Arrangement of Business
The Deputy Chairman of Committees (Baroness Watkins of Tavistock) (CB)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Medical Nuclear Radioisotopes
(1 day, 2 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Bloomfield of Hinton Waldrist
To ask His Majesty’s Government what steps they are taking to enable the domestic manufacture of medical nuclear radioisotopes.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, it is always a privilege to be allocated a slot in the ballot for Questions for Short Debate. While I am disappointed with the small number of speakers, I feel sure that had more noble Lords been aware of the challenges facing the supply of these clever little chemical elements, this debate might have generated a bit more interest. My contribution seeks to address this issue of both national and personal significance. I declare my interest as a trustee of the Royal Marsden Cancer Charity.
Radioisotopes have transformed science, medicine and industry. Their ability to emit radiation makes them both powerful and, when handled safely, invaluable to modern society. In medicine, they are the backbone of modern diagnostics, innovative therapies and clinical trials. They are vital for the early detection and treatment of cancer, heart disease and many neurological disorders. Every year, more than 700,000 NHS procedures rely on medical isotopes and yet, despite their critical importance to world-class patient care, we face an acute and growing crisis in their supply. Currently, around 60% of our medical radioisotopes are imported. For the isotopes that we use in therapeutic treatment, almost 100% comes from overseas. The UK produces radioisotopes domestically only for PET-CT scans, and even that capacity is very limited.
Recent disruptions, triggered by overseas reactor shutdowns and global manufacturing shortfalls, have already led to the delay and cancellation of critical diagnostic tests. Delays can cost lives. Molybdenum-99, a critical isotope for cancer testing, was acutely limited in late 2024, forcing health leaders to ration supplies and to prioritise only the most urgent cases. Between January and May this year, dozens of cancer patients in the Nottinghamshire and east Midlands trusts experienced delays in PET-CT scans due to radioisotope shortages.
This fragility of supply has a very human cost. The root causes are clear: our dependence on ageing foreign reactors, transport hurdles and Brexit-related trade barriers all converge to create a precarious, expensive pipeline for these life-saving elements. The majority of them are produced by an ageing global network: 64% of current production capacity, in 11 reactors, is expected to be decommissioned by 2030. Shutdowns, such as that of the Belgian BR2 reactor, are more likely to occur as global demand increases, reactors age and more research reactors come offline.
The situation is unsustainable but, luckily, neither inevitable nor unfixable. However, it requires the Government and the scientific community to explore and pursue long-term solutions—not an easy ask in times of serious budget constraints—where cross-departmental co-operation is key. I note that it is the noble Baroness, Lady Merron, responding as Minister for Health, but it could as appropriately have been a Minister from the Department for Science, Innovation and Technology, the Department for Business and Trade or indeed the Department for Energy Security and Net Zero.
Any long-term solution must have at its core a vision for a secure, sovereign supply chain anchored in world-leading research, agile infrastructure and a skilled workforce. As well as direct benefits, research reactors have been demonstrated to create technological clusters that attract investment as industry benefits from proximity, which reduces the loss of radioactivity due to decay, and highly skilled expertise is built up in a local workforce. But the supply chain challenges for molecular radiotherapy stem from the fact that the radioactive component—the radionuclides—are short lived, so must be made continuously and cannot be stockpiled.
Where could we build a reactor where there is already a suitable nuclear site, owned by the Nuclear Decommissioning Authority, with a highly skilled local workforce in the relevant nuclear and medical sciences, a welcoming population well educated in the advantages of living in close proximity to a nuclear site, and an airfield almost adjacent to export the radionuclides with short half-lives—more likely to be counted in hours, not days—to the UK and beyond? Extensive research by the Snowdonia Enterprise Zone, backed by the Welsh Government, assessed long-term economic uses for the Trawsfynydd site in south Gwynedd. Given the site’s heritage, it concluded that it is most suited for nuclear development. Following detailed assessments of a number of different options, two projects were confirmed as having the greatest potential to deliver socioeconomic benefits, namely SMRs and a medical research reactor to produce radioisotopes for cancer diagnostics treatment and research.
The proposed ARTHUR—advanced radioisotope technology for health utility reactor—initiative envisages a dedicated medical reactor capable of producing a steady flow of radioisotopes for NHS use and research, and for export. The recommended reactor design for the ARTHUR project would use proven technology and is modelled on the ANSTO OPAL reactor, the world’s leading example for secure and efficient medical isotope production. The plan is supported by leading academic voices. Professor Simon Middleburgh of Bangor University’s Nuclear Futures Institute has stated that
“such a facility is not simply a Welsh inspiration—it is a UK wide imperative. Without it we remain at the mercy of foreign reactors, rising costs and global shocks”.
In 2022 the Government took a step in the right direction by announcing a £6 million medical radionuclide innovation programme. The commissioned report, issued by TÜV SÜD, warned of a supply vulnerable to technological failures, infrastructure delays and geopolitical upheaval, underscoring the conclusion that our current system is not future-proof. The recent review of molecular radiotherapy services produced by the Royal College of Radiologists, the Royal College of Physicians, the Institute of Physics and Engineering in Medicine and the British Nuclear Medicine Society made one key recommendation: that every devolved Government and every radiotherapy operational delivery network in England appoint a molecular radiotherapy champion, someone with the mandate and vision to drive the change we need. By investing in infrastructure using the existing workforce, as well as training the workforce of tomorrow, we can become self-reliant and once again lead the world in nuclear medicine innovation.
One in two UK citizens will be diagnosed with cancer in their lifetime. Many will see their quality of life and the efficacy of their treatments enhanced as a result of nuclear medicine. Every hospital in the UK uses it to help patients on a daily basis—700,000 patients a year and counting. We must act now. Let us not wait for another global shortage, another shutdown or another delayed shipment to force us into crisis mode. Let us choose instead to build a secure, resilient, sovereign supply of medical isotopes for the UK and, of course, I hope that will be in Wales.
Lord Patel (CB)
My Lords, I am pleased to take part in this short debate. All the important issues were covered by the noble Baroness, Lady Bloomfield, in her brilliant, comprehensive speech—but not by me, as they say, so I will repeat them.
The noble Baroness is right that it is time urgently to address this issue. The point has already been made that we increasingly need these radioisotopes as medical advances occur, particularly in molecular radiotherapy, which the noble Baroness did not mention. Molecular radiotherapy is used as internal therapy for diseased organs, as opposed to external radiation, which is what we are all familiar with.
We all know that one in two people are going to get cancer. The monitoring of cancers—for example, prostate cancers—requires a particular kind of radioisotope tracer to identify whether there are any metastases. This is now in short supply because we rely on a supply chain that comes from overseas.
Basically, there are two nuclear imaging modalities: SPECT, single-photon emission computed tomography, and PET, positron emission tomography. SPECT imaging relies primarily on reactor-produced isotopes, and we have to completely import them because we do not have a reactor. PET relies on cyclotron-produced images. While we have that facility, we do not have it extensively, so we often have to rely on overseas supply chains.
I will put it in the context of a patient. The overall problem is that they are waiting for a diagnosis, but cannot have it made because the supply chain for radioisotopes is in short supply or has been held up, and their appointment is cancelled. They wait another few weeks before that appointment is made again, during which time the patient’s cancer grows. Alternatively, they are relying on finding out how the cancer is progressing following diagnosis, particularly to see whether the cancer is responding if treatment is being given, and imaging facilities are needed, but the tracer or isotope is not available.
There is a further issue: if we have our own reactor that can be used for research, we will innovate for newer radioisotopes for both diagnosis and treatment. Our scientists are good enough; in fact, they are world leading. Furthermore, most tissues in the body are specific to certain chemical agents. For instance, iodine is used for the thyroid. If we want to diagnose or treat thyroid cancer using internal therapy, we would have a tracer with iodine to target thyroid tumours. Glucose is similarly used for brain tumours, and for identifying cancers that an MRI sometimes will not see. With a particular kind of tracer, PET-CT scans will see them, and therefore diagnosis and treatment happen earlier.
I could say this in one sentence or half an hour of speech, but the message would be the same. We urgently need UK-based radioisotope reactor facilities that produce tracers using radioisotopes, and also a cyclotron facility, so that the whole UK can then rely on our own supply. It also enables our researchers to further innovate for new tracers, and therefore end up leading the world. I say to the Minister that the time is now. Can we have the plan, please? Whether it is in Wales or not—I might have been tempted to say Scotland—the ARTHUR project has already made a good business case and worked this out. The cost is not enormous, particularly in the context of the NHS budget and the benefits that the NHS will derive. I plead for the same as the noble Baroness, Lady Bloomfield.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
My Lords, I congratulate the noble Baroness, Lady Bloomfield, on securing this valuable debate. I think we should judge its value not by the number of people here but rather by the quality of the contributions. This is an important issue and, as the noble Lord, Lord Patel, said, the noble Baroness introduced this in a very comprehensive way, which was extremely welcome.
The Government are committed to delivering critical services that depend on the reliable supply of medical radioisotopes, to which both noble Lords referred. I agree with the noble Baroness and her reflections on the positive health outcomes, also supported by the noble Lord, Lord Patel. These isotopes support positive health outcomes, both for diagnostics and for therapeutics. I was looking at the figures: in England alone, some 700,000 procedures are carried out using radioisotopes every single year. This figure is expected to increase, not least because of their value in the process.
There are three main uses for medical radioisotopes; each relies on different manufacture to get the desired result. PET-CT scans, primarily used for cancer and cardiovascular diagnostics, use isotopes from a comprehensive network of UK-based cyclotrons. SPECT scanners are mainly used to confirm the cancer stage, to identify blood clots and to assess organ functions. These scanners use isotopes manufactured abroad in reactors; the noble Lord, Lord Patel, drew our attention to this. This is also the case for radioisotopes that are used for therapeutics.
As the noble Lord pointed out when he expressed concerns about delays to treatment and the impact on patients—the point was well made—the UK does not currently manufacture medical radioisotopes in reactors. Instead, we have in place a supply chain with isotope sources from multiple countries to aid resilience. I will come on to the point that the noble Baroness made about when that supply chain is disrupted. This gives us access to a global network of expertise and high-quality medical radioisotopes.
The noble Baroness made a strong case in advocating for the Welsh project ARTHUR, a reactor specifically designed for the purpose of medical radioisotope manufacture. The Minister for Medical Technology and Innovation, Zubir Ahmed MP, recently met Liz Saville Roberts MP to discuss this matter, and I can assure the Committee that the Government are in active discussions about this project. I note the points made about the suitability of the area and the potential benefits of this project. The UK Government have not made a formal assessment of the project at this time but are supportive of any manufacturing capacity that can improve reliable access to medical radioisotopes, as has been called for. A domestic reactor would certainly be a welcome addition to the overall supply.
The noble Baroness understandably highlighted the severe shortage of a specific medical radioisotope in 2024. I agree that this was caused by a global disruption to its manufacture. The underlying issue was that several nuclear reactors used for its manufacture were undergoing critical repair work. As noble Lords can imagine, these repairs are normally planned ahead and co-ordinated to ensure that there is always enough capacity to deliver critical isotopes. However, the safe running of reactors will always determine whether they will be taken offline for repairs. In this instance, critical repair work was identified and meant that multiple reactors were closed down at the same time.
Due to a diligent response from the Department of Health and Social Care, NHS England, industry and the NHS services impacted, I am glad to say that the patient impact from this severe shortage was limited. I am grateful to all those who worked to ensure this. However, it underscores the need for multiple available sources of medical radioisotopes. A Welsh reactor—or perhaps a Scottish one, although I would rather not dwell on the argument around the devolved Governments and locations—could be an important addition to this supplier base.
Also raised were the issues with the supplies for PET-CT scanners earlier this year. I can give an assurance that, when there are specific supply issues, such as the one the noble Baroness referred to that impacted north England and the Midlands, the department works with suppliers to recover supplies and services. We are aware of the difficulties and issues that both noble Lords have raised. I hope that response is of some assistance.
We are working to support services and improve outcomes for patients. The noble Baroness said that the Government should explore long-term solutions, so let me outline some of these actions. First, we are committed to a thriving life sciences sector and the development of high-skilled jobs in that sector. The Government have made up to £520 million available through the life sciences innovative manufacturing fund; that is available for any private manufacturing proposal, including for medical radioisotopes in the UK.
Medical radioisotopes support life-saving services, including for diagnostic tests; this Government are committed to supporting the improvement of these services. Therefore, we have announced £6 billion of additional capital investment over five years across new diagnostic, elective and urgent care capacity. This includes funding to increase capacity for both testing and reporting across community diagnostic centres and hospitals.
In early 2026, which is nearly upon us, the Government will publish their national cancer plan. This will set out how we will improve diagnosis, treatment and waiting times in order to improve outcomes for cancer patients and increase survival rates. UKRI, the UK’s national funding agency for science and research, also supports the overall service delivery and has recently invested £32 million for novel total-body PET-CT scanners. All these interventions will, as I say, improve the situation for patients and improve services.
In conclusion, as the noble Lord and the noble Baroness have called for, this Government are committed to ensuring robust and reliable supplies of medical radioisotopes to deliver critical services. We are supporting the development of manufacturing and delivery capabilities in the UK, where this is appropriate, alongside working closely with international partners and suppliers. We are also committed to the economic and industrial development of the UK science sector. That is why we have made available investment funds that are open for applicants who are looking to expand or improve UK manufacture of medicine and medical technology products. This includes UK-based manufacture of medical radioisotopes or their adaption for diagnostic or therapeutic applications.
Lord Patel (CB)
I know that intervening on the Minister is unusual in a short debate, but we are not exactly short of time. I think the Minister said that if we had a reactor, it would be a useful addition. It would not be a useful addition; it is a necessity. She did not define any solid plans—unless I missed them—where the Government have a clear intention to establish a nuclear reactor for producing radioisotopes. There is a promise that we will have good contractual agreements with the supply chain lines that the Minister mentioned—I cannot make the Minister’s speech, but I am asking the question—but those cannot be guaranteed because there are only six reactors in the world and they are more than 50 years old. Maybe the Minister could comment on that.
Baroness Merron (Lab)
I understand the noble Lord’s point. The point I am trying to make is that a supply chain is important. I was indeed careful in my choice of words, not least because, as I mentioned elsewhere in my speech, the Government have not made a formal assessment of, in this case, the ARTHUR project. So I am limited in how far I can go on the most obvious presentation before us today, but I understand the point made by the noble Lord.
I thank the noble Lord, Lord Patel, and the noble Baroness, Lady Bloomfield, for raising this important matter, which is important for the whole of the Government.
Private Equity
Lord Monks
To ask His Majesty’s Government what assessment they have made of the role of private equity in the UK economy.
Lord Monks (Lab)
My Lords, I am grateful for this opportunity to revisit one of the darker corners of the financial services sector and to see what has altered since noble Lords last debated the issue in 2022. The excellent Library brief defines private equity as “a managed fund”, aiming to secure “a controlling share” of established companies, then, after a few years, to sell the companies on at a profit. The funds typically aim to sweat the assets as one of the ways of increasing profits. By sweat I mean sales of property, reductions in staff and sometimes their pay, cutting back on investment in new products and services, sometimes reducing maintenance and using the high debt involved to reduce tax. Growing the business is a stated aim but often turns out to be a second-order objective.
In addition, fund managers secure their remuneration by aiming for a share of the profits—often around 20%—and by interest payments and dividends. These are taxed at a lower rate than the higher rate of top income tax. Compensation arrangements are complex, but PE takes full advantage of what is known in the City as the carried interest loophole and sometimes as Wall Street’s favourite tax break. The rewards at the top often contrast with the meagre rewards for the staff in PE companies.
In the union world, we became aware in the mid-2000s of hostile buyouts fuelled by PE. They were associated with job losses, depressed wage growth and union derecognition in some cases. We learned that company managers we dealt with no longer had the same authority and decision-making power. The PE fund was the boss, and the employees were often demoralised.
The British Private Equity and Venture Capital Association responded to concerns by setting up a standards-setting exercise involving Sir David Walker and later established a PE reporting group on which my noble friend Lady Drake serves. This was welcome, but concerns remain. I confess that when the banking crisis broke in 2008-09, my first thought was that highly leveraged private equity and its cousin hedge funds were major factors in it. I was wrong. The explosion was triggered on subprime mortgage markets. The question still in my mind is that private equity and its high leveraging could cause a massive problem with instability and company failure.
Things have moved on since the mid-2000s, but there are signs of a revival in PE. According to the FT just 10 days ago, there is developing in Germany in particular an impetus for major household-name companies—I will point out just one: Volkswagen—to sell off non-core divisions to PE, which would do the dirty work of asset sales including job reduction. The tax deductibility of interest payments on debt creates an incentive for PE funds and others to borrow to buy, even though the Finance Act 2017 restricted some activities in this area. One of the criticisms made of Unilever in the context of a takeover bid by Kraft was that its balance sheet was insufficiently leveraged. Unilever is over 90 years old. Will any PE-fuelled companies endure and prosper like that?
Anyone who has looked at the history of PE will have seen some of the horror stories. My noble friend Lord Sikka mentioned some of these in the debate in 2022. I just pick out one: Toys R Us was a well-known retailer in the US and the UK. It was taken over by Bain Capital and Kohlberg Kravis Roberts, stellar names in the PE world. Staff and benefits were cut, and interest expenses consumed 97% of the company’s operating profits. The company was still paying interest on loans to KKR and Bain until 2016; it is small wonder that it collapsed.
Currently, I am particularly concerned about PE operations in the social care sector. According to the Guardian on 12 November:
“Private companies operating … in … three regions of England have taken more than £250m in profits in three years”
from their social care activities,
“with more than a third going to … private equity firms or companies based in tax havens”.
This is a lot of public money going astray. I think that PE should not be allowed anywhere near social care.
I could go on with other examples of poor behaviour, but it would be more interesting to hear advocates of PE listing positive examples where, as a result of the actions of PE, companies have been transformed from laggards to dynamic and sturdy firms. Do any such examples exist? Where are the successful poster boys for private equity?
I recognise that private equity is a substantial part of the UK economy. It is too big to ignore. The Governor of the Bank of England, Andew Bailey, has recently announced that the Bank is planning to run a series of tests of private equity and credit firms. This follows some problems in the United States. The governor is seeking to discover whether these are isolated examples or, as he put it, a “canary in the coalmine” indicating wider systemic problems. This is important work by the Bank.
I appreciate that the Government are desperate to boost growth and seek new investment, especially on necessary infrastructure improvements. They are always looking for new sources of capital, but is private equity contributing or is it undermining traditional ways of investing in business, such as issuing new equity?
Do the Government have any current concerns about the role of private equity? Do they see any need for further regulation for PE or, more widely, the shadow banking sector? Are there plans to remove the tax advantages of debt relative to equity? Where are we on the Government’s aims to tackle the injustices of carried interest? This is an area that needs considerable scrutiny, and I hope that this short debate can help stimulate that further scrutiny.
Baroness Stedman-Scott (Con)
My Lords, I will speak on the role of private equity within the modern pensions landscape and, in particular, the implications of the Government’s Mansion House reforms for the Local Government Pension Scheme and long-term investment in the United Kingdom. The reforms announced in 2024 mark an important moment. They aim to consolidate our fragmented defined contribution sector and strengthen the investment management of the Local Government Pension Scheme. Taken together, they represent an attempt to align pension outcomes with the broader goal of promoting productive investment across the country.
The challenges of the next half-century are considerable: climate transition, energy security, technological change, demographic pressures and geopolitical instability will all shape the environment in which pension assets must be managed. In that context, private capital, including private equity, has a role to play not only in delivering returns but in addressing some of the systemic issues that confront the country.
It is important to acknowledge that private equity is not a uniform asset class. When approached with discipline and proper governance, it can generate significant value. Over the past two decades, it has produced sustained double-digit returns, considerably outperforming public equity indices. For many defined contribution schemes, which seek long-term growth and diversification, such returns are both attractive and aligned with members’ interests.
Private equity also provides access to parts of the economy that public markets do not easily reach: smaller companies, specialised sectors and innovative enterprises. It enables long-term investment in businesses without the short-term pressures that arise in listed markets, and it brings with it an attractive investment approach, drawing on skills that help transform businesses and support growth. Other jurisdictions demonstrate what can be achieved at scale. Canada’s major pension funds, for example, have used their size to deepen allocations to private equity infrastructure and real estate, generating stronger returns and reducing costs. The United Kingdom should be ambitious in seeking similar outcomes.
This brings me on to the Local Government Pension Scheme. With nearly £400 billion in assets—that figure is projected to reach £1 trillion by 2040—the LGPS is uniquely positioned to contribute in order to improve member outcomes and to increase productive investment across our regions. Encouragingly, we are already seeing progress. The Greater Manchester Pension Fund has committed more than £500 million to SME investment, supporting more than 160 business and creating more than 16,000 jobs. Funds in the West Midlands, South Yorkshire, Avon, Clwyd and Devon are showing similar leadership.
Noble Lords are, I am sure, quite surprised that I should be speaking in this debate on private equity, but I absolutely pay tribute to the Private Equity Foundation. When it makes money, which is a good thing, it actually puts that money into a good cause. The charity that I ran a few years ago was a beneficiary: it invested in the work that we did with children in schools. We reduced truancy, increased academic achievement and got young people into work who would never have done so otherwise. It deserves credit for that.
There are jobs for young people in the areas that need them most. There are opportunities and hope. As of 31 December 2024, £203 million had been invested directly into the West Midlands Combined Authority area. This includes funding for housing, infrastructure, commercial property and small businesses, creating jobs, building homes and improving services. More than 22,000 jobs have been supported, with nearly 5,000 homes delivered and significant investment directed into hospitals, schools and digital infrastructure. Such examples show that institutional rigour can sit comfortably alongside place-sensitive investment strategies. They demonstrate that pension funds can achieve strong financial returns while also contributing to local economic development.
However, context matters. Many LGPS funds are currently well funded. The scheme as a whole was estimated to be 107% funded in March 2022, and early indications suggest a further strengthening by 2025. For some funds, that may reduce their immediate appetite for additional private market exposure. The Government’s proposed allocation target of 10% for private equity may, therefore, appear ambitious. Yet, if the consolidation envisaged by the Mansion House reforms proceeds, the LGPS will inevitably become a larger and more sophisticated investor in private markets.
As this occurs, the secondary market, which is all too often overlooked, will play an increasingly important role. It will provide liquidity, support portfolio rebalancing, and enable the effective recycling of capital. The UK must ensure that this market is deep, transparent and trusted. If we are to meet the challenges of the coming decades and seize the opportunities that accompany them, we must treat our pension system as a cornerstone of national economic strength.
Baroness Moyo (Non-Afl)
My Lords, as I have disclosed in the register of interests, I serve on Oxford University’s endowment investment committee, which allocates capital to private equity. There is always a risk that a debate on the role of private equity will be based on dated views of the industry, characterised by asset stripping, financial engineering and cutting jobs. However, compared with 20 years ago, today’s private equity is largely focused on creating growth through productivity gains driven by operational improvements and technological innovation.
I will make three points about private equity as it relates to the United Kingdom’s prosperity. First, private equity is an engine in the British economy. The British Private Equity & Venture Capital Association estimates that, in 2025, private equity-backed companies employ approximately 2.5 million workers—that is one in 14 of Britain’s working population. The association also estimates that these companies generate nearly £200 billion, or 7% of GDP, for the economy. More widely, when suppliers and related consumers are included, 2023 estimates put private equity’s economic impact at roughly £300 billion, or about 11% of the UK’s GDP.
Secondly, private equity plays an important role in boosting the country’s productivity. The Productivity Institute found that private equity-backed companies benefit from productivity gains that are higher than those in the wider economy. Specifically, the institute notes an increase in total factor productivity of greater than 4%, and an increase in labour productivity as large as 5%. Crucially, the report notes that these gains are unlikely to be the result of cutting jobs. This revelation about productivity alone is key; it should not be overlooked amid concerns around the UK’s persistent productivity puzzle.
Thirdly, private equity must continue to play a vital role in driving innovation. Private equity is not just helping to turn around older, established companies; it is also providing growth capital to help companies scale up, and venture capital to support start-ups. The noble Lord asked for specific examples. I give him the magnificent seven, which are currently powering 200 to 300 basis points of economic growth as we live and breathe.
More specifically, both artificial intelligence and climate efforts, which are critical for future economic success, require large-scale capital investment, which private equity can help to provide. The era of AI in particular promises to drive down costs in public goods and increase efficiency of delivery in things such as the National Health Service. The IEA estimates that the energy transition and climate initiatives are going to require $5 trillion per year globally. Essentially, these efforts need all the capital that we can get, private equity included.
Yet today, in the UK context, private equity faces challenges, including finding a route to sell companies it has invested in and nurtured. This is, in part, due to the UK’s capital markets having weakened and investor interest in IPOs and public markets falling away. Worryingly, this year the United Kingdom has fallen out of the world’s top 20 IPO markets. Additionally, private equity investors are struggling to find promising new UK companies to invest in, highlighting burdensome regulation that ultimately holds back growth and puts the UK at a distinct disadvantage in the global competition for investment capital.
Britain needs more good jobs, more innovation and greater productivity. It also needs more infrastructure and improvements in public services. All of these require vast quantities of large-scale investment. At a time when this country’s growth is slowing—it recorded growth worth just 0.1% of GDP in the last quarter and is registering a 5% unemployment rate—this backdrop is a stark reminder that we must not deter major sources of capital and job creation such as private equity.
To be balanced, there are notable criticisms—some of which have already been mentioned—from local authorities experiencing escalating costs in both child and adult care provision from the private sector, and, in some cases, private equity-owned businesses. Business and the Government must, of course, come together and co-operate to address these urgent concerns. But more generally, government action, be it through legislation or regulation, should aim to create a much more engaging environment for private equity investment opportunity.
Lord Davies of Brixton (Lab)
My Lords, I thank my noble friend Lord Monks for introducing this debate on an important subject and the noble Baronesses, Lady Stedman-Scott and Lady Moyo, for their interesting contributions. They presented a powerful case in favour of private equity, but there is another side to the story. My noble friend Lord Monks explained, as I am sure my noble friend Lord Sikka will, some of the problems created by private equity. I am afraid that I am not as sanguine as the noble Baroness, Lady Moyo, that the bad old days are over. The potential is still there—it has not gone away. It is about the way that this tool is operated. You cannot deny the problems of the past. What guarantee is there that they will not return in the future?
My particular interest in private equity is in the way it has become embroiled in current debates about pension schemes. The Mansion House accord, mentioned by the noble Baroness, Lady Stedman-Scott, seeks to commit pension schemes to invest significant amounts in private equity. In the House of Lords, we will shortly receive the Pension Schemes Bill, which explicitly refers to the need for large pension funds to be able to invest in private equity. It is a very topical issue.
The promise is attractive. We are told that it will lead to higher returns; in introducing the Mansion House accord, the Treasury specifically referred to the higher potential net returns for savers. I suspect there is a significant element of survivor bias in these figures. None the less, the higher returns are not a free lunch; they come with the downside of failure. Private equity investments are not by their nature successful; they require the hard work and knowledge of experienced investors.
We need to identify the problems with private equity in its own terms. My noble friends will point out some of the other problems that have been faced, but one is illiquidity. As pension funds are operated at the moment, any member is entitled to move their money out and take it somewhere else, or to use it to buy an annuity when they get to retirement. Illiquidity, which is inherent in private equity funds, is a problem for pension funds.
Another problem is valuation uncertainty. Pension funds are required to tell their members what the fund is worth. The funds held in private equity are calculated in a way that, at best, we could describe as opaque. Members will be given a figure as to what it is worth, but it is not the same sort of figure as in market investments, where there is a market and you know what the investment would actually raise if you sold it tomorrow. You do not know what your private equity investment will raise if you have to sell it tomorrow.
Then there is the inevitability of higher costs and fees being charged. In some way, that is the point of private equity—so that advisers can charge higher fees, which are inevitable. Finding these splendid investment opportunities, as previous speakers have identified, does not fall into people’s laps. It requires hard work and skill, which comes at a significant cost. Talking about private equity without recognising the costs involved is wrong.
Of course, there is the overall problem of really knowing what these funds are doing. There have been well-attested cases reported in the Financial Times of private equity funds selling their investments to a self-owned subsidiary. This is not uncommon; the sort of financial structures which are developed in order to hold private equities are, at best, obscure, as I said earlier. Then there is the alpha problem, with the Government as a fiduciary in pension funds; it is the trustees who should be taking the decision and not the Government.
Lord Leigh of Hurley (Con)
My Lords, I congratulate the noble Lord, Lord Monks, on securing this very timely and important debate. I declare all sorts of interests. I am a founder and current senior partner of the advisory firm, Cavendish Corporate Finance—I am grateful to the noble Lord, Lord Davies, for his comments on the skill and hard work needed in that area. I personally invest in several venture capital and private equity funds, directly and indirectly, and I often negotiate against, and sometimes for, private equity as a professional M&A adviser.
When I started Cavendish in 1988, PE was a new and unknown phenomenon. A most important breakthrough happened when the Treasury agreed that carried interest should be taxed as capital not income, and there were other legislative changes in the 1980s and 1990s that enabled the industry to flourish. Noble Lords may recall the Chancellor at the time who facilitated this—it was not Lawson or Major; it was, to his credit, Gordon Brown. Those who think this is all a terrible, Thatcher-inspired “Greed is good”-era event are wrong. To be fair, there were lots of other hidden benefits at the time for the PE industry, which successive Governments allowed: an unlimited write-off of interest against profit—which is now capped—with that interest going to tax-free funds; base cost shifting, which has now stopped; very advantageous LLP structures, which the forthcoming hokey-cokey Budget may or may not stop; and offshore benefits, which have now been stopped.
However, at that time, the culmination occurred when an unfortunate PE individual boasted, at a House of Commons Select Committee, that he paid less tax than his cleaner. It was all the above, together with some very aggressive behaviour by some operators, which left PE with a very negative reputation. I recall a meeting of a PE-backed company that was behind budget, and the PE executive demanded that someone was fired as a result. They said they did not care who was fired, they just wanted to see someone fired immediately—and they were. As noble Lords will have gathered, I do not have rose-tinted spectacles when looking at PE. I have seen some bad behaviour and some enormous—I mean: enormous—fortunes made by some who really did not contribute much to our economy.
However, that being said, I make the point that, originally, PE was solving a major issue, as typified by RJR Nabisco, when the barbarians at the gate took over a company run by grossly inefficient management, who treated their corporation as a cash cow for their own private excesses. The point is that the capitalist system is the most successful ever created to enhance all our welfare, and it works on the constant need for greater efficiencies to maximise the return to shareholders for their investment. This is what really matters, not the ESG policy or the mission statement—or its purpose or self-declared interest to do good—or all the other fluffy stuff put up to deflect us. A company needs to be measured and assessed overwhelmingly by its return to shareholders on their investment—that is all. If management need to be sacked, they should be, unlike in other sectors. Of course, exploitative behaviour, modern slavery and cartel-like behaviour all have to be banned, but the overwhelming focus needs to be the efficient return to shareholders on their capital.
That matters to many of us in this Room. It matters not to those on the state pension or state benefits, which they enjoy because of state employment, but to those who, like me, have saved and invested in funds which, in turn, have been allocated to PE investments. We need them to succeed, and they are doing so at a time when public markets are sadly struggling because the Government keep failing to stimulate them—I hope the Minister will say more about that. Private capital is needed more than ever.
PE has helped some 13,000 firms in the UK and this Government, who claim to be focused on growth, have done nothing to encourage it. Indeed, they have brought on the disastrous Employment Rights Bill which every trade representative body and pretty much every private business realises will kill growth.
I turn briefly and more importantly, to venture capital, which the noble Baroness, Lady Moyo, touched on. It does an outstanding job in taking a risk that no one else will. As a result, 40% of the UK’s fastest growing 100 companies in the UK have VC money, with £14 billion in tech companies last year.
Since some of the other horror stories I mentioned earlier, the Walker guidelines, which was briefly mentioned, have been implemented successfully and seem to have changed behaviour, so let us try to ensure that PE companies play by all the rules, that investors feel welcomed in the UK and that we celebrate the sharp and necessary focus PE brings to the UK, ensuring that profitability is maximised for all our benefit.
Baroness Bennett of Manor Castle (GP)
My Lords, in following the noble Lord, Lord Leigh, I have to note that capitalism focused on shareholder returns is dependent entirely on the natural world and a functioning society. There are no shareholder returns on a dead planet or in a collapsed society.
I thank the noble Lord, Lord Monks, for providing this opportunity to assess the enormous and wide-spread damage that private equity has done to the UK and the world, with some $13 trillion now held across 50,000 companies worldwide. Their tentacles spread, particularly for the relatively poor, into every aspect of their lives, being their landlords, their electricity and water providers, their providers of travel to work, their employers, their doctors, their debt collectors and even caring, very expensively, for their pets. It is, as has been described in virological terms, a financial pandemic.
The author Megan Greenwell in her book Bad Company focuses on the US and, as she identifies, the death of the American dream which is associated with private equity. If noble Lords have not read it, I recommend it. She tellingly contrasts venture capital, which seeks to invest money mostly in start-ups to support the development of something new, with private equity, which typically buys company outright—often mature and established companies. The private equity aim is to get money out of the company without really caring whether the company makes any money. They are parasitic.
We all know the ways in which they do this, as the noble Lord, Lord Monks outlined: selling the company’s land and buildings, which are frequently bought through high-interest loans from related companies, then charging the company rent to continue to occupy its own premises. Money not already being drained by the interest payments is pumped out in dividends. Those are the returns that the noble Baroness, Lady Stedman-Scott, referred to. Then we see the buyer slashing the workforce, cutting the quality of services and products and it all crashes and burns in a couple of years, as it has in so many cases. Then the private equity firm moves on to the next victim.
As evidence given recently to our own Public Accounts Committee shows, some of the most vulnerable people in our society are suffering the worst as individuals from this model. The Public Accounts Committee inquiry, launched in July 2025, was prompted by National Audit Office research showing that the cost of children’s residential care placements has risen 96% since 2019. It heard from the Children’s Homes Association, which has removed tax-haven based private equity providers from its membership and called them out, pointing out that there are now large national providers with several hundred placements earning windfall profits from the coffers of local authorities that are then shipped straight off to tax havens.
The chief executive of the Children’s Homes Association told the Public Accounts Committee that measures in the Children’s Wellbeing and Schools Bill will not deal with this situation. He asked,
“is there political will to tackle tax haven-based private equity providers?”
I ask the Minister that question directly and non-rhetorically. Will the Government get private equity out of children’s care, out of aged care and disabled homes, where it has been doing similar damage for decades? These were issues raised by the noble Baroness, Lady Moyo.
My second question to the Minister is about the welfare of us all. We continue to see the enormous price paid by the young, the poor and the disabled after the financial crash of 2007-08, caused by the greed and fraud of the bankers. We are now hearing increasing warnings about the risk of it all happening again from multiple quarters: from the AI-fantasy bubble to the crypto mania, but also from the risk of collapse of the private equity model. There are only so many juicy targets from which money can be sucked, and they are drying up as our economies are hollowed out and financialised, with few sectors not already left victim. As the Bank of England’s Financial Stability Report said last year:
“Vulnerabilities from high leverage, opacity around valuations, variable risk management practices and strong interconnections with riskier credit markets mean the sector has the potential to generate losses for banks and institutional investors”.
Natacha Postel-Vinay, an assistant professor at the London School of Economics, said in commentary:
“I think a lot of people do not know exactly what is going on”.
Another question for the Minister is whether the Government can say, hand on heart, that they are confident that the regulators, and they themselves, know what is going on in terms of the financial risks being presented by private equity, particularly in light of the obscurity as outlined by the noble Lord, Lord Davies?
I finish on a message of hope, because I am always looking for hope. One of the reasons I recommend Greenwell’s book is that she talks about the people who are fighting back against the damage done by private equity; the workers and communities who are fighting back. My final question to the Minister is what the Government are going to do to fight back and tackle some of the tax issues that have already been raised by other noble Lords. They are, after all, the Government. Surely, the state of the country and the economy is their ultimate responsibility.
Lord Sikka (Lab)
My Lords, it is a pleasure to follow the noble Baroness, Lady Bennett, and I also thank my noble friend Lord Monks for securing this debate. Private equity’s trail of destruction includes Debenhams, Homebase, LloydsPharmacy, Maplin, Poundworld, Silentnight, Toys R Us, The Body Shop, Southern Cross Healthcare and more. High streets have become economic deserts, thousands of SMEs have been strangled and Governments just wring their hands. Private equity is part of shadow banking and remains unregulated. There are no effective rules about leverage or capital adequacy. Governments are playing with fire, as the next crash will surely come from this sector.
Tax abuse, profiteering, asset stripping and cutting staff and wages are the standard private equity tools. The controlling entity is usually in some opaque offshore tax haven: no tax is paid on dividends extracted from UK operations. Instead of share capital, private equity loads companies with secure debt; this enables it to eliminate a downside risk of shareholding as, in the event of liquidation, it is paid first. Unsecured creditors get little or nothing.
Some years ago, I was asked by the Work and Pensions Committee to look at the liquidation of Bernard Matthews, a well-known poultry company. It was deliberately gutted by private-equity owners: the directors sold the assets and jettisoned all the liabilities, including deficit on the employee pension scheme, to maximise profit. Suppliers, SMEs, employees, local communities and HMRC were harmed. Governments did absolutely nothing. Can the Minister say how many SMEs have been damaged by private equity, and will the Government investigate liquidations concocted by private equity?
The crisis at Thames Water has been deepened by private equity’s cash extraction. Northumbrian Water, Southern Water, Wessex Water and Yorkshire Water are partly or wholly owned by private equity. All have hundreds of criminal convictions and are still allowed to fleece customers. Private equity is devouring ASDA and Morrisons: staffing and wages have been cut to boost profits and investment has been neglected. Large corporations, many controlled by private equity, have 60% of the veterinary market. Vets’ fees have increased at double the rate of inflation. Vets are under pressure to meet financial targets and sell unnecessary appointments to pet owners—that is what vets have told me.
Profit margins range between 16% and 20%. Social care is mainly under the control of companies increasingly backed by private equity. They are extracting £1.5 billion a year for their investors. Private equity-backed fostering agencies provide almost one-quarter of all child fostering places in England. In 2023, the parent company of the UK’s biggest provider, the National Fostering Group, made an underlying profit of £104 million with a profit margin of 21%. That is unacceptable. Profiteering from vulnerable children is what private equity does. Despite the glossy statement, it has no notion of ethics or social responsibility. On 18 November 2024, the Government issued a press release entitled Biggest Overhaul in a Generation to Children’s Social Care. It stated:
“We will crack down on care providers making excessive profit”
and
“put a limit on the profit providers can make”.
A year later, nothing has been heard. Can the Minister tell the Committee when this legislation will be brought to Parliament?
Too many dental practices are taken over by private equity as it seeks to build local monopolies. My dentists—PortmanDentex and Rodericks—are leading players and are controlled by opaque entities from Luxembourg and the Cayman Islands. They are not there for the sunshine. The typical cost of dental treatment at these dental surgeries is three and a half times what NHS dentists charge.
Too many GP surgeries are controlled by private equity. There are pressures on them to increase profit by cutting staff and using unqualified staff. The NHS is increasingly a shell doling out contracts to private operators backed by private equity. Just five firms received thousands of cataract surgery contracts. They have a profit margin of between 32% and 43%. In 2023-24, they received £536 million from the NHS and made a profit of £169 million. It is a matter of great concern that under their 10-year plan, the Government plan to hand more of the NHS to private equity.
Finally, can the Minister explain what the Government are going to do to curb abuses by private equity?
Lord Altrincham (Con)
My Lords, I declare my interest as a director of South Molton Street Capital. I congratulate the noble Lord, Lord Monks, on securing this important debate about private equity and on his membership of the important French Légion d’honneur alongside Stephen Schwarzman, who is the founder of the largest private equity investment firm in the world: Blackstone.
Private equity and venture capital-backed businesses directly supported approximately 7% of UK GDP, 8% of employment and 9% of gross earnings in 2025; those numbers were, I think, referenced by the noble Lord, Lord Monks. The British Private Equity & Venture Capital Association reports that private capital-backed companies now generate around £200 billion annually in GDP for this country and support 2.5 million jobs. As the noble Baroness, Lady Moyo, pointed out, that is one in 14 jobs in the UK.
It is important for me to frame my remarks with a clear eye to both the benefits and the risks that come with private equity funds. Private equity remains well placed to deliver solid, diversified returns. Over the past two decades, it has outperformed listed equities by between 4% and 6% a year after fees, supported by both the value creation role of active ownership and the illiquidity premium.
For DC schemes supporting UK retirees, those advantages are particularly attractive, as my noble friend Lady Stedman-Scott mentioned. Local government pension pools have already saved £380 million through consolidated private equity investment, and 17 major workplace pension providers have pledged to double their private market exposure to 10% by 2030. The UK’s traditionally cautious pension landscape is clearly opening up, with an estimated £50 billion to £75 billion in new private equity commitments expected over the next five years.
Studies have found that, on average, private equity-backed firms achieve higher productivity growth, as noted by the noble Baroness, Lady Moyo, than comparable companies and often outperform on operational metrics after investment. Long-run analysis of UK portfolio companies suggests that, on average, private equity-backed firms have achieved faster growth in productivity and greater growth in organic employment than comparable private sector benchmarks. When Nat Benjamin from the Bank of England spoke to the House of Lords Financial Services Regulation Committee on 5 November, he commented on the role of private equity in supporting business:
“There have been research and studies on precisely that question—academic research. They tend to show that on average the performance of the businesses, of the corporates that are financed by private equity, tends to improve”.
Private equity and private credit providers create important professional services jobs and income and prosperity for our country and our tax base. It is in the national interest that the Government should work to preserve and strengthen this position because it delivers real, tangible benefits to people across the UK.
However, I appreciate that private equity is not without its risks. We have heard reference to the problems that have arisen in social care from the noble Lords, Lord Monks and Lord Davies, and the noble Baroness, Lady Bennett. The debt burden can become unsustainable if the business hits a downturn and debt repayments and interest eat into cash flow. The noble Lord, Lord Sikka, referenced a long list of private equity calamities in this country and the US and touched on the debacle at Thames Water, which remains a cautionary example. Successive private infrastructure investors, including Germany’s RWE and Australia’s Macquarie, left the company unmodernised and heavily leveraged while continuing to extract substantial dividends when interest rates were very low. When interest rates returned to more normal levels, Thames Water was exposed. It was clear that funding that ought to have been directed towards upgrading the Victorian sewer network, which serves 16 million people around London, was instead diverted to servicing debt.
However, it is important that we do not let these risks deter us from supporting private equity. The question is not whether these funds are wholly good or wholly bad, but how we can manage and engage with them as parliamentarians and Ministers—and, in the noble Lord’s case, as a Government—in a way that minimises risk and maximises benefits for the British public. I welcome that it seems to be in this spirit that the FCA proposes to alter and develop the regulatory regime surrounding alternative investment funds to allow more flexibility for smaller funds, saying that it believes that,
“clearer rules, better tailored to firms, could create efficiencies in how firms do business and further support economic growth and competition”.
Private equity funds have the capacity and potential greatly to benefit our economy. We need to make sure that any changes to the regulatory environment support growth and embed efficiency. We on these Benches will look at this closely as the FCA’s consultation concludes and steps are taken in this direction.
We need to appreciate that the success or failure of these funds is also determined in part by the macroeconomic environment, which the Government have a substantial hand in creating. I appreciate that the Minister cannot comment on specific measures in the Budget, but can he assure us that the Government are forming their plan with a mind to enabling private equity funds and alternative investment funds to continue to contribute to the economy? Does he also recognise that, however they are presented, tax changes can have a real effect on market actors, such as private equity funds, which play an important role in investment, employment and growth? What steps is the Treasury taking to assess and mitigate any unintended consequences so that tax policy does not inadvertently undermine the Government’s growth objectives? I look forward to hearing from the Minister on these points and his response to the other questions raised by noble Lords.
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
I thank my noble friend Lord Monks for securing this debate and all noble Lords for their contributions this afternoon. It has been an energetic debate that has covered all bases in the discussion around private equity. The role of private equity is a salient issue for the UK economy, and it is important for us to recognise the role that private equity investment plays. I thank noble Lords for their constructive contributions to this thoughtful debate.
Growth is the central mission of this Government, but we recognise that government alone cannot deliver growth. That is why investment is a cornerstone of the economic strategy. The UK’s Modern Industrial Strategy set out the Government’s commitment to enable investment and growth in city regions and clusters across the country.
The growth of private markets has enhanced the types of capital available to the real economy, providing increased competition and diversification. Private equity companies provide capital from investors with a broad range of risk appetites. This has increased the availability of finance for businesses, providing long-term capital and support for business plans that enable those businesses, especially smaller or high-potential firms, to scale and innovate.
For many companies, private equity plays an essential role, from supporting firms to scale up from the venture capital stage to listing on a public market. By offering diverse sources of finance and allocating risk to where it can best be managed, private equity can reduce pressure on the banking system and support broader economic resilience. Capturing the benefits of this global growth in private markets is essential to increasing growth and investment in the UK.
The Government remain committed to ensuring that private market investment is sensible and sustainable, and we are working closely with the Bank of England and Financial Conduct Authority as we pursue reforms to support growth. Some noble Lords will have seen the Economic Secretary to the Treasury making just that point yesterday to this House’s Financial Services Regulation Committee.
As noble Lords will have heard, the Economic Secretary welcomed the work of the regulators to monitor and understand these risks and welcomed the Bank of England’s proposals for a system-wide exploratory scenario exercise focused on private markets. She noted that the Chancellor will ensure that the Financial Policy Committee continues its work on these risks through her annual remit letter to the committee.
I reassure noble Lords that the Government are committed to maintaining high regulatory standards for private markets, including private equity firms. Private equity companies in the UK must comply with the necessary requirements, including the Alternative Investment Fund Managers Regulations and the Companies Act. These regulations help to ensure that fund managers and private companies act responsibly, balancing the interests of investors with those of the wider economy and society. The Government’s ongoing review of the Alternative Investment Fund Managers Regulations seeks to maintain this balance, strengthening protections where necessary while ensuring that regulation remains proportionate and targeted.
The noble Lord, Lord Monks, asked where we are on the Government’s plans to appropriately tax carried interest, and other tax issues. While the Government do not comment on speculation about tax policy outside of fiscal events, I remind the noble Lord that, at the Budget in 2024, the Government announced their proposals to introduce a revised tax regime for carried interest from April 2026, which will put the tax treatment of carried interest on a fairer and more stable footing for the long term while safeguarding the strength of the UK as an asset management hub.
The reforms will increase tax on carried interest, ensuring that fund managers pay their fair share. At the same time, the effective tax rate for qualifying carried interest will be at the top end of international competitors, reflecting the Government’s commitment to fairness while maintaining the UK’s position as a leading asset management hub.
I will now try to answer all your Lordships’ questions; if I miss any, I will write to the noble Baroness or noble Lord concerned. The noble Baroness, Lady Stedman-Scott, and the noble Lord, Lord Davies of Brixton, mentioned the issues around pension investment reform. The Government’s reforms to pensions are designed to improve outcomes for savers and support UK economic growth. Larger consolidated pension schemes can access a broader range of investments, including private markets, which offer the potential for higher long-term returns.
The Mansion House accord is a voluntary industry-led commitment to invest in these assets, and the Government have taken forward a reserve power in the pensions Bill to act as a backstop. Of course, this does not mean we are complacent. The reserve power includes robust safeguards, including a financial detriment test, a sunset clause and a requirement to consult and publish an impact report before use.
The noble Baroness, Lady Moyo, mentioned the capital markets issues. Britain’s capital markets are deep and liquid, with more capital raised in the year to date than the next three European exchanges combined. The Government are not complacent and have taken forward an ambitious programme of reforms to reinvigorate our capital markets, including a once-in-a-generation rewrite of the listings rules.
The noble Lord, Lord Davies of Brixton, mentioned private market valuations. Alongside the Treasury, the FPC and regulators are working to improve transparency in valuation practices and understand leverage and counterparty exposures. Internationally, the Bank, the FCA and the Treasury are collaborating with the Financial Stability Board better to understand cross-border risks in private markets.
The noble Lords, Lord Davies and Lord Leigh, talked about reassurance on regulations. The Government are reviewing and reforming the regulatory framework underpinning the sector, recognising the key role that it plays in growth for the UK. This exercise is not about cutting back regulations at any cost but about tailoring the requirements to the UK market to boost competitiveness and encourage growth. Existing regulations help to ensure that private companies act responsibly, balancing the interests of investors with those of the wider economy, society and the environment. There are a number of requirements imposed through regulations, including the Companies Act, ensuring that private market firms act in a responsible manner.
The noble Baroness, Lady Bennett, asked several questions and raised issues around, for example, social care. The noble Baroness was right to point out that private equity investment has increased in adult social care, with many services now provided by private companies. Under the Care Act 2014, local authorities must shape local care markets to meet community needs, while the Care Quality Commission oversees care standards and operates a market oversight scheme to mitigate risks from provider failures. The Government plan to build a national care service and have commissioned the noble Baroness, Lady Casey, to recommend reforms, including how services should be organised and funded to ensure fair, affordable and high-quality adult social care for current and future needs.
The Government are committed to delivering children’s social care reform in addition to providing over £500 million to refurbish and expand children’s homes and foster care placements. The Children’s Wellbeing and Schools Bill will improve the safeguarding of children.
The noble Lord, Lord Sikka, mentioned asset-stripping and other issues. Private equity can play a constructive role in supporting businesses, but it remains important that such investment is carried out with transparency and responsible ownership. Incidents of value extraction can of course occur, which can be detrimental to creditors, employees and wider stakeholders. That is why there is regulation in place to address this issue. For example, under the Companies Act, directors of all companies are required to have regard in their decision-making to the long term and to impact of the companies’ operations on the community, and they are required to report against these requirements.
We welcome the CMA’s provisional decision report on veterinary services and continue to engage with the CMA ahead of the publication of the final report, which is expected in the spring of next year. As for the water companies, the Government are fixing the water sector’s broken regulatory system. Sir Jon Cunliffe published his recommendations for water sector reform in the summer and the Government have already responded to a number of them.
Private equity is a vital sector for the economy. There is a lot of good in it and probably some other not-so-good issues with it as well, but the Government are looking at all that and remain committed to fostering a dynamic investment environment that supports sustainable growth, innovation and job creation across the UK. We will continue to monitor developments in private markets and ensure that our regulatory framework evolves to meet emerging challenges while maintaining investor confidence and public trust. I again thank all noble Lords who have taken part.
Plastic Recycling Targets
Baroness Bakewell of Hardington Mandeville
To ask His Majesty’s Government what progress they have made in achieving plastic recycling targets.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, since the resources and waste strategy of 2018 and the 25-year environment plan of January 2019, plastic recycling has moved up the political and public agenda—but not as quickly as it might, despite the sterling efforts of David Attenborough. I am grateful to the Green Alliance for its briefing.
Over the intervening years, the banning of some plastic-containing products has helped. However, this is a small piece of the problem. Previous television coverage of UK plastic export strategy showed waste being sent abroad on barges to Turkey, with children playing among toxic waste. This created public outcry, but the practice is ongoing. Earlier this year, an investigation found that 200 young people had died in Turkey’s recycling industry. The EU is introducing a total ban on exporting waste to non-OECD countries up to 2029 and strict limits on plastic exports to other OECD countries. Meanwhile, the UK gaily continues to export waste plastics.
Figures from July show that plastic packaging had decreased from 2.6 million tonnes in 2012 to 2.3 million tonnes in 2024—a small reduction. Figures achieved for recycling increased from 25.2% in 2012 to 51% in 2025—a better, but misleading, figure. In April 2024, a survey conducted by Greenpeace and Everyday Plastic estimated that UK households discard approximately 1.7 billion pieces of plastic weekly, which is around 60 pieces per household. We are up to our necks in plastic. Snack packaging and fruit and vegetable packaging are the items most responsible. Some 58% of plastic packaging thrown away was being incinerated, an increase from 46% in 2022.
This is nothing to be proud of. Raising awareness with the public is crucial to future success in reducing discarded plastic in our environment. Analysis published in October 2023 by WRAP, a brilliant organisation dedicated to reducing plastic waste, noted that local authority collection rates for plastic were improving, with 6.1 million tonnes of plastic packaging collected for recycling in 2021, a 4% increase on the previous year. I stress that local authority plastic waste collection is not the same as plastic waste recycling; they are two very different things.
Figures from 2019 indicate that 16.6% of the material that sorting facilities dealt with was contaminated. This means it was unsuitable for recycling. Local authorities up and down the country have diverse ways of tackling their responsibilities towards recycling. Having come from Somerset, where there was a combined waste strategy between the county and district—now a unitary council—with separated waste collections covering all recyclable products, I am aware of what is achievable. I now live in Hampshire, where all recyclable products except glass are collected together. This leads to contamination and poor recycling rates.
Throughout the country, there is a series of large and small recycling and processing plants to deal with waste, especially plastic. These recycling plants transform waste plastic into PET for future use in the soft drinks industry. However, partly due to the inferior quality of the recycling materials available to the plants, the import of cheaper virgin plastic and rising electricity costs, 21 of these reprocessing plants have shut down over the past two years. Some of these plants might have stayed open if the recyclable plastic collected had not been contaminated.
I referred earlier to the export of plastics for other countries to deal with. The UK remains reliant on exporting its plastic recycling waste, with 47% of accredited UK recycled plastic packaging reported as being exported; Turkey was the largest destination for these exports. This loophole in the legislation allows the export of waste to be included in recycling figures. This is a smoke and mirrors exercise. Neither the Government nor local authorities have recycled their plastics if all they have done is bundle them up and send them abroad. This is outrageous. We have no way of knowing precisely what is happening to it. Is it being discarded close to waterways or coastlines, where it will damage the environment of aquatic animals and fish? Can the Minister say whether the Government have a strategy to move towards preventing the export of recyclable plastic waste? If not, why not? Exporting plastic waste for recycling when we have adequate recycling plants in the UK that could process this waste is extraordinary, to say the least.
The cost of virgin plastic needs to be comparable with or higher than that of recycled plastic. Without this, our recycling is not competitive. Cheap virgin plastic imports undercut demand. Sadly, the UK market is currently flooded with cheap imports of virgin plastic from China, Africa and the Middle East. For recycling plants to thrive, they need two things: first, a supply of high-quality used plastic to recycle; and, secondly, electricity to be affordable. The Government could do more by placing tariffs on imported cheap virgin plastic, making UK recycled plastic affordable. The plastic packaging tax, currently set at £223.69 per tonne, has increased demand for recycled plastic. However, it takes no account of the origin of the plastic and offers our domestic recyclers only weak support. It reduces the price gap between virgin and recycled plastic but does not close the gap altogether; the system needs to be geared towards the home market.
I turn briefly to the deposit return scheme for recycled plastic bottles. It was first mooted in 2017 but we are now told that it will be rolled out in 2027; that is 10 years to implement, which is unacceptable. Can the Minister reassure us that the target of 2027 for a DRS will be met? To sort the problems of plastic waste, we need a strategy to include, but not be limited to, increasing the plastic packaging tax; banning the export of plastic waste; and swift implementation of a deposit return scheme.
I look forward to a positive response from the Minister on dealing with waste and reducing plastic pollution. This is not a “nice to do”; it is absolutely essential if we are to reduce plastic pollution.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Baroness, Lady Bakewell of Hardington Mandeville. I thank her for securing this debate and setting out many important points.
As the noble Baroness said, we are up to our necks in plastic. In 2020 the previous Government banned plastic straws, stirrers, spoons and cotton buds, but that is nothing to be proud of—it is like trying to use a toothbrush to clean up the planet. It is easy to hold the previous Government at fault for the failure to progress plastic recycling, whether on the slow progress on reducing the use of plastic packaging, on optimising the design of packaging for recycling, on domestic collection, on domestic recycling provision or on the failure to regulate the Wild West of exporting materials for so-called recycling. Indeed, I do hold the previous Government responsible. I meet so many people who ask, “What happened to the bottle deposit scheme?”. Quite a few still remember the £20,000 donation from the Wine and Spirit Trade Association to the Conservative Party just before it used the internal market Act to kill Scotland’s well-advanced scheme.
While this is a long story of regulatory failure—not to mention the underfunding of the local authorities that have to deal with the mess created by giant multinational companies profiting from the use of dangerously toxic, polluting materials—there is a more fundamental problem on which I want to focus. Plastics are a material that simply do not fit within the model of a circular economy, which is of course an absolute necessity if we are to live within the boundaries of this terribly fragile, terribly poisoned, planet.
Glass can be recycled indefinitely, steel can be recycled indefinitely, aluminium can be recycled indefinitely and even paper can be recycled five to seven times. Plastic, however, can effectively only be downcycled. Even to get to that, plastics have to be sorted by colour and type, washed and shredded up. These processes burn large amounts of fossil fuel, produce waste—including large quantities of the microplastics and nanoplastics that are now polluting all our bodies—and contaminate water. Then they are most often turned into items of lesser value and quality; for example, plastic water bottles go to fleece jackets or carpet fibre. Why is that? It is because newly made plastic can have some 16,000 different chemicals added to it. Used plastic can have residues of pesticide, biocides, pharmaceuticals and other toxic chemicals, so when it is used for food purposes, it is usually mixed with virgin plastics to dilute the toxicity.
I point noble Lords to a study in the Journal of Hazardous Materials in 2022, which showed how antimony and well-known endocrine-disrupting chemicals, notably bisphenol A, migrate out of particularly recycled PET drink bottles into the products that they contain. We might want to think about how long even those downcycling possibilities will be around. As our understanding of the human and environmental health threat posed by microplastics and nanoplastics grows, who will want to wear a jacket shedding plastics into the air around their nose and mouth? Who will want to have their baby crawling over a plastic carpet, breathing in all the toxins and fibres that it is producing?
That is on the individual scale; to go back to the planetary scale, we have choked the planet with more than 10 billion tonnes of toxic plastic. About 460 million tonnes of plastic are being produced annually, and the fossil fuel merchants are aiming to treble that by 2050, as the market for their products as a fuel fast fades away. I therefore ask the Minister: what are the Government going to do, domestically and diplomatically, to stop this taking of carbon out of the very long-term storage in which nature put it and eventually, inevitably, pumping it into our already overheated air? This is something that has only been magnified by the new wheeze of so-called “advanced recycling”—sometimes called chemical recycling. There is nothing advanced about using heat or chemicals to melt down plastic to downcycle it into petrochemical products that are very likely to be burned as more dirty fossil fuel energy.
It is time to focus on the producers of this toxic material, and I would ask the Government to do so. The noble Baroness, Lady Bakewell, spoke about educating consumers but, very often, consumers have no escape but to buy items in plastic—and that is the responsibility of the producers and retailers, not the consumers. I note a report from the Center for Climate Integrity from 2024, which lists the number of lies from plastic companies over decades, claiming that their products are recyclable and not harmful.
I finish by looking at both ends of the plastic journey. Two years ago, a train derailment in East Palestine, Ohio, highlighted the damage done by just one of the many toxic materials that go into making plastics—generally in poorer communities. At the other end, as the noble Baroness, Lady Bakewell, said, it is going to global South countries where people are being poisoned.
When we look at the waste pyramid, recycling is a very poor solution. It is the third choice; it should be used only when reducing the use of material or reusing products has proved absolutely impossible, not when it is slightly less convenient or slightly less profitable—when it is simply not possible. That means that the vast majority of the plastic products on our retail shelves today should not be there. We should not be looking to recycle them; we should be looking to get rid of them. What are the Government going to do to get us to that crucial goal?
Baroness Miller of Chilthorne Domer (LD)
My Lords, it is a pleasure to follow the noble Baroness, Lady Bennett of Manor Castle. I congratulate my noble friend Lady Bakewell of Hardington Mandeville for securing this debate and for highlighting in her very powerful speech the incredibly detrimental effects of plastic in the environment. As she says, successive UK Governments have failed to grasp the plastics issue with the urgency it actually needs.
However, I will start my intervention today with encouragement to the Government, and some congratulations at least for their ongoing efforts as regards the UN global plastics treaty. The Minister will know that the UN global plastics treaty has been in negotiations since 2022, and that it would be a game-changer. It is the first ever attempt to create a dedicated, legally binding plastics treaty.
In March 2022, the UN Environment Assembly agreed to develop the legally binding global agreement on plastics, covering the full life cycle, from production to disposal. The problem is that the negotiations are ongoing. The treaty is expected to include targets on ocean plastic pollution, microplastics, product standards and the reduction of single-use plastics, but whether it is adopted depends on overcoming the major sticking points. I would be very grateful if the Minister could say where he understands the negotiations are now.
The Minister in the other place, Emma Hardy, said:
“I’m hugely disappointed that an agreement wasn’t reached, but am extremely proud of the way the UK has worked tirelessly until the end”,
of that round of negotiations,
“to seek an ambitious and effective treaty”.
My question to the Minister is: what efforts is the UK making now to ensure those negotiations are still continuing? Would he agree that it is actually the fossil fuel producers that did not want to see that treaty succeed? This is for the very reasons that the noble Baroness, Lady Bennett, alluded to—as fuel is phased out for transport use, they are finding other markets for their product. Until we can overcome that, the plastics treaty, which is so crucial, is not going to move forward.
Given this opportunity today, I must mention a plastics problem closer to our shores that really requires the Government’s urgent attention and some decisions from Ministers: the problem highlighted by the recent bio-beads spill at Camber Sands. However, that is by no means is the first disaster of this nature; I recall an incident near Truro, in Cornwall, some years ago. I declare an interest as someone who uses the beaches in the south-west a great deal, as do my family, and we enjoy them.
The bio-beads in question facilitate sewage treatment. It is perhaps ironic that the very things that treat sewage have ended up polluting the sea and the beaches to such a terrible degree. Surfers Against Sewage, to whom I pay tribute for their ongoing campaigning on all sorts of issues, explained the bio-beads issue. Once released, bio-beads behaved like any other microplastic and can be ingested by fish, seabirds and shellfish. They enter the food chain, carry harmful pollutants on their surface and pose health risks to humans.
There are modern alternatives, such as activated sludge systems. I am not going to go into those now, but the fact is that those systems have not been universally adopted. I understand that there are big costs implications. For example, South West Water still has eight plants that use bio-beads. Understandably, the Government have encouraged the water companies to focus on sewage overflows, which have been polluting our rivers and seas so harmfully, but the issue of how that sewage is treated simply has not been addressed. It is about not just the capacity of the sewage system but the sort of system that it is. That needs to be given more government attention.
In April 2025, the European Parliament, the European Council and the European Commission reached agreement on a long-awaited EU regulation to prevent plastic pellet losses into the environment, because, of course, they are a major source of microplastics pollution. That would address not only bio-beads but nurdles, which are the building blocks of plastic. That is how plastic gets shipped around before it gets made into whatever it is going to be made into. There have been some horrendous spills of nurdles at sea.
The EU has passed this regulation but, post-Brexit, we in the UK will not benefit from it. My question to the Minister is: what plans do the Government have to address nurdles and bio-beads? Will they introduce some similar regulation here so that these plastics are no longer wreaking havoc in our oceans?
Lord Blencathra (Con)
My Lords, I am grateful to the noble Baronesses who have taken part in today’s debate. It is important that we reflect on both the importance of the recycling targets and the current situation we find ourselves in. Only if we reflect on both will we be able to reach our targets sustainably.
This debate was founded on Conservative principles and initiatives—principally, recycling targets, waste reduction, and our pragmatic and conservatist goals. Practically, the Conservatives have a good track record of creating and supporting recycling initiatives. In 2018, the Government of my noble friend Lady May of Maidenhead began funding the UK Plastics Pact, which was created with the aim of eliminating problematic or unnecessary single-use plastic packaging. UK Plastics Pact members now cover the entire UK plastics value chain and are part of an initiative being continued by the current Government. I congratulate them on that.
In 2020, we implemented a single-use plastic ban. The result of that is that our beaches have seen significant reductions in littering, plastic stemmed cotton buds dropped out of the UK’s top 10 most littered items, and we reached our lowest littering level in 28 years. That is tangible evidence of progress being made in achieving recycling targets. I say to the noble Baroness, Lady Bennett, that I would not scoff at these little things—they had a big impact. Getting rid of millions of those little plastic buds was a rather good success.
Last year, the Government set a statutory target to ensure that the total mass of residual waste does not exceed 287 kilograms per person by 2042—residual waste that contains plastic and is sent to landfill or incinerators. This was accompanied by a plastic-specific residual municipal waste target for 2027. If achieved, this would mark a 50% decrease from 2019.
In addition, we introduced the simpler recycling scheme in May last year, requiring firms to separate different types of recycling. The current Government saw the advantages of our approach and have continued and even extended the proposal to microfirms.
The previous Conservative Government were committed to reducing plastic waste within the bounds of our capabilities. We set target upon target; we matched them with regulations and produced guidance to make sure they were achievable. I am glad that the current Government have continued to build on Conservative targets and initiative. I am less glad, however, that they have not based their approach on the same Conservative principles of acting within our means. At the end of the previous Government, unemployment was below 5%. Inflation was at the target of 2%. The fact that the economy was relatively prosperous, compared with the current day, enabled us to take the pragmatic approach that the Government now attempt to copy.
Unfortunately, the Government do not have the luxury of a Conservative-run economy. Regulations such as the simpler recycling scheme work when businesses are doing well. They work when margins are wide enough for businesses to afford the extra costs that come with government intervention. They do not work when the number of payrolled employees is falling by 20,000 a month, as is currently happening, and when businesses—especially small businesses—are hammered with tax increases that they inevitably must pass on to employees or consumers to stay afloat.
I regret to say that it is therefore not the time to implement a host of new regulations that burden businesses with new costs. Extending our simpler recycling scheme is welcome in theory but should be opposed in practice. Not only will it impose an extra administrative burden on microfirms at a time when they can least afford it, but it is overly cumbersome. One misplaced bit of waste and an entire batch of recycling is ruined. That is not efficient enough for a system that aims to eliminate unnecessary plastics. In fact, the Confederation of Paper Industries says that it takes only one dirty pizza box in a whole bin to ruin a whole binload of paper recycling. We have already heard from the noble Baronesses that similarly contaminated plastic bottles can ruin a whole consignment of plastic.
The noble Baroness, Lady Bakewell of Hardington Mandeville, voiced concerns about the speed of implementation. She wants it to go faster. My concern is that the Government are seeking to implement things too quickly. UKHospitality and the British Soft Drinks Association have voiced their concerns about the scale and speed of implementation. They are worried it will be another anti-growth measure brought in by the Government.
It has taken Germany 30 years to slowly build up its deposit return scheme. It was only two years ago, after being at it for 28 years, that Germany introduced glass to it. The current Government are trying to do in three years what it took Germany 30 years to do. I have no criticism of the Government if they must go past their 2027 deadline, because they are trying to do too much too quickly, which will be damaging to industry.
We know that those who create growth and the conditions to implement these green initiatives are those who create jobs and enterprise. They need the right regulations around them—those that do not overburden them and allow them to comply with the plastic regulations that we all want to implement. Individual regulations seem to have merit, but simpler recycling, deposit return and EPR responsibilities, if collectively implemented at the same time, will impose too many regulations at too high a cost. Individually, they are all good things but introducing them all together could be damaging.
The UN treaty and a question about the Government’s position on it have been raised. I am afraid that we will never get a unanimous United Nations treaty on this, and it is not necessary. It will be blocked by the oil-producing countries. I understand that about 130 user countries, including us and others, are looking to reduce plastic waste. The Government should continue to ignore attempts to create a United Nations treaty signed by all and instead work with those 130 countries that want to reduce plastic waste. It is in our power to do so. This is rather like the United States complaining, “Could South America please stop sending all the drugs to the States that our people are using?”, instead of saying to Americans, “Stop using drugs and there’ll be no market for South America to send them to”. If we, the user countries of plastic, use less plastic products, then so what if Saudi Arabia and others want to pump out more oil? They will have no one to sell it to—or they will not be able to sell as much. There is certain logic in what I suggest.
Keeping within our plastic targets is a noble goal and should be adhered to as much as we can, but it must not come at the expense of business and enterprise. I am grateful that the Government intend to continue this goal, but I hope they do so prudently and carefully. I look forward to hearing what reforms and adjustments the Government intend to make to reflect the current economic landscape.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, I am grateful for the opportunity to address this important question on the progress that His Majesty’s Government have made towards achieving our plastic recycling targets. I am also grateful to all those who have contributed to the debate, particularly the noble Baroness, Lady Bakewell of Hardington Mandeville, for bringing the debate in the first place.
The Government inherited a situation, as was reflected in the noble Baroness’s contribution, whereby the waste from household recycling rates had stagnated at around 43% to 45% since 2015. We are fully committed to reversing this trend, and building a sustainable future where resources are valued, waste is minimised, and our economy thrives. I am pleased to report significant strides forward through a comprehensive programme of reform. It is worth noting that in 2023 UK plastic recycling rates were 52.5%, which is a good 10.5% above the EU average. We should criticise, therefore, where there are grounds for criticism, but we should also praise our efforts. Collectively, we have made progress.
From January this year, the extended producer responsibility for packaging, or pEPR, came into force. This is a landmark reform, and shifts responsibility for managing packaging waste from local taxpayers to the businesses that produce and use packaging. Producers will now fund the full net cost, approximately £1.4 billion annually across the UK, creating powerful incentives to design packaging that is recyclable and reusable. To improve recycling outcomes across the UK, pEPR will bring in over a billion pounds per year in revenue. That is something that we should celebrate. From the second year of the scheme, we are introducing fee modulation to reward producers using recyclable packaging with lower fees, while charging more for hard-to-recycle packaging. This “red, amber, green” system will drive innovation in packaging design and materials selection, and will drive better behaviour as well.
We have set ambitious material-specific recycling targets through to 2030. For plastic packaging, we aim to achieve 59% recycling by 2027, rising to 65% by 2030: this is a substantial increase from the 43.8% achieved in 2018, and significantly beyond the 55% target that the EU has set for 2030: we expect to meet or exceed that this year.
On 31 March this year, Simpler Recycling came into effect for workplaces with 10 or more employees across England, ensuring consistency in what can be recycled. From 31 March next year, local authorities will collect the same core recyclable waste streams from all households, including glass, metal, plastic, paper and card, and food waste.
By standardising collections, we will reduce contamination—mentioned by the noble Baroness, Lady Bakewell, in her contribution—as well as improve material quality, and provide the recycling industry with confidence to invest. This represents a transformative step forward. The noble Baroness talked about the export of plastic waste, and we recognise that there are a number of factors that have caused issues in the UK recycling sector. We feel that the shift to pEPR will help transform this, as I have already set out. The noble Baroness blamed contamination, but probably the cheap price of virgin plastic is a greater factor in that move away than contamination alone.
On export of plastic waste specifically—following the noble Baroness’s question—I hope that I can provide reassurance that waste exports from the UK are tightly regulated, and businesses must take all necessary steps to ensure that waste exported from the UK is managed in an environmentally sound way. The Environment Agency, as the enforcement body in England, works with our international partners to enforce compliance.
Recognising the particular challenge of flexible plastics, currently collected by fewer than 15% of English local authorities, we are requiring kerbside plastic-film collections from all households and workplaces by 31 March 2027. We have also provided financial support for the multimillion-pound FlexCollect project, which funded local authorities to roll out kerbside plastic film collection trials. This is an ambitious target, but no doubt we must meet it, if we are going to make progress on plastic recycling.
We have also worked with the Food Standards Agency to confirm that it will act as the competent authority for England, Wales and Northern Ireland—working with Food Standards Scotland—to establish an auditing programme for recycled plastic materials in contact with food, further upholding high-quality UK-recycled plastics.
In January 2025, we brought forward legislation to introduce a deposit return scheme for drinks containers in October 2027. The noble Baroness, Lady Bakewell of Hardington Mandeville, asked whether the scheme is on track; it will come into fruition on that date. A new organisation called UK Deposit Management Organisation Ltd will run the scheme. Once the DRS is introduced, UK DMO will be required to collect at least 90% by year 3 of the scheme. International deposit return schemes have seen recycling rates increase to over 95%; this will transform the recycling of plastic bottles while reducing litter.
I recognise what the noble Lord, Lord Blencathra, said about the ambition of the scheme and the length of time to make the progress we expect—I think he cited Germany. There is greater awareness of the need to recycle plastic bottles, and younger generations are more responsible on this. We are learning from the experience of Germany and others to ensure that we can meet the ambitious targets of this scheme in time—so watch this space.
These reforms are already stimulating investment. In February, the Environmental Services Association wrote to the Exchequer Secretary to the Treasury outlining the certainty that pEPR has provided. As a result, its members plan to invest over £10 billion to improve recycling infrastructure over the next decade, creating over 25,000 jobs across the country. This is good news for that industry and for the economy more generally; these are homegrown, green jobs that will provide investment in communities and our environment.
The plastic packaging tax, set at £210.82 per tonne for packaging containing less than 30% recycled content, creates strong incentives for using recycled materials. At last year’s Budget, we announced support for a mass balance approach for chemically recycled plastic, recognising emerging technologies that can recycle a wider range of plastics. These measures form part of our broader vision for a circular economy. Our forthcoming plan for delivering a circular economy in England represents a fundamental reimagining of how we design, produce, use and recover materials right across the economy, including in the plastics and chemicals sector. I note the tremendous progress achieved through the UK Plastics Pact, supported by the Government and led by WRAP, which the noble Baroness, Lady Bakewell, mentioned. Since 2018, member organisations have increased average recycled content in packaging from 8.5% to 22% while reducing problematic single-use items by 55% by weight.
The noble Baroness, Lady Bennett of Manor Castle, spent some time on the subject of reuse. We are committed to transitioning to a circular economy, in which reusable packaging plays a vital part. There is already a strong incentive for reusable packaging through pEPR, as producers pay the disposal cost fees only the first time that reusable packaging is placed on the market. Each reuse cycle avoids additional charges, which creates a strong incentive for businesses to adopt reusable systems. At the end of life, reusable packaging can be offset against fees if collected and sent for recycling by the producer, which further reduces pEPR fees.
Baroness Bennett of Manor Castle (GP)
Before the noble Lord moves on, I would understand if he wanted to write to me on this, but can he indicate what progress is being made at scale on reusables?
Lord Katz (Lab)
I was going to give some examples of schemes for reusables, although I might have to write on the details of the metrics. A good example of a reusable plastic cups scheme already operating in a closed environment setting is the one launched in 2023 at Blenheim Palace in Oxfordshire, operated by Re-universe. Noble Lords may be familiar with it. A customer pays a deposit of £2 per cup for takeaway drinks and, when the cups are returned to designated bins—it is a vending machine-style facility—the deposit is refunded to the customer. The scheme has saved 400,000 single-use coffee cups from disposal since it was launched in 2023. Using these cups just three times renders them carbon negative compared to single-use alternatives. It has saved Blenheim Palace £45,000 annually by eliminating the need to purchase single-use cups.
More anecdotally, when I went to visit my club—Tottenham Hotspur—a couple of weekends ago, it was using a reusable cup scheme. Drinks are given out in plastic cups which are returned and can be washed and reused. It saves money and is good for the planet.
I have run over a little, but I shall endeavour to answer a couple of outstanding questions from the noble Baroness, Lady Miller, and the noble Lord, Lord Blencathra, on the global plastics treaty. Although the meeting to discuss the treaty did not result in agreement on a treaty, the UK joined more than 80 countries in making clear the weight of support for an ambitious and effective treaty. The UK was one of 100 countries to support the global target to reduce the production of primary plastic polymers to sustainable numbers. Of course, the UK will continue to work with its partners in the High Ambition Coalition and other countries to reach an ambitious agreement at the next negotiating session.
Lord Blencathra (Con)
I neglected to say that I should congratulate the Defra officials—that is, the British team, under both the previous Government and this Government—on the superb job they have been doing on the UN treaty. We are regarded as one of the finest advocates for reducing plastic use, and that needs to be put on the record. We did a good job. The fact that we do not have a treaty is not the fault of any British Government or Defra officials.
Lord Katz (Lab)
I am grateful to the noble Lord for that; he has pre-empted my vote of thanks to the negotiating teams. I am glad about, and welcome, his recognition of our intent, the quality of the people involved and the thought we put into the negotiation process.
The noble Baroness, Lady Miller, touched on the issue of Camber Sands and bio-bead spills. This was obviously an awful event. As somebody who enjoys the natural environment of the south coast’s beaches as much as anyone, I thought it terrible to see the impact of this spill. The Government have supported industry-led initiatives such as Operation Clean Sweep to promote good practice in pellet loss prevention.
I cannot speak in more detail about the different kinds of sewage processing that the noble Baroness mentioned. If I recall correctly, a record level of investment from the water companies—around £100 billion—has been secured by Ofwat for the next period. That is exactly the sort of investment, in not just pipes but processing sewage, that will lead to the transition we want to see away from bio-beads and towards sludge.
We inherited years of underinvestment in recycling infrastructure, but the foundations are now firmly in place. Through simpler recycling, extending producer responsibility for packaging, the deposit return scheme and the plastic packaging tax, we have created a comprehensive framework that will drive substantial increases in plastic recycling rates while stimulating investment, creating jobs and supporting our transition to a circular economy. We are committed to ending the throwaway society, delivering on our plan for change and ensuring that Britain leads the world in sustainable resource management.
Litter on Canal Towpaths
Lord Evans of Rainow
To ask His Majesty’s Government what assessment they have made of the impact that litter on canal towpaths owned and maintained by the Canal and River Trust is having on urban communities.
Lord Evans of Rainow (Con)
My Lords, it is a pleasure to open this important debate on an issue that has caused concern for canal users up and down the country. Outdoor recreation is essential for people’s well-being and health. We want more people to get out and about and the tow-paths are fantastic open spaces. Sadly, this summer, many of our tow-paths looked like Birmingham during the bin strike, discouraging people from using them for outdoor recreation. We need to change.
Earlier this year, campaigners began to speak out about the appalling amount of litter on our canal tow-paths. The Cleaner Canals Campaign has been documenting this growing problem on social media. Thanks to its efforts, the media has reported on the problem, with stories appearing on BBC News and in the Sunday Times, the Islington Tribute and the Prime Minister’s own local newspaper, the Camden New Journal. The photographic evidence shows that coffee cups, pizza boxes, Deliveroo takeaway packaging and beer cans have been piling up on the tow-path all summer. This is because people living in the centre of our cities are using our canal tow-paths as recreational spaces and there are no bins.
Residents in Stockton-on-Tees, Hayes, Islington, Manchester and even the Prime Minister’s own constituency of Camden have all raised litter as a huge problem. This is clearly a national issue. I live in Macclesfield. The principal engineer for the canal in my own area, built in 1831, was Thomas Telford. The canal is a great resource for walkers, runners and boaters, located on the edge of the Peak District. Historically, it transported coal, raw cotton, silk and finished goods into Manchester and down to the Midlands along the Grand Union Canal. What has connected Macclesfield to the world is now a vital outdoor space for local people. I use it regularly for marathon training. It is an idyllic and beautiful part of the country.
Until two years ago, the Canal & River Trust, which manages a number of our navigable canal tow-paths in England and Wales, provided bins all along our tow-paths, so that canal users could dispose of their litter responsibly. This is a question of personal responsibility, but it is also incumbent on the taxpayer-funded Canal & River Trust to maintain bins so that people can do the right thing and responsibly dispose of their litter. The trust, which has just welcomed Campbell Robb as its new chairman, says that it has saved £500,000 annually by removing the bins. Additionally, it has claimed that removing the bins has not caused an increase in litter. The evidence gathered by campaigners is clear: litter is a huge problem on urban tow-paths. In urban areas, the Canal & River Trust lets business premises to cafés that operate on the tow-path. Much of the litter that we see is an externality of business activities that directly benefit the trust.
It is important to remember that the trust has a statutory responsibility to manage litter on the tow-paths, as Ministers have confirmed in previous Answers to Written Questions. The background to the trust’s decision to cut bin services is its claim that it does not have the finances to maintain the bins. It is not only cutting bin services but campaigning for additional taxpayer funding from government. However, the £500,000 that the trust says that it has saved is just 1% of the £50 million that it receives from the taxpayer. The amount that it saved from removing the bins across London and the south-east was £250,000. At the same time, the Canal & River Trust’s latest annual report revealed that pay for its executive team has increased by £300,000 since the bins were removed. The CEO’s pay is now over £200,000 a year.
This is the reality. The Canal & River Trust is cutting vital public services while increasing pay for the top team. We must not forget that this is a taxpayer-funded body that receives over £15 million a year. Many people would be shocked by those numbers. What can the Canal & River Trust do? It can bring back our bins. It can start engaging properly with the many volunteers who take time out of their day to do what the trust is legally responsible for—tackling litter. It can also reassess its priorities, putting public services and not executive pay at the top of the list.
Noble Lords may be asking what this has to do with the Government. The Canal & River Trust is not an arm of government, but it does have statutory duties and Ministers should hold it to account for its actions. Can the Minister say what conversations they have had with the new CEO of the Canal & River Trust, Campbell Robb? Has the department raised with him the issue of litter on tow-paths, and what powers does it have to monitor the trust’s performance against any statutory duties? I invite the Minister to tackle this head-on in discussions with the trust to see what can be done to bring back the bins.
In closing, I quote Elena Horcajo who, before going to work, volunteers to pick up litter on our tow-paths to make canals cleaner. In Charlotte Ivers’s excellent article in the Sunday Times, Elena said:
“I’ve spoken to absolutely everybody to find a way to fix this issue … I see the Canal & River Trust doing absolutely nothing … Your whole job is to take care of the canal, so show that you care for the canal”.
We all, especially the Canal & River Trust, have a duty to care for our canals. I hope the Minister will help campaigners like Elena to get this issue resolved.
Viscount Trenchard (Con)
My Lords, I congratulate my noble friend Lord Evans of Rainow on his steadfast support of this important issue and for obtaining this debate today. I first became aware of the growing concern about the amount of litter on canal tow-paths when my noble friend tabled his amendment to the Private Member’s Bill from the noble Lord, Lord Krebs, earlier this year. I agreed with him then, and I share his view that the removal of the litter bins by the Canal & River Trust is hugely regrettable.
We have over 2,000 miles of navigable canals in England and Wales, many of which have tow-paths that allow people to enjoy our beautiful countryside and admire our fascinating canal infrastructure heritage. In urban areas, the tow-path is an even more vital open space as an area where people can get a breath of fresh air in heavily built-up areas. The level of concern among the campaigners who are fighting for bins to be reinstated on canal tow-paths is testament to how much people value their local canal tow-paths.
My noble friend explained the problem clearly in his speech. It really is appalling that the Canal & River Trust is not listening to the concerned campaigners across the country who want the bins put back. I simply cannot understand why the trust is refusing to do the right thing and reverse its decision on this. The fact that campaigners have managed to get the media’s attention, as they have over the past year, shows that this a genuine problem.
My noble friend has spoken about our canals being an eyesore and that piles of litter will discourage people from using our tow-paths. I will focus on the impact that litter on canal tow-paths has on the environment and wildlife. Beside every tow-path is a canal or river, and they are home to a whole host of wildlife, including coots, moorhens, ducks, cormorants and others. All these are negatively affected by litter. When people leave their food waste and plastic rubbish on the tow-path, the wildlife on our canals is bound to be at risk. Whether it is from getting entangled in plastic packaging or consuming dangerous items, litter is a threat to wildlife. The excellent House of Lords Library briefing for this debate, citing the Canal & River Trust itself, confirmed that,
“Plastic and other waste can be ingested by or entangle wildlife and contribute to habitat degradation. Accumulated litter can also reduce water quality and impact bank and reedbed conditions”.
What I cannot understand is, if the Canal & River Trust is aware of the harm that litter and plastic waste does, why has it removed the bins that enable canal users to dispose of their litter responsibly? It makes no sense. Will the Minister please take that point to the Canal & River Trust at the next meeting between Defra and the trust?
In the trust’s annual report for the year ending 31 March 2025 its chair, David Orr, highlighted the contribution of the past chief executive, who stepped down in July. He said:
“Richard’s contribution to the Canal & River Trust becoming an established and admired national charity has been phenomenal”.
In reality, it seems to me that the new chief executive, Campbell Robb, has quite a task ahead of him to restore the trust’s reputation, so damaged is it by its obstinate refusal to reverse its misguided decision to scrap the bins.
The annual report acknowledges that:
“As the nation’s largest canal charity, we benefited from just under three-quarters of a million volunteer hours, with volunteers playing an essential role in repairing and maintaining canals and helping us across nearly all aspects of its work”.
The report proudly boasts:
“In December 2024 we submitted our first Climate Adaptation Report, putting us amongst the major infrastructure providers reporting to government about managing climate risk”.
It also informs the reader:
“We commissioned the Energy Saving Trust to help develop a plan to transition our 400 work vehicles to electric power. The first 25 electrically powered vehicles will be purchased in 2025/26 when we’ll also start installing charging points”.
Does the Minister know how much the trust’s electric vehicles transition plan is going to cost? What is the average age of the vehicles being replaced?
Surely, if the trust is so rich that it can afford to purchase 25 new electric vehicles just to show how good it is at managing climate risk, it must have enough money to continue to provide bins on tow-paths—otherwise it seems to me that its management has a warped sense of priorities. Besides, the trust’s accounts reveal that it derives 23% of its revenues—that is, £52.6 million—from its Defra grant, and a further quarter from its boat licensing fees, which increased by 7.3% to £55 million in the year just ended.
I think I speak for all noble Lords in this debate in saying that we want to see clean canals and clean tow-paths on their banks, with healthy wildlife. That should be a shared ambition. Can the Minister say what consideration the Government have given to this issue? Have they considered taking a more direct approach to the trust to resolve it? Now that the trust has a new chief executive, the Government have a fresh opportunity to put pressure on it to crack down on litter, as its supporters and the wider public all expect it must do. We cannot allow this to go on year after year, with litter piling up on our tow-paths, especially in the summer months. Can the Minister please commit to taking some proper action, so that we do not have to come back again next year to discuss the same problem?
Lord Murray of Blidworth (Con)
My Lords, I shall not repeat at length the points so eloquently made by my noble friends Lord Evans and Lord Trenchard. I will, however, make one or two slightly different points.
As my noble friend Lord Trenchard has identified, litter by canals can have three principal impacts. The first are environmental—the plastic and other waste, as referred to by my noble friend. Secondly, there are the public health and safety risks that arise from the presence of waste, particularly biological waste, dog waste in particular, and those posed by debris building up in channels and drains, which can obstruct water flow and, in turn, damage canal infrastructure, which will probably cost a good deal to correct.
Thirdly, there are the further economic costs in relation to the disposal of litter, particularly litter that has got into the waterway itself. The Canal & River Trust estimates that the costs of dredging are £100 to £200 per cubic metre, depending on certain variables. It is undoubtedly true that the trust has removed a lot of bins, and it would probably say that it is not going to fit any new ones unless the local councils or others are going to pay to collect them. The trust would probably say that that is part of the funding squeeze it says it is experiencing. Avoiding new bins has been its practice for many years, although the policy of removing them is undoubtedly new. Trust staff rarely pick litter but, as has been observed, there is a ready body of willing volunteers who are vital to the administration of the canal network who help in many ways, including through picking litter, as has been identified by my noble friends.
I know that the Canal & River Trust is seeking to rationalise its estate and in particular to sell property that is not core to the waterways, to try to plug what it perceives to be a spending gap. The property that was transferred to the trust included a number of buildings that were some distance from the network. The obvious targets have already been sold, but there are still some more to be sold in relation to the canal network that may raise further money. It must be said that some of these properties are probably better cared for in private hands, because there is not money in the trust to maintain those properties.
So far, it is certainly the case that the trust has not sold any of the family silver of the canal network. However, the trust seems to have an effective investment team that is reinvesting the money for a return, and I suggest that funding should go towards the types of maintenance that we have heard about in the debate. It would certainly be a great shame if the trust felt it was necessary to mothball parts of the network in order to sustain those parts that run through urban areas.
Canals are a vital part of our national heritage and a much-loved outdoor recreational resource. Clean water, clean banks and clean tow-paths are a legitimate and reasonable expectation. Section 89 of the Environmental Protection Act 1990 places a statutory duty on relevant bodies to keep the land they are responsible for clear of litter and refuse. For canals in England and Wales, that duty falls primarily on the Canal & River Trust, and the Government should ensure that it is complying with those statutory obligations.
The Minister may be suffering from déjà vu because he made that very point himself in a debate on 13 June in Committee on the Environmental Targets (Public Authorities) Bill, and he was reminded in that debate of the same point having been made by his fellow Minister, the Parliamentary Under-Secretary at Defra, the noble Baroness, Lady Hayman, who also drew attention to the statutory obligation in relation to the clearing of litter. Can the Minister update us on what has gone on since 13 June in relation to communicating with the trust on actioning its statutory obligations? I suspect that the trust may say that the bins are being cut to save money, but that does not excuse its statutory obligation. Clearly, it should take steps to address this issue and ensure that the litter that we see, particularly in urban areas, is dealt with as swiftly as possible.
Lord Macpherson of Earl’s Court (CB)
My Lords, I will speak very briefly in the gap. First, I should mention that I, too, make regular use of canal tow-paths: I often walk along the Grand Union Canal, either through Camden and Islington or, mainly, from Boston Manor, through Osterley and down to the Thames in Brentford. My experience may be unusual, in the sense that I do not detect a huge amount of rubbish; certainly, in London, the trust seems to be doing rather a good job. I do worry about restoring bins. I think a lot of London boroughs have found that, the more bins you set out, the more people will put rubbish in and around them and thus create a real problem. I therefore have some sympathy for the trust in its endeavours.
Like others, though, I worry about funding. My recollection is that the last Labour Government had already decided to bring the British Waterways Board into co-operative ownership, and it was then the Conservative Government that introduced the trust. But—I speak as a former Treasury official—they did endow the trust with a reasonable amount of money, and it is still open to it to earn fees through effective management of marinas and so on. So, unusually for someone speaking in the House of Lords, I do not believe that throwing more money at the issue is the solution.
I do think that volunteers, as other noble Lords have mentioned, have a critical role to play. Is there anything the Government can do to encourage volunteering? Doing voluntary work around the canals is very rewarding; they are an amazing part of our country’s heritage. So, when the Minister replies, I hope to hear of his commitment to encourage volunteering in this space.
Lord Addington (LD)
My Lords, this is a debate where I think most people will have some input, because they have walked beside a waterway. We all know that, if you are going to walk beside a waterway as a leisure activity and then face piles of rubbish and, let us face it, dog excrement sitting in its lovely little plastic containers draped around the place, along with crisp packets and drink cans, that is not a pleasant experience. We have the Canal & River Trust, which is supposed to make us use the waterways, and, if they are not pleasant, you will not use them—so why is it there? Case closed.
However, is the primary duty to make sure these are navigable waterways or something we can access along the side? I hope the Minister will be able to clarify this. It seems to me that the only argument about this would be that we know we need it to keep the waterways open. Let us face it: bins are not as expensive as lock gates. They do not have the same implications for water management and flood prevention. You name it—there is a whole structure there that we have to manage properly and that the Canal & River Trust will have responsibility for, at least in part. So, to get the best out of this, we have to maintain the paths as something not only accessible but pleasant.
We then come to what the Government should do about this. They could try—I would not recommend it—to say, “Well, this just isn’t our job”. Well, it clearly is, or at least they have some influence there. What are we doing to make sure that access to this is maintained in a usable format for these purposes of recreation, so that it is safe and pleasant? Bins will be used and will occasionally overflow, and it will depend on the time of year you are out there, and on the structure and the access going around it—so there will be no “one size fits all”.
If the noble Lord has found a nice stretch of waterway, possibly we should all get the address. But I have been down once when it was a warm day, and a few people had sat down there, possibly with one of those barbecues or something—the bane of many people’s lives—and a few beer cans. “Is there a bin around here? Sod it, they can clear it up afterwards”. That happens. It will always happen. Any planning structure that does not take account of it is guaranteed to fail.
Can the Minister say what advice the Government are giving or what structure they are putting in place to try to counter this? If volunteers are needed, we know that people like volunteering for nice, big, positive tasks; an incredibly repetitious task tends to get less enthusiasm. What structure should there be for volunteers, and what will be their impact? Clearing a canal, taking out the water, is a big task. You can sit down and have a big celebration at the end. Emptying a bin every third day in the summer, when it is hot and you would rather not be there, is something that you can guarantee will not attract quite the same enthusiasm. What are we doing to make sure that this happens?
I shudder to say—many of my colleagues on my Benches would probably lynch me if I did—that local government should take charge, because it is a very stretched commodity at the moment. What is the interaction with local government to make sure that there is some support for activity taken by the Canal & River Trust? It is basically very simple: if you maintain these products, you will get something good out of it—something environmentally positive and a recreational facility. If you do not, you will have something that may become, if not totally clogged up with weeds with some water running through it, environmentally unpleasant and more difficult to maintain.
Can the Minister give us some idea of the conversations being had within government on how the various bits of government can make sure that this is addressed? If we have commercial activity beside the canal benefiting from it, what share of the heavy lifting on this mundane and irritating but persistent task are they required to do? What encouragement, and indeed use of the law, is there to make sure that they will do it? The is lots of law about collecting and not dumping litter, but it tends to be unenforced. Thus, it is ignored and the problem carries on. Do the Government have any strategies to make sure that this does not happen in the case of our canals and rivers?
I look forward to the Minister’s reply. I probably do not terribly envy this job, but the Government have a series of levers to make the various groups here take some action. It will be interesting to hear just how hard they are being pulled by the Government.
Lord Blencathra (Con)
My Lords, this has been an important and enjoyable debate. I congratulate my noble friend Lord Evans of Rainow on securing it. The fact that concerns have been raised in so many towns and cities across the country is demonstrative proof that there is a problem here that the Canal & River Trust must grasp. I pay tribute to my noble friend’s commitment in raising this issue. He has already tabled a significant number of Written Questions, raised this problem in Committee on the Private Member’s Bill from the noble Lord, Lord Krebs, and asked Oral Questions. His tenacity is to be applauded. I also congratulate my noble friends who have spoken strongly on this issue, and the noble Lord, Lord Addington, on his contribution—he was also spot on in this debate. This is rather a frightening week for me. On Monday and Wednesday, on the crime Bill, the noble Lord, Lord Clement-Jones, and I found ourselves in complete agreement on a number of issues, which we both found rather scary—and perhaps likely to be expelled from our parties for being in complete agreement. I am, however, also in complete agreement with what the noble Lord said today.
The Conservative Party has consistently taken a firm view on litter. In government, we launched the litter strategy for England and increased the maximum on-the-spot fines from £80 to £150 in 2018. Even before that—I think way back in 1992—I was appointed to a joint ministerial working group on litter. I do not think we achieved very much, as every Minister from every different department said, “It’s nothing to do with me; it’s their job to sort out the litter”. Nevertheless, we tried to tackle it way back in 1992.
Littering is, first and foremost, an issue of personal responsibility. It is utterly unacceptable that people feel that it is for someone else to clear up after them. Anyone who litters creates a problem that someone else has to come along and fix. It is a breach of the social contract. That is why we have tough laws, and we need punitive fines for this selfish and anti-social behaviour. That said, we all know that public bins are useful and essential. They provide ordinary people with the opportunity to do the right thing and dispose of their litter responsibly.
That is where I disagree with the noble Lord, Lord Macpherson of Earl’s Court. It is rather naive for organisations to say, “If we put out bins, people will use them. They will fill them up and they might overflow”. The whole point of having litter bins is that they will be used. There is a naive belief that if we do not have bins, people will take their litter home. People will say, “Oh my God, there’s no bin, I must take it all home with me”. That simply does not happen. In most cases, they will leave it behind. I am not sure whether it was the highways department or county councils—certainly in my own patch in Cumbria—that removed litter bins from laybys on A roads in the naive belief that, if we have no litter bins, lorry drivers and others will not dump their rubbish. That is absolute nonsense; laybys are stuffed full of litter.
I am a board member of a community interest company, CleanStreets, and we work hand in glove with Keep Britain Tidy, tackling cigarette litter on pavements. Over the past three years, we have had some considerable success, getting litter down by 18%. We spend a lot on research, and that shows that, in an area where there are smokers and no bins, the pavements are covered in cigarette litter. Believe it or not, if you provide bins, most cigarette users will use them. We also discovered that people do not like those posh bins, where you stub out your cigarette then poke it through the hole, because they feel that their hands will get dirty. They love a bucket full of sand where they chuck the litter. The point I am making is that if you provide bins, people generally will use them. If you do not provide bins, you will get excess litter.
On our pavements, we pay for the public service of having litter bins, but our tow-paths are different. They are a different story, but the principle remains the same. As my noble friend Lord Evans of Rainow told us, the Canal & River Trust receives more than £50 million of taxpayers’ money every year, so the public do pay for the services they receive from the trust. Does the Minister agree that taxpayers should not have those services cut, given that they are paying for them? I agree with my noble friend that many will be shocked to hear that executive pay at the Canal & River Trust is at hundreds of thousands of pounds since the bins were removed. That feels like a misalignment of priorities. Will the Minister tell the Committee his view of that statistic?
I read in a recent article in the Sunday Times that the Canal & River Trust spent £6.7 million on fundraising costs, while raising just £6.7 million in donations. It is probably the only charitable organisation with a net-zero fundraising policy. Have Ministers looked into the financial management of the Canal & River Trust?
As part of our Litter Strategy for England, we established the National Fly-Tipping Prevention Group, of which the Canal & River Trust is a member. Can the Minister please confirm when the group last met and what discussions Ministers in his department have had with the Canal & River Trust in connection with its membership of the group? Does he agree that it is incongruous that an organisation that is a member of the National Fly-Tipping Prevention Group has removed all the litter bins on their tow-paths? For complete transparency, I need to admit that, speaking three days ago on the Crime and Policing Bill, I condemned the terminology “fly-tipping” as too nice a term that diminishes the evil of what is currently happening with massive fly-tipping around the country.
Some of the facts we have heard over the course of this debate, from noble friends and the noble Lords, Lord Macpherson and Lord Addington, have highlighted the seriousness of the problem and the fact that the Canal & River Trust does not appear to be taking the action needed to fulfil its existing statutory duties. Again, I ask the Minister whether he feels that Ministers have sufficient powers to hold the Canal & River Trust to account for its actions. What steps can Ministers take to encourage or require the Canal & River Trust to restore bin provision on urban canal footpaths? If the Minister does not feel that Ministers have the powers necessary to ensure that bins are restored to canal tow-paths, can he commit to reviewing the status of the Canal & River Trust itself so that publicly elected officials can have some control over how the money is spent?
Outdoor space is a much-prized commodity in our ever-growing cities. We need outdoor spaces to be cared for properly so that everyone can enjoy them and rely on them, not least as excellent places to exercise and keep fit. I hope the Minister will listen carefully to everything my noble friend Lord Evans of Rainow has said and all the other comments from my noble friends and the noble Lord, Lord Addington, about the necessity of restoring these bins and keeping our tow-paths in clean and pristine condition.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, I am pleased to respond to this Question for Short Debate. I am grateful to all who spoke, particularly the noble Lord, Lord Evans of Rainow, and I join the noble Lord, Lord Blencathra, in paying tribute to his tenacity in pursuing this subject. As the noble Viscount, Lord Trenchard, noted, we all took part in the debate on the Private Member’s Bill on environmental targets. His passion for keeping the canal tow-paths as clean and litter-free as possible was clear then, and I am glad to see that it is as strong now as it was in June. It feels much longer ago than that.
Litter is, unfortunately, a perennial problem across our country. As we have heard clearly today, it has an adverse impact on people’s everyday lives. It spoils our urban space, our rural spaces and the beauty of our countryside, as well as bringing serious risks to our wildlife and, indeed, to public health. Although it is an ongoing problem, the Government are not standing still when it comes to addressing the root causes of litter. As I was saying in the previous debate, we are committed to reducing waste by transitioning towards a circular economy. We have convened a Circular Economy Taskforce of experts to help develop an action plan for England. To combat behaviours driving litter, we will be bringing forward statutory enforcement guidance on both littering and fly-tipping. Or, rather, I join the noble Lord, Lord Blencathra, in calling it—I have forgotten what he said—
Lord Blencathra (Con)
I have forgotten what terms I used on Monday or Wednesday this week. I did not call it fly-tipping. I honestly cannot remember; I could not find it when I was searching for it. It was “criminal waste disposal”, or something like that.
Lord Katz (Lab)
I am happy to join him in that sort of terminology or to call it environmental vandalism, which is a phrase I certainly used when responding to the noble Lord in that debate in the Chamber.
We are modernising the code of practice on litter and refuse in England, and refreshing best practice guidance on the powers available to local authorities, to force landowners and building owners to clear up their premises. That address in part the point from the noble Lord, Lord Addington, about involving local authorities.
The noble Lord, Lord Evans, has focused on the problem of litter on canal tow-paths, particularly those belonging to the Canal & River Trust. He gave examples of complaints, particularly from parts of London where littering has increased noticeably since the trust removed bins from its tow-paths in 2023. I am pleased that he cited my own local paper, the inestimable Camden New Journal. Like the noble Lord, Lord Macpherson, I walk stretches of Regent’s Canal in and around Camden. While I am not trying to evade the point of the debate that the noble Lord, Lord Evans, has brought, I also find that some stretches are no worse than they used to be in terms of litter, and some stretches under the Westway, around the Paddington area, have always been bestrewn with lots of fly-tipping. It is a problem. I observe hotspots, anecdotally, but I will say no more about that.
I challenge the argument that reducing government funding for the trust is to blame for the removal of litter bins. As the noble Lord, Lord Evans, said, the Canal & River Trust is publicly funded, but it is not only publicly funded. The current annual grant provided to the trust—£52.6 million—constituted 22.6% of the trust’s total annual income of £232.6 million last year. The grant is but a contribution towards the trust’s total waterway maintenance costs of around £100 million a year. We have some agency, but not exclusive agency. I will come on to talk about this in a bit, but we are not the only funder of the organisation.
However, as we were saying, the trust is an independent charity, and the Government do not direct its management or operational decisions. Similarly, the annual grant does not stipulate how much is spent on any activity eligible for the funding, including litter management. That is a decision for the trust to make based on operational need at any point.
Having said that, there is close contact between Defra and the Canal & River Trust at all levels. To respond to the noble Lords, Lord Evans and Lord Blencathra, and the noble Viscount, Lord Trenchard, Defra officials meet the trust’s senior management formally three times a year to discuss issues around the use of the grant funding; that may well include litter management arrangements, as appropriate. There is regular contact between the CRT’s chief executive and senior Defra officials. I can also confirm that Minister Hardy is due to meet Campbell Robb, the new chief executive; I do not think that a date has been set for that meeting yet, but it is certainly in train. Moreover, I can commit here that Defra officials plan to raise the issue of litter management with the CRT at their next meeting; indeed, it has commissioned a paper from the CRT on the issue.
It is fair to point out that the trust’s decision to remove litter bins from tow-paths was not taken in a vacuum. In fact, I can tell noble Lords that the trust carried out an assessment of the likely impact of this move prior to making the decision; the results indicated that it would be broadly neutral. A key consideration was that, where the bins are in place—I cite the contribution from the noble Lord, Lord Macpherson, and agree with what he said—they attracted the dumping of litter or fly-tipping around them. The trust noted that, before removal, the cost of servicing the tow-path bins was some £400,000 a year. Since their removal, the cost of dealing with litter on tow-paths has more than halved; the resulting savings are being reinvested in the upkeep of the network infrastructure.
The trust is very aware of its statutory duty, under Section 89 of the Environmental Protection Act 1990, to keep the land for which it is responsible clear of litter and refuse. It is for the trust to work out how best to comply with that, taking account of the standards in the statutory code of practice on litter and refuse. The annual grant provided by the Government to the CRT is a contribution to support its network and infrastructure management, including via a range of eligible activities that are enumerated in the grant agreement; litter management is included in that list of activities. However, the grant agreement does not specify how funding should be allocated. I stress that that is a decision for the trust to make, based on operational need at any given point.
I contend that it is evident that the trust continues to take littering seriously, with its staff and volunteer teams—I assure the noble Lord, Lord Murray, it is both staff and volunteers—regularly engaging in clean-ups. The trust has some 5,500 volunteers across the country who carry out a range of activities, with 2,800 of them in waterside and conservation tasks that include litter picking. In respect of the question asked by the noble Lord, Lord Addington, on the impact of volunteers and volunteering activity in the CRT, it is worth noting that those numbers have increased by some 20% in 2024-25, as compared to 2023-24: the figure for 2023-24 was 4,566 but, in 2024-25, it is 5,473. It is an active target for the CRT to increase the number of volunteers and the range of volunteer activity in which it engages; that is part of its work as a charitable organisation.
These activities are carried out in work parties on a weekly or monthly basis. They are, as I have said, very much in line with the trust’s charitable objectives and its original policy intent: creating greater community involvement in the running and care of local canals, as part of the transfer from the old British Waterways Board to the CRT more than a decade ago. Last year, 300 trust volunteers gave more than 34,000 hours of their time in London. A litter sweep of the nine-mile Regent’s Canal takes place at least once a week; I say in response to the noble Lord, Lord Macpherson, that that may explain why, in our experience, it is in a good state. This is a full day’s work for four operatives and generally fills a workboat to capacity with seven-tonne bags of litter and larger items. The trust’s contractor also undertakes around 60 fly-tipping clearance tasks each month in this area alone.
The noble Lord, Lord Blencathra, and others have discussed the status of the funding of the CRT. It was taken out of public ownership by the former Prime Minister David Cameron as part of the big society experiment, and I want to stress that the Government’s funding is but a part of its total income. It is on a journey to self-sufficiency. We are limited in our time, so we cannot go into the detail of that decision, but we have to accept that that means the CRT receives money from a range of sources, so it is not simply for the Government to tell it what to do. I say to the noble Lord that government cannot take more powers without taking more control, and I am not entirely sure that that is what this Government want. I would certainly be surprised if the Benches opposite were calling for nationalisation of the CRT, but perhaps we can all be surprised.
The trust has increased its fundraising income by nearly 20% over the last two years. It generates annual income through its boat licence fees and mooring charges of around £55 million; commercial arrangements with utility and water companies generate around £45 million, and returns on its investments and property holdings amount to around £52 million.
We are running out of time, so I will conclude. Fully addressing littering and dumping rubbish involves changing people’s behaviours. Improving awareness of the impacts and consequences of littering through educating and encouraging behavioural change is something that we can all play a part in, along with local authorities and, in this case, the trust. I hope that I have provided assurances that the CRT continues to take seriously its responsibilities for tackling littering on its tow-paths, notwithstanding the removal of litter bins. The Government are also taking forward a number of initiatives to strengthen nationwide action on littering so that we can all better enjoy our surroundings, be they in the city, in the countryside or on canal tow-paths.
Water and Sewerage Companies: Statutory Consultees
(1 day, 2 hours ago)
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Baroness McIntosh of Pickering
To ask His Majesty’s Government what plans they have to make water and sewerage companies and undertakings statutory consultees on major new housing developments and nationally significant infrastructure projects.
Baroness McIntosh of Pickering (Con)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and refer to my interest as an officer of the All-Party Water Group.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, water companies must by law provide new water and sewerage connections to housing through drainage and wastewater management plans. As relevant statutory undertakers in the nationally significant infrastructure project regime, they must be consulted on relevant applications for development consent. The Government’s forthcoming guidance will promote early engagement with them. The Government have paused creating new statutory consultees in the Town and Country Planning Act regime. As part of a wider review, a consultation on streamlining this system is under way, with decisions to follow.
Baroness McIntosh of Pickering (Con)
My Lords, I am grateful for that Answer. It begs the question how the Government plan to build major housing developments of 300,000 a year, many of them on flood plains with no sustainable drains, with the additional demands of the new data centres and mindful of the Environment Agency’s national framework for water resources, giving the acute warning of a deficit of water of 5 billion litres by 2050. Do the Government agree that we need to end the automatic right to connect, so that where water companies say there is simply no capacity, the development will not go ahead?
Baroness Taylor of Stevenage (Lab)
I thank the noble Baroness for her constant interest in this subject through many of the pieces of legislation that she and I have debated across the Chamber. There is no automatic right to connect to a sewerage system. Section 106 of the Water Industry Act allows a sewerage undertaker to refuse a proposed connection to its public sewer system, which is otherwise a statutory right. Refusal is possible—and would be subject to an appeal to Ofwat—only when the mode of construction or condition of the sewer does not satisfy the undertaker’s reasonable standards, or where the connection would otherwise prejudice the system. I appreciate her great interest in sustainable drainage systems. As she knows, we are pursuing that for new developments with our colleagues in Defra.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, we desperately need new housing, but avoiding flooding is also essential. Internal drainage board levies make up a significant proportion of the budgets of some local authorities, which often have to cut off other services to fund the IDB levy. The IDB’s work ensures that communities are safe, so that essential housebuilding can go ahead. Pumping stations are run on electricity, the cost of which has risen exponentially since the introduction of Ofgem’s targeted charging review. The Government announced £5 million for councils this year. That is short term, so what is the Government’s long-term solution to this pressing problem?
Baroness Taylor of Stevenage (Lab)
I have been greatly involved in the issues around internal drainage boards and the constant tensions in their financing over the years. Internal drainage boards are not statutory consultees, but they work proactively with local authorities, which are represented on their management boards and can comment on proposals within the statutory consultation period. Where an internal drainage board raises issues that are material to the determination of an application in question, local authorities must take these into account. We are working at pace to deliver the renewable electricity and other energy we all need, to help reduce costs for householders and businesses alike.
The Duke of Wellington (CB)
My Lords, the Minister, in her reply to the noble Baroness, Lady McIntosh, mentioned Ofwat. The Independent Water Commission, which reported in July, recommended the abolition of Ofwat and the institution of a new regulator. I realise that this falls under a different department, but would the Minister be prepared to accelerate the start of the new regulatory regime? It seems to be in everyone’s interest that this should happen sooner rather than later.
Baroness Taylor of Stevenage (Lab)
We were very grateful for the work of the Independent Water Commission. As the noble Duke says, it is not my department that is working through the procedures needed to reply to the recommendations. The Government are considering the recommendations on whether water companies should be statutory consultees or subject to a requirement to notify. A water White Paper will be published before the end of this year, and I am sure that it will contain many of the issues that were the subject of those recommendations. People will be able to comment on the water White Paper in due course.
Baroness Buscombe (Con)
My Lords, is the Minister aware of how many pumping stations are either completely inoperable or malfunctioning?
Baroness Taylor of Stevenage (Lab)
That too is probably a question for my Defra colleagues to answer, but I will come back to the noble Baroness with a written response.
Baroness Jones of Moulsecoomb (GP)
My Lords, we are seeing more erratic weather patterns and some increasingly severe floods. Is the plan for sustainable drainage systems speeding up? Will we see that in the water White Paper?
Baroness Taylor of Stevenage (Lab)
The recent issues in Monmouthshire—we are terribly sorry for the people there; they have had a dreadful time over the past few days—make us even more determined to support the delivery of high-quality sustainable drainage systems to help us manage flood risk and adapt to the effects of climate change. National planning policy therefore makes it very clear that developments of all sizes are expected to make use of sustainable drainage techniques where the development could have drainage impacts. I have seen some fantastic examples of that when visiting housing sites around the country. Not only can it be done, but in a way that enhances the environment for local residents. We are considering what further changes need to be made to planning policy.
Lord Spellar (Lab)
My Lords, in looking at the system of regulation, can we consider that Ofwat’s failures are not in isolation? Many regulatory authorities in this country are showing similar failings, although sometimes in slightly different manifestations. Do we not need not only individual changes, but to look at the whole regulatory system—not just to change legislation but to change the whole culture of these bodies?
Baroness Taylor of Stevenage (Lab)
Of course our regulatory system is important in helping and supporting the management of the development of the number of new homes we want to deliver. But we have taken a step back to look at the statutory consultees within the planning system—the moratorium was announced by the Chancellor in January—so that we can take account of some of the feedback we have had that the statutory consultee system is not working as well as it should. The Statement confirmed to the House a number of steps that the Government have taken to improve those statutory consultee arrangements—and that includes some of the regulators—including limiting the scope of those consultees to apply only where advice is strictly necessary.
Lord Jamieson (Con)
My Lords, does the Minister agree that water and sewerage companies and undertakings should fully engage with local plans and spatial development strategies as statutory consultees, so that these issues can be addressed up front at the strategic level rather than having to do it on a site-by-site basis? That would speed up the planning process and deliver better outcomes.
Baroness Taylor of Stevenage (Lab)
I agree with the noble Lord that early engagement with the local planning authority, the Environment Agency and the relevant water and sewerage companies, as appropriate, can help establish whether there will be water and wastewater issues that need to be considered. We expect water and sewerage companies to take a strategic approach to planning their water services, accounting for growth and the needs of the environment. There must also be strong collaboration between local authorities and water companies, so that local plans, water resources management plans, and drainage and wastewater plans align.
Baroness Fookes (Con)
Is it correct that the Government’s housebuilding target can be reached only if flood plains are used for building—and is that not a practice to be deprecated?
Baroness Taylor of Stevenage (Lab)
The National Planning Policy Framework is very clear that housing and most other types of development should not be permitted in functional flood plains—that is, in flood zone 3b—where water must flow or be stored during floods. Where development is necessary in such areas, it should be made safe for its lifetime without increasing flood risk elsewhere, so there must be no displacement of the risk. In 2023-24, 96% of all planning decisions complied with the Environment Agency advice on flood risk. In the same year, 99% of residential development proposals also complied with that advice.
South Western Railway
(1 day, 2 hours ago)
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Lord Strathcarron
To ask His Majesty’s Government what assessment they have made of the performance of South Western Railway since nationalisation, and whether they have taken account of its performance in their plans to nationalise other railways.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, South Western’s performance before and after public ownership has remained below the standards passengers deserve. We inherited from both the previous Government’s management and the previous owners a very serious driver shortage, and 84 out of 90 new trains sitting in sidings, unused but being paid for from the public purse, for several years. Since May, the number of new trains in service has quadrupled and many more drivers are being recruited. It will take time to fix the poor management of the past, but the new managing director and his team will do just that.
Lord Strathcarron (Non-Afl)
I thank the Minister for his reply, and I agree that this has been a disaster for years. However, passenger groups report that since nationalisation, South Western has suffered a 50% increase in cancellations—it is even worse on Monday mornings and Friday afternoons—and delay minutes per hundred miles have risen by 29%. Rakes have often been halved, leaving passengers standing for whole journeys. Meanwhile, if we can understand them, we see that fares have risen faster than inflation. Would the Minister join me on a weekday morning and pay £49 to stand for one hour in a train from Winchester to Waterloo, and see for himself the results of nationalisation before it starts to affect us all?
Lord Hendy of Richmond Hill (Lab)
I do not need to join the noble Lord on his service, because I am on my own, from Richmond to Vauxhall. It is true that there are some short forms—the result of both the driver shortage and the failure to put the new trains into service. Those are linked, because it is clear that the previous management did not choose to put the trains into service because they would have had to train the drivers. There are 780 drivers to be trained on those trains, and getting them into service means withdrawing 20, 30 or 40 of them from what they do normally. Meanwhile, the trains that are used are falling to pieces. Those are the old red ones, as anybody who has travelled on them will know, and they are best used in their last journey to the scrapyard in Newport, South Wales. They will be gone by December. It takes time to fix things. They were not being fixed under the previous regime, and they are now.
Baroness Pidgeon (LD)
My Lords, I acknowledge that there have been serious infrastructure issues, some natural and some legacy, but that does not take away from the poor service provided on the longer-distance services. When will passengers on South Western services be able to buy a cup of tea on board, and to reserve seats for their journeys, which is what many would consider to be a basic standard?
Lord Hendy of Richmond Hill (Lab)
The noble Baroness is referring to the London to Exeter service, which has not been very good in recent months, although the timetable will be reinstated from 29 November. That is because there was a serious problem with soil moisture deficit, as we have had the driest spring since 1836—and that was not due to public ownership. She also refers to the refreshment trolleys. She may know that I have asked the managing director to see what he can do to put back the refreshment trolleys, which were withdrawn some time under previous Governments—after Covid, I think.
Lord Watts (Lab)
My Lords, does the Minister agree that this is a failure not of nationalisation but of privatisation, and that we have had 13 years of wrecking the train service, like everything else? Is it not the case that we are clearing up the mess left by the previous Administration?
Lord Hendy of Richmond Hill (Lab)
I thank my noble friend, and he is right.
Lord Grayling (Con)
My Lords, a few months ago I asked the Minister about the transition payments that were previously paid when a franchise ended and a new operator came in. He was not at that point able to answer the question about SWR, so I ask him again now, as a few months have passed: have the Government paid any money to FirstGroup as a result of the transition from private to public, and have any further payments been made since the time of the transition?
Lord Hendy of Richmond Hill (Lab)
The Government are very reluctant to pay any money to the previous owners, bearing in mind the condition in which the service was left. That discussion is still carrying on, but I am not aware of any money so far being paid and I would not be keen to pay any in the future.
Lord Mackinlay of Richborough (Con)
My Lords, I am delighted that my noble friend Lord Strathcarron has opened up this debate about privatisation. I have been the first to admit that previous privatisation was on a strange footing, but I notice that on my Southeastern service on the north Kent line, we are getting that back-to-nationalisation Gallic shrug from many of the staff. On the last 20 sectors that I have used over the past three weeks, I think 15 have been delayed. I am using the Delay Repay service, which comes straight out of His Majesty’s Treasury. Whatever one thinks the turnover and the profits of these services are, they are being massively reduced because of the delays. This applies not just to services on the railway; I am also seeing stations under damage and pressure. For instance, the lift has been out of operation for two weeks at Rochester station, which causes me some inconvenience.
Lord Hendy of Richmond Hill (Lab)
There was not a question in there but, now that Southeastern is run by a managing director who is responsible for both the operations and the infrastructure, I will get Steve White to talk to the noble Lord, and he can make his complaints in person on Rochester station.
Lord Stoneham of Droxford (LD)
My Lords, I declare an interest as a user of South Western, but on the Portsmouth line. I suggest that the noble Lord, Lord Strathcarron, buys a senior railcard. Is not one of the problems with the Government’s policy that they now get blamed for all the problems of the railway companies that they so-called own? The service on my train has been pretty good, except for one incident which I blame the Minister for. Is he confident that South Western will continue to get the investment it needs now that it is under government control?
Lord Hendy of Richmond Hill (Lab)
I am confident of that. Indeed, if the noble Lord is a regular user of the Portsmouth line, he will know that the signalling has been replaced in the last three weeks, which demonstrates significant investment in what was an unreliable system. The purpose of the forthcoming Railways Bill is to create Great British Railways so that, for the first time in over 30 years, the railway is run as a holistic whole by people who understand how to run a railway for the benefit of passengers and freight. That is better than the system that I have inherited and have had to work with for many years.
Lord Spellar (Lab)
My Lords, have not a lot of the problems with the conditions of the rolling stock arisen from the ludicrous decision to put out the work to the leasing companies, for which it was a massive licence to print money? Certainly, neither passengers nor the Treasury benefited from that.
Lord Hendy of Richmond Hill (Lab)
Although it might be possible to agree with my noble friend, on this occasion that is not correct. The old South Western trains have been at the end of their lives for some five years. Indeed, I found when I arrived there an extraordinary plan to spend £25 million trying to resuscitate rusty trains to keep them in service because the new ones have been in the sidings for five years. That is a fault not of the rolling stock companies but of management and the previous Government.
Lord McLoughlin (Con)
My Lords, under the system of franchising, should a franchise fail, the Government would have the opportunity to put in an operator of last resort. Who is the operator of last resort now?
Lord Hendy of Richmond Hill (Lab)
The noble Lord is familiar with that system; indeed, in his Government’s time, four franchises were already in public ownership as a consequence of that. By and large, they are doing better now than they were under the previous regime. You do not need an operator of last resort if you have management committed to a long-term future of the railway which satisfies passengers and freight.
Lord Moylan (Con)
My Lords, my noble friend Lord Strathcarron is a passenger who has a strong voice because he sits in your Lordships’ House. Before the election, the Labour Party promised in its manifesto and its document about rail that it will create a “strong passenger voice” for all passengers. However, now that we can see the Railways Bill, we see that it is a wimpish creature—a revamped TravelWatch—which has no power at all to compel Great British Rail. Would not the Minister just like to admit now that in his vision of a single directing mind for the railways in this country there really is no room for the passenger except as supplicant, never as customer?
Lord Hendy of Richmond Hill (Lab)
The noble Lord should read the draft Bill more carefully. If he does, he will find that the rather antiseptically named passengers’ council—it will have a better name than that in practice—will have the right to ask for regulatory action to be taken against Great British Railways if it fails to deal with subjects that the passengers’ council has a view about. I am very happy to meet the noble Lord afterwards and point him to the specific wording of the clauses; no doubt we will debate them in due course.
Child Grooming Victims: Compensation Awards
(1 day, 2 hours ago)
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Baroness Nicholson of Winterbourne
To ask His Majesty’s Government what steps they will take to ensure compensation awards to victims of child grooming scandals are made in a timely way.
The Parliamentary Under-Secretary of State, Ministry of Justice (Baroness Levitt) (Lab)
My Lords, there are three routes by which victims of child grooming may be awarded compensation. First, following a criminal conviction, a court can order compensation to be paid to the victim, but the criminal courts cannot embark on a detailed inquiry as to the extent of any injury, loss or damage. Secondly, victims can bring an action for damages for personal injury in the civil courts; the Government are abolishing the three-year limitation period so that it no longer operates as a barrier to compensation for such victims. Thirdly and finally, victims can apply to the criminal injuries compensation scheme. These awards are assessed on a case-by-case basis, and the majority are decided within 12 months.
Baroness Nicholson of Winterbourne (Con)
I thank the Minister for that very helpful reply and for our earlier meeting, but might I request a further meeting? These young ladies, who may not all have the strength of Madame Pelicot, will still be living in a highly corrupted community in terms of the activities that were perpetrated upon them earlier. Some of them may not be relevant for an award; none the less, the entire community does not seem to be honouring British law with regard to respect for women, young women and children. Would the Minister be willing to have a meeting, to discuss not the award but the wider implications which perhaps we might manage to do something to help?
Baroness Levitt (Lab)
It is always a pleasure to speak to the noble Baroness, and the answer is yes.
Baroness Walmsley (LD)
My Lords, will the Government set up a unit to start assessing the numbers of the victims of the grooming gangs, and in particular their distribution and their personal situation, and then start learning from the problems of the previous schemes, such as the Post Office Horizon and infected blood schemes, so that when the inquiry is complete, the victims do not have to wait years for their compensation?
Baroness Levitt (Lab)
As the noble Baroness, Lady Walmsley, knows, it is a top priority for the Government to appoint the chair of the national inquiry as quickly as possible, and we are grateful to the noble Baroness, Lady Casey, for supporting these efforts. Once the chair is in place, the terms of reference for the inquiry will be settled, and we will take it from there.
Baroness Armstrong of Hill Top (Lab)
My Lords, we discussed criminal exploitation of children last night. I know from my experience that a young woman was denied any compensation because of the way the trial was conducted. She was in the position where, when the third barrister had been appointed by the defendant, she was told that she had to go through her third cross-examination. She went out that night and did things she should not have: she got drunk, and maybe had other substances—I do not know—and ended up in the police station overnight, and then any compensation was denied her. We are in the position that because these young women are extremely vulnerable, the way we operate our court system retraumatises them in many ways. I hope that the Government, in thinking about the compensation, take these issues into account.
Baroness Levitt (Lab)
The noble Baroness raises a number of points in that question. Many of those will be for the national inquiry to deal with, so I will simply deal very quickly with the question of convictions and their effect on compensation. It is right to say that it is a condition of applying to the criminal injuries compensation scheme that the applicant does not have unspent criminal convictions. The difficulty with waiving that for one group is that it undermines the universality of the system. We are very anxious not to create a hierarchy of victims where some are seen as more worthy of belief or compensation than others, and we will do everything we can to avoid that.
Lord Keen of Elie (Con)
My Lords, it has been widely reported that four victims of the grooming scandal have resigned from the liaison panel of the national grooming gangs inquiry, describing a “toxic, fearful environment” and accusing the process of being manipulated away from the central issue of the grooming gangs. Will the Minister commit to publishing a proper timeline, including a fixed timescale for the appointment of a chair, and a clear start date for this important inquiry?
Baroness Levitt (Lab)
The Government were extremely saddened by the resignation of those victims, and they are always welcome to rejoin and re-engage with the process—we very much hope that they will. The process of appointing the chair is well under way. As I have already said, the noble Baroness, Lady Casey, is assisting with this. It would not be helpful to give a running commentary on what is happening, but it is important to the Government to get on with this.
Lord Faulks (Non-Afl)
My Lords, the Minister mentioned three possible avenues for compensation. I think she would accept that the largest award is likely to be if there is a civil claim, rather than the other two avenues. Can she help the House with who the potential defendants in such a claim might be? I am not asking for her legal advice but for some general guidance if this is to be a realistic remedy.
Baroness Levitt (Lab)
Of course, we are speaking generically about victims of grooming, but they may fall into a number of different categories. There are the grooming gangs, about which a great deal has been heard, but there are also, for example, victims of online grooming. So I cannot really give an answer as to who the potential defendant is going to be that will actually deal with all the victims. That is a case-by-case decision to be made.
Baroness Sanderson of Welton (Con)
Have the Government consulted the Independent Public Advocate about the new inquiry? As the system threatens yet again to overwhelm the voices of victims and survivors, would not her guidance and support for this group be really valuable in this instance?
Baroness Levitt (Lab)
I thank the noble Baroness for her question. I recognise, of course, her ongoing interest in the Independent Public Advocate, which is very welcome. I do not know the answer, so I shall write to her.
Lord Pearson of Rannoch (Non-Afl)
Will the Minister join me in congratulating the noble Baroness, Lady Nicholson, on the wording of her Question, which for once does not put the word “Pakistani” in front of “child grooming scandals”? Does the Minister agree that the problem is to be laid at the door not of our Pakistani men but, very largely, of our Muslim men and that, therefore, the problem is religious, not ethnic?
Baroness Levitt (Lab)
I am afraid I am absolutely not going to agree with that. It is going to be a matter for the new national inquiry, and I am not going to pre-empt that.
Lord Scriven (LD)
My Lords, my noble friend Lady Walmsey did not necessarily ask about the terms of reference of the inquiry; she asked about the mechanisms of the payments of the compensation scheme. Have the Government learned from what has happened in the infected blood and Post Office Horizon schemes, and are they now working on the mechanisms of the compensation scheme so that fast payment will flow once the public inquiry has reached its conclusions?
Baroness Levitt (Lab)
The difficulty with that question is that it presupposes the existence of a compensation scheme for these victims. There is no such compensation scheme in existence. Whether or not that is something that is recommended by the national inquiry, we will wait to see. As I have already said, there are a number of different categories of victims in these cases, and not all the same conditions apply to all of them. But I take the point that if there were to be a compensation scheme, it would be important that it paid out quickly.
Baroness Foster of Aghadrumsee (Non-Afl)
Given the question asked by the noble Baroness, Lady Armstrong, surely a very specific compensation scheme would deal with those issues. I suggest to the Minister that she looks at the scheme that we set up in Northern Ireland to deal with institutional child abuse. The way in which that scheme worked meant that it was very quickly operated and that victims were able to access it. It is something that the national inquiry could very much benefit from looking at.
Baroness Levitt (Lab)
I thank the noble Baroness very much for that. Obviously, that is something that will be very useful to look into once the inquiry is set up.
Lord Mohammed of Tinsley (LD)
My Lords, the perpetrators of these crimes are men from all backgrounds, but many of them are not from upstanding backgrounds in the sense that some are involved in criminal activities such as drug dealing. So what action are His Majesty’s Government wanting to take against those convicted, looking at the Proceeds of Crime Act? These people were able to groom some of these young ladies—women—and girls because they had flash cars, et cetera. How do we ensure that those monsters have all the criminal assets from their ill-gotten gains taken away from them after conviction?
Baroness Levitt (Lab)
It is a very good point. Every judge at the end of a criminal trial has the ability to make a confiscation order, and these are being pursued with rigour because it is really important to ensure that criminals do not profit from that kind of illicit activity.
President Trump: Nuclear Weapons Statement
(1 day, 2 hours ago)
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Lord West of Spithead
To ask His Majesty’s Government what assessment they have made of President Trump’s statement on 30 October regarding the testing of nuclear weapons.
The Minister of State, Ministry of Defence (Lord Coaker) (Lab)
My Lords, the United Kingdom has ratified the Comprehensive Nuclear Test-Ban Treaty and continues to press for its entry into force. We remain committed to our voluntary moratorium on nuclear test explosions, having ceased nuclear testing in 1991. The nuclear testing policy of the United States is a matter for the US Government, and it would therefore be inappropriate to comment further.
Lord West of Spithead (Lab)
My Lords, it is easy to look on this as some sort of playground bravado by President Trump, who clearly did not understand the implications of, or what was meant by, the trials of delivery systems that Putin was conducting. With him having made his statement, President Putin wanted to show how tough he was and made his statement about doing tests again. This would be probably quite amusing if it was not so incredibly dangerous. The comprehensive test-ban treaty is one of the few treaties regarding nuclear weapons that are still in existence; many have fallen by the wayside. We are less safe than we used to be because of that. If the comprehensive test-ban treaty is broken, it opens a Pandora’s box. All of us will be far less safe. That is extremely worrying.
I know the Minister cannot say very much in response to my Question—in effect, it was nothing, but those are wonderful. However, even though something may not happen because the Department of Energy in America is unable to do a test straight away—it will take a couple of years and cost billions of dollars, so this thing may go away— and even though, as he says, it is their business, does he believe that the Government should make it very clear to the Americans how much we support keeping the test ban treaty in place and that we will be very disappointed if there is any break to that?
Lord Coaker (Lab)
The UK has a long-standing and important relationship with the United States—it is important to start out and say that on a number of occasions. The comprehensive test-ban treaty, as my noble friend has said, is a really successful treaty, and we continue to push and to do all we can to ensure that it is as effective as it is with as many states as possible. We look forward to everyone who signed it ratifying it in due course.
Lord Ahmad of Wimbledon (Con)
My Lords, we saw the PrepCom for the nuclear non-proliferation treaty—or NPT—conference, which is due to meet again next year. We have five signatories. In light of what we have heard from the rhetoric of Russia, and the actions that others have taken, what assessment is being made of the potential success of the NPT meeting next May? Further, linked to the recent conflict we saw between India and Pakistan, what extra efforts have been made to ensure that those countries also sign the NPT?
Lord Coaker (Lab)
The noble Lord has a lot of experience in these matters, and he knows that numerous conversations go on and numerous efforts are made by numerous countries, in ways we cannot often speak about in this Chamber. Whether it is India and Pakistan, or other countries, numerous debates and discussions take place to ensure that we are as safe as we possibly can be. As he knows, the parties to the nuclear non-proliferation treaty will meet in New York next year—I think is an important statement that it is taking place in New York. It is a really important treaty. We have the comprehensive test-ban treaty, and we have the nuclear non-proliferation treaty. I think sometimes that what countries such as us should do, as well as recognising the difficulties and problems, is to continue to push the importance of those treaties and to do all we can to ensure their continued success.
Lord Hannay of Chiswick (CB)
My Lords, does the Minister not agree that this is the latest instance of the potential use of nuclear weapons being referred to loosely by leaders of the recognised weapon states, on which President Putin gave the lead on several occasions when he spoke about it in the context of the Ukraine conflict? That is surely a lamentable change from the taboo on talking about these matters since the end of the Cold War. Does he think that we would do better to work at the non-proliferation treaty review conference next year for a reaffirmation of the view that a nuclear war must not be fought and cannot be won?
Lord Coaker (Lab)
The noble Lord makes a good point. With all the questions and my comments so far, it is extremely important that we do not let rhetoric cause a problem. The question that the noble Lord has posed is important. As I have said in my answers so far, it is important that we talk about the success of the Comprehensive Nuclear Test-Ban Treaty. We have not conducted a nuclear test explosion since 1991. The United States and others have conformed to that as well. People must be really careful in the use of rhetoric in whatever circumstance. Our debates and discussions on these matters are looked at and pored over. I take the noble Lord’s point very seriously. We need to be very careful in how we discuss these matters while having the right to discuss them.
Lord Bruce of Bennachie (LD)
In a conflict-beset world, a credible nuclear deterrent is unarguable, but macho posturing by the leaders of the United States and Russia is an alarming development that undermines the non-proliferation treaty. In response to the noble Lord, Lord Ahmad, will the Government take a lead to encourage or persuade India, Pakistan and Israel to sign that treaty, reaffirm it, strengthen it and make it clear exactly what has been said? A nuclear war cannot be won and must not be fought.
Lord Coaker (Lab)
We encourage all states to join the nuclear non-proliferation treaty. It has been a huge vehicle by which we have worked together to keep the world safe. This Government accept, as previous Governments have done and as do many Governments across the world, that the nuclear deterrent is part of the security architecture of the world. Part of having a nuclear deterrent is to deter from war, deter from aggression. The restatement of the deterrent policy is consistent with the nuclear non-proliferation treaty, under which the noble Lord will know that the UK is allowed to have weapons.
Baroness Goldie (Con)
My Lords, following on from what the Minister has just very helpfully said, in relation to our own United Kingdom nuclear defence capability, we have seen just this week that between 400 and 500 jobs will be put at risk at the Atomic Weapons Establishment. The Government claim that the workforce needs to be reshaped so that it is fit for the future. However, in a time of growing international insecurity, can the Minister confirm that there will be no reduction in staffing for our nuclear weapons capability?
Lord Coaker (Lab)
What I can confirm is that there will be no reduction in our capability of ensuring that the nuclear deterrent is effective and that it remains so seven days a week, 365 days a year and 24 hours a day. That is the commitment that the Government make. I hear what the noble Baroness says about the AWE. That is about looking at reshaping how that important body works. The Government have committed £31 billion to the Dreadnought programme, with a £10 billion contingency. We have committed £15 billion in this Parliament to the development of a new warhead. That is a Government who are committed, as the last Government were, to spending billions of pounds on maintaining the credibility of our nuclear deterrent, which, as I said in answer to the question asked by the noble Lord, Lord Hannay, is essential to the global security of the world.
Lord Browne of Ladyton (Lab)
My Lords, I draw the attention of your Lordships’ House to my entry in the register of interests, particularly as vice-chair of the Nuclear Threat Initiative, which I am a consultant to as well. Every European NATO member has ratified the 1996 nuclear test-ban treaty. In addition to a commitment to Article VI, the commitment by the five nuclear weapon states to the CTBT was essential to the indefinite extension of the nuclear non-proliferation treaty in 1995. My noble friend the Minister will be aware that former US officials who have had responsibility for their nuclear arsenal have stated publicly that new US nuclear tests are unnecessary, unwise and unwelcome. As those officials have done, have our Government assessed the impact on the NPT’s future if there are renewed explosive nuclear tests by any of the five—including the US and the UK?
Lord Coaker (Lab)
As I have said, the nuclear non-proliferation treaty is an essential part of the Government’s policy. We remain committed under that treaty to the aspiration to a nuclear-free world, which may seem a long way off but is our aspiration. All I can say with respect to this is to reiterate the complete commitment that the Government have to the nuclear non-proliferation treaty and to the meeting next year in New York. We want that conference to be a success.
The UK remains an active participant in all the nuclear non-proliferation treaty forums, alongside the commitment to maintain for as long as is necessary our nuclear deterrent. The commitment that we have to that nuclear non-proliferation treaty is important as well. That is good UK government policy.
Broadcasting (Independent Productions) Regulations 2025
(1 day, 2 hours ago)
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Baroness Twycross
That the draft Regulations laid before the House on 13 October be approved.
Relevant document: 39th Report from the Secondary Legislation Committee. Considered in Grand Committee on 18 and 19 November.
Merchant Shipping (Marine Equipment) Regulations 2025
(1 day, 2 hours ago)
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Lord Hendy of Richmond Hill
That the draft Regulations laid before the House on 14 October be approved.
Considered in Grand Committee on 19 November.
Infrastructure Planning (Business or Commercial Projects) (Amendment) Regulations 2025
(1 day, 2 hours ago)
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Baroness Taylor of Stevenage
That the draft Regulations laid before the House on 15 October be approved.
Relevant document: 39th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument). Considered in Grand Committee on 18 November.
Asylum Policy
(1 day, 2 hours ago)
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Lord Davies of Gower (Con)
My Lords, the Home Secretary’s Statement to the other place announced a number of reforms which are very welcome. When the Government bring forward strong measures, we will support them. The Home Secretary should be praised for accepting a simple truth—that Britain’s asylum system is far more generous than that of many other European countries.
It is a truth that, unfortunately, many Labour Back-Benchers cannot seem to grasp. The true test to these reforms will be whether the Government can face down opposition from within their own ranks and implement them.
There is another welcome truth that the Home Secretary has implicitly accepted: up to now, the Government’s measures to tackle illegal migration have failed. The Border Security, Asylum and Immigration Bill, which we have spent many hours debating in this House, is woefully inadequate to deal with the issue. It is a shame that it took the Government so long to realise this, but we are where we are. We will have to have another immigration and asylum Bill next year because the Government were too slow to reach the logical conclusion that their plans are not working. These new announcements are at least a tacit acceptance that that Bill did not go anywhere near far enough to seriously tackle small boat crossings.
There are a number of proposals here that are very similar to amendments I tabled during the Report stage of the border security Bill—amendments that the Government completely opposed. It is heartening to see that they have finally come round, but it might have been easier for all of us if they had compromised earlier.
For example, the Government opposed my amendment to create third-country removal centres. The Minister criticised it for wanting to rehash the Rwanda policy, but that is a complete falsehood. The Rwanda policy would have sent illegal migrants to Rwanda, where their asylum claims would be processed. The amendments I brought to the border security Bill would automatically reject that asylum claim brought by an illegal migrant and then return them to either their home country or a safe third country. Their claims would not be processed in Rwanda because they would never be allowed to make a claim in the first place.
That amendment was about having safe third countries where we can send failed asylum seekers and illegal migrants who cannot be returned to their home country. Now, in their policy statement, the Government say:
“We will continue to explore the use of ‘return hubs’ which are safe third countries that failed asylum seekers can be sent to instead of their country of origin. Negotiations with a number of countries are ongoing”.
This is precisely what we were pushing the Government to do, and I am pleased that they have announced that they will look to send failed asylum seekers to safe third countries, but this all could have been much easier if they had come to this conclusion earlier.
The Government have also announced changes to the appeals procedure. The Statement says that the Home Office will
“create a new appeals body, staffed by professional independent adjudicators”.
However, it does not mention whether this appeals body will run alongside the First-tier Tribunal (Immigration and Asylum Chamber) or replace it. Could the Minister please clarify this?
Would the Government run this new body alongside the judicial appeals tribunals? If so, how would they decide whose appeal is heard before which body? Or are they proposing to abolish the immigration and asylum tribunal and replace it with the Home Office review body? If so, then that was exactly what I proposed by way of Amendments 46 and 47 to the border security Bill. On Report on 5 November, 128 Labour peers voted against that. If they have changed their mind on this, it is very embarrassing to say the least; it is disappointing for them to vote against that proposal and then come up with something very similar.
The Home Secretary has claimed that she is following the lead set by Denmark, but this is only a partial truth, because Denmark requires asylum seekers to prove full-time employment for several years before they qualify for permanent residence.
The Government’s plans extend the waiting time to get indefinite leave to remain to 10 years once a person’s refugee status has been granted and if they entered legally. This would be 20 years for those who entered illegally, but this does not impose any conditions. Theoretically, a person could enter illegally, languish on benefits for 20 years and then be granted the right to indefinite leave to remain. While I am pleased to see asylum status become temporary, and for anyone whose home country becomes safe to be returned there, it is absolutely wrong that a person could enter illegally and still be allowed to remain, especially given the Government’s opening of new safe and legal routes. If we are to have legal routes for refugees, we absolutely cannot reward those who enter illegally. That would make even more of a mockery of the whole system. Why would a person bother to apply for the legal route if they know that they can board a boat and be allowed to stay here? The Government need to follow this plan to its logical conclusion and ban asylum, human rights and protection claims from any illegal migrant.
Finally, the plan to reform Article 8 is all well and good, but the Government have to know that this will not be enough. While we have the Human Rights Act in force and are party to the ECHR, we will face the same barriers to removals that we do currently. Reforming the interpretation will simply allow crafty human rights lawyers to find innovative new ways to circumvent it. Only a wholesale repeal of the Human Rights Act and withdrawal from the ECHR can finally remove the legal barriers to deportation.
The Government have started moving in the right direction. As my right honourable friend the Leader of the Opposition said, we will support the Government in making these changes. But I fear that they will not be enough and that the Government will end up coming back to us next year with further changes. If they simply accepted that now, and went even further with these changes, it would save us all a lot of time down the line.
Lord German (LD)
My Lords, I draw attention to my interests, and I am supported by the RAMP organisation. I am minded to think of the title of that great film, “The Good, the Bad and the Ugly”; I am afraid that these proposals have all three within them. I will go through some of those.
Starting with the positive, we support the Government’s intent to bring order in the asylum system, and we welcome the announcement of new, capped, safe and legal routes for refugees. These pathways, with security checks and controls, are the correct way to fulfil the UK’s responsibility to those in need. Confirmation that the Government will not leave the European Convention on Human Rights is welcome, as is the recognition that early legal advice should be a core part of the appeal system.
Moving on to the bad, or impractical, the argument that asylum seekers should contribute is undermined when they are denied the means to earn their way. Denmark allows asylum seekers to work after six months. Why are the Government persisting in stopping asylum seekers from working when there is no evidence that this is a pull factor? We question the assumption of the UK as a magnet, given that we receive far fewer asylum seekers per capita than our European neighbours. Home Office analysis itself found that asylum seekers have little to no understanding of welfare policies before arrival. Shared language, diaspora communities and perhaps even colonial connections are the primary drivers for asylum seekers taking irregular routes to the UK. Can the UK Government provide evidence, rather than simple assertion, on this matter?
Revoking the duty to support risks creating more destitution and pushing more asylum seekers towards illegal working and exploitation. What assessment has been made of this risk? What action are the Government taking to avoid passing the financial strain onto already struggling local authorities? The use of immoderate language is also unhelpful and risks stoking division. Why do the Government feel the need to create a whole new asylum appeals structure? Why not simply expand the existing system?
The most severe criticisms target the core protection model and its administrative fallout. Core protection requires a status review every 30 months and delays permanent settlement for 20 years, which in our view is unnecessary and cruel. This prolonged state of instability will inhibit successful integration by making it difficult for refugees to secure tenancies, employment or higher education. The Home Office is currently struggling with a backlog, yet this policy would impose what has been called bureaucratic madness, requiring a huge increase in capacity to review the status of an estimated 1.45 million people by the end of 2035, potentially costing £872 million. Do the Government accept these figures or have they alternative ones to offer?
Scrapping the refugee family reunion route pushes children and spouses into the hands of smugglers, directly contradicting the goal of safe migration. Has this risk been assessed? How will the long-term separation from family impact refugees’ ability to contribute and reduce their reliance on state support? Will the Government be detaining and deporting children who were once accepted as refugees but will subsequently not be when their home country is deemed safe?
Given that Denmark’s temporary protection scheme clearly failed to result in returns for Syrians, how do the Government justify the massive cost and profound uncertainty imposed by the UK version? What is the timescale for these changes? When will they be implemented and what method will be used to implement them?
Finally, do the Government agree with the report in the i newspaper that deportations will be retrospective? It says:
“It means that, if a refugee has not already been granted indefinite right to remain before the Home Secretary’s new legislation comes into force, they will be deported if their home country is subsequently deemed safe by the Government”.
I look forward to the Government’s response to these questions.
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
My Lords, I am grateful to the noble Lord, Lord Davies of Gower, and I will try to answer his questions first of all. I am grateful for the welcome he gave to some of the Government’s proposals. I remind him that the reason we are undertaking these reforms is that we have inherited a very broken system: a system that has been in operation for 14 years, where the number of asylum claims has risen, where the backlog has grown and where the deportations have not existed where they are rightfully proposed to exist. We have a duty, on behalf of the British people, to take some difficult decisions to sort this out.
The noble Lord mentioned that the border security Bill, which has completed its passage bar one Commons amendment, has not been effective. Let me remind him that we have introduced a border security commander, who has negotiated deals with France, negotiated deals with Iraq, negotiated deals with the Germans and has been put on a legal footing by this Bill. We have put extra measures in place to support penalties for people smugglers, which will now, once Royal Assent is achieved, allow us to take some further deterrent actions against people smugglers to end that vile trade. We have put in place mechanisms to stop the manufacture and use of boats, to seize engines and to do other things which will take effect once Royal Assent is agreed. I do not, therefore, accept his contention first and foremost that the border security Bill, about which we have had many hours of discussion, is pointless.
I have to say to him, however, that the Government have to keep these issues under review because it is self-evidently a broken system, which is why we put in place additional people to speed up the backlog. The measures before the House today, outlined in the Statement, will be brought forward in legislation, subject to consultation. We will also look at a range of other measures we need to take to fix the system we have inherited from the noble Lord and his political party. He may not like that—I do not want to politicise that: I want his support for this—but we have had to take those steps because of where we are, and I think that is reasonable.
The support he has given for some of those steps is particularly good. He mentioned, for example, the tightened criteria. I think it is fair and proper that, if a country is deemed safe after two and a half years, the individual concerned is encouraged and supported to return to that country; or, as is in this proposal, they can apply for a different route through work or study to get permanent residence downstream. If the country is safe, however, it is perfectly reasonable to look at how we can remove that individual.
The proposals include tackling increased enforcement on illegal working. I think it is perfectly reasonable to put some pressure and heat into the system to tackle people who are being employed illegally, to look at increasing the right-to-work checks, to provide digital ID requirements—which I suspect he will oppose—to ensure there are mandatory right-to-work checks and collaboration to verify companies. I think that is reasonable. I think it is reasonable to look at return hubs: not Rwanda, not £700 million being wasted, not two people being removed voluntarily, but discussing proper return hubs for people who do not have safe countries but where their asylum claims have failed. It is perfectly reasonable to remove people whose asylum claims have failed because their asylum claims have failed. That is perfectly reasonable to do.
It is perfectly reasonable to do what we are doing in this proposal to speed up assessments and appeals. He asked about the First-tier Tribunal. We are going to put extra hours into the tribunal and we are going to ensure that we look at improving the legal system to get appeals dealt with and tribunals dealt with much more quickly. It is reasonable—and this is, again, where we will have a bit of blue and red water between us—to be committed to the European Convention on Human Rights, to be committed to legislation to uphold human rights, but actually to say that we want to look at how we can tweak that to make sure that it acts in the interest of our country, at the same time as being part of our international obligations, which is where we are. He wants to leave those conventions. I do not, and the Government do not, but we need to make sure we make them work in a better way to deal with this issue. I think it is reasonable for us to do all those things and I hope for and look forward to his support on them.
I welcome the welcome from the noble Lord, Lord German. It has been overlooked in this, but there are safe and legal routes that we want to develop, as we have done, for example, in our bespoke schemes for Ukraine and for Syria. There are bespoke routes that we can develop. There are safe and legal routes that we can look at. In this Statement, my right honourable friend the Home Secretary has said that we wish to look at doing that. We are committed to human rights, but we are committed to looking at these particular issues. We will encourage people to look at the work route, if necessary, for safe and legal routes, and we will ensure that a range of other issues are examined.
The noble Lord takes issue with the core protection measures that we have before us in this proposal. I think, again, that it is reasonable, given where we are, to look at how we can ensure that those people are assessed very quickly, within two and a half years, or 30 months. If the country is safe to return to, they can return. If not, let us get that asylum claim approved, or let us get that asylum claim rejected and the individual then returned. I think that is a reasonable proposal. It is reasonable that we look at family reunion, and the noble Lord asked about child deportations. I do not want to see child deportations, but what I want to see is, if people have failed their asylum claim or if they are a foreign national offender—of which we have many languishing in UK jails at the moment—we must find mechanisms to return those individuals fairly and properly to their communities if they are safe, or, if not, to look at the issue that we have talked about here of an alternative holding establishment. All of this will be consulted on.
The noble Lord asked about when and how this will be brought in. There will be legislation brought before both Houses of Parliament, at a point to be determined, and the consultation will take place. However, I ask all those noble Lords who may criticise the proposals: are they happy with the status quo? Do they think the status quo is a good place to be? I think nobody in this Chamber will say that the status quo is a good place to be. Therefore, my objective with the Home Secretary and the Home Office is to look at ways in which we can maintain our international obligations, welcome genuine refugees and asylum seekers, but also speed up a broken system to make sure it works effectively.
Lord Howard of Lympne (Con)
My Lords, who will decide whether a country is safe? The previous Government decided that Rwanda was safe, but the Supreme Court, following a decision of the European Court of Human Rights, said that it was the body with the responsibility for deciding whether a country was safe. So my question to the Minister is: who, under the Government’s proposals, is to decide whether a country is safe—the Government or the Supreme Court?
Lord Hanson of Flint (Lab)
I am grateful for the noble Lord’s question. I take the view that the Government will determine ultimately which are safe countries. The Government will make that judgment. We are open to challenge and discussion, but the Government will have to make a determination on that. In doing so, we will look at a range of factors. What does the United Nations think? What do the other agencies think? In the end, however, the Government ultimately will have to determine. Again, let me just say that it may not even be a blanket “safe” for a particular country. It may be safe, for example, now, for individuals post an Assad regime to return to Syria, but it may equally not be safe for some individuals to do that. There is a case-by-case basis for the individual, but, ultimately, we have to make that call.
Baroness Chakrabarti (Lab)
My Lords, I welcome the Minister’s commitment to human rights, and I know it is a sincere one, but the Statement itself appears to express some irritation with both Article 8, respect for private and family life, and even Article 3, the prohibition of inhuman and degrading treatment and torture. In the light of our own justice and prison system being found in breach of Article 3 in the High Court just two days ago, can the Minister say a little more—give us a little more specificity—about the detail of the proposed renegotiation of Article 3 that the Statement refers to?
Lord Hanson of Flint (Lab)
I am grateful to my noble friend. We are seeking international reform of the application of Article 3. We will work with partners to reform the application of the ECHR’s prohibition on inhuman or degrading treatment. That means we have to discuss it with our partners and get joint agreement, but it is an objective to which the Government are committed. It is one that will be tested. It will be in our consultation in due course. We will bring forward primary legislation with a definition of family life for the purposes of Article 8. That will be subject to scrutiny, but it will be within the spirit of maintaining our commitment to the European Court of Human Rights application. Those are fair and legitimate objectives, and I hope that my noble friend will support them in due course.
Lord Kerr of Kinlochard (CB)
My Lords, the Home Secretary ended her Statement by saying that her reforms
“are designed to bring unity where others seek to divide”.
My greatest worry about them is that making refugee status only temporary, and subject to review every 30 months and deportation, will have the opposite effect. It will not bring unity, it will not encourage community or integration, and it is not very British. The Attlee Government did not try to deport the noble Lord, Lord Dubs, in 1945. The attempt to send trucks round south London to generate a hostile environment and tell people to go home was called off very quickly because of the public revulsion. I remember being very warmed to see crowds in Glasgow blocking the streets to prevent the deportation of their neighbours.
I have two questions for the Minister. First, he did not answer the question asked by the noble Lord, Lord German, about retrospection. Can he assure us that the change from five years to 10 years or 20 years will not be applied retrospectively to those people who are here, have been allowed to stay here and came when the rule was that they could obtain citizenship after five years? It will not apply to them, I trust.
Secondly, the Statement says that
“as order and control are restored, we will open new, capped, safe and legal routes into this country”.
Does “as order and control are restored” imply a sequence: that we need first to see order and control restored, then we will open safe and legal routes? If it does, is that not wholly illogical? The best way of putting the traffickers out of business and ensuring that there are no deaths in the channel is to open safe and legal routes. Will the Minister also tell us how a system of capping safe and legal routes will work? How will the caps be set and how will they be made compatible with our obligations under the refugee convention?
Lord Hanson of Flint (Lab)
I will try to answer the three broad issues within that. The first is the reduction in time from five years to 30 months. It is not, “At the end of 30 months you are deported”; at the end of 30 months, an assessment will be made about whether the country the person has come from is safe, to go back to the point from the noble Lord, Lord Howard. I hope that we will not have long backlogs on asylum claims in the first place. That is why other measures are being sped up. Part of the problem, and the reason why people are waiting for five years and beyond, is that asylum claims are not met. From our perspective, if an asylum claim can be met and sped up then a decision can be taken to grant asylum, in which case the individual has asylum—admittedly with a longer period for final settlement—or they are removed from the country under a deportation route. The purpose is to try to put some energy into the system to get that sped up very quickly.
The noble Lord, Lord Kerr, asked about safe and legal routes, and the annual cap. The Home Secretary will examine and consult on this as part of the proposals, but it is perfectly reasonable to try to set an annual cap, in discussion with our refugee convention and other obligations, to see what the country can bear in terms of housing support and everything else so that annual cap is based on community capacity. We can then look at safe and legal routes that help support individuals to come here so they do not use the illegal routes that are universally condemned across the House. We will maintain the flexibility that we have for things such as the Ukraine scheme and the Gaza scheme. If I had been putting this before the House six years ago, we would not have been talking about a Ukraine scheme. Who knows what will happen next? We retain our international obligations to do that.
The noble Lord asked about retrospection. That will be part of the discussion and consultation. Legislation will be brought forward to address what will happen, and that will be subject to tests by both Houses of Parliament.
The Lord Bishop of Hereford
My Lords, I declare an interest as a participant in the Homes for Ukraine scheme. Three and a half years on, we have a delightful Ukrainian family still living in our house. In the section of the report on safe and legal routes, the options in the policy document include a route to safety for students and skilled workers. Such schemes may be a useful adjunct to sufficient open safe and legal routes, but does the Minister share my concern that, in a world where safe and legal routes are limited, we may send a message that young, healthy, skilled people are more deserving of sanctuary than others?
Lord Hanson of Flint (Lab)
No. We need to look at individuals’ asylum claims based on their merit. An individual who is not of working age or is not going to be involved in education or study can have an asylum claim. The key point in the safe and legal routes aspect is that we need to look at what that is and design a scheme. We will consult on that. The work and student visa route will be one that individuals can apply for during the course of their asylum claim. If their asylum claim is granted, that gives another route into longer-term settlement, which would be valuable if the individual wishes to do that. I retain an openness to examine individuals’ claims and positions on the basis of their individual status.
Baroness Hoey (Non-Afl)
My Lords, I welcome the Home Secretary’s Statement and the acceptance that the current system is unsustainable. It is interesting that perhaps a year or two ago, people proposing some of these measures would have been accused of being racist, so I welcome the Statement. The Government will have to get support from other political parties to get these measures through. Does the Minister accept that he will have to work with Reform UK, whose leader, whatever noble Lords may think about him, was one of the first people to raise the issue of the difficulties and the possibilities of migrants coming in on small boats?
Lord Hanson of Flint (Lab)
I will welcome support for the Government’s proposals wherever they come from, but if the noble Baroness thinks that I have anything in common with the honourable Member for Clacton and his crew, she is sadly mistaken. I come from a position of trying to ensure that we build a coterminous, cohesive society that is open and tolerant but manages its borders effectively. I do not seek to cause division, which I think the honourable Member for Clacton seeks to do. He wants us not to solve this problem; he wants it to continue. He wants the small boat routes to continue so that he can spread division. That is not on this Government’s agenda. We are here to fix this problem, not to exploit it.
Lord Dubs (Lab)
My Lords, I urge the Minister to think again about the sequence of events regarding safe and legal routes. Many of us believe that introducing safe and legal routes would take away the business of the traffickers. Therefore, leaving it until the end of the line seems to allow the traffickers to go on doing their business. Could we speed that up, please? Secondly, on the 20-year period when people may or may not feel secure in this country—the noble Lord, Lord Kerr, has already referred to this—is the problem not that if people feel insecure in this country then local communities will feel less likely to support them, and integration will suffer? Is there something the Government can do to make people feel more secure, because 20 years is a long time when families are here and children have been born here? It is not a humane way to proceed.
Lord Hanson of Flint (Lab)
I know my noble friend takes a great interest in this, and I am very happy to discuss safe and legal routes with him and my colleagues in the Home Office, because I know that he is committed to this issue and we must ensure that we explore it extremely safely. I want to see community cohesion, and longer-term integration is an issue the Government have set their stall on. That is subject to consultation. Again, I want to work with my noble friend to ensure that we deal with this in a proper and effective way. The door is open to him at any time.
Lord Faulks (Non-Afl)
My Lords, during the passage of the Border Security, Asylum and Immigration Bill, the Minister made it quite clear that the Government would not in any way amend the Human Rights Act 1998 and that they were very concerned about the independence of the judiciary. Yet the Statement refers to potentially changing the approach to Articles 3 and 8 of the European Convention on Human Rights. Section 2 of the Human Rights Act requires the judiciary to take jurisprudence from the European Court of Human Rights into account; this has been followed and built upon by judges in this country. How will the Government alter the approach to Articles 3 and 8 without amending the Human Rights Act and without impeding the independence of the judiciary?
Lord Hanson of Flint (Lab)
On the question of Article 8 claims, Article 8 is a qualified right, which means that interferences with it can be justified where it is proportionate to the public interest. We will bring forward primary legislation with a definition of family life for the purposes of Article 8. On Article 3, we will work with partners to reform the application of the ECHR’s prohibition of inhuman or degrading treatment. Both of those are potential tweaks, which will be subject to legislation and consultation, but which we believe can be done within our international obligations. We are not the Official Opposition who wish to withdraw from those international obligations; we wish to maintain them. But I think it is fair, open and proper that we can examine legislation to tweak them.
Lord Harper (Con)
My Lords, there is not a word of the Prime Minister’s foreword to this Statement that was not true on the day that he became Prime Minister. It is welcome that the Government have got to where they have. The Minister referred to our record; my recollection is that, every time we proposed tough things, they were opposed by the party opposite. I do not remember us ever being challenged because we were not being tough enough.
My question is this: having read through the Statement and the policy document carefully, there are a number of measures that require changes to the Immigration Rules, which is obviously secondary legislation, but there are also a number, as has just been referred to, that require amendment to primary legislation. Certainly, my sense of the Home Secretary’s demeanour is that she feels that this is a very urgent matter to deal with. Has the legislation been drafted and is it ready? When is it going to be introduced? Will it be introduced in this Session to carry over or will it have to wait until the next Session of Parliament? If the latter, it does not strike me that the Government are treating it very urgently.
Lord Hanson of Flint (Lab)
I remember serving as the noble Lord’s shadow about 10 or 11 years ago, when he was the Immigration Minister and we were both Members of Parliament. I supported a number of the measures that he brought forward then, which were very difficult. We, too, will take some very difficult decisions, and I hope to take Members of both the Government’s party and opposition parties with us.
On the question of legislation, he will expect me to say this, but I am going to say it anyway: legislation will be introduced in due course. I cannot comment on legislation in the second Session yet, but legislation will be introduced in due course.
Lord Green of Deddington (CB)
I declare an interest, having been engaged with these matters for rather more than 20 years as the co-founder of Migration Watch, together with Professor David Coleman of Oxford University. I have read the Government’s Statement with great care. It covers a huge amount of ground, as previous questions have indicated, but it is clearly a serious attempt to deal with a matter that is a real and growing public concern. Further measures will certainly be needed, but this is at least a useful start.
Lord Hanson of Flint (Lab)
I am grateful for the noble Lord’s support. A number of Members of the House have asked why the Government did not do this a few months ago and what the Government will do next. Life is not static. There are competing challenges at all times. We are trying to bring forward the immigration Bill and bring forward proposals here. My right honourable friend will soon be making a Statement on other aspects in the House of Commons, which I suspect I will have to repeat early next week, and there is an immigration White Paper proposal as well.
This is a journey to try to ensure that we bring order to a system that is currently failing while maintaining our international obligations, being fair to people who are escaping war, poverty and terror, and at the same time making sure that we support United Kingdom citizens in finding integration and welcome where that is required. That is an ongoing process, and I would welcome the noble Lord’s support for any measures that we bring forward.
Lord Cashman (Non-Afl)
My Lords, the status quo might not be where we want, but where the Government are moving to causes me some deep concern, not least about integration and the dehumanisation of migrants and people seeking sanctuary. I want to bring to the Minister’s attention some interesting polling by HOPE not hate, which reveals that most people are not anti-migrant; they are angry that they do not have access to public services, a GP, hospitals and housing for themselves and their children. They are worried about the future and they need good schools. Does he not realise that, until we deal with these issues, people will always look for somebody else to blame, particularly the stranger in our midst?
Lord Hanson of Flint (Lab)
My noble friend makes a strong case for what I believe is the Labour Government’s intention, which is to rebuild public services and public trust in government. If he looks across the board at employment measures in the Employment Rights Bill, at housing measures in our housing proposals and at public transport measures with my noble friend here, he will see that we are trying to rebuild public services that have been hollowed out and to raise aspirations for an equal, prosperous society where everybody can contribute and reach their full potential. That is what the Government are trying to do. I take his point that people will always try to find scapegoats on issues where they feel uncomfortable that they are not having a fair crack of the whip. We need to encourage that integration and look at the social issues that my noble friend mentioned.
Lord Murray of Blidworth (Con)
My Lords, I say to the Minister and the Home Secretary that this set of measures is to be welcomed, but I am afraid that it does not quite go far enough. I have one specific question for the Minister on the Statement. The Home Secretary said this in the other place:
“We will never return anyone to be tortured in their home country, but the definition of ‘degrading treatment’”,
in Article 3 of the ECHR,
“has expanded into the realm of the ridiculous. Today we have criminals who we seek to deport, but we discover we cannot because the prisons in their home country have cells that are deemed too small, or even mental health provision that is not as good as our own”.
She is absolutely right to say that. She goes on to say that, in order to address this problem,
“we are seeking reform at the Council of Europe, and we do so alongside international partners who have raised similar concerns”.—[Official Report, Commons, 17/11/25; col. 512.]
I am afraid the reality is that that sort of international method to seek amendment to the European convention will take years and years.
Lord Hanson of Flint (Lab)
It is an objective that we have set, one that we are trying to achieve and one that the activities of the last few weeks have shown the Home Secretary to be very focused on delivering. We want to make sure that we can effect those changes. There is an appetite in certain parts of Europe to begin that dialogue and process. Perhaps I should say in conclusion that it is only a shame that the noble Lord did not do any of these things when he had the chance.
Sustainable Aviation Fuel Bill
(1 day, 2 hours ago)
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Lord Hendy of Richmond Hill
That the Bill be now read a second time.
Scottish and Welsh legislative consent sought, Northern Ireland legislative consent granted.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, I am pleased to present the Sustainable Aviation Fuel Bill for Second Reading today. I welcome the right reverend Prelate the Bishop of Chester and congratulate him on his forthcoming maiden speech in your Lordships’ House today. I look forward to hearing his contribution to this important debate, and to his many contributions in the months and years ahead.
If we are to be an outward, confident trading nation that is connected to the world and leading the way on innovation, we must move as fast as we can towards a greener, cleaner future for flying. Domestic transport accounted for 29% of the UK’s greenhouse gas emissions in 2023. Aviation is currently the second largest contributor, and it faces unique barriers to decarbonisation. By 2040 it is set to overtake road vehicle use as transport’s largest emitter. SAF will be key to decarbonisation, a drop-in solution that can be used today in today’s aircraft with today’s infrastructure. SAF also has huge economic benefits for the wider low-carbon fuels industry, potentially supporting up to 15,000 jobs and contributing up to £5 billion to the economy by 2050.
SAF is not the only measure that we are supporting to address emissions in the aviation sector. The Government are supporting the development of more efficient and zero-emission aircraft technologies, and we have announced a further £1 billion of funding for the Aerospace Technology Institute to help to spur green aerospace innovation. The Civil Aviation Authority, supported by my department’s funding, is shaping regulations for zero-emission aircraft through its hydrogen challenge. Alongside that, we are advancing airspace modernisation to enable cleaner, quicker and quieter journeys. The Government are also establishing a UK airspace design service with the Civil Aviation Authority and the National Air Traffic Service, which are working together to launch this by the end of the year.
Turning to aviation fuel, the Government, alongside industry, are working collaboratively to ramp up the UK’s SAF industry. The UK stands at the forefront of global efforts to decarbonise aviation. When this Government came into power, we acted immediately by laying the statutory instrument for the SAF mandate, which came into force on 1 January this year. We have invested £63 million in 17 projects through the Advanced Fuels Fund, which will drive growth, support good jobs and deliver emissions reduction.
The revenue certainty mechanism introduced in the Bill is a scheme designed to support UK SAF production to drive growth and opportunity across the country. It addresses the lack of a clear and predictable market price for SAF, one of the biggest constraints on investment in UK SAF production. The RCM builds on the established precedent of contracts for difference in the renewables sector. Under the RCM, an SAF producer will enter into a private law contract with a government-owned counterparty that sets a guaranteed strike price for SAF. If SAF is sold for under that price, the counterparty will pay the difference to the producer. If SAF is sold above the price, the producer will pay the difference to the counterparty.
It is important to emphasise that no final decisions have been taken on how the strike price will be determined. The RCM contracts must set a strike price that finds a balance between securing the appropriate protection for the producer and its investors and providing value for money for the scheme and the wider sector. This is a new and emerging market. This will be the world’s first SAF RCM, and it will derisk SAF projects by addressing barriers to investment in a nascent market that is using innovative technologies. Like similar schemes in the low-carbon electricity sector, this will help to provide greater certainty of future revenue, help to attract investment in first-of-a-kind SAF plants, and support growth and opportunity across the country.
Turning to the SAF Bill, it has four key areas. First, it will enable the Secretary of State to designate a counterparty that is wholly owned by government. Secondly, the Secretary of State can direct the counterparty to enter into private law contracts with SAF producers, guaranteeing a price for the sale of eligible SAF over a period of time. The mechanism is there to support the development of a first-of-a-kind plant by increasing investor confidence. While first-of-a-kind plants are likely to be more expensive than future plants, supporting them allows future, cheaper plants to get constructed and start producing SAF. The contract allocation process will be designed to maximise competition, with all contracts to be underpinned by robust technical and commercial due diligence to ensure that successful projects represent value for money.
Thirdly, the Bill will enable the Secretary of State to make regulations imposing a levy on suppliers of aviation fuel in the UK, in order to fund the RCM. That will allow the counterparty to collect the levy to cover the costs of issuing payments under contracts that are administering the scheme. It is right that the costs of decarbonising air travel should at least be partially borne by the aviation sector rather than the taxpayer. We are levying aviation fuel suppliers because placing the levy higher up the supply chain spreads costs across the sector, and because aviation fuel suppliers will benefit from the greater volumes and lower prices for SAF that the RCM will create. The RCM will provide support only if SAF is actually being produced. If a project fails, there is no obligation on the Government to provide support. While novel technologies can have high failure rates, we can support multiple technology pathways to minimise risk and strengthen the UK’s project pipeline.
Fourthly, the Bill will enable the Secretary of State to enforce certain provisions imposing financial penalties. The Secretary of State may impose a financial penalty on a person who fails to comply with levy regulations, or with requirements under regulations made to ensure that any paid-out surplus is used to benefit fuel suppliers’ customers.
This is a comprehensive and focused Bill that lays the foundations for a thriving UK SAF industry by delivering investment certainty, cutting emissions and securing the long-term sustainability of the aviation industry. More SAF supply and lower prices are good for the aviation sector and, ultimately, for those who wish to fly. The Bill is an essential part of securing our world-class aviation sector’s future, and we want it to do that sustainably. I look forward to engaging with noble Lords on this legislation. I beg to move.
Lord Davies of Gower (Con)
My Lords, it is a pleasure to contribute to this debate on the Second Reading of the Sustainable Aviation Fuel Bill. I declare an interest as vice-chair of the Aviation All-Party Parliamentary Group.
I do not intend to make a lengthy speech, but I shall touch on the essential ingredient of the Bill: the introduction of a revenue certainty mechanism to support the production of sustainable aviation fuel in the UK. We know that the Government currently impose an SAF mandate on the aviation industry whereby 2% of aviation fuel used in the UK must be SAF. That target is set to rise to 10% by 2030 and 22% by 2040—somewhat ambitious, I believe; nevertheless, that is the target.
I have met and spoken to representatives of all aspects of the industry, at their request, over the last year—airport owners, airline representatives and SAF producers, to name but a few. They all have one thing in common: a genuine desire to see the introduction of lower-carbon alternatives to conventional aviation fuel, which is very encouraging, particularly when you look at some other sectors.
Worthy of mention, perhaps, is that, on the domestic front, in 2022 the Royal Air Force and industry partners carried out the world’s first 100% SAF flight, in an RAF Voyager, an Airbus product with, I might add, wings constructed in Wales. We know that most of the SAF currently produced is HEFA-based: that is to say, made from hydro-processed esters and fatty acids—hence the acronym HEFA—that are derived from oils or fats such as cooking oil. A 2025 market report produced by companies in the sector stated that globally, 82% of current SAF capacity relies on HEFA technology, which is limited by available feedstocks. Moving forward, we look to second-generation and third-generation SAFs from solid waste and other materials.
The Climate Change Committee, the independent adviser to the UK Government on climate risk, said in its 2025 report to Parliament that SAF supply was sufficient to meet the Government’s current SAF mandate that 2% of aviation fuel must be SAF. However, it said that meeting the Government’s 10% target by 2030 was “uncertain” as production of different forms of SAF
“will need to scale up”.
The committee said that SAF producers must now start to diversify away from HEFA-based forms of SAF if the 2030 target is to be achieved.
That brings me to the main points that I wish to raise with the Government today. I believe that the Bill will be successful if it includes the necessary provisions to protect existing SAF production in the UK and maintain its competitiveness in the international market. A number of global renewables companies are in the process of developing techniques to produce low-cost, low-carbon SAF, and they have chosen to conduct business here in the UK. I know this to be true because I have met them. They see the UK as a convenient climate in which to operate. Coupled with the SAF mandate already in force, this could make the UK a leader in green aviation fuel production.
However, if the Government are serious about building a UK SAF industry and capturing the green jobs and fuel security benefits of doing so, the revenue certainty mechanism needs to be introduced at pace. Other major economies are moving ahead with their own plans to support domestic SAF production, particularly in Europe through the EU’s green deal industrial plan, which provides billions of euros in incentives. If UK policy incentives do not keep pace with these markets, this will at best delay production and at worst mean that companies move their global hub and associated production facilities overseas.
I ask the Minister: how seriously do the Government take the need to move at pace to retain companies developing SAF in the UK? Does he agree that if SAF production is to be viable for developers, they will require early access to the designated counterparty for revenue certainty mechanism negotiations ahead of the Bill’s ratification? Also, while they are keen to attract foreign investment, can the Minister say what steps the Government are taking to ensure that grants from the advanced fuels fund are directed to support British technology?
Finally, what assurances can the Minister give to the travelling public that the Government’s estimated impact on ticket prices, of between minus £1.50 and plus £1.50, is accurate? In Committee in the other place, the International Airlines Group commented that some elements have not been included in the calculation, noting that the cost
“will be nearer to £10””.—[Official Report, Commons, Sustainable Aviation Fuel Bill Committee, 15/7/25; col. 17.]
I look forward to the Minister’s response.
Earl Russell (LD)
My Lords, we too look forward to the maiden speech of the right reverend Prelate the Bishop of Chester, and we welcome him to the House. We are generally supportive of the measures in the Bill but have some concerns about areas of government policy that lie beyond its scope, and a few questions about the details.
To put the Bill in its legitimate context, it will help reduce CO2 emissions from aviation, but it is not a magic bullet. Alone, it is not a sustainable answer to the challenges we face. Aviation is, of course, one of the hardest sectors to abate and it is expected to show continued and rapid upward growth. Aviation is critical to our economy and our way of life. It moves some 240 million international passengers and 2.4 million tonnes of freight each year, adding £14 billion in GVA to UK GDP. The industry also supports 1 million associated jobs and £4.2 billion in associated passenger duty. Aviation accounts for 7% of UK carbon emissions, but this figure is due to rise significantly, to 11% in 2030 and 16% in 2035. Unless decisive action is taken on a broad range of fronts beyond the scope of the Bill, we will not meet our targets. Net zero 2050 is not optional; it is imperative.
We on these Benches do not wish to challenge any UK family’s right to a holiday. When we debate the Bill, we need to be clear that 15% of people in this country take 70% of the flights, and we need to change that. The Climate Change Committee was clear in 2023 when it said that SAF alone is a risky strategy. My party would reform air passenger duty to target the most frequent flyers. We would ensure that we have an escalating passenger duty so that those who fly the most frequently, pay more. We also oppose overexpansion of the airports, particularly in the south-east. This Government have chosen to take a different path, and it is for them to balance this path of increased airport expansion against their climate change commitments and targets. Therefore, we welcome the Bill but note our caveats.
SAF is widely considered as the main available pathway to decarbonise aviation. It can cut lifecycle emissions by up to 70% compared with conventional jet fuel. As we have heard, it is a drop-in fuel that can be used alongside existing aircraft and infrastructure. The SAF mandate passed last year starts at 2% and rises to 10% by 2030, and then to 22% in 2040. From 2040, the obligation will remain at 22% unless there is greater certainty of supply. The SAF mandate could, it is claimed, deliver up to 6.3 megatons of carbon savings each year by 2040.
We on these Benches welcome the revenue certainty mechanism. It will serve to strengthen investor confidence and unlock significant capital investment in the production facilities that need to be based here in the UK. It will allow for long-term stability and contracts through the guaranteed strike price. As the Minister said, this mechanism has been widely used in the renewables sector, and we know that it works. It will provide certainty to these suppliers. The approach is logical. The industry stands to benefit from cheaper staff, and the cost will be spread widely throughout the industry.
We recognise the UK’s approach, the long-term mandate, the proposed revenue support and the degree of certainty it will provide to help with this transition. Indeed, the UK is seen as an example of best practice, with ambitious targets and support mechanisms. Establishing a homegrown low-carbon fuel sector will bring significant jobs and benefits to the UK industry and wider society. Will the Minister update the House on the progress of ongoing negotiations with industry, running parallel with the Bill? Further, when will the Government be able to provide details on how the strike price will be set and what mechanisms will exist for adjustments? When do the Government anticipate that the first contracts will be signed?
While we welcome the Bill, we stress that SAF is only a first step. This is about not merely blending fuels but seeking alternative, more sustainable climate-friendly options for the longer term. That needs continuous investment and innovation in the next generations of technologies, including the battery/electric and hydrogen-fuelled. The Bill sets the policy framework, but crucial details are left to subsequent negotiations.
We have several key questions regarding the Bill’s ambition, scope and technical design. The SAF mandate requires 22% of jet fuel to be sustainable by 2040. This means that 78% of fuels will still be polluting just a decade before our net-zero deadline, so how will the Government achieve this target? In addition, the European Union has a higher target of 70% by 2050. What action will the Government take to bring further alignment not just with our EU partners but internationally?
We also have concerns about SAF feedstocks and the amount of cooking oil that is imported. It is important that we have a reliable domestic supply. We also note concerns about bioethanol and the closure of plants, particularly the Vivergo plant in Hull, and the impact of the US trade deal and subsidies on US ethanol. We are concerned about the potential for future bioethanol plant closures.
What consideration have the Government given to the inclusion of intermediate cover crops, such as catch and cover, as a scalable feedstock outside the HEFA cap to expand the resource base without competing with food markets? We believe that the transition to a sustainable aviation industry must be strategically linked to our existing industrial base. What actions are the Government taking to see that existing industrial plants are brought back into use, make sure that the planning system is fit for purpose and ensure that these plants can be brought online quickly?
While the Government are committed to undertaking a comprehensive assessment of these industrial sites to see that they are brought back online, transparency is paramount given the importance of public trust and accountability. The funding levy should also not place undue financial burden on air travellers, so how will the Government review the impacts to ensure that the levy does not include further burdens on those travellers? For the sake of public accountability, are the Government amenable to ensuring that the airlines report publicly on their use of SAF and the amount of it that they supply? We broadly welcome this Bill, but the Bill alone is not a sustainable long-term solution, and we call for greater monetary transparency and openness.
Lord Ravensdale (CB)
My Lords, I declare my interests as a chief engineer working for AtkinsRéalis and co-chair of Legislators for Nuclear. I look forward to the maiden speech of the right reverend Prelate the Bishop of Chester. I support the Bill, with the caveat that costs to consumers of these measures must always be front and centre, with all the freedoms that cheap air travel has opened up to people from all backgrounds in recent decades. But I accept that there is a strategic need to invest in the long-term sustainability of aviation fuel for the UK and that we need a revenue certainty mechanism alongside the mandate.
I have three broad points. My first is around the definitions in the Bill of fuels that are eligible for the revenue certainty mechanism. Clause 16 defines “sustainable aviation fuel” as,
“aviation fuel that is renewable transport fuel”.
“Renewable transport fuel” is defined in the same clause as,
“anything that is (or is treated as) renewable transport fuel for the purposes of Chapter 5 of Part 2 of the Energy Act 2004”.
It then refers to Sections 131D and 132. I proposed the amendment to what is now the Energy Act 2023 that led to Section 131D, which treats recycled carbon fuels and nuclear-derived fuels as renewable transport fuels. That amendment was therefore a key enabler for this Bill in enabling support for second-generation and types of third-generation SAF.
However, this requires secondary legislation to take effect and treat these fuels as renewable transport fuels. This has not been completely done for the surface transport renewable transport fuel order; it has been done only for recycled carbon fuels. But it has been done for the sustainable aviation renewable transport fuel order, so we have quite a convoluted legislative route here between various Acts and secondary legislation. Can the Minister please confirm that recycled carbon fuels and nuclear-derived fuels are within the scope of the revenue certainty mechanism outlined in the Bill?
Clearly, recycled carbon fuels will be very important in the near term. Over the medium to long term, nuclear could well be a significant source of synthetic fuels due to the potential economic efficiency it brings to hydrogen production, whether that is high-temperature electrolysis, with the current pressurised water reactor plants, or, looking further ahead, the sulphur-iodine cycle in advanced high-temperature nuclear plant.
My second point is around the powers that the Government are taking in the Bill. They have clearly stated that they do not intend to offer contracts for first-generation SAF based on hydrogenated esters and fatty acids—HEFA. Should this therefore be stated in the Bill? The Government should take only the powers they need, given that this Bill is a framework for the long term. There is a case that the powers in the Bill should be limited to second-generation and third-generation sustainable aviation fuels. I do not foresee any good reason why HEFA fuels would need such support, so I believe that this could be clearly stated in the Bill.
My third point is around value for money and competition. We rightly heard a lot of discussion in the other place around costs to consumers and analysis on the £1.50 impacts on airfares. The Minister clearly stated that we need to get the right balance between investors and consumers with the prices that are negotiated, but another way of looking at this relates to the competitive structure within the Bill. Of course, the way the Bill is structured around bilateral negotiations, rather than a competitive process, is what is needed for the SAF market at this stage, noting its immaturity. An auction process, such as that which we have for offshore wind, is not perhaps appropriate at this stage.
However, this Bill needs to be fit for the longer term. Competition is the way to drive down costs for consumers in the long term, as has been demonstrated in more mature markets such as offshore wind. So, in the longer term, we need that mechanism for auctions and competitions within the Bill but, looking through it, I cannot see a mechanism for setting up such a competitive process.
Other government legislation, such as the Energy Act 2013 for CfDs for renewable energy generation, clearly states that regulations made may include provision for,
“the determination of a matter on a competitive basis”.
We also have that in the Energy Act 2023 for low-carbon hydrogen, which clearly states:
“Provision falling within subsection (2) may include provision for … the determination of a matter on a competitive basis”.
This Bill makes no provision for regulations to cover the determination of a matter on a competitive basis, or indeed for allocation frameworks. I would be grateful if the Minister could state whether, in his view, a competitive framework is covered by the Bill as written and, if not, whether it should be. The Bill should be fit for the future to avoid the need for future legislation in this area, and it should be structured to minimise costs to consumers, which in the end will be enabled through competition.
Finally, this Bill will go a long way to realising second-generation and third-generation SAF production in the UK, but the Government need urgently to address broader challenges as well, not least our high industrial electricity prices. I have spoken to a number of companies that want to set up SAF plants and related infrastructure in the UK, but they simply cannot make the numbers stack up when our electricity is four times as expensive as competitors such as the USA. This is a very energy-intensive industry. Alongside the measures in this Bill, we need to address the fundamentals to ensure that we are being fair to consumers and minimising required subsidies. I hope the Government will think about the broader framework as well and not just see this as a problem to be addressed through subsidies.
The Lord Bishop of Chester (Maiden Speech)
My Lords, I thank noble Lords for their warm welcome, although I confess that sustainable aviation fuel was not a subject that I imagined I would be addressing when various noble Lords have given me advice about maiden speeches. I am grateful for their wisdom, warmth and welcome, and especially that of the doorkeepers and staff of this House. It seems that I should have taken them rather more literally when they said I would be working with high-flyers, and rather less literally when they pointed out that not everything was rocket science.
I speak as one born almost two and a half thousand miles from where we sit. Indeed, the first serious journey of my life was by air, back here to the UK. I am also a father and, like the rest of this noble House, entrusted with passing on entire to the next generation this good earth. Sustainability matters: the good Lord provided us with many things, but a spare planet was not among them, at least in this age. It is this balance of pragmatisms which means that I speak largely in support of the Bill. We need to be real about air travel being vital to modern life. It builds community, enables encounter and crosses divides.
My diocese of Chester serves communities in two nations and 23 local authorities. It spans urban and rural, wealth and extreme poverty. We gaze at the universe from Jodrell Bank. We support half of the Mersey’s industrial life. We rejoice in our schools and in Chester University, and we cherish our world-renowned zoo. Indeed, we also have Warrington, which, according to the i Paper, may be Britain’s hardest-working town—who knew? All are part of the life of the diocese, from the newish migrant to the most established among the Cheshire set, from those who take penalties on the sporting field to those who serve a very different type of penalty. We are linked to the world both by Liverpool John Lennon Airport, which is in the diocese of Liverpool just across the River Mersey, and Manchester Airport, where one actually lands in the diocese of Chester but disembarks in the diocese of Manchester.
To repeat myself, the diocese of Chester touches two nations. I serve a border people, just as I did in my former see of Berwick-upon-Tweed. In Chester, we have several parishes which are all or partly in Wales. My Lords—or, as I should say, “fy Arglwyddi”—“Esgob Caer ydw i a ’dw i’n dysgu tipyn bach o Cymraeg”. I apologise for my lamentable Welsh accent. I am learning a little Welsh, partly because I carried on with Duolingo long after lockdown but, much more importantly, because communication is a vital gift for those of us who nurture and curate community. In communication, we need to learn to speak and to listen. This is almost always done in person and directly. Indeed, I argue that one of our primary vocations in this noble House is to be with and to listen, for few disciplines are more vital in the search for wisdom—the search I so often witness in your Lordships’ House. The question for me is not so much how we can be great again, but how we can be kindly present. Greatness is great, but grace is greater.
Air travel does more than build community; it enables partnership and commerce. It is a vital part of the defence of our nation, as I witnessed when offering chaplaincy to our Armed Forces. It is the backbone of much international aid provision, and it enables care for people and the planet. Chester Zoo, for example, serves ecosystems around this world. The relative ease of transport is one factor in this. My experience working in the university sector showed just how much journeys matter in the service of education.
Air travel is vital and is here to stay, but its environmental impact must be addressed. This means that net zero matters, but it is not the only sustainability consideration. Mike Berners-Lee points out, when ostensibly discussing the environmental impact of bananas, that the problem is not only emissions but where they are released. Sustainable fuel is far from carbon neutral. Although it shortens the life cycle of released carbon in the sense that it releases carbon which has only recently been captured, it also moves that carbon into the upper parts of the atmosphere, where it is most harmful.
I welcome the Bill’s creation of an economic framework in which SAF becomes a viable investment. I welcome the balancing of the use between investment by directing costs towards those who make use of the service—in effect, taxing flying to enable more sustainable flight seems very sensible. By itself, though, the Bill does not do nearly enough. The move it encourages from first- to second- and then, vitally, to third-generation SAF is essential. HyNet, in which the University of Chester is a partner, and which makes use of the geology and industrial infrastructure in the north-west, is one other expression of this kind of investment. The production of green hydrogen, which combines captured carbon with sustainably electrolysed hydrogen, really is the holy grail here—let any budding and noble theologians note that I do not use that term in a technical sense
Alongside the Bill, we must invest in rail and in environmental road transport if we are to progress to sustainability. It cannot be right that more than half my return trains from this place to my home in Chester seem to be delayed or cancelled. What are the projected timescales for substantive provision of third-generation SAF? Is consideration being given to roll out this technology beyond aviation?
The Bill helps us play our part in global well-being in every sense. The question with which I come to this House is—as I mentioned earlier—not so much how we make Britain great again, but rather how we make Britain kind again. Such kindness and responsibility are what leads to greatness in a manner which actually lasts and embraces all. In this, this Bill matters. Our infrastructure must line up with our fundamental identity and core vocation if we are to thrive. The Bill represents one structural step, but it is a step in the right direction and I support it.
Lord Raval (Lab)
My Lords, I welcome the Bill and commend the Government on bringing forward a serious and long-awaited framework to decarbonise a sector that accounts, as the Minister said, for its ever-rising share of our national emissions.
Before I turn to aviation fuel, an altogether more uplifting and sustaining subject commands our attention. It is an extraordinary privilege and an honour to congratulate the right reverend Prelate the Bishop of Chester on his outstanding maiden speech. His contribution displayed the wisdom, moral seriousness, humour and quiet authority with which he will flourish in the work of this House.
If I may declare a personal interest, long before he was a Bishop, the right reverend Prelate joined a Senior Faith in Leadership programme which I directed. Across residencies with rabbis, imams, priests, business leaders, medics and public servants, I observed at first hand the depth of his character. He remained firmly rooted in his own tradition while offering genuine friendship across boundaries. In our digitally recorded conflict simulations—designed to test even the most devout—he kept his cool, listened with generosity and mediated with a humility that enabled others to shine. As I recall, he won.
I learned then that, although the right reverend Prelate had read mathematics at Cambridge, with every conventional avenue of worldly success open to him, he could not escape a deeper calling to ministry. As warden of Cranmer Hall, and vice-principal of St John’s College, Durham, he nurtured generations of leaders and equipped them to grapple with exactly the kinds of questions he raised a few moments ago—questions about community, purpose, presence and belonging.
The right reverend Prelate’s recent doctoral thesis offers a further window into his nature: a pastor-scholar attentive not to abstractions but to how real people grow, collaborate and serve. In it, he explores the call to integrate a leadership that is rooted ultimately in love—in the words of the right reverend Prelate himself,
“a combination of spiritual, emotional, rational, and pragmatic intelligence”,
reflecting a “relational understanding of humanity”. As was underscored by this and the preceding debate, we meet in a time marked by polarisation, disaffection, a growing distance from once-trusted institutions and the unsettling acceleration of trends intensified by digital habits, including, regrettably, the amplification of hatred that distorts our public square. The right reverend Prelate brings precisely the countervailing gifts this moment requires: not only the intellect, analytical clarity, logic and tech-savviness to address these forces—he is really brainy—but the pastoral breadth to speak, as he reminded us only moments ago, with the communication and genuine connection needed both for those who share his convictions and for those who feel unheard or left behind.
It is often communities whose social anchors have shifted that can be drawn towards simpler, louder narratives. The right reverend Prelate offers instead an approach that sees diversity not as a difficulty to be managed but as constituting a tapestry of human intelligences to be woven for the common good. Such leadership is not merely timely, it is essential. We look forward to, and indeed need, the right reverend Prelate’s statesmanship in this House.
I turn briefly to the Bill before us. The Sustainable Aviation Fuel Bill, working alongside the SAF mandate, provides the clarity and confidence that industry has long sought. With first-of-a-kind plants costing between £600 million and £2 billion, and typically running at a loss in their early years, the revenue certainty mechanism is a critical enabler of the investment this industry requires. This is precisely the sort of pragmatic investment-led policy that creates jobs, strengthens supply chains and positions the United Kingdom to lead in clean aviation technology—but ambition must meet delivery.
Industry modelling suggests that announced UK SAF projects may deliver only around half the volume required under the 2030 mandate unless further policy and investment steps are taken. Meanwhile, total UK greenhouse gas emissions, including aviation and shipping, amount to approximately 414 million tonnes of CO2 equivalent. Aviation will not decarbonise itself, and the Bill helps ensure that the UK does not fall behind while others race ahead. I therefore strongly support its direction of travel.
My question to the Minister concerns the feedstocks that will power this transition. As has been said, many early SAF pathways rely on used cooking oils, industrial residues and, critically, black bin bag and other residual wastes. As we rightly reduce such waste and increase recycling, how does the Government’s modelling ensure a stable, sustainable and ethically sourced supply? How will Ministers balance emerging SAF demand with existing waste-to-energy plants and local authority waste reduction targets so that one green ambition does not inadvertently undermine another?
Lord Grayling (Con)
My Lords, it is a particular pleasure to follow a very well-articulated tribute to the right reverend Prelate, to whom I also offer my congratulations on a very well-made, thoughtful and appropriate maiden speech. He will undoubtedly make a major contribution in this House, and I think all of us welcome him to this place.
I start, ironically, by referring to my entry in the register as an advisor to AtkinsRéalis as well as to Hutchison Ports. It is a particular pleasure for me to speak in this Second Reading debate. Two years ago, I was responsible for an amendment to the then Energy Bill which mandated the Government to set up a revenue support mechanism for sustainable aviation fuel in the UK. I stopped after getting 56 Conservative signatures to the amendment, which proved enough, just about, to finally jolt the Government, particularly the Treasury, into action and starting a process which has brought us to this point today. I am glad that I will be speaking alongside my noble friend Lord Harper, who followed that by playing a significant part in delivering us to the point we are at today. My noble friend is another example of why this is a genuinely bipartisan Bill. There are debates, differences and discussions about the detail, but there has been strong support across all sides for the principles that underlie the Bill today.
I was very pleased at the time that Ministers then recognised that they needed to do something and I am very pleased that Ministers in the current Government have continued the work that we started and have delivered this piece of legislation, which I strongly support, albeit with some caveats and questions which I want to push the Minister on today, in Committee and subsequently. I think there are some things that need to be tightened up and some questions that need to be answered, but the principle is absolutely right.
For me, the reason this all matters is very simple. The aviation industry is under growing pressure over its carbon footprint. Whether you are an opponent or a supporter of net zero is, to my mind, completely irrelevant to this debate. This is actually about the market pressures on the airlines themselves, particularly from a younger generation of potential customer among whom flight shaming has become more visible. The industry has to address those concerns, and we have to help it address those concerns and its impact on the environment.
It is not just about politics, it is actually about what is commercially necessary for what is one of our most important economic sectors. Of course, that is why Virgin Atlantic, Boeing and Rolls-Royce collaborated on the ground-breaking transatlantic pioneering flight using sustainable aviation fuel two years ago. We were on that flight and it was a very unique experience. It is why I know that most of the industry strongly supports this legislation. It is why the last Government brought forward plans for the SAF mandate and why this Government continued to introduce the mandate at the start of this year.
Why then do we need a revenue certainty mechanism of the kind set out in the Bill? Our airlines could just buy SAF from overseas. The initial product being used in this country will almost certainly come principally from the United States. There are two very good reasons why the Bill remains necessary. First, our aviation sector is, as I say, a key part of our economy; it is the strongest sector in Europe, it is fundamental to our regions and to the economy of so many different parts of the country. Do we really just want to import the fuel it needs for the future, or is it better to encourage serious investment here, of the kind that companies such as alfanar are planning for Teesside—a part of the country that clearly wants and needs investment?
Even in a world of free markets, sometimes I really think we need to make sure that we do some important things for ourselves. I think we can have a successful SAF sector in the UK that brings investment and creates jobs, but SAF plants require a very large amount of capital, and investors are always cautious about new markets and developing technologies. The truth is that the first SAF plants in the United States, of which there are just a handful, received investment support from the Biden Administration. The EU is poised to introduce its own revenue certainty mechanism. The Minister was right to say that ours is the first in the world, but it is not going to be the last, so for me it comes down to a straightforward choice: do we want a SAF industry in the UK or do we just have to depend on imports? I do not think we have to. My view is that we need that industry in the UK and I strongly support the Bill as a result.
There is another reason for caution about buying SAF from elsewhere: I think the UK approach is much smarter and much better. In the United States, SAF is being produced primarily from corn. In the EU, SAF will be produced, as we have heard, from what is called HEFA—basically, used cooking oil. I absolutely do not support growing fuel in fields that could be used for growing food. I have long been uneasy about the practice of growing crops for purposes other than food, but I think it is mad to use the space that the world needs to feed itself to grow aviation fuel. The UK is right also to accept for now, I think, that HEFA will be needed for the time being, but we need to understand that it is not going to be there for ever, and it is right that its future use is capped.
There are serious question marks about the availability of HEFA and there is also the suggestion that it is often not really used cooking oil at all but near-virgin oil that has been doctored to create the semblance that it has been used in a kitchen. Of course, much of it comes from the Far East, and SAF mandates are going to spread there too, so there is absolutely no certainty of supply going forward. The UK’s approach, which has been to push quickly towards SAF produced from biowaste, of which we have quite a lot here already, and then in due course from municipal waste, has to be the right one. To me, this really is the nirvana of sustainable aviation fuel: if we can turn our waste—what we put in our black bins each week—into fuel oil, removing the impact of landfill, incineration and the rest, that has to be a good thing.
I have a question for the Minister, and this is the first of the points I want to put to him. There are rumours around that the Government want to allow first-generation SAF from crops here. I really hope that is not true and I ask the Minister to set that to rest by confirming that there are no such plans. We should not be growing agricultural crops to turn into fuel. We have taken a much smarter approach in this country to delivering aviation fuel that has a positive environmental impact. We must not see that compromised in any way.
There are a number of other issues I have with the Bill that I want to put to the Minister. I want to see these issues addressed in the debates ahead, and there is at least one that I am very committed to asking the Government or this House to put in the Bill.
My first concern is about how the levy is applied on conventional aviation fuel manufacturers. I know that the Government’s initial intent was to assign the levy based on the previous year’s market share. I genuinely do not think that approach is viable. It misses out the impact of changes in the composition of the market, which could mean that a new player faces a period without charges and is able to undercut the existing market. The levelling-up process would then come way down the track, after a long period of time when there had been a real price discrepancy between the two and a competitive advantage to the newcomer.
Also, if someone disappears from the market—and we have seen two refineries close in recent times—such a delay will also cause complications for the counterparty. So, the mechanism to apply the levy has got to be immediate. I do not understand why it cannot just be done per barrel of fuel as it leaves the refinery or the terminal. I think the Minister needs to explain to all of us why that cannot happen. I appreciate that that is going to come in the secondary legislation, but we need to understand how it is going to be applied, and it has got to be done in a timely way. It cannot happen way after the event.
I was grateful to the Minister for spending some time with me and allowing his officials to spend some time with me. I know they have thought about this, but I ask him to now put some of the Government’s thinking about this on the record, so we can understand where it is going as we go through the Bill.
My second concern is there has got to be a direct link between the commencement of the levy and the opening of the first SAF plant. We do not realistically expect the first SAF plant in the UK to be operational much before 2030. So, the levy cannot start until close to 2030, otherwise we would be raising money—which passengers are paying more for—and just leaving it sitting in the bank. It is important that there has to be a clear linkage between the arrival of SAF manufacturing in the UK and the application of the levy.
On the timeframe, there is one other thing I would just ask the Minister to consider. At the moment, because there is not an awful lot of SAF capacity anywhere in the world, we must not apply the mandate on a ratchet scale up to 2030 in a way that is detached from the reality of the availability of SAF in the marketplace. I would ask him to keep monitoring the mandate as we go towards 2030 and make sure we are not actually out of kilter with the availability of SAF for the airlines to put in their planes.
The third concern I would ask the Minister to address is there has got to be no legal doubt whatever that the proceeds of the levy will be used only to support investment in the manufacturing of SAF in the UK. There has just got to be a proper safeguard against any other part of Government going, “Oh, there’s some money there. We’ll have that for something else”. It does happen; it has happened in other countries in similar areas. We need that certainty in the Bill.
I think the most important addition to the Bill—and I would ask the Minister to go away and think about this, because it must be in primary legislation, so there is no doubt in the courts going forward—would be to make it absolutely certain that the revenue support mechanism is going to be used only to support the production of SAF in the UK. There has got to be no legal doubt about this and no loopholes whatever.
The Government already know that there are loopholes out there and there are people trying to take advantage of them. The Government have already had to stop one multinational in the hydrogen marketplace from benefiting from UK financial support while planning to produce part of its product in the Middle East. It would be relatively easy for a manufacturer of SAF to import an intermediate fuel into the UK, process it at a SAF plant and claim the benefits the RCM would offer. The legislation has got to be absolutely categoric: that cannot be allowed to happen.
I would like the Bill to say very explicitly that any certified fuel that is a component of SAF has to be manufactured in the UK and that only the feedstock can be imported. Of course, there will be times when we buy biowaste from other European countries—that is perfectly reasonable. But you cannot be allowed to produce a three-quarters-finished fuel that you just adjust, turn into SAF at the end and claim that that should benefit from the revenue support mechanism. I would only countenance the feedstock as being imported, and hopefully, as we see the move towards urban municipal waste and even sewage turned into fuel, even that will not be necessary.
It is really important that we have that in the Bill, because courts do strange things. They interpret laws in different ways, sometimes in ways that those in Parliament do not expect or do not want to be the case. We have got to have absolute certainty on that in primary legislation. I mention this now to the Minister ahead of Committee to give him advance warning that I really want to explore this in detail.
I believe the Bill to be essential to the UK, benefiting from a new industry that we have ourselves mandated as essential to one of our most important and oldest sectors. It makes no sense to tell airlines to buy SAF but then ignore the opportunity to produce it here and let other Governments incentivise their own investments and industries instead.
I am very glad that both the last Government and this one accepted the intent behind that amendment two years ago, and I look forward to seeing the Bill pass into law. Our job in this House is to make sure it leaves no loopholes and then to encourage the Government to get on with the secondary legislation, so that contracts and the constructions can begin as quickly as possible.
Lord Berkeley (Lab)
My Lords, I support the Bill. I am not often known to be supporting aviation, but this is the first time there has been a serious attempt to reduce its carbon emissions. At the same time, it can be used also to help the millions of households across Britain that actually do not have access to gas. I spoke about this in a debate on the energy Bill earlier this year and I declare an interest as the owner of a house that does not have gas, so we have to use oil.
There are 1.7 million homes in the UK, serving about 4 million people, that are off the gas grid and rely only on heating oil. They will be suffering at the present time, when it is really cold. They are mostly in rural community areas, where alternatives such as heat pumps work sometimes but not always.
It has come out of the recent debate that HVO, hydrotreated vegetable oil, is a renewable fuel that can cut emissions from home heating by up to 88% compared with kerosene, which is used at the moment. It works as a drop-in replacement—you just tip it in the tank. I do not know, because I have not tried it. The reason I bring it up again this morning is that HVO is a by-product. It is only about 30% of the output from SAF and, as SAF production goes up, we can increase the domestic supply of HVO.
Ministers have rightly said that HVO will play a vital role in our aviation decarbonisation journey, and I certainly agree with that. But it looks as if the SAF mandate will accelerate that growth from what I think is about 2% of jet fuel demand today, rising to 10% in 2030 and 22% in 2040. That is enough HVO to provide a 66% or so blend of heating oil, which will sort out the decarbonisation needs of most off-grid homes. Especially at this time of year when it is really cold, this is a benefit not only for the aviation industry but for people who live in the countryside or cannot connect to alternatives.
We need the right mechanism, as other noble Lords have spoken about. Section 159 of the Energy Act 2023 gives the Government power to create a renewable liquid heating fuel obligation, which mirrors what the Labour Government did with the transport fuel obligation last time. I was really pleased, therefore, to read an announcement from the Government on Tuesday this week about a consultation on this. The industry that provides SAF and other similar material, working with their off-grid customers, has built up a considerable bank of evidence and data to show that this policy will actually benefit both consumers and the environment. I hope now that the consultation will allow things to move forward at pace.
I was interested to read that the Irish Government recently confirmed their intention to implement a renewable heat obligation, confident that their feedstocks are available to supply their off-grid homes. That is terribly important, as the noble Lord, Lord Grayling, referred to. If there are enough feedstocks, the market will work.
This is an opportunity to deliver a win-win: cleaner skies and warmer homes. I hope that my noble friend the Minister will discuss this with his new ministerial colleague, the noble Lord, Lord Whitehead—who was introduced today and has a lot of experience—confirm the Irish Government’s conclusion and commit to implementing Section 159 swiftly following the consultation.
On that basis, I hope we can have a win-win solution for aviation and home heating.
Baroness Jones of Moulsecoomb (GP)
My Lords, I welcome the right reverend Prelate the Bishop of Chester. I was absolutely delighted to hear him remind the House that there is no spare planet. Quite honestly, the rate at which we humans are trashing our planet suggests that we actually do think we can go to Mars, or something spectacular like that, and still live a good life. However, I point out that if we destroy this very beautiful planet, or make it increasingly less beautiful and diverse, our lives will be utterly constrained as well.
I like to say something nice about the Government occasionally, if I possibly can. I noted the Minister’s statement at the start that this Bill aims for a greener, cleaner future for aviation. That is a very noble aim, but I am afraid it is impossible unless we radically rethink how we are going to deal with it.
About 25 years ago, when I was on the London Assembly, we assembly members and the mayor, then Ken Livingstone, had a presentation by Heathrow representatives. They promised—this is 25 years ago, remember—that Heathrow could become sustainable within a few years. They claimed it should be given permission to expand because it would soon be polluting less.
It took us a couple of years, but the mayor and the assembly soon realised that Heathrow had lied. It still lies about expansion and pollution. It lies about how important it is to the economy and about how much public subsidy it gets. The truth is that the aviation industry cares about profits, not the environment. You can no more have sustainable aviation than you can have a crocodile with a conscience; it just does not exist.
There is absolutely no techno fix for the pollution that aviation causes. The Royal Society worked out that to reach net zero for aviation fuel—is this what we are snappily calling “jet zero”?—we need at least half the UK’s agricultural land to grow the raw materials. That would be over two-thirds if farmers only grew rapeseed.
That means less wheat, barley and fodder for livestock. That also means higher prices for cereals and food. We already have food inflation due to floods in some areas and droughts in others. Last year, the 2025 UK harvest was the second worst on record. If the Government want farmers to grow jet fuel instead of food, prices in the shops are going to rise in order to keep the planes flying.
As we enter the era of climate crisis impacting on world food production, our country will have less farming land but will want more of it devoted to support the oxymoronic idea of sustainable aviation. In the past 25 years, the UK has lost 771,000 hectares of farmland, contributing to a 12% fall in food self-sufficiency. That decline is about to get worse with the disastrous planning Bill the Government have passed.
I love the effort going into expanding renewable energy and battery storage, but as the Climate Committee has pointed out, that does not stop aviation becoming the number one contributor to emissions in the next few decades.
This Government have lost all claim to be a green Government, with their attack on nature in Britain and their decision to expand aviation. The go-ahead for the expansion of London City Airport, Luton, Gatwick and Stansted means an extra 51 million passengers per annum. If the Government add Heathrow to that total, that is an extra 65 million passengers. If all those extra flights result in either extra emissions or extra farmland taken up growing jet fuel, that means rising fuel prices and more public subsidy.
Of course, the reality is that we will not switch two-thirds of our farming land to jet fuel. The whole Bill is greenwash, designed to provide political cover for aviation expansion and bigger profits. The real solutions are to tax private jets and the ultra-frequent flyers, to stop short-haul flights, and to make train journeys cheaper and more reliable. The solution is less flying, not this fiction of sustainable aviation.
A noble Lord mentioned “flight shaming”; I am not trying to do that. It is understandable that families want to go on holiday once a year, but as the noble Earl, Lord Russell, pointed out, 70% of flights are taken by 15% of the population, which suggests that those people are grabbing their unfair share of the pollution that we can each expect to produce. Therefore, I ask the Minister: does he approve of making train journeys cheaper and more reliable, and putting a tax on private aircraft and frequent flyers?
I said to the owners of Heathrow 20 years ago—much to their annoyance, “If you want to show how environmental you are, then go ahead and fix the major problems of noise and air pollution and stop ruining the climate. Once you’ve done that, then, and only then, can we have a conversation about expansion of airports and of aviation”. I am so disappointed that this Government cannot see that. I recognise that they feel the need to explain that aviation can go on just as it has in the past, but that simply is not true.
Lord Harper (Con)
My Lords, I declare my interest as a non-executive chair of RVL Aviation.
I too congratulate the right reverend Prelate on his excellent maiden speech. Before he started speaking, I wondered whether he was going to set out the Church of England’s policy on sustainable aviation. I was pleasantly surprised by the excellent content of his speech and look forward to his further contributions in the House. The bit I will particularly remember is his injunction to be “kindly present”, which we should all strive to do. If I ever require someone to provide a reference for me, I will think of the noble Lord, Lord Raval, who spent most of his speech, rather than talking about the Bill, saying fantastic things that the right reverend Prelate would have been too humble to have said himself. He painted a rich picture of the right reverend Prelate’s skills, and I look forward to his future contributions.
The noble Baroness, Lady Jones, will not be surprised to learn that I disagreed with almost every word of her speech. On flying, she referred to the ability of people to go on holiday. We had a very interesting test case during the pandemic, when, in effect, we told people—albeit not for this reason—that they could not fly. Listening to constituents then as a Member of Parliament made clear to me the breadth of reasons why people value aviation. The right reverend Prelate the Bishop of Chester touched on some of them, including aviation bringing people together and enabling people to see friends and family around the world. It is not just about holidays; it is about bringing people together.
I also do not share the noble Baroness’s distaste for frequent flyers. Most of the people who do frequent flying are those involved in business, in global investment and in growing both the British and the global economy, which is essential to generate the wealth that we will need to green the economy and to make it more sustainable. We will get public acceptance for a lot of this only if we also make people better off, so it is incredibly important that we support flying and enable more people to fly. I want people who currently do not have the opportunity to fly, both in the United Kingdom and globally, to have the chance to do so.
Where I do agree with the noble Baroness is that we absolutely need to do that sustainably. It will be done by the use of technology. Before I move on to the subject of the Bill, it is worth me saying that a range of technologies are available. When I was Secretary of State, I was surprised by the unanimity across the aviation industry—airlines, airports and the aerospace sector involved in developing technology and manufacturing planes—on the importance of sustainability and decarbonisation. We never had any arguments with the industry or had to push it in this direction; it was already there and moving at pace. I found that incredibly encouraging.
Innovative companies based in the United Kingdom, such as ZeroAvia, are working on the technology around hydrogen fuel cells, which will be available in the future. I will discuss SAF in a moment, but there are also companies working on electric planes. There is also the important work that the Government are doing on airspace modernisation, which we kicked off when I was Secretary of State; that will also make a contribution. To get to net-zero aviation, we will also need to use—for the bit you cannot abate with plane technology—carbon capture and storage, and I know that a great deal of work is going on in that space, too.
I was very pleased to see the Government carry on our Jet Zero Council, which they now call the Jet Zero Taskforce—the renaming is a minor detail. That brings together industry, government, academia and, importantly, representatives from the Climate Change Committee, who provide helpful advice. They therefore learn about where the technology has got to, to inform the advice that the Climate Change Committee then provides to the Government. That is very welcome.
On sustainable aviation fuel, my noble friend Lord Grayling referred to the VS100 flight that Virgin Atlantic put on; it was funded by Virgin Atlantic but also supported by a contribution from the taxpayer because of a competition run by my predecessor. That flight took place in November 2023 and captured enormous public interest and attention. It was one of the rare occasions that I was able to do the morning broadcast round standing in front of a plane at Heathrow Airport—a great backdrop. It also had a good response from broadcasters, who found the whole thing very interesting and who did great explainers for the public on some of this technology; they wished us well with the endeavour, which is not something that broadcasters usually did to Ministers doing the morning broadcast round. It captured attention not just in Britain but around the world. When I went, shortly afterwards, to the climate change conference, COP 28, I was able to speak about that flight, which was a very good example of Britain leading the way in this area and demonstrating the value of technology.
We then started developing and consulting on the SAF mandate, which, in effect, provides the demand side of the equation for sustainable aviation fuel. I am very pleased again that, with the present Government, there has been enormous continuity in policy in this area.
On the supply side, the Minister referred to the excellent work being done by the Aerospace Technology Institute, which I also support. As has been mentioned, including by my noble friend Lord Davies of Gower, the capital cost of the domestic production of sustainable aviation fuel has been supported from the advanced fuels fund. I think the third round of that took place recently; the first round happened when we were in government. I would be interested if, in his winding-up speech, the Minister could provide us with an update on where the development of those plants has got to and when we might see more. My noble friend Lord Grayling suggested one timeframe for that, as did my noble friend Lord Davies. If the Minister gives us an update on progress in this area, it would be helpful if he also sets out something that my noble friend Lord Grayling also touched on, which is the value that the Government place on domestic production of sustainable aviation fuel.
There is a national resilience case for that, because again we saw during the pandemic that countries, regardless of the contractual obligations that businesses had, very much protected their domestic supply of this sort of fuel. We can quickly find that our reliance on getting this from overseas rapidly dries up. Having some domestic resilience is very important, and I would be grateful if the Minister could set out the Government’s view.
The specific purpose of the Bill is the revenue certainty mechanism. My noble friend Lord Grayling touched on this, and I clearly remember what I might term his rebel amendment to force the pace. It was good that he provoked that debate. I must confess that, when I was Secretary of State, I took quite a bit of persuading about the need for the revenue certainty mechanism. I will say a few words about that, because it will be helpful in posing some questions to the Minister, both here and when we are in Committee.
When the industry and my noble friend were lobbying for this, I was clear that I wanted to understand what the market failure was that we were trying to fix with the revenue support mechanism. We have ended up with a clear enunciation of it in the Explanatory Notes for the Bill. In his opening remarks, the Minister touched on this and talked about how the need to develop first-of-a-kind technology, which is not currently in existence, requires a significant amount of capital and is very high risk.
The caveat is that, when I had some round-table discussions with some of the investors, both here and in the United States, they understandably quite liked the idea of some guaranteed demand through a mandate. They also quite liked the idea of guaranteed pricing through a revenue certainty mechanism. I gently pointed out to them that they have to take some risk in this process in order to justify the return. The trick here is not to remove all risk, but to get the risk to the level of comparable investment projects, so that we make sure that we get appropriate levels of investment. But we must guard against what has happened in some of the rest of the energy sector, with very long-run contracts guaranteeing returns to investors that are higher than are strictly necessary, with the costs being paid by the consumer.
It is important that, when the detailed work is done, we get the balance right between securing the investment in domestic SAF production, minimising the cost to the consumer and getting the length of the contractual terms right. I do not pretend that that is easy, but it will be important to do it. In Committee, I think we will be discussing how to design the levy obligations on the fuel suppliers. My noble friend Lord Grayling touched on some of the detailed questions, such as how the levy interacts with the UK’s emissions trading scheme, the CORSIA scheme that has been set up internationally and the EU scheme, particularly as the free allocations for aviation under the emissions trading scheme expire.
Some argue that payments under the emissions trading scheme should be used to fund sustainable aviation fuel plants, rather than creating yet another obligation. I would be interested if the Minister set out how he and the Government see those schemes interacting with each other to ensure that consumers do not pay more than once.
My final point, which was also touched on by my noble friend Lord Grayling, is about the composition of sustainable aviation fuel and the international dimension to this. It is quite right—I agree in principle with what my noble friend Lord Grayling said—that we should not be using land that could be used for food crops to produce SAF. But there is one thing that we need to be realistic about, which maybe we should not have to but we do.
There is a big lobby in the US, which my noble friend touched on, that wants to use corn ethanol for SAF. Normally, I would be very much against that. The only argument in favour of it is whether it may be necessary to engage the United States Administration, who are not enormously well disposed towards sustainability and net zero, about what international agreements we may need to have with them, because it is really important in this area to keep the United States Administration broadly aligned. Given that aviation is by definition an international industry, it will be quite difficult to decarbonise the industry if the United States is heading in a different direction. Therefore, I would be interested to know what discussions the British Government are having with the United States Government about trying to keep them in this space and what sorts of discussions are going on with fuel providers. The only argument for using food crops for this would be that if by doing so we could keep the United States in this space.
However, in summary, I strongly support aviation and strongly support making it more sustainable. That will be done not by stopping people flying but by using technology—all the technology. Sustainable aviation fuel is the technology solution that is going to be available first—it is available now. The Virgin flight that I referred to demonstrated that you can have a 100% sustainable aviation fuel flight that works. It is a drop-in fuel with existing technology, and the revenue certainty mechanism that is enabled by the Bill, if the design of it is correct—we will test some of that in Committee—will help get that domestic production up and running. With those caveats, I support the Bill and look forward to further debate in Committee with the Minister and, I suspect, a number of the noble Lords who are here today.
Viscount Trenchard (Con)
My Lords, I add my congratulations to the right reverend Prelate the Bishop of Chester on his entertaining and informed speech. He should moonlight and take a second job on the Climate Change Committee.
It is a great pleasure for me to follow my noble friend Lord Harper, who rightly stressed that we should continue to lead the way in developing new technologies. Perhaps the Government could pay more attention to the absurdly high level of electricity costs in this country and the high levels of taxation.
I thank the Minister for introducing the Bill today. I have been a frequent flier for most of my working life and still travel regularly overseas, especially to the Far East. So I declare my interest as set out in the register, especially in connection with advising Japanese companies and British companies with regard to their Japanese business.
My noble friend Lord Grayling knows a great deal about this subject and made a compelling speech. The rapid adoption of SAF is still broadly supported by the Conservative Party, but I believe the sands have been shifting on the whole question of how quickly and at what cost businesses and individuals should be compelled to adopt a net-zero and clean energy agenda. In particular, if the larger carbon dioxide emitters, such as China and developing countries in Africa and Asia, are not imposing similar constraints on market forces in their countries, logic suggests that we should not do so either.
It seems to me that the effect of the Bill is to distort the market for sustainable aviation fuel. I suspect that the cost of this distortion will be borne ultimately by consumers. The Bill is about the creation of a revenue certainty contract, which will, in effect, insulate the quango which will be created as the counterparty from market risk. I am very sceptical about the Government’s claim that the net cost per passenger of implementing the revenue certainty mechanism will be between minus £1.50 and plus £1.50 per passenger. How can this be possible if the cost of the SAF itself is going to be more like £10 per passenger? In any event, ticket prices have soared beyond our wildest expectations over the last few years, so whether the cost of the RCM amounts to one cup of coffee or 100 cups of coffee is not really relevant.
I am not certain that forcing an increase from 2% to 22% of the SAF component of aviation fuels over the next 15 years is likely to save the planet. Can the Minister tell us whether the Government will interfere with airlines’ freedom to refuel their aircraft in other jurisdictions at will, including those that either have not imposed any mandate for inclusion of SAF or have imposed a less onerous one? I am not sure that the performance in miles per gallon of cars using E10 fuels is not slightly inferior to that of cars using E5 fuel, and I ask the Minister to tell the House what evidence there is that fuel economy and, crucially, safety are not at all impacted by the quite steep and burdensome mandate imposed on an already challenged aviation sector.
My noble friend Lord Davies of Gower in his interesting speech encouraged me to be more positive about SAF and to recognise its benefits and its importance. But he did point out that the Government’s mandate will be difficult to achieve without diverging from HEFA-based SAFs, and there is doubt about whether second- or third-generation SAFs will work well. There are more than 160 ships powered by small nuclear reactors, and the noble Lord, Lord Ravensdale, rightly drew attention to nuclear power as a potential source of power for aircraft. In particular, he pointed out that high-temperature gas-cooled reactors enable the production of hydrogen at scale, and hydrogen technologies are already capable of powering aircraft. Airbus plans to have commercial hydrogen aircraft in service by 2035. Unfortunately, the Government’s hydrogen strategy does not recognise the role of nuclear in producing hydrogen at all. I ask the Minister why this is the case. Our Japanese friends are disappointed that we are moving so slowly with their project to develop high-temperature gas-cooled reactor technology with the National Nuclear Laboratory and believe that Poland may be a better partner than we are likely to be.
Can the Minister tell the House about the counterparty? He is going to have a great number of powers to direct it. How many people will it employ, and what does he expect will be its annual cost of operation? The Bill is designed to enforce a piece of industrial policy. Is the Minister certain that the counterparty will be well placed to manufacture SAFs competitively in this country, given our very high energy costs? Surely, if either the taxpayer or the consumer is going to have to pay for the cost of the counterparty and its activities, it follows that the legislation should require the Government to monitor costs and that the counterparty should be required to prioritise British technologies. Can the Minister tell the House why the Government declined to accept a perfectly reasonable and sensible amendment to require transparency over the effect of any revenue certainty contract on ticket prices, on both a one-year view and a five-year view?
I note that Jonathon Counsell of IAG, in his evidence to the Public Bill Committee in another place, raised the question as to whether the Government’s estimate of plus £1.50 to minus £1.50 really included all elements of the counterparty’s costs. If the Government did not like the amendment moved by my right honourable friend Richard Holden, could the Minister not undertake to bring forward the Government’s own amendment to achieve the same purpose? It is beyond doubt that the public and the consumer are entitled to know that the costs of this new foray into industrial policy will be strictly monitored.
How will the Minister ensure that the counterparty will ensure that any contract leading to the establishment of a new factory will prioritise the use of British technologies? We would certainly welcome the Minister telling the House how we can ensure that new factories will prioritise the use of British technologies. I look forward to hearing the Minister’s winding-up speech and to working with other noble Lords to improve the Bill, which is absolutely necessary.
Viscount Hanworth (Lab)
My Lords, the carbon content of fossil fuels has been accumulating over eons by the removal of carbon dioxide from the earth’s atmosphere via biological processes of photosynthesis, depending on chlorophyll and powered by sunlight. Such processes are highly efficient in their use of energy but they are far too weak and gradual to remove from the atmosphere the quantities of carbon dioxide that have been emitted by burning fossil fuels.
Capturing this carbon dioxide requires artificial processes that are far less efficient than the biological processes and far more consumptive of energy. Only by expending a large amount of energy that could be supplied by nuclear fission, and possibly in the long run by nuclear fusion, can there be any hope of cleansing the atmosphere of its excess carbon dioxide. According to a recent analysis, about 3% of carbon emissions are due to aviation. This figure is rising. We have heard that it is about 7% of UK emissions. Jet aircraft consume high-octane kerosene, which is refined from petroleum. Each flight powered by hydrocarbons adds to the burden of atmospheric carbon dioxide. If global heating due to carbon dioxide is to be addressed, something must be done to staunch the carbon emissions of aviation.
The problem is that there is no viable means of powering long-haul aviation other than kerosene, which has an unequalled energy density. Moreover, the technology of jet turbines, which has developed over the past 80 years, is not easily replaceable. Electric batteries or hydrogen fuel cells can be used in short-haul aviation, but their weight penalty precludes their use in long-haul aviation. Hydrogen, which has been used to power space rockets, has been proposed as an alternative for aviation fuel. Hydrogen has a very high energy content per mass, which is significantly greater than that of gasoline, but it has a low energy density per volume, meaning that it requires a large space to store it, even when compressed or liquefied. Liquid hydrogen has an energy content of about 5.6 megajoules per litre, whereas gasoline has about 32 megajoules per litre—almost six times as much. To use hydrogen to power aircraft would require a technology radically different from the current aviation technology, which would take a long time to develop. Its efficiency in transporting passengers would be severely limited by the storage requirements of the fuel.
If we are to sustain the present aviation technology, we need to develop sustainable aviation fuels, or SAFs. The ultimate requirement for such fuels is that they should emit to the atmosphere no greater quantities of carbon dioxide than are removed from the atmosphere for the purpose of creating their carbon feedstock. At present, so-called sustainable aviation fuel, which forms a very small proportion of the total supply of fuel for aviation, depends on a carbon feedstock that originates in biomass. Such aviation fuel cannot be relied on to reduce significantly the net emissions of carbon dioxide. They can have a beneficial effect only if the net supply of biomass can be increased to cover their use.
There are three cases to consider. First, the carbon feedstock might be grown for the purpose without displacing any other processes, but this is unlikely to happen. Secondly, the feedstock might be freely available, such as materials that would otherwise be consigned to landfill. Finally, and at worst, the production of the feedstock could displace other activities, such as the growth of foodstuffs.
Only in the first case, where there might be a net increase in photosynthesis, could there be a subtraction from atmospheric carbon dioxide. In the other cases, the emission of carbon dioxide from burning the fuel would be more rapid than if it had resulted from the natural decay of the feedstock, which might gradually add carbon dioxide and methane to the atmosphere.
It should be observed that wood, unless it is burned, will lock away carbon for many human generations. Therefore, forestry products should not be used as a carbon feedstock for synthetic fuels. Sustainable aviation fuel will deserve its name only if its carbon content can be removed directly from the atmosphere via the so-called technology of direct air capture.
This Bill has the ambition of stimulating the production of sustainable aviation fuels. It proposes to do so via minor financial interventions modelled on those that intend to encourage investment in renewable means of generating electricity.
The Bill itemises three levels, or generations, of SAF production. The first-generation SAFs are made from hydrogenated esters and fatty acids derived from oils or fats, such as used cooking oil. The second-generation SAFs are to be made from waste sources, including so-called municipal solid waste. The third-generation SAFs, also known as power-to-liquid aviation fuel, are to be made by combining hydrogen produced by electrolysis and carbon monoxide, which can be produced from captured carbon dioxide.
Regarding the first generation of SAFs, hydrogenated esters and fatty acids—commonly described as chip fat, because that is their major source—are already pre-empted to produce biodiesel. There is a good deal of mystery and doubt surrounding the second generation of SAFs. Their primary feedstock, which is described as municipal solid waste, is poorly defined, and different processes will be needed to cope with different categories of waste. A website of the British company Johnson Matthey, which is proposing to build plants in the US and Germany to produce second-generation SAFs, mentions a variety of sources for the carbon feedstock, including agricultural residues, forestry biomass, captured carbon dioxide, and the ill-defined municipal solid waste.
At the heart of the second generation of SAFs is the venerable Fischer-Tropsch process, which was invented in Germany in 1925 and used extensively in Germany during the war to create synthetic fuels using coal as the predominant carbon feedstock. The process generates hydrocarbons from syngas, which is a mixture of carbon monoxide and hydrogen. The syngas will be the product of a gasification plant, which must be specific to the nature of the primary feedstock. If this process were to take its carbon dioxide from captured industrial emissions then it would emit carbon to the atmosphere that might otherwise be sequestered in the ground. The conclusion of this critique is that the only sure way of reducing aviation emissions would be to capture the carbon directly from the atmosphere. In that case, the Fischer-Tropsch process would continue to be used to synthesise the fuel.
The Bill appears to envisage a gradual transition between the three generations of SAF production, and it imagines that this can be achieved by financial incentives that could be structured by the Government. There would be no other government intervention and the Government would bear no costs. The costs would be covered by levies on the aviation industry and maybe by the suppliers of hydrocarbon fuels.
This is a weak proposal for addressing a crisis. The Bill has been inherited from the Conservatives, and it bears the marks of their social and economic philosophies. One might have expected a more interventionist approach from a Labour Government. One is reminded of how an early post-war Labour Government sought to revolutionise the supply of power to industrial and domestic users by creating a completely new industry: the nuclear industry. A similar endeavour would be required to create a sustainable aviation fuel industry, but there is little indication that this will be forthcoming.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I speak today in strong support of the Sustainable Aviation Fuel Bill, a measure that is not only timely but essential if the UK is to maintain our leadership in clean aviation, deepen our energy security and strengthen our competitiveness in a rapidly changing global landscape. I welcome the Minister’s opening speech, in which he confirmed the Government’s desire to encourage the many different technologies being developed to produce SAF, and I am grateful for the letter we received yesterday, following the all-Peers session on the Bill last week.
May I also take this opportunity to apologise to the right reverend Prelate the Bishop of Chester, and to the other five noble Lords whose contributions I missed, owing to having to lead my own debate in the Moses Room in Grand Committee? I look forward to reading their contributions in Hansard. I declare my interest as the unpaid chair of the advisory board of Eq.Flight, a government-backed project seeking to harness the power of nuclear energy to deliver SAF at scale. Its power-to-liquids technology is known as third generation.
Aviation remains one of the most challenging sectors to decarbonise. Even as new technologies and aircraft efficiencies develop, the industry will continue to rely on liquid fuels for many years to come. Sustainable aviation fuel provides the most scalable way to cut emissions, but this transition will not happen without clear long-term signals; industry needs confidence, stability and a durable policy framework—exactly what this Bill is designed to provide. A critical part of this transition is long-term certainty. Projects of this scale cannot proceed on short-term signals alone; they require the revenue certainty mechanisms that give investor confidence over the lifespan of the asset. Without stable, predictable support, the capital simply will not flow, the UK will miss the opportunity to build these industries here at home, and UK aviation will support jobs abroad instead of on UK soil. A clear RCM framework is therefore vital if we are to attract investment and give industry the confidence to build. It is what allows companies to commit, communities to benefit, and supply chains to grow with confidence.
We must also recognise the distinction between what can be delivered now and what must be delivered over the long term. In the near term, bio-based feedstocks are essential; they are proven, available and capable of delivering real emissions reductions today. However, bio-based feedstocks are ultimately finite; they cannot meet the total future demand of global aviation. The long-term solution is power-to-liquids—synthetic aviation fuels produced using clean energy and made from nothing more than air and water. These fuels offer potential deep decarbonisation of tailpipe emissions and can mitigate other greenhouse effects such as contrails. To achieve this, they require large quantities of firm low-carbon power, which is where the UK has a unique strategic advantage.
In the decades ahead, advanced nuclear technologies will be critical to producing the clean electricity, the hydrogen and the high-temperature heat needed for sustainable aviation fuel at scale. The UK’s positive and forward-leaning nuclear policy means we are exceptionally well placed to become a world leader in nuclear-enabled sustainable aviation fuel; but for this to happen, we must give nuclear investors the long-term certainty they require. Advanced reactors by their very nature demand longer revenue certainty mechanisms if they are to deliver affordable, sovereign clean energy for the industries of the future. The Government must ensure that consistency between technologies is maintained, but the absence of a defined carbon intensity for nuclear-derived SAF in the SAF mandate creates some uncertainty and therefore additional risk for investors. This barrier to the use of nuclear energy for SAF production risks the UK missing out on investment and the jobs that would inevitably follow investment in nuclear-derived SAF projects.
Globally, the potential for sustainable aviation fuel is now widely understood, and competition to become a world leader is intensifying. Countries and regions are moving quickly to secure the investment, the skills and the supply chains that will anchor these new industries for decades. The European Union’s ReFuelEU initiative provides strong market signals and long-term clarity for SAF deployment across Europe. If the UK is to keep pace—and indeed to lead—we must provide the same level of long-term certainty. A clear RCM framework is therefore vital if we are to attract investment and give industry the confidence to build.
Domestically, sustainable aviation fuel production can underpin a new generation of green industrial hubs, creating skilled jobs and strengthening economic resilience across all corners of our country. The aviation sector may be the final consumer, but the industrial benefits will be broad and enduring. The transition to sustainable flight will not be achieved with a single measure, but this Bill is a cornerstone, providing the certainty required to unlock investment, encourage innovation and build the infrastructure that will power aviation for decades to come. If we get this right, we will not only decarbonise one of our hardest-to-abate sectors: we will secure thousands of future-facing jobs and reaffirm the UK’s position as a world leader in clean aviation.
Baroness Pidgeon (LD)
My Lords, I congratulate the right reverend Prelate the Bishop of Chester on his excellent maiden speech and his commitment to sustainability and rail, which is music to many of our ears in this House. I look forward to working with him in the months and years to come.
As we have heard today, the Sustainable Aviation Fuel Bill aims to encourage investment in sustainable aviation fuel in the UK by creating a mechanism to guarantee a certain level of revenue. The Bill provides for a guaranteed strike price, guaranteeing price for a producer selling SAF over a defined period. The GSP will be funded via a levy on the aviation industry, specifically through a variable levy on all aviation fuel suppliers over a set period. This legislation should help the industry meet its requirements under the SAF mandate, introduced in January this year, which specifies that at least 10% of all jet fuel used in flights taking off from the UK from 2030 must be made with sustainable fuel, rising to 22% by 2040. This is clearly an area where the UK is trying to lead the way in decarbonising the aviation sector.
However, it should be noted that aviation, with all its benefits in connecting people and businesses, was responsible for almost 30 million tonnes of CO2 in 2022, equivalent to about 7% of the UK’s total emissions. As I understand it, even as emissions from other sectors decline, aviation’s share is projected to rise to 16% by 2035. This is not compatible with our net-zero targets. Sustainable aviation fuel is not a silver bullet, but it is a step forward to help us in the challenging environment that other noble Lords have described.
We on the Liberal Democrat Benches welcome these steps to decarbonise our aviation industry, including investment in sustainable aviation fuels. However, we see SAF as just the first step; we want it to offer a real low-carbon alternative. We believe that the Government should set out how they will go beyond securing investment in SAF and ensure that, longer term, this measure complements rather than detracts from investment in zero-carbon flight technology. We want to see greater innovation, research and development to make the UK the world leader in zero-carbon flight. SAF should be a springboard for that objective rather than a final destination, helping the UK transition to truly climate-friendly options such as battery-electric platforms and hydrogen-fuelled models as these technologies develop. There is a lack of clarity about what level of zero-carbon flight the Government are aiming for, if any, so perhaps the Minister can advise.
It is hard to square an objective of net-zero aviation by 2050 without measures alongside SAF to cut emissions and make climate-friendly flight a reality, and it is hard to look at the decarbonisation of fuel use in aviation while this Government seem intent on expanding airports such as Gatwick and Heathrow, to name just two, leading to many more flights.
There are a number of areas that we will be probing further in Committee. There are some concerns about the levy and the need to ensure that there are no loopholes, that progress is monitored and published and that we are aligned with our European and global neighbours or even ahead of them. Looking at international examples, the EU’s ReFuelEU aviation regulation requires a minimum blend of 2% SAF in 2025, rising to 70% by 2050; it focuses far more on both fuel suppliers and airlines; and, as we heard from the noble Lord, Lord Grayling, it is considering its own revenue support mechanism. Singapore and Thailand’s mandates started a 1% blend in 2026. Japan and South Korea are considering mandates starting some way off, in 2027 and 2030. In China, there is a SAF mandate at 2% that increases to 15% by 2030. Elsewhere, India and Brazil are considering SAF mandates. In the US, while there is no mandate, there is government support, as we have heard, to boost production, in the form of tax credits and other incentives. While there is no consensus on the route map for sustainable aviation fuel and how to support its growth, in developing this mechanism, what international examples have the Government considered to help shape their approach and the Bill before us today?
The levy on fuel producers is not necessarily the wrong approach, but key details are missing and could have unintended consequences if regulations are poorly designed. Leaving the mechanism to be determined later provides useful flexibility for a new and emerging industry. However, assurances are needed on how the mechanism will be designed. One issue that has been raised by industry and by other noble Lords today is that the levy is based on historical market share, which could cause problems. It is not clear if new market entrants might avoid paying the levy if they have no prior market share. Perhaps the Minister can clarify.
Another important issue I have picked up from talking to producers such as Neste is that, although industry in general supports the creation of a revenue certainty mechanism as a means to strengthen investor confidence and unlock the significant investments required for SAF production, there is concern that a level playing field would be guaranteed internationally. There is a strong feeling that revenues of the levy should not be used to support production of SAF that is subsequently exported. This should be about developing and supporting our own UK industry and needs. The levy should be focused on ensuring SAF supply at an affordable price within the UK. Since the UK and EU SAF mandates, I understand that we have seen an increase in the cost of SAF. This mechanism should help with the supply of SAF within the UK and help to ensure a stable price.
I have also been talking to operators that use SAF, for example DHL. In 2024, DHL used 73,000 tonnes of SAF in its own fleet, which is 3.5% of their total fuel share. This is in addition to investing in its fleet to decarbonise and in its ground-handling equipment to move to fully electric. We need to ensure that all operators are looking to decarbonise their whole operations and are not just relying on SAF to tick the green box, in effect.
A final issue that has come up in discussions and been raised by many noble Lords today, including my noble friend Lord Russell, is a concern that the levy will filter down and potentially cost passengers and airlines significantly. Can the Minister explain what assessment the Government have carried out and assure the House that passengers will not be significantly penalised? The combination of a long-term mandate and the proposed revenue support mechanism clearly offers a high degree of regulatory certainty, which is crucial for attracting the significant capital investment needed for SAF production in the UK. I hope the Minister can reassure us on the important points raised today and as we move forward to Committee.
Lord Moylan (Con)
My Lords, what is one to say? The easy part is to start by joining other noble Lords in congratulating the right reverend Prelate the Bishop of Chester on his entertaining and interesting maiden speech, and to welcome him and the many contributions he will no doubt make to your Lordships’ House in the future.
When the Labour Party, the Conservative Party and the Liberal Democrats, even without the support of the Green Party, all agree in supporting a measure, who can withstand them? Some might call it groupthink; others might see in it the spirit that defeated fascism in Europe. But here we are. We have huge support for this Bill from all quarters of the House, but I am afraid that it is the job of the Official Opposition to express a degree of scepticism.
Our debate has ranged very widely indeed, whereas the Bill has a very narrow focus. Many have spoken of it as if it were a net-zero measure. I dispute that. The net-zero measure was the SAF mandate that was put in place, as the Minister said, before Christmas last year, in November, which mandated airlines to use a certain quantity of SAF in their fuel, increasing every year over a period and set out in a statutory instrument. That was certainly a net-zero measure.
However, few noble Lords were open in saying that the Bill is not a net-zero measure as such but an industrial policy measure; in fact, it was really only my noble friend Lord Grayling who was explicit about that. He was explicit also in saying that he supported that industrial policy, which says that not only do we have to require SAF to be used by airlines in this country but we have to be the producer of that SAF. He gave reasons: he said, “Why would you want to use foreign producers? Why would you want to import your SAF?” But there are answers to that.
I am told that there is no future in being an old-fashioned Thatcherite and believing in markets, and that people like me are terribly out of date. However, the noble Baroness, Lady Pidgeon, made clear that SAF mandates are not confined to Britain and the European Union; there are countries all over the world with SAF mandates. She mentioned Thailand and Singapore, and I am sure there are many others as well. SAF is a global business. There is an argument that you might be able to import your SAF more cheaply and have a more efficient market if you were not insisting on producing it all yourself. None the less, the Conservative Party when in power and the Labour Party today have decided on that as a matter of industrial policy.
So what can possibly go wrong, even though it is hard to see what comparative advantage the United Kingdom has as a producer of SAF? The noble Lord, Lord Ravensdale, pointed to one element that seemed pretty damning of our comparative advantage—our very high electricity costs by international standards. He pointed out that this the production of SAF is an electricity-hungry process, but that none the less has to be ignored and overridden.
The Government have decided to be a leader in this uncertain field, and it is uncertain. I think we have agreed that there are three stages of SAF. There is HEFA, which the Government do not want to subsidise, as I understand it, even though, as again the noble Lord, Lord Ravensdale, pointed out, the Bill appears to be drafted so that they could. We need to examine that more closely in Committee. Assuming that the Government do not want to subsidise HEFA, that leaves us with non-HEFA SAF, but the processes for producing non-HEFA SAF are highly uncertain and some of them are first of a kind. We do not even know that they are going to work, but we are putting in place a revenue certainty mechanism so that investors can find out, for practically no risk, whether they are. This is going to be of advantage to the national economy.
Beyond that, as the noble Viscount, Lord Hanworth, said, there is a power-to-liquid option, but the Government do not appear to believe that it is worth investing in that at the moment, even though it is being pursued in the United States with the support of tax credits and, as I understand it, with a large plant in Texas.
Anyway, having decided that this is our industrial policy, we have to find a way of subsidising it. The Treasury has discovered this wonderful thing, the contract for difference, which is a form of subsidy that means that they do not have to shell out any money, because the cost of the subsidy is passed on to the consumer. Contracts for difference have given us the very high electricity costs to which the noble Lord, Lord Ravensdale, referred earlier, which are apparently crippling the process on which we are embarking. So we are to have not a subsidy but a contract for difference, and we are to set up a counterparty that will be able to work that out. It is going to have the skills to negotiate with the hard-faced lawyers sent by the investors to get, as my noble friend Lord Harper said, absolutely that price which offers an appropriate level of reward for the very low level of risk the investors are taking, but not a penny more. Our negotiators will be able to manage that and land it to perfection, and they will have the resources to do that. And so we go on.
Noble Lords have raised a whole series of questions, which I suspect will form the basis of our discussion in Committee. I will add a few myself. Can the Minister clarify whether the Government have made an assessment of the compatibility of the revenue certainty mechanism with the non-discrimination requirements of the WTO’s Article III.4 of the General Agreement on Tariffs and Trade, particularly in relation to the differential treatment between qualifying SAF and imported non-qualifying non-fossil aviation fuels such as HEFA? Also, will he indicate—I assure him that I do not necessarily expect him to answer these questions at the Dispatch Box, though it would be very impressive if he did—whether the Government have assessed whether the RCM would constitute a subsidy for the purposes of the WTO Agreement on Subsidies and Countervailing Measures, and whether any risk of countermeasures or formal dispute settlement from other WTO members has been identified?
I am sure there are further questions, which I can bring up in Committee, but for the moment, there we are. We stand solidly behind the Bill, but we see a large number of holes in it. We are far from convinced that it will do the job that the Government have said it will set out to do. Whether it can be done at a price of £1.50 per ticket seems to be something else that is worthy of exploration—as is what that figure actually means. Since the mandate increases every year, at what point does the £1.50 come in? Surely, the cost per ticket would rise over the course of time as the mandate requirement rises. We will explore both how it was calculated and what it means but, for the moment, we look forward to hearing what the Minister has to say in response to what has been a lively and well-informed debate.
Lord Hendy of Richmond Hill (Lab)
My Lords, I thank all noble Lords who have engaged in today’s lively debate on the Bill. I have listened with much interest to the excellent points raised across your Lordships’ House, and I will now attempt to answer some of the questions. Of course, we can explore many of the issues in greater detail in Committee. In the meantime, I will follow up as soon as I can on some of the issues that I cannot answer now, but I am grateful for such wide, general cross-party support for this important measure.
First, I should compliment the right reverend Prelate the Bishop of Chester on his maiden speech. He said that sustainability matters; I am so glad that he did, and that he said it in English, because he might have been able to say it in Welsh and I would not have been able to respond. The Government and I are grateful for his support of a vital sustainability measure for air transport, which is essential for the nation’s wealth and defence. The only other thing I should say to the right reverend Prelate at this point is that I am sorry about his train service. I will speak to him separately about the trains to Chester.
As I said, I am grateful for the support of many noble Lords who have spoken. The noble Lord, Lord Davies of Gower, was supportive. The points that he and many others made and the questions he asked were all about making early progress. The Government are pursuing the Bill now, as we did with the SAF mandate, in order to get on and do this, because getting on and doing this is absolutely what we seek achieve. The noble Lord referred to the net effect of this on the price of airfares, as a number of other noble Lords have done. Our best estimate is plus or minus £1.50—we are confident on that—but I am happy to explore that further in Committee. We do not believe it is plus or minus £10. We believe that we have, at least for the moment, explored the cost that would fall on air passengers.
A number of points made by the noble Earl, Lord Russell, were about progress, and this Bill is evidence of the Government making progress. Like other noble Lords, he referred to the point of the first tranche and subsequent tranches. We of course need to move beyond HEFA feedstuffs, which is the point of the further tranches of the revenue support mechanism. The noble Earl also referred to the sustainability of UK plant, which is why the Government have put £63 million into the advanced fuel fund: for the very purpose of ensuring that there are plants in this country which can produce sustainable aviation fuel and that the plants themselves are sustainable.
The noble Lord, Lord Ravensdale, referred to competition in due course. The Bill includes the opportunity for the Secretary of State in due course to run tenders or auctions as a means of developing this market.
The noble Lord, Lord Raval, talked about waste and foodstuffs. We will, as we go through this Bill, have regard to its overall effect on the provision of sustainable aviation fuel.
I am grateful to the noble Lord, Lord Grayling, for his detailed and compelling speech on this subject and for his great interest. He talked about not allowing crops to be made into SAF. We have committed to publishing a call for evidence by the end of this year on the use of crops in the SAF mandate. The aim is to improve the evidence base on crop-based SAF production, following suggestions from some stakeholders that certain types of crops could be used to increase SAF supply without compromising our approach to sustainability. But we will get information provided through that call for evidence, and we will consider what we find out.
The noble Lord, Lord Grayling, referred particularly to the use of data and how the market price is determined. The counterparty will be responsible for determining the market and should do so by using data that suppliers submit to the SAF mandate reporting system. Our live consultation seeks views on whether the assessment period should use volume data from an earlier period, or—since he suggested that is not sensible—uses forecast volume data. We will have more discussion about that in due course, I am sure. He also made a very strong point about the support being used only for production in the United Kingdom. We intend to support only eligible SAF plants in the UK; I am sure we will discuss that further. It is a strong point and I will consider it as we get to Committee.
The noble Lord, Lord Berkeley, talked about cleaner skies and warmer homes. I am aware of the consultation on alternative heating solutions, and we are working with our colleagues in DESNZ to move those forward.
The noble Baroness, Lady Jones, does not agree with this at all. We have discussed the points she was making about aviation before. This is a move towards net zero. We are trying to make aviation more sustainable, as it is not going to stop overnight and is important for the economy of the country. The mandate will save some net additional 54 million tonnes of CO2. On the noble Baroness’s other point about frequent flyers, last year the Government altered air passenger duty which does have an effect on more frequent flyers.
I am grateful to the noble Lord, Lord Harper. He made some substantial points. The noble Lord referred to a flight that used 100% sustainable aviation fuel; I believe he was a passenger on it. If I may, I will try to respond in detail to the points that the noble Lord made before Committee stage.
The noble Viscount, Lord Trenchard, is perhaps not so supportive, though in the end I think he said he was. But what we are doing is important. We should be trying to move into a market that self-evidently can be a success for British industry, if we approach it properly. Government intervention, as justified by a number of noble Lords this afternoon, is the only way to do it. The noble Viscount is very sceptical of the effect on pricing for passengers; again, I have no doubt that we will discuss this in Committee and afterwards. Of course, he wants safety not to be compromised; none of us does. It is only right to point out that another noble Lord on his Benches was on a flight wholly powered by sustainable aviation fuel and I doubt whether the noble Lord would put himself at risk: I hope he would not. We are absolutely committed to safety. We are also committed to the fuel economy, which he mentioned.
The noble Lord, Lord Ravensdale, referred to nuclear and hydrogen power. The Government have clearly not set their mind against any solution. The significant funding put towards investing in technical solutions and the way in which the SAF process is being developed encourages other solutions and will encourage British industry to look particularly towards these solutions in the longer term. We will, of course, prioritise UK technology. This is the point and it is a good thing to do.
My noble friend Lord Hanworth is also probably not supportive—not because he does not agree with the general principle but because he somehow thinks, despite all we are doing to be at the forefront of global action, including the £63 million we are putting into the advanced fuels fund, that somehow this is not enough and that there should be some red-blooded approach. I contend that this is a pretty red-blooded approach from the Government. Significant sums of public money have been put into it, and we believe that it is the right thing to do.
The noble Baroness, Lady Bloomfield, referred to the nuclear option. SAF produced using nuclear energy is and will be eligible for the SAF mandate. We have provided funding to support the development of this technology through the grant funding programme of the advanced fuels fund. We are clearly on a journey and I note the noble Baroness’s proposition that it will need longer-term support. Although the Bill is limited to a term of 10 years, the support term is not so limited. I hope the noble Baroness will note that this is one of the reasons why.
The noble Baroness, Lady Pidgeon, made some strong points. As I have said, we are on a journey. In Committee, we can discuss the consistency of the trajectory of that journey with the EU and other countries that have set themselves different targets. Of course, it is not the only measure: zero-emission flying is and could not be just about SAF. To that end, we have talked about airspace modernisation, which is something the noble Baroness knows about. We have looked at funding of up to £2.3 billion over 10 years to extend the Aerospace Technology Institute which was announced in the modern industrial strategy in June to look at low-emission and zero-emission aircraft. We are looking at reducing aviation emissions through schemes such as the UK Emissions Trading Scheme on carbon pricing. We are also seeking to address the non-CO2 impacts of aviation. The noble Baroness is correct, of course, in looking at everything to do with carbon reduction in flying, not just aircraft fuel and technology but the operations surrounding aircraft. She mentioned the activities in that respect of DHL, which is a major user of aircraft.
Lastly, the noble Lord, Lord Moylan, for whom I have huge respect, appears to see a conspiracy between all the parties here to do something which he does not seem to support, which is to have an industrial policy that gives British industry the chance to develop something new in the world and to develop jobs and processes which will lead to a bigger economy. He is not in the same place as some of his colleagues on his own Benches on that and I think that he is wrong, because this is not only an industrial policy but a step towards net zero. He mentioned power-to-liquid, and we have invested in that in the advanced fuels fund. He asked a couple of very detailed questions about the World Trade Organization, and I would be delighted to write to him with the answers, supposing that I was unable to provide answers from the Dispatch Box just now.
Once again, I thank all noble Lords who participated in the debate today and I welcome the support of the many who spoke in favour of the Bill’s measures. The Bill will kick-start the UK SAF industry, attracting investment and creating jobs. By addressing the market and investment uncertainty in SAF production, it will enable the UK to lead the way to greener aviation. I beg to move.
Radio Equipment (Amendment) (Northern Ireland) Regulations 2025
Lord Leong
That the draft Regulations laid before the House on 13 October be approved.
Relevant document: 39th Report from the Secondary Legislation Scrutiny Committee
Lord in Waiting/Government Whip (Lord Leong) (Lab)
My Lords, I note the regret amendment tabled by the noble Baroness, Lady Hoey, and will respond to the points raised. However, I will first outline the context of this instrument, which was laid before the House on 13 October 2025. This instrument relates to radio equipment, which encompasses a broad range of products, including smartphones, laptops, fitness tracking devices and other connected or small devices. Under the Windsor Framework, the Radio Equipment Directive 2014/53/EU continues to apply in Northern Ireland, ensuring dual access to both the UK internal market and the EU single market. In 2021, the European Commission adopted Delegated Regulation (EU) 2022/30, which supplements the Radio Equipment Directive and introduces additional essential requirements for certain categories of radio equipment.
The additional essential requirements applied to internet-connected radio equipment, including consumer connectable electronics and smart devices. Such equipment must be constructed in a way that protects networks, safeguards users’ personal data and privacy, and prevents fraud. Furthermore, radio equipment, whether internet-connected or not, that is covered by the EU toys directive and is intended for childcare or is wearable on the body must also be constructed so that it protects user data and privacy.
Baroness Hoey
At end to insert “but that this House regrets that the draft Regulations are being made to give effect to legislation made by the European Commission, without public consultation and without taking account of the needs of small businesses in Northern Ireland.”
Baroness Hoey (Non-Afl)
My Lords, I welcome the noble Lord, Lord Leong, to his position. He is about the third noble Lord we have had answering SIs, so we are gradually getting round all of them. It is of course very nice to see the noble Baroness, Lady Anderson, who is very involved with and supportive of Northern Ireland, and she is very much respected there.
The noble Lord has set out in detail why this is happening, with a lot of words and explanation, but the reality is that it is happening because the United Kingdom Government signed up to the Windsor Framework protocol, which is now ensuring in legislation after legislation that Northern Ireland is treated differently. To comply with the EU law, we are therefore now required to update the EU law as defined in our 2017 regulations to take account of the new directive.
The regulations before us today seek to comply with this European Union diktat by applying a new regulation, Regulation 6A, into the United Kingdom regulations with respect to how they apply to Northern Ireland only. The legislative change does not apply to the rest of the United Kingdom; it does not apply to Great Britain.
I see there is an absence of the Liberal Democrats here today. That is because the Liberal Democrats tend to think that such regulations should be hidden away in the committee room and fail to understand that when it is an affirmative regulation, we have the right to bring it here to the Chamber. We do that because these regulations provide us with an object lesson of all that is wrong with the Windsor Framework protocol and the Irish Sea border that it creates.
To really understand the problems with these regulations and others like them, it is important to assess them from the vantage point not just of their immediate physical impact—which I will mention—but of their wider impact in Northern Ireland, part of the United Kingdom. The Irish Sea border arose from a decision of Parliament, but unlike the decisions in relation to devolution and joining the European Union, the resulting arrangements were not operated consistently with its ethos as a representative body. From the outset, their very point of conception, they have been fundamentally alien to the political tradition we have in the United Kingdom, because they involve transferring lawmaking powers for a part of the UK to a Government beyond the UK—to legislative arrangements that do not represent the United Kingdom.
This deeply affects the part of the United Kingdom in question, because as participants in a political nation, a political body politic that is nurtured, upheld and sustained by representative principles, this does not just take from us the ability to make some of our own laws but necessarily disinherits us from a key aspect of our identity.
In this context, the Radio Equipment (Amendment) (Northern Ireland) Regulations, along with all other imposed legislation, are deeply problematic. It is worth reminding the House that while the Northern Ireland protocol was addressed through primary legislation, since February 2023 every piece of legislation that has been introduced and given effect to the Windsor Framework—without any say from people in Northern Ireland—has been by means of statutory instrument.
Someone engaging with this subject for the first time—perhaps a noble Lord today—might come to one debate and see that it highlights the imposition of EU law in one narrow area. However, that is very narrow; we have to regard the cumulative effect of all the different statutory instruments that have been brought in, and will be brought in, in the past and coming months. That is why, along with other noble friends from Northern Ireland, we will continue to bring these debates to the House. The House needs to understand that this is not just about one law—radio equipment—this is about the whole way we are now being governed in Northern Ireland.
That said, the draft Explanatory Memorandum makes the position very clear, and the Minister has gone through the far-reaching effects of the radio equipment regulations. Everyone needs to read paragraphs 5 and 6, which state:
“The essential requirement not to harm the network or its functioning applies to any internet-connected radio equipment … consumer electronics and smart devices … the protection of user/subscriber personal data and privacy also applies to the following radio equipment, where that equipment is capable of processing personal data, traffic data or location data: Internet-connected radio equipment; and Radio equipment, whether internet-connected or not, that is: (i) designed or intended exclusively for childcare; (ii) covered by the EU Toys Directive; or (iii) designed or intended, to be worn on, strapped to, or hung from the body or clothing”.
The final bit of the explanation states:
“The essential requirement to ensure protection from fraud also applies to internet-connected radio equipment, if that equipment enables the user to transfer money, monetary value or virtual currency”.
It is very wide-ranging.
Turning to those who will be impacted by the legislation, the draft Explanatory Memorandum is very clear that the effects on business are far-reaching. It states:
“This instrument will impact on manufacturers of specific types of radio equipment that are placed on the Northern Ireland marketplace, authorised representatives carrying out manufacturers’ tasks on their behalf, importers who place these products on the Northern Ireland marketplace, and distributors who make these products available on the Northern Ireland marketplace”.
It actually states:
“There is no, or no significant, impact on charities or voluntary bodies”,
but the impact on small businesses is also very clear. It states:
“The legislation does impact small or micro businesses … The legal requirements do not differentiate between businesses in terms of their size. Therefore, we are unable to take any mitigating actions to minimise the regulatory burdens on small or micro businesses”.
The officials who drafted this draft Explanatory Memorandum pass over those points very quickly, without acknowledging and confronting the obvious implications of what has been said. This legislation relates only to Northern Ireland and has an impact on small businesses and micro-businesses, yet Northern Ireland is the part of the United Kingdom where the economy is more dependent on such businesses than any other. In that sense, if we were told to apply this to one part of the UK, Northern Ireland would be the last place to start because of the unusual size of its small business sector. Can the Minister say what the Government will do practically to help those small businesses that are already drowning in an Irish Sea border of endless paperwork and bureaucracy?
The Minister will recall—the noble Baroness, Lady Anderson, will certainly recall—the Federation of Small Businesses research, which, critically, was conducted before the introduction of the Irish Sea parcels border in May, the used farm machinery border in June and the huge increase in labelling requirements on 1 July, not to mention the impending arrival of the pet medicines Irish Sea border, which is due in January 2026, together with the application, from 1 January, of the much more demanding Import Control System 2.
The report demonstrated that 33% of GB suppliers had already withdrawn since the arrival of the Irish Sea border. I ask the Minister: how much more pain would the Government like to devise for small businesses in Northern Ireland? This imposition of EU legislation on Northern Ireland effectively declared that while the people of England, Wales and Scotland are worthy of the right to stand for election to make all the laws, or to elect a fellow citizen to represent them for this purpose, the people of Northern Ireland are only worthy of the right to stand for election to make some of the laws to which they are subject.
These changes do not have just a narrow functional effect, so that some of our laws are made by others; they actually erode and undermine our place in the nation of the United Kingdom. I do not think that noble Lords will fully appreciate that, until they themselves, perhaps as fellow citizens, find that that has been taken from them. In coming to terms with this, we must also understand that the purpose of all these imposed laws is to create an all-Ireland single market for goods. The political importance is hard to overstate, because the prerequisite of achieving statehood is described internationally as securing economic nationality.
One disturbing consequence of all this is that once people have been subject to the laws of another country or another institution, they not only lose the right to stand for election to make the laws to which they are subject, or to elect someone for this purpose; they also lose the right to be consulted about the law.
The Explanatory Memorandum states:
“The Government has not undertaken a formal public consultation as this instrument’s provisions are confined to the implementation of provisions as required by the terms of the Windsor Framework, ensuring that Northern Ireland has in place EU derived essential product safety requirements.”
In other words, the legislation has to be imposed because the EU has told us to impose it, and we signed up to that, so we do not need to bother with the consultation because there would be no point.
The other striking feature about these regulations is that the Explanatory Memorandum and supplementary paperwork are distinctive in not volunteering that the Government will definitely align GB with the new Northern Ireland legislation, opening the door to regulatory divergence. Paragraph 9.1 says: “Many UK businesses also supply the EU market (as well as the UK market) and have already taken steps to come into compliance with the Radio Equipment Directive. We therefore do not anticipate significant impacts on the supply of products from Great Britain to Northern Ireland”—anyone in Northern Ireland will tell you that they have heard that before—“and the UK’s Product Security and Telecommunications Infrastructure Act sets a framework for the cyber security of internet connected products in the UK and works alongside radio equipment directive provisions in Northern Ireland.”
As has been said, the Government intend to review the operation of the PSTI in the coming years, including through an interim post-implementation review in 2026, and will continue to monitor the functioning of the internal market. That is very complacent, and we could be left with legal divergence for a very long time. Why are the Government not more energetically seeking to avoid legislative divergence? If most companies in GB will comply automatically anyway, why accommodate needless legislative divergence?
Finally, I want to pick up the point that the Explanatory Notes suggest that these regulations are a good thing because they are part of the delivery of the wonderful dual market access. We need to be absolutely clear that dual market access is a myth. We have not secured a single piece of inward investment to access this special status, because it does not exist. Businesses are not stupid. If there was a special advantage, they would have come in from across the world.
Of course, you will find companies that would rather have the border in the Irish Sea because their business is based on trading with the Republic of Ireland and not with GB, and which say that they benefit from the current arrangements. However, if you drill down into that, it is not because they get dual market access but because at the end of the day, although the Windsor Framework fetters access to GB production inputs, it provides completely unfettered access to the Republic—that is, single market access to an all-Ireland economy—which is what they actually want. The problem is that most Northern Ireland businesses are based on needing unfettered access to GB, which is denied them by both the red and green lanes. It is therefore a very clear net negative for the Northern Ireland economy as a whole rather than a net positive. I do wish that Ministers would stop saying, every time the Windsor Framework is mentioned, that this is why it is so great.
I want to end by reading out two emails that I got sent yesterday from Northern Ireland relating to the veterinary effect which will come in in January. The first is to a lady who has pets and gets her veterinary medicine from GB:
“Thank you for your query regarding veterinary medication to Northern Ireland. Since Brexit, we have been operating under a grace period that has allowed us to continue medications to Northern Ireland. However, this grace period will come to an end on 31st December 2025. From 1st January it will no longer be possible for suppliers based here on the UK mainland to ship any class of medication, including prescription medications, to Northern Ireland”.
Another email reads:
“Good afternoon and thank you for your email. We will be stopping the last delivery to Northern Ireland on December 19th. This is due to a change in the Windsor Framework, which means medicines now need a Northern Ireland licence or EU licence to be sold there and cannot be imported free”.
This is happening over and again, and it means that many pet owners who cannot afford insurance and who go on to the internet to get the same veterinary medicine more cheaply from Great Britain are not now going to be able to get it.
We are seeing, over and again, ridiculous things that are happening because of the Windsor Framework/protocol. I cannot understand how any sensible person, including ex-Government Ministers from the previous Government, cannot realise that this is not in the long-term interests of Northern Ireland. Therefore, I beg to move this regret amendment with very great pleasure but with sadness that we are having still to come back to this House over and again on this issue.
Lord Dodds of Duncairn (DUP)
My Lords, I too am grateful to the Minister for outlining in detail the impact and effect of the statutory instrument before us today and for clearly setting out the reasons behind it as well. I am also extremely grateful to the noble Baroness, Lady Hoey, for her regret amendment, which ensures that there is time in this House for your Lordships to consider this latest piece of legislation, which has been consulted upon in Europe, drafted in Europe, devised in Europe and planned in Europe for the benefit of the European Union states, and which has been implemented in part of the United Kingdom without any input into any of that process by any Member of the Northern Ireland Assembly, any Member of Parliament or any Member of your Lordships’ House. It is quite a staggering situation in modern Britain, in a modern G7 country, for part of its own country to be subjected to this kind of colonial legislative process. It is quite remarkable when you think about it.
This latest regulation deals with a very important area, which, as the noble Baroness, Lady Hoey, outlined, covers a wide range of equipment in Northern Ireland and will have a lot of impacts, particularly on small and medium-sized businesses.
This is the latest in a long line of statutory instruments affecting a very wide range of subjects, all listed in Annex 2 of the Northern Ireland protocol. Last week, I raised the issue of dental amalgam, because that is now under EU law and jurisdiction. Next week, we will be debating in Grant Committee the issue of cars coming into Northern Ireland, whereby now the biggest-selling car in Northern Ireland cannot be shipped from Great Britain to Northern Ireland, even though we sell, from Britain into the Irish Republic, only a handful of cars every year. But this is why consumers and motorists in Northern Ireland are going to have to pay more and come to Britain to buy their cars. This is the modern United Kingdom.
As the noble Baroness, Lady Hoey, reminded your Lordships, we have a problem with veterinary medicines, which is going to come in on 1 January 2026. We have an issue to do with the carbon border adjustment mechanism, which again is going to come in on 1 January 2026 in Northern Ireland. We have an issue to do with the Sentencing Bill, which your Lordships considered the other day at Second Reading, in which plans to deport people who come here may not be applicable, with part of the United Kingdom providing a back door and a loophole for all sorts of nefarious activity. We have court challenges in Northern Ireland to immigration policy and to legacy problems, all based on the fact that they do not comply with and conform to European law through the Windsor Framework. Not only are they ruled to be contrary, they actually strike down legislation passed by this House—in part of the United Kingdom.
It is a sad state of affairs, a lamentable state of affairs, a state of affairs that cannot endure in the long run. Sooner or later, even those who today are prepared to accept anything the European Union passes because it is the European Union, even those who care about democracy but these matters do not matter as much to them, even nationalists in the Northern Ireland Assembly, those who are not unionists, will say: “Hold on a moment, surely we should be making and devising and formulating the laws for the people we represent”. They may not wish to be part of the United Kingdom, but they do not want to have laws imposed upon them by a group of countries which make these laws in their own interests. They do not consult with anyone in Northern Ireland—nationalist, unionist or anyone. So I make a plea on behalf of everybody in Northern Ireland. Citizens and elected representatives of all shades should be saying: “Hold on a minute, we would like to actually make these laws for ourselves”. But here we are, once again, looking at a piece of legislation which applies European law because it is in Annex 2 of the protocol.
I am not going to go through all the issues that the previous speakers have raised. The point about consultation is an extremely important one. The Explanatory Memorandum implies, more or less, that because there is no room for amendment, the legislation must be imposed in Northern Ireland because the EU has decided this and passed this. There is no room for getting rid of it. Therefore, what is the point of consultation? That is, in essence, what the consultation part of the Explanatory Memorandum says on the regulatory divergence point.
As in so many cases, we are now told that while the rest of the United Kingdom may come into line with EU regulations and therefore mitigate the frictions between Great Britain and Northern Ireland, often that is vague, often it is not 100%, and often it is very delayed. What happens in the meantime? I would be grateful if the Minister could outline in more detail the implications of regulatory divergence between Great Britain and Northern Ireland—between the immediate implementation of this statutory instrument and the current position in the rest of the United Kingdom.
The impact on small and medium-sized businesses has been mentioned. I note too that paragraph 9.5 of the Explanatory Memorandum states:
“There is an impact on the public sector because the enforcing authorities … are the Northern Ireland district councils”.
I hear from council members all the time about the straitened fiscal position they find themselves in. They are being lumbered continually with more and more investigatory, regulatory, enforcement and monitoring obligations and responsibilities as a result of European regulation. It is made much more difficult because they are now in a unique position of having to police this without any back-up or support elsewhere in the United Kingdom, because it does not apply elsewhere in the United Kingdom. I would be grateful if the Minister could tell us what resources will be given to district councils in this and other cases where they face greater regulatory monitoring and enforcement obligations as a result of the Windsor Framework.
Baroness Ritchie of Downpatrick (Lab)
My Lords, I declare two interests. I am a member of the Secondary Legislation Scrutiny Committee, which considered this statutory instrument, and a member of the Government’s Veterinary Medicine Working Group. This is important because those interests are relevant to the general debate on the Windsor Framework. I welcome my noble friend the Minister to this debate and to the ongoing issue of the Windsor Framework.
I acknowledge the regret amendment in the name of the noble Baroness, Lady Hoey, but that does not mean that I agree with it. I am a firm supporter of the Windsor Framework. I believe we should seek to get back into the European Union because that is the best way to represent our interests. We should be working towards dual market access—not decrying dual market access but actively supporting businesses that are seeking to achieve the benefits of dual market access, not only for their businesses but for the wider community in Northern Ireland.
I remind noble Lords that the root cause of the problem is Brexit. Various events over the past 17 years have undermined the UK economy. We had the economic crash in 2008, which impacted many global economies. We had Brexit in 2016. We had Covid-19 and all the payments for that. Then we had the money to invest in defence for Ukraine and in defence of democracy, and to build up resilience against other powers, such as Russia.
In this instance, Brexit ushered in the Northern Ireland protocol and then the Windsor Framework to prevent a hard border on the island of Ireland. I personally do not have a problem with that, as we argued back in 2016 that special arrangements were required on the island of Ireland, where two jurisdictions and two systems would apply. Hence, we have the UK internal market and EU single market. I make a plea that politicians of whatever hue should be encouraging people and businesses to avail themselves of dual market access, and it is wrong to decry them. I remind those who argued for the hardest form of Brexit, either in this House or in the other place, that in some ways we are paying for the consequences of that.
It was remarked on that our committee did not receive any submissions or comments relating to the Windsor Framework for this statutory instrument. That was a surprise, because we have received voluminous comments for other statutory instruments related to the framework. Also, the Government have undertaken stakeholder engagement with a cross-representation of stakeholders, including industry, trade associations and other government departments with an interest. Like my noble friend the Minister said, it will be subject to further review as part of the radio equipment directive provisions in Northern Ireland. I hope that that will prove productive.
Lord McCrea of Magherafelt and Cookstown (DUP)
At the commencement of her address to the Chamber, the noble Baroness said that she was a member of the Secondary Legislation Scrutiny Committee. I noticed that its 39th report said, at paragraph 35, that the Department for Business and Trade
“therefore does not anticipate ‘any significant impacts’ on the supply of relevant products from Great Britain to NI”.
If the reality turns out to be that there is a significant impact, could the noble Baroness, who supports the Windsor Framework, tell us how it could be rectified?
Baroness Ritchie of Downpatrick (Lab)
I thank the noble Lord for his intervention. I sincerely hope that there are no particular difficulties, but if there are any hiccups in the situation, I hope that, as part of that, the challenges and the operational difficulties that have presented themselves over the last number of months can be ironed out, and that we have a listening Government who will do everything within their power, working with the EU, to ensure that that is the case.
I will move on to what else I want to say. Undoubtedly, we need to resolve the challenges, the delays, and businesses’ lack of knowledge around the Windsor Framework. Therefore, I ask my noble friend the Minister to outline when we will receive the responses to the following reports, which highlighted those operational difficulties and challenges, and the lack of knowledge for businesses operating within the Windsor Framework. Those reports are: the independent monitoring report, published two weeks ago; my noble friend Lord Murphy’s independent review, published in September; and the report of our Northern Ireland Scrutiny Committee, of which I, the noble Baroness, Lady Foster, and the noble Lord, Lord Dodds, are members. We discussed those issues yesterday. When will the Government respond to those three reports, which all highlighted the need for a resolution to the operational difficulties? If operational difficulties and challenges exist for businesses, they should be resolved. To go back to the point made by the noble Lord, Lord McCrea, I imagine that is probably what he is referring to, rather than an outright rejection of the Windsor Framework.
Furthermore, as the noble Lord, Lord Dodds, has said, we also need answers on CBAM, and we need clarification. What will this mean for people’s electricity supply, taking on board that we have a single electricity market on the island of Ireland? We need to know what framework will be operational from 1 January 2026. What discussions have taken place with the EU regarding those interim arrangements for Northern Ireland? I have spoken with representatives from Manufacturing NI, and they have told me that they have had no discussions with the Government since November 2024. I say gently to my noble friend the Minister on the Front Bench that this needs to be resolved quickly. I urge him to work with his ministerial colleagues in the department responsible to resolve these issues and to provide clarity and clarification for businesses and all those involved in manufacturing.
Finally, reference has been made to veterinary medicines and the ongoing difficulties and challenges there. We need a resolution to those issues, which are largely of a market and regulatory nature, and we need to know how many authorisations will be available and how many—because of pack size—will not. We need clear, professional guidance to be issued urgently and communicated to veterinarians and farmers in Northern Ireland. I understand that the BVA and NOAH would be willing to help with this, but we need that briefing in relation to the veterinary medicines directive to go directly to veterinarians, the BVA and farmers. We also need an industry-level co-ordination group to be established to share confidential, category-level supply risk signals, because much of this information, as I know from the Veterinary Medicines Working Group, is confidential and commercial in confidence. It should also be able to agree clinical fallback pathways for when authorised products are unavailable and be able to use the two systems that, thankfully, the Government have brought forward, and co-ordinate communication to vets, SQPs—or suitably qualified persons—and probably agricultural merchants, practices and producers.
I urge the Minister to obtain clarity on those various areas as they relate to the operational challenges and difficulties faced by those who have to work under the auspices of the Windsor Framework. For clarity, I support the Windsor Framework; I would like to see a route back to the European Union, because I believe in full democratic accountability. That can be achieved only through that mechanism and not by decrying the Windsor Framework, because that simply, in many ways, is a denial of democracy, when people argued for the hardest possible Brexit.
Lord Morrow (DUP)
My Lords, I have been provoked to respond to what the noble Baroness, Lady Ritchie, has said. I had some difficulty in following her, but that might be more my fault than hers—I think it is not, but that is by the way. She went on at some length about the dual membership. Let me very clear to your Lordships’ House today: there are no tangible benefits from dual membership. What we are getting is unfettered access to the Republic of Ireland—our smallest market—in return for fettered access to our greatest market; namely, GB. I hope that your Lordships’ House, particularly the Minister, will keep that in mind. I am sure he is listening, and I know that the noble Baroness beside him always listens to what we are saying—she might not always agree, but she certainly always listens, and we commend her for that.
The Earl of Effingham (Con)
My Lords, this instrument, as the Minister has outlined, amends the Radio Equipment Regulations 2017 to ensure that additional essential requirements covering cyber security, data protection and fraud prevention apply to certain categories of radio equipment marketed in Northern Ireland. The objectives of these requirements are sensible. In an era of ultra-connected devices such as smartphones, watches, fitness trackers and more, the need to protect personal data, prevent fraud and safeguard network integrity is clearly paramount. Consumers rightly expect that the technology that, in many cases, they entirely rely on does not expose them to unnecessary risk. However, this instrument raises broader constitutional and practical questions, as has been pointed out by many noble Lords.
First, it is another example of legislation applying in Northern Ireland that originates, unfortunately, not from the Palace of Westminster, not from the Northern Ireland Assembly, but from Brussels. Whatever view noble Lords might have of the Windsor Framework, it is undeniable that these rules are imposed under obligations that leave little room for domestic discretion. That is the reality, which is a concern for many, including in your Lordships’ House.
Secondly, while the Department for Business and Trade assures us that the impact on businesses will be minimal, given that many firms already comply in order to access EU markets, we must be allowed to scrutinise that claim. For smaller manufacturers and distributors, particularly those focused on the UK market, compliance costs and administrative burdens may not be negligible. As was so well put by the noble Baroness, Lady Hoey, my noble friend Lord Dobbs and the noble Lord, Lord Morrow, have the Government undertaken a full assessment of the cost to SMEs? What support will be available to businesses in Northern Ireland to navigate these requirements?
While we do not oppose measures that enhance consumer protection and cybersecurity, His Majesty’s loyal Opposition regret that this instrument exemplifies the democratic deficit inherent in the current arrangements. We urge the Government to provide greater transparency on the cumulative impact of these regulations and to ensure, above all, that Northern Ireland businesses are not disadvantaged and can remain competitive, thrive and flourish.
Lord Leong (Lab)
My Lords, I thank all noble Lords for the warm welcome to this statutory instrument. In fact, when I was asked to take this SI, I thought it would be happening in Grand Committee and we would probably look at it for half an hour and then complete it, but obviously we have wider issues to consider today. I am grateful for the support given from across the House to these regulations. I thank all noble Lords for their consideration of this instrument and all their excellent questions and contributions. I will respond to as many of the questions posed as possible and, if I run out of time, I will obviously write to noble Lords accordingly.
I shall first address the issue of the Windsor Framework. Look, is the Windsor Framework perfect? Of course it is not; nothing is perfect, other than being in a single market and customs union—we are not there and that boat has sailed—but it is definitely better than the Northern Ireland protocol. What is important here is that the Windsor Framework has delivered substantial improvements to the operation of the Northern Ireland protocol. It has removed routine checks for the overwhelming majority of goods moving from Great Britain to Northern Ireland, ensured that supermarket shelves are stocked normally, secured long-term continuity of medicine supplies and restored the free flow of parcels for households and businesses.
At the same time, the Government have always been clear that the Windsor Framework is not the end of the journey but a significant step forward. There remain areas where further work with the EU is required, particularly around the practical implementation of the red and green lane arrangements and certain aspects of agrifood certification. We continue to engage constructively through the Joint Committee to reduce burdens where possible, provide clarity to businesses and ensure that the framework operates in a way that fully supports Northern Ireland’s place in the UK’s internal market.
On the point made by the noble Baroness, Lady Hoey, about consultation and engagement for business, my officials regularly and continuously engage and consult with businesses, and they have found that many businesses are already coming into compliance. They have also issued guidance to support industry. These engagements include UK retail and trade associations representing, for example, the manufacturers of small and large domestic appliances. They reported that there were no particular problems from this instrument relating to its impending GB-to-NI trade that they were aware of from discussions with their member companies. They also welcome the Government’s guidance and confirmation that products can continue to be placed on the GB market as long as they comply with the requirements of the PSTI Act, where relevant.
In addition, the Government share the EU’s desire to ensure that manufacturers are considering measures to improve the cybersecurity of relevant devices. We are also looking at further options for securing digital devices, as evidenced by our recent call for views on enterprise-connected devices, and will take into account arrangements in Northern Ireland, including impacts on SMEs.
The noble Baroness, Lady Hoey, mentioned dual access, and said it was a myth and that companies were not investing. I disagree. Just last month, the parcel delivery company Evri announced the opening of a new £1.3 million EU gateway depot in Mallusk, creating something like 650 jobs, which Evri itself said would enable it to avail itself of dual market access.
The noble Lord, Lord Dodds, asked about new cars, a subject that I think was in today’s papers. The Government are engaging closely with manufacturers to better understand what is needed to sell vehicles on the market in Northern Ireland, and we expect to make a further announcement on the next steps.
The noble Lord also asked whether this would create divergence between Northern Ireland and the rest of the UK. We consider that the additional legislative requirements that this SI puts in place in Northern Ireland will have limited impact in practice. My officials have engaged in discussions with a range of industry stakeholders, such as the AMDEA, which is the UK trade association for domestic appliances, the British Retail Consortium and government departments. These discussions have not identified any significant impacts or concerns for this instrument. Many businesses across the UK have already adapted to the new requirements. We therefore do not anticipate significant impacts on the supply of products from Great Britain to Northern Ireland.
Baroness Ritchie of Downpatrick (Lab)
I exhort my noble friend the Minister to implore his colleagues to provide speedy, expeditious responses to those reports, because they are vital in addressing the operational issues and challenges of the Windsor Framework.
Lord Leong (Lab)
I thank my noble friend for that. I am sure that, as a former Minister, she will know that we will try our best to get that done swiftly. Further to her question on the EU’s carbon border adjustment mechanism, CBAM, we have always been clear that we will apply the UK’s CBAM across the UK, including in Northern Ireland, and that the EU’s CBAM does not apply to Northern Ireland. The Northern Ireland Scrutiny Committee yesterday wrote to the Government on this issue and we will respond in the usual way.
My noble friend Lady Ritchie and the noble Baroness, Lady Hoey, also asked about veterinary measures. The vast majority of veterinary medicine will remain available in Northern Ireland from 1 January. The Government continue to engage extensively with industry and have announced two new schemes to support supply to Northern Ireland.
I come now to the question posed by the noble Earl, Lord Effingham, on impact assessments. An impact assessment has not been prepared for this instrument, as measures resulting from the European Union (Withdrawal) Act 2018 are out of scope for assessment. However, my officials have engaged in discussions with a range of industry stakeholders and government departments on Commission delegated regulation (EU) 2022/30 and have not identified any significant impacts or concerns for this instrument. We therefore expect limited impacts, if any, on the supply of goods from Great Britain to Northern Ireland.
As I have set out, this instrument ensures effective implementation in Northern Ireland of Commission delegated regulation (EU) 2022/30, which applies additional essential requirements for manufacturers of certain radio equipment and enables them to be enforced. As a former businessperson, I am constantly encouraging my colleagues at the Department for Business and Trade to engage regularly with micro and small businesses. The Government are committed to engaging and supporting all businesses, not only in Great Britain but across Northern Ireland.
Many businesses have already prepared to comply with these new essential requirements, which came into force on 1 August this year, in order to continue to supply the EU. My officials have not identified significant impacts on this instrument in discussions with industry stakeholders, including trade associations. This is because many businesses have already adapted to these new requirements. We therefore expect the impact on the flow of goods from Great Britain to Northern Ireland to be very limited.
This instrument ensures our compliance with international law in relation to Northern Ireland’s continuing dual access. I am therefore pleased to commend this statutory instrument to the House.
Baroness Hoey (Non-Afl)
My Lords, I thank the Minister for that response to this rather wide-ranging debate. We tend to have them on statutory instruments, because there seems to be no other way of raising and having debates in this place on the overall issue of the Windsor Framework and how it is affecting Northern Ireland. The Northern Ireland officials in the Northern Ireland Office must have it very easy because, with all these SIs, they simply exchange the word “radio” for “motor car” or “dental” and then produce the rest of the speech more or less the same—we hear more or less the same response every time. I appreciate that the Minister is carrying out his party policy.
I was very disappointed, as I said, that there was no one here from the Liberal Democrats, because normally what they say is, of course, that it is all about Brexit: “If we hadn’t had Brexit, you wouldn’t have a Windsor Framework protocol”. But I am sure that Liberal Democrat noble Lords will be pleased that the noble Baroness, Lady Ritchie, seems to have taken up that mantle. Indeed, the Minister himself said that the best thing would be to rejoin the customs union and the single market. Has the Labour Party policy changed, or was that just a throwaway line?
Clearly, there was absolutely no need to have the Windsor Framework protocol because the people of the United Kingdom voted to leave the European Union; they did not have on their ballot paper, “Northern Ireland to be left under 300 areas of law”—absolutely outrageous. The Minister did not raise—and none of the Ministers who respond ever raise—that kind of constitutional issue. It is all about the EU saying that we must comply.
There was much agreement between the rest of the noble Lords who spoke about the Government dressing everything up as, “Oh, but you’ve got dual access”. Dual access is a joke. It has not produced a single job; that has been confirmed by Invest Northern Ireland. We might have dual access, but the raw materials and so on need to come in from Great Britain and through an international customs border.
This particular SI will affect small businesses. We have had no real response to what might be given in mitigation to help them and no response to a number of the other questions. But I would say one positive thing: I welcome the more critical response of the noble Earl, Lord Effingham, to the SI. Perhaps that is just a bit of movement within the opposition party towards accepting that what was signed up to in the Windsor Framework protocol is not in the interests of the United Kingdom as a whole, never mind the people of Northern Ireland. What we have ended up with is the Minister basically saying, “We didn’t write this law and we can’t change it, so you’re just going to have to put up with it”. Noble Lords will be relieved to know that I withdraw the amendment.