Draft Electricity and Gas (Energy Company Obligation) (Amendment) (Specified Period) Order 2026
(1 day, 8 hours ago)
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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Martin McCluskey)
I beg to move,
That the Committee has considered the draft Electricity and Gas (Energy Company Obligation) (Amendment) (Specified Period) Order 2026.
It is a pleasure to serve under your chairmanship, Mrs Barker. The draft order was laid before the House on 26 January this year.
This Government remain fully committed to ensuring that households, particularly those on low incomes or at risk of fuel poverty, can live in warmer, more energy efficient homes that are affordable to heat. At the heart of that endeavour lies the warm homes plan, which is a comprehensive and long-term strategy to reduce energy bills, alleviate fuel poverty and enhance energy security. We have committed to investing £15 billion, the biggest ever public investment to upgrade British homes and cut energy bills. Of that amount, £5 billion is allocated to support low-income households.
The energy company obligation has played a key part in helping households to reduce their energy bills. ECO was launched in 2013, and the current phase, ECO4, which has run since 2022, has delivered more than 1 million energy-saving measures to around 300,000 households. The scheme places an obligation on the larger energy suppliers to deliver energy efficiency improvements to vulnerable and fuel-poor households that result in measurable bill savings.
Although ECO4 has delivered a significant volume of home energy efficiency improvements, it has not been without challenges. As the National Audit Office recently set out, there have been widespread, systemic issues in the delivery of solid wall insulation, which we have taken urgent steps to tackle. We are also bringing forward comprehensive reforms to the retrofit consumer protection system to make it stronger, more transparent and more accountable, so that this cannot happen again. We expect all installers to ensure that households receive timely and high-quality remediation of any non-compliance identified.
Given these systemic issues and inflation that is still too high, we have taken the considered decision not to replace ECO4, therefore easing pressure on household energy bills. This, in combination with the Government’s funding 75% of the domestic cost of the legacy renewables obligation, will remove around £117 of costs on average from household energy bills across Great Britain.
This instrument will introduce a small and necessary change to the existing scheme by extending the end date of ECO4 from 31 March 2026 to 31 December 2026. The extension provides obligated suppliers with additional time to meet their existing targets, and most importantly allows them time to focus on the remediation of non-compliant installations. The instrument does not change targets, impose new obligations, increase supplier costs or increase consumers’ bills.
Finally, the changes made by the draft order are limited but important. By extending ECO4, we are ensuring a stable period of delivery and an orderly closure to the scheme, and we are safeguarding consumers. I commend the draft order to the Committee.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure, as ever, to serve under your chairmanship, Mrs Barker.
Energy efficiency in the home sits at the heart of our ability as a country to support those struggling with energy bills, protect consumers from volatile energy bills and maintain the skilled retrofit workforce that this country will need in the years ahead. Since 2013, the energy company obligation has delivered around 4.4 million measures in 2.6 million properties. Under ECO4 alone, around 949,800 measures have been installed in approximately 281,000 households. Whatever its imperfections, it has been a lifeline for millions of low-income families, and the supply chain that grew around it employs tens of thousands of people across the country.
As the Minister said, this statutory instrument will extend the ECO4 end date by nine months to 31 December 2026. The stated purpose is to allow suppliers additional time to meet existing targets, remediate non-compliant installations and avoid a cliff edge in delivery before any successor arrangements are in place. The Opposition support this extension. It is responsible and the right thing to do and we will not stand in its way this afternoon. However, support for the principle of orderly transition does not mean that the Government escape scrutiny and there are several questions that I would be grateful if the Minister could answer clearly.
On cost, the Chancellor was emphatic in her Budget statement last year that ECO costs households £1.7 billion a year through levies on their bills and that ending the scheme would save the average household £59 annually. She described it as a failed scheme and said that she was scrapping it. However, this nine-month extension means that the levy continues on bills for longer than households were led to expect. Ministers must set out plainly how much consumers will pay during this extended period, and whether that figure of a £59 saving remains accurate. As the shadow Secretary of State for Energy Security and Net Zero, my right hon. Friend the Member for East Surrey (Claire Coutinho), has rightly observed, moving costs from energy bills to general taxation is not the saving it appears on paper. Households are still paying; they are just paying from a different pocket.
On the issue of quality, a National Audit Office report published in October 2025 found that many of the home improvements funded under ECO were carried out to a poor standard, particularly those involving external wall insulation. Families have been left with damp, mould and homes made worse by interventions that were supposed to help them. That is not an abstract concern and my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie) has raised those failures directly in the House. The Opposition have committed to working cross-party to ensure that affected households receive proper remediation—and we stand by that commitment. However, the Government must confirm that Ofgem’s oversight is fully resourced, that installers and not consumers are funding that repair work, and that further audits will be carried out without delay.
Finally, on the supply chain, the Government’s own rationale for this extension acknowledges the need to protect the supply chain and jobs while continuing support for low-income households. That language reflects a real anxiety in the sector. Anna Moore, chief executive of retrofit company Domna, put it plainly when she warned that suddenly removing £1.3 billion of funding was “chaotic” and had
“created a cliff edge for thousands of low-income households in fuel poverty as well as SMEs employing some 10,000 people.”
Joel Pearson of Net Zero Renewables made the same plea directly to the Chancellor. These are not abstract economic arguments; they are real firms, jobs and communities that depend on this sector continuing to function.
The extension buys a little time, but time alone is not a strategy. The Chancellor has announced that there will be no successor to ECO4, and that future support will come through the warm homes plan—£15 billion over five years, funded through general taxation. The Opposition do not oppose the principle of that shift, but the warm homes plan remains, at this stage, more promise than programme. It has not yet been finalised, piloted or mobilised. This extension exists in part precisely because the replacement is not ready. This is an honest admission and we welcome it, but it underlines that the instrument is a holding measure, not a solution. ECO4 is also estimated to deliver carbon savings of around 0.38 metric tonnes of carbon dioxide equivalent per year once all measures are installed. Whatever replaces it must be designed to match and exceed that ambition—not simply to fill a political gap.
I would therefore be grateful if the Minister could address three specific points. Can he confirm the precise additional cost to bill payers during the nine-month extension period? Can he provide a full update on the remediation programme for substandard installations and give this Committee confidence that affected households will not be left waiting indefinitely? Finally, can he set out a clear timetable for the warm homes plan so that the supply chain can plan with confidence, rather than continuing to operate under uncertainty?
The households who have relied on the ECO scheme deserve an efficient transition, not the chaotic cliff edge that the Government are presenting; the retrofit workforce that will be central to this Government’s own climate ambitions deserve certainty, not managed decline; and taxpayers deserve full transparency about what this extension will cost them. We support this instrument, but the Government must use the time it buys wisely.
Pippa Heylings (South Cambridgeshire) (LD)
The extension of the ECO scheme until December will be welcome news for the numerous insulation installers who have faced significant instability after the ECO scheme cliff-edge cut in the November Budget. However, the Liberal Democrats remain frustrated at the original decision to scrap the energy company obligation. Energy retrofit firms warned of a supply chain collapse after the Government pulled vital funding for upgrading damp, mouldy and draughty homes for the poorest households, as well as pulling funding from the small and medium-sized contractors that deliver the work. I am now hearing of thousands of redundancies among skilled installers coming down the line. What a waste and a crying shame—putting businesses and livelihoods at risk over this period.
It is also concerning that there are no carry-over arrangements for when the scheme ends. The National Insulation Association made its concerns clear in the consultation, opposing the cut and saying that any extension should come with a pro rata increase in obligation levels. Equally, the lack of detail in the warm homes plan for ECO’s replacement, with a suspected 18-month delay to delivery, means that next winter there will effectively be no operational national fuel poverty strategy. Given the middle east energy crisis, reducing energy demand is one of the best ways to help lower-income households reduce bills. Improving building fabric could cut heat demand by 15% to 20%, which would also help to reduce risk and balance the grid, reducing the peak heat gap in winter, as research by Energy Systems Catapult shows.
It is shocking that 90% of solid-wall homes are still uninsulated. That is why the Liberal Democrats keep calling for a 10-year emergency home upgrade scheme that would offer free insulation to low-income households.
Sadik Al-Hassan (North Somerset) (Lab)
It is a pleasure to serve under your chairship, Mrs Barker. I am glad to see that there is likely to be no impact on consumers or energy bills as a result of this amendment, particularly in the light of the current hostilities in the middle east. At a time when prices are rising and energy bills are due to be affected, it is reassuring to know that residents in North Somerset and across the country, who are simply trying to heat their homes, will not be impacted.
For low-income and vulnerable households already struggling with the cost of living, schemes such as ECO4 are more vital than ever. The extension will ensure that suppliers have the time they need to complete installations and, critically, remediate non-compliant works, so that households who need help the most actually receive it in full.
Martin McCluskey
I thank hon. Members for their contributions to the debate. I will turn briefly to each of the points that were raised.
The hon. Member for Mid Buckinghamshire asked about cost. The measure comes at no cost, and there is no additional funding behind the amendment. It is an extension of the obligation largely to ensure that remediation is conducted on those properties that require it. That comes at no additional cost. The bill savings that the Chancellor outlined in the Budget stand, and consumers will see them when they receive their energy bills on 1 April, after which the new price cap will see energy bills reduce by 7% over the price cap period, funded by the move of 75% of the RO to general taxation and the abolition of ECO from bills.
On the second point, the remediation programme is moving at pace. We have already contacted all affected households. We are encouraging everyone to come forward for an audit. If any Committee members have affected households, I encourage them to ensure that their constituents take up the offer of an audit. There is no route to remediation without constituents contacting us to ensure that they get an audit. As I said in the House, I think in October, this will happen at no cost to the consumer. It is backed by guarantees that will ensure that it is paid for through the system and the supply chain, not drawing on any additional funds, at this stage, from the Government.
On the supply chain more generally, we recognise the fact that there has been disruption—the hon. Member for South Cambridgeshire raised this as well. We have done a number of things to try to combat that. First, we have set up a taskforce alongside industry and the Local Government Association to bring together the bodies that procure from small and medium-sized enterprises in the ECO supply chain. That has already borne some fruit; hon. Members may have seen last week that an additional £295 million, announced to run through the warm homes local grant and the warm homes social housing fund, will provide a bridge through to the additional schemes that will come in future.
I would like to push back gently on some of the points about the lack of a fuel poverty plan. Significant amounts of money are already being deployed through the warm homes local grant and the warm homes social housing fund. The deployment of the new scheme from 2028 will involve integrating those two schemes, which are working right now and are already delivering measures to people’s homes.
I have also heard, not just from hon. Members today but more generally, the idea that we are no longer standing behind insulation. I would not want people to leave this Committee with that impression. The warm homes plan has a significant focus on new technology, but also on insulation, and I anticipate that the amount being deployed for insultation will remain.
I agree with the hon. Member for South Cambridgeshire: there is no point deploying measures onto homes that are leaky and will not keep people warm and dry. Many of the warm homes local grant and warm homes social housing fund projects I have visited in the short time I have been doing this job are benefiting from a combination of insulation alongside modern technology such as heat pumps, batteries and solar.
For every building and project, it is about getting the mix of measures correct to deliver warm homes and lower bills. It would be remiss of us to publish a plan in this day and age that did not reflect the technological changes of the 10 years and the efficiency of batteries, heat pumps and solar, which are helping people to drive down their bills today.
We intend to consult on the integration of the two schemes shortly. Again, I impress on hon. Members that we will not be left without a scheme for low-income people. Some £5 billion of the £15 billion for the warm homes plan is focused on low-income households. As I said earlier, an additional £295 million is already being funded through those schemes, in addition to what was already budgeted for in these scheme years.
Finally, on remediation, which I know has interested and concerned hon. Members across the Chamber when we have discussed this subject before, I want to repeat that it is really important that people come forward for those audits. The supply chain and the system stand ready to remediate homes, but we cannot do that without people coming forward for those audits.
I thank all hon. Members for their contributions to this debate. As I said, the instrument before us will ensure that the ECO scheme concludes in an orderly, responsible and consumer-focused manner. I commend the draft instrument to the Committee.
Question put and agreed to.
Draft Sussex and Brighton Combined County Authority Regulations 2026
(1 day, 8 hours ago)
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Miatta Fahnbulleh)
I beg to move,
That the Committee has considered the draft Sussex and Brighton Combined County Authority Regulations 2026.
The draft regulations were laid before the House on 11 February 2026. Before I proceed, I draw the Committee’s attention to the correction slip, which corrects the name of the appropriate administering authority for pension purposes from East Sussex to West Sussex. This change was requested by and agreed with the constituent councils. From here on in, when referring to Sussex and Brighton combined county authority, I will use the term “strategic authority”.
Let me state very clearly that we believe that devolution is a critical lever for delivering growth and prosperity, with mayors and local leaders being best placed to take the decisions that benefit local communities. The Government were elected on a manifesto commitment to widen and deepen devolution across England, and the English devolution White Paper sets out our plans to achieve that. Much of that White Paper is now being taken through Parliament via the English Devolution and Community Empowerment Bill. The White Paper also launched the devolution priority programme, to provide a fast track to establish a new wave of mayoral strategic authorities, including Sussex and Brighton. This statutory instrument, which will establish their strategic authority and provide for the mayoral elections, represents substantial progress towards fulfilling our commitment to move power out of Whitehall and back to those who know their patch best.
The Government have worked closely on the draft regulations with the constituent councils in Sussex and Brighton: West Sussex county council, East Sussex county council, and Brighton and Hove city council. All the constituent councils have consented to the making of the regulations, and I thank personally the local leaders and their councils for their support in getting us to this point. The regulations will be made, if Parliament approves them, under the enabling provision in the Levelling-up and Regeneration Act 2023. The strategic authority will be established on the day after the regulations are made. The inaugural mayoral election is due to take place on 4 May 2028, and the elected mayor will take office on 8 May 2028, with a four-year term.
The draft regulations make provision for the governance arrangements for the strategic authority. Each constituent council will appoint two of its elected members to be members of the strategic authority, with the mayor also a member once in office. The strategic authority can also appoint non-constituent and associate members to support its work. Each voting member is to have one vote, and the vast majority of decisions are to be determined by a simple majority of the members presenting and voting. Once the mayor takes office, that majority must include the mayor, or the deputy mayor acting on the mayor’s behalf.
The regulations provide some functions in relation to transport and economic development, but there is a strong link to the English Devolution and Community Empowerment Bill. Subject to Royal Assent, which I hope we will get, the Sussex and Brighton strategic authority will be classed as a mayoral strategic authority, and the functions reserved for that tier will automatically be conferred. Even before the mayor is in office, the strategic authority will be able to exercise mayoral strategic authority functions, with the exception of those specifically reserved for the mayor.
As this is an important change to the governance landscape of the area, we ensured that there was robust and effective consultation with stakeholders across the area. The consultation was promoted using social media, a communications campaign, a dedicated website, online and in-person events, and the distribution of the consultation material. Responses could be made online, by email and by post. We received a wide range of responses from key stakeholders: the public, businesses, councils, universities, and third sector and other bodies. A summary of the responses has been published on the gov.uk website. We are clear and confident that the statutory tests to establish the strategic authority have all been met.
Subject to the regulations being made, the strategic authority will receive devolved funding, including funding for transport and adult skills, capacity funding, and a 30-year mayoral investment fund to support key local priorities.
The draft regulations represent clear progress on our mission to widen and deepen devolution in England and will make that a reality in Sussex and Brighton. They will empower local leaders to deliver for their communities, improving residents’ lives and opportunities. I look forward to answering any questions that Members may have, and I hope that the Committee will join me in supporting these critical regulations.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
It is a pleasure to serve under your chairmanship, Sir Desmond. Let me say at the outset that the Opposition do not propose to divide the Committee on the regulations, because they achieve an ambition that we support. Indeed, Katy Bourne was selected some time ago as the Conservative candidate for the new mayoral role and has been campaigning for a good deal of time, in the expectation that the election would take place in May 2026, as per the original timetable.
The fact that we are here considering this instrument, which will be made under Conservative legislation—the Levelling-up and Regeneration Act 2023—is an indication of how far behind the Government are on achieving their ambitions for devolution in England. We find ourselves in the position that elections will go ahead in May for councils that the Government are set to abolish, but not for the new mayor, who, it is envisaged, will take over some of their responsibilities. I intend to press the Minister a little on those issues.
The first thing that it will be helpful to understand is the likely cost of the delay. As we know from feedback from local authority leaders around the country, the delays that the Ministry of Housing, Communities and Local Government has introduced consistently to this process have meant that things like the renewal of contracts to provide children’s social care, adult social care, highways and pothole maintenance—all kinds of different local authority services—have been put in question, because the new authorities do not know when they will come into those responsibilities, and the authorities that currently hold them do not know when they will be abolished. That imposes a cost on taxpayers, causes a degree of uncertainty and bears down on the service quality that can be leveraged through that process.
It will also be helpful if the Minister can set out what interdependencies there are between the draft regulations and the English Devolution and Community Empowerment Bill, which is yet to make its way through the parliamentary process. There is no carry-over provision for the Bill, so, with Prorogation imminent, the Government will have to undertake significant consideration of what parts of it will make it through, if any at all. Having spent many painful days on the Bill Committee, I am sure that the Minister is no more enthusiastic than the Opposition about the prospect of having to relitigate all the points on the Bill. However, the Bill is designed to create the underpinnings of the role that this mayor will occupy. Clearly, there is significant doubt about the ability to implement those policies, if the necessary legislation has yet to make it through Parliament.
Finally, is the Minister able to say anything about the interaction between these regulations and the Home Office proposal to abolish the role of police and crime commissioner? The Government set out very clearly in the English Devolution and Community Empowerment Bill the expectation that these new mayoral authorities would take on some of the responsibilities of PCCs, but the elections of the new mayors have been significantly delayed, so there will be a gap between the end of the current PCCs’ terms in office and the election of the new mayors, of whom I think this the first to have delegated legislation underpinning their role.
Alison Bennett (Mid Sussex) (LD)
It is a pleasure to serve under your chairship, Sir Desmond. Before I begin, I refer the Committee to my entry in the Register of Members’ Financial Interests.
The Liberal Democrats want to see devolution to local people, and we believe that every area in England should be able to secure a devolution deal that works for it, for its local economy and for its residents. We believe that local government reorganisation should be a matter for councils and local people to decide.
However, I am mindful that the regulations are being debated before the Government’s decision on the new unitary authorities that will replace the three councils—Brighton and Hove city council, West Sussex county council and East Sussex county council— so is the Minister able to tell the Committee when the announcement will be made on those new unitary structures? Folk in Sussex were working on the understanding that it would be made in March, so, given that the House will rise for the Easter recess on Thursday, can she give any clarity on when that decision will be announced?
Let me also make some points about fair representation. There is concern from the county areas that Brighton and Hove may be over-represented and West Sussex and East Sussex under-represented. If that is not to be the case, how will it be safeguarded against? In addition, in the interim, transitional period before the new unitary councils come into place, what will be the roles of the district and borough councils in the combined authority? How will their voices be heard? They are the most local level of government, and they understand the community they are so closely attached to. Finally, how will fair representation be ensured when authorities are in a state of no overall control?
Miatta Fahnbulleh
I thank Members for the cross-party support for both devolution and the regulations. This is an important step forward for the area, and I am glad it is being done with our collective support.
Let me pick up the specific questions that were asked. When we informed both the areas concerned and the House that we would be postponing the elections until 2028, I said the rationale was that, in our judgment and from the experience of devolution in lots of different areas, the strength of the partnership is critical. In the context of local government reorganisation and creating strategic authorities—the footprint upon which we put a mayor—our view was that we needed to create the time to allow those institutions to bed in. We have been working very closely with the constituent authorities to ensure that there is an effective partnership, which will create the foundations upon which we can have mayoral elections. I think that is the right way to go. In the end, what we all care about is that at the other side of the process we have effective institutions that can deliver for local people. We think that by taking this slower, more considered journey towards it, we will deliver better outcomes for everyone.
On the costs specifically of mayoral elections—rather than those associated with local government reorganisation—we do not think that costs will be incurred by the constituent strategic authorities. We have committed to capacity funding from this year so that the institution can build its capacity and resources to work collectively. We are also clear that in advance of having the mayor, the strategic authority will operate as a mayoral strategic authority with powers over transport and skills, for example, so that it can crack on with the job that it needs to do. We will work on a case-by-case basis where there are pressures in the system. That support has been welcomed by the constituent authorities, and we are clear that we will do this in partnership.
On the interdependencies with the English Devolution and Community Empowerment Bill, we are optimistic and confident that we will get the Bill through in this Session, and it is key to this change; part of the reason that this statutory instrument is much slimmer than ones approved previously is that a lot of this is built into the Bill. We are working relentlessly with our colleagues in the House of Lords to make sure that we can get the Bill through. I think there is cross-party support for the idea that this is a critical step in terms of governance and pushing power out, and I hope we will have cross-party support to get the Bill through in this Session.
An important question was asked about the abolition of police and crime commissioners. We are working very closely with the Home Office to make sure that we get that transition right.
As Members will know, we are in the process of rolling out strategic authorities across the country, because we want to make sure that devolution is spread across every part of the country. Those strategic authorities, whether they have mayors or not, potentially have an important role to play in the transition of both police and fire services. We are working with constituent, combined and strategic authorities to think about how we transition the functions that currently sit with PCCs or with fire authorities into those authorities.
On the point about devolution being required in all areas, I completely agree with the hon. Member for Mid Sussex. That is why we are rolling out devolution through strategic authorities. We have just closed expressions of interest for all areas to come forward and set out the partnerships that they want to build, and we will be taking that forward. We will move at the pace that places want to move, because we are very clear that we will not impose devolution geographies on places, but we are working actively with all areas. My hope is that in a year—possibly a year and a half—the entire country will be filled with the strategic authority footprints that will allow us to push powers down to those different areas.
On the hon. Member’s point about Brighton and Hove being over-represented, that is not my understanding. I have spent a lot of time engaging with the constituent authorities, and that issue has never been raised. What I would say—and this is right—is that we have left the particular set-up of the committee and governance structure to local partners. It is not for the Government to dictate to them how they should govern themselves; that is based on what the constituent authorities think is right and on local consent. I hope everyone would agree that that is the right approach.
We are therefore leaving it to our partners in local government to decide the right balance, particularly in the transitions where we have district councils in place that may not be in place in 2028. Different areas will approach it differently, and that is what we are seeing here. Ultimately, as I said when we were taking the English Devolution and Community Empowerment Bill through the House, it is in the interests of constituent authorities to make sure that they are engaging their communities, and all constituent authorities, because, ultimately, partnerships are based on consent. That is what we are seeing in practice, and that is what I believe that this particular strategic authority will continue to take forward.
In conclusion, we have worked incredibly closely with the constituent authorities. I am confident that they will make this work and that, even though the mayoral elections will be in 2028, we will create a strong partnership that will allow them to crack on with the important job of building an economic strategy for their area and delivering for their area, with the investment to do that. I thank hon. Members from across the House for supporting the regulations, and I hope that we can take them forward in order to deliver the benefits of devolution.
Question put and agreed to.
Financial Assistance to Industry
(1 day, 8 hours ago)
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The Chair
It may help if I clarify from the Chair that we will debate for up to 90 minutes the content of the motion in the name of the Secretary of State, which is listed on the future business section of the Order Paper. The House will be asked to pass the motion without debate after the text has been reported from the Committee.
The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)
I beg to move,
That the Committee has considered the motion, That this House authorises the Secretary of State to make payments, by way of financial assistance under section 8 of the Industrial Development Act 1982, in excess of £30 million to any successful applicant to the Life Sciences Large Investment Portfolio, launched on 15 November 2025, up to a cumulative total of £570 million.
It is a pleasure to serve with you in the Chair, Sir Alec. The life sciences sector is a jewel in the crown of our economy, a national asset that plays a unique role in the health and wealth of the United Kingdom. The sector consistently drives skilled employment, attracts cutting-edge research and stimulates inward investment in communities across every nation and region of our United Kingdom. From pioneering new medical technologies to developing life-saving therapeutics, life sciences generate immense economic value and vital public health benefit.
The Government’s life sciences sector plan sets out a comprehensive, long-term strategy to ensure sustainable growth across all parts of the sector. It outlines our ambition for the UK to secure more life sciences foreign direct investment than any other European economy by 2030, and to position ourselves as the third largest global destination for such investment by 2035, behind only the United States and China. Meeting that ambition requires an internationally leading support package and a clear signal to global investors that Britain is open, competitive and committed to scientific excellence.
Peter Fortune (Bromley and Biggin Hill) (Con)
Given that the individual grants can exceed £30 million and are monitored for only 10 years, if a company, say, relocates to another country or fails to deliver over that period, is there any mechanism for the Government to claw back some of that money?
Kanishka Narayan
I would not make claims about any individual-level investments we have made through the fund at the moment, but I am happy to write to the hon. Gentleman about the provisions in the fund as a whole.
Central to our ambition is boosting manufacturing through the delivery of up to £520 million to the life sciences innovative manufacturing fund, one of six headline commitments in the sector plan. The covid pandemic demonstrated beyond doubt that we cannot take our critical supply chains for granted. The disruption of that period showed the risks of relying too heavily on overseas production for medicines, vaccines and essential medical supplies. Supporting the onshoring and expansion of life sciences manufacturing through the life sciences innovative manufacturing fund is therefore a vital part of strengthening our national resilience, improving preparedness for future health emergencies and ensuring that UK patients benefit quickly from innovation.
In the past six months alone, that Government support through the life sciences innovative manufacturing fund has unlocked more than £600 million in investment in our life sciences sector, which will create and safeguard more than 600 jobs. That includes a £500 million investment by global pharmaceutical company UCB in Surrey, alongside a £23 million investment to expand production of essential medicines at Norgine’s facility in Hengoed, Wales.
Those investments position the UK as a world leader in health and manufacturing innovation and boost regional economic growth. More than that, they restore a proud culture and heritage of innovation in so many of these places. Hengoed, for example, was the place that powered this country’s industrial development across the 20th century with coal from the Penallta colliery. Now, that heritage of coal leads into the future of essential medicine production as well. The life sciences innovative manufacturing fund is unlocking expanded warehouse capacity, expanding production capacity and creating 44 new local jobs. At the heart of it all, it restores that critical heritage of innovation in our communities.
Of course, if we are to maximise the full potential of UK life sciences, we must go further and faster in our support for the largest transformational projects. That is why the life sciences sector plan includes a commitment to develop a new, bespoke approach to supporting major life sciences investments of more than £250 million. Such large-scale and globally mobile investments are particularly critical to the ecosystem here in the UK. They attract further private capital, create clusters of expertise and bring significant economic and health resilience benefits to both the local areas that host them and the UK as a whole.
The life sciences large investment portfolio is designed to meet that need. It offers tailored Government support to attract the world’s largest and most strategically important life sciences investments to the UK. The scheme enables the Government to provide bespoke support for investment portfolios with investments in manufacturing and in research and development totalling at least £250 million over a three-year period. It will give confidence to companies and ensure that the UK remains an internationally competitive destination.
Crucially, the life sciences large investment portfolio brings together regional and devolved delivery partners with UK Government support, so that we can leverage the full UK offer for investors. That means aligning national incentives with place-based strengths in skills, infrastructure, clusters and planning, so that every part of the proposition works together, and the UK is as competitive as possible for the largest and most mobile life sciences investments.
The Government are clear that the life sciences large investment portfolio is a strategic investment in our future. It will strengthen our capabilities, support high-value jobs and reinforce the UK’s global reputation as a science superpower. Most importantly, it is a vital step in delivering the Government’s commitment to support the UK’s life sciences sector, and to ensuring that our country remains at the forefront of global innovation for decades to come.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
It is a pleasure to serve under your chairmanship, Sir Alec. His Majesty’s Opposition welcome this motion, which will allow the Secretary of State to make individual payments above £30 million to successful applicants to the life sciences large investment portfolio.
The LSLIP has been developed and designed to support large-scale manufacturing and R&D investments in medicine, medtech and diagnostics, with a total budget of up to £570 million, and scope for individual awards of up to £130 million per project. It very much builds on the life sciences innovative manufacturing fund set up by the last Conservative Government to provide substantial capital grants for manufacturing innovation to strengthen the UK’s health supply chain. Together, the life sciences large investment portfolio and the life sciences innovative manufacturing fund provide a pipeline of support in the UK for both resilience-building manufacturing and global-scale industrial capability.
The year 2025 was a challenging one for the UK life sciences sector, with AstraZeneca first scrapping plans to invest £450 million in expanding a vaccine manufacturing plant in Merseyside, blaming a reduction in Government support, and then announcing in September that it was pausing its £200 million research investment in Cambridge. That same month, Merck announced that it was scrapping a planned £1 billion expansion of its UK operations. However, that was not the full extent of the problems, with Eli Lilly and Sanofi also pausing investment in their UK operations.
Several life sciences investments secured under the previous Conversative Administration were culled or put on hold after this Government took office. The life sciences large investment portfolio may go some way to recovering that lost ground and signalling to the life sciences sector that the UK remains serious about attracting, retaining and growing a world-leading life sciences R&D and manufacturing sector. Sadly, it will not be sufficient in isolation.
The Government intervened late last year to stabilise the rebate rate applied to newer medicines under the voluntary scheme for branded medicines pricing, access and growth for 2026. However, UK rates remain significantly higher and more volatile than those in many of our peer countries, which is a deterrent to significant investment in UK life science industries. My first question therefore is, what further action are the Government taking to secure longer-term stability and predictability in this area?
Last year, the Association of the British Pharmaceutical Industry made a pre-Budget submission calling on the Government to take action to restore the UK’s position as a global leader in life sciences. Among the ABPI’s recommendations was ensuring that VAT is not applied to free-of-charge medicines under early-access schemes, to preserve access for UK patients and maintain the UK’s attractiveness for clinical trials. However, The Sunday Times reported yesterday that one multinational drug company has stopped patients receiving early-access medicines, with another considering similar action after His Majesty’s Revenue and Customs issued VAT bills to pharma companies providing medicines under the scheme.
That fiscal folly has real-world effects on not only the economy, but the lives of patients with debilitating and life-threatening conditions who are taking part in those trials. Therefore, my second question to the Minister is, what discussions has he had with Treasury colleagues about the urgent need to reform the tax system to make the UK a more attractive and stable jurisdiction for investment in life sciences?
Olly Glover (Didcot and Wantage) (LD)
It is a pleasure to serve under your chairship, Sir Alec. I thank the Minister for moving the motion, which the Liberal Democrats are also minded to support. It is vital that the UK life sciences sector, which is such an important part of our economy, is supported and has the potential to thrive and compete on the global stage. That is not just for economic reasons, but so that the UK can respond, and contribute to responses, to future health emergencies and pandemics, given its focus on research and development and its manufacturing capacity in medicines, medical technology and diagnostics.
The only concern we might have is based on the Competition and Markets Authority assessment of this proposal, which identifies potential downsides for small and medium-sized enterprises. I have many of those in my Oxfordshire constituency of Didcot and Wantage—for example, Adaptimmune, AMS Biotechnology and Bounce Biomedical on Milton Park, and Accentus Medical and the internationally respected diamond light source facility, used by academia and industry to conduct research in life and physical sciences, on the Harwell Science and Innovation Campus. It would be interesting to hear a little from the Minister about how the investment set out in the motion will benefit small and medium-sized enterprises, as well as the very large companies it is clearly most focused on.
Kanishka Narayan
I thank both hon. Members for their contributions. To respond to the hon. Member for Didcot and Wantage, the large investment portfolio part of the fund is of course focused on larger projects that materially move the needle for the sector as a whole. The life sciences innovative manufacturing fund as a whole is much more focused on singular sites, and as a result smaller firms are able to participate in it. That is alongside a series of measures that the Department has been taking to back the best of British start-ups in this space.
The shadow Minister, the hon. Member for Runnymede and Weybridge, asked what we are doing on longer-term stability to continue to attract large-scale investment into this country. The pharmaceutical agreement we have struck with the United States is a really important location for a series of commitments that support our commercial investment environment and provide the best care for patients within that.
We have committed to investing around 25% more in new medicines, with two key changes at the National Institute for Health and Care Excellence—an increase to the cost-effectiveness threshold, and the introduction of a new value for assessing health-related quality of life. We have also introduced a 15% cap on repayments made by industry as part of the voluntary scheme for branded medicines pricing, access and growth, with greater market predictability for investment as a consequence of that as well. Furthermore, colleagues across Government continue to work closely with industry, patient groups and the devolved Administrations on ideas to support the commercial environment, as well as on medicines pricing in a future voluntary scheme.
On the hon. Gentleman’s point around reforms to the tax system, he will be aware that discussions are ongoing across Government all the time, particularly in support of entrepreneurial investment decisions made in this country. That is true not least for early-stage founders in the life sciences and broader technology as well, where, as a consequence of decisions made by the Treasury, this country now has one of the most attractive regimes for employee equity participation.
The motion will ensure that the UK can compete for the largest and most impactful investments in life sciences manufacturing.
Dr Spencer
Will the Minister respond on the point about VAT on medicines and trials?
Kanishka Narayan
I am happy to look into the specific case study in the papers, which the hon. Gentleman referenced. I have to say that I have not seen the mention in The Times of the company he talked about, and I am reluctant to speculate on the context. However, if he is looking for an answer, I am happy to write to him about that case.
These investments will make a significant contribution to UK economic growth and outcomes for NHS patients. The life sciences large investment portfolio is a key tool that will support the Government’s missions to kick-start economic growth and build an NHS fit for the future. Working together with industry, the Government are delivering better patient outcomes and driving economic growth, and I look forward to continuing that work and building on that momentum. I commend the motion to the Committee.
Question put and agreed to.
Resolved,
That the Committee has considered the motion, That this House authorises the Secretary of State to make payments, by way of financial assistance under section 8 of the Industrial Development Act 1982, in excess of £30 million to any successful applicant to the Life Sciences Large Investment Portfolio, launched on 15 November 2025, up to a cumulative total of £570 million.