks to delivering their funding and investment strategy, to explain how these risks are monitored and to set out the steps being taken to mitigate them. Trustees must also assess the employer covenant, as the employer’s financial strength is central to supporting the scheme.

The Pensions Regulator has set out guidance for schemes to consider their long-term objective and options, including buyout, superfunds and run-on, which sets out clear expectations of trustees. It will be updating the guidance and will work with the FCA and, where appropriate, the PRA and FRC to ensure alignment across all guidance relating to considerations of alternative options. Requiring alignment between regulations and professional standards could have unintended consequences, including reducing flexibility for trustees and requiring a succession of further legislative changes to maintain alignment as these standards evolve over time. It could also result in the actuarial profession being the driver behind the content of regulations, when this should clearly be a matter for government policy.

It is crucial that trustees remain in the driving seat when making decisions for schemes, which this amendment would have the effect of removing. I am grateful to the noble Baroness, Lady Bowles, for giving us the opportunity to have this debate, on behalf of the noble Baroness, Lady Altmann, but I hope she feels able to withdraw the amendment for the reasons that I have outlined.