Draft Marine Licensing (Miscellaneous Provisions) (Amendment etc.) Order 2026
(1 day, 17 hours ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Mary Creagh)
I beg to move,
That the Committee has considered the draft Marine Licensing (Miscellaneous Provisions) (Amendment etc.) Order 2026.
What a pleasure it is to serve under your chairmanship today, Sir John. I am very glad that the rain has managed to hold off so far, so let the summer begin.
The draft order, which was laid before the House on 15 April 2026, is one of the legislative measures being taken to implement the UK’s obligations under the biodiversity beyond national jurisdiction agreement—that is, the agreement under the United Nations convention on the law of the sea on the conservation and sustainable use of marine biological diversity of areas beyond national jurisdiction—the fact that I have had such trouble pronouncing it shows why it is always called “BBNJ”. It helps to implement the UK’s obligations in relation to environmental impact assessments for activities carried on in areas beyond national jurisdiction within the remit of marine licensing. The UK must be able to meet all its obligations under the BBNJ agreement before we can ratify it. The draft order enables this by amending the marine licensing regime.
I will begin by underlining why it is so important that the House supports this legislation. The BBNJ is an implementing agreement under the UN convention on the law of the sea which aims to support the conservation and sustainable use of marine biodiversity in areas beyond national jurisdiction. It is a landmark international agreement that creates a legal framework to protect the two thirds of the ocean that lies beyond any nation’s jurisdiction. These vast waters contain extraordinary biodiversity and ecosystems vital to the health of our planet; they are home to sharks, whales, sea turtles and countless other species, many of which we have not actually discovered yet.
Primary legislation was needed to implement our BBNJ obligations fully. Accordingly, the Biodiversity Beyond National Jurisdiction Act 2026 was introduced last year and received Royal Assent on 12 February 2026, marking a significant milestone in our journey towards ratification. We are now taking forward the secondary legislation needed for the UK to implement the agreement. The draft order is part of that work, and it needs to be made before the UK can ratify the agreement and participate fully in the first conference of the parties, which we expect to take place in January 2027.
The draft order implements the UK’s obligations under part IV of the agreement, which requires environmental impact assessments for activities taking place in areas beyond national jurisdiction that could have a significant impact on the marine environment. Under the agreement, the UK is required to ensure that the potential environmental impacts of any planned activity in these areas are suitably assessed before a decision is taken to authorise the activity. The draft order makes provision relating to activities carried out in areas beyond national jurisdiction so that environmental impacts can be suitably considered in line with these obligations.
Currently, a small number of activities involving deposits, scuttling and incineration are already licensable in areas beyond national jurisdiction, but only two marine licences for such activities have been issued since 2011. The draft order extends the marine licensing regime to additional activities carried out in areas beyond national jurisdiction. These new activities correspond to the types of activities that are already licensable when carried out in UK waters, such as construction or removal activities. Licensable activities carried out in areas beyond national jurisdiction will include those carried out or controlled by UK persons, as well as activities undertaken from British vessels, aircraft, marine structures or floating containers.
This instrument also makes a number of amendments to the Marine Licensing (Exempted Activities) Order 2011. An exemption is added so that several of the new activities will not require a marine licence where they do not meet the threshold for needing an environmental impact assessment or a screening for an EIA as set out in the BBNJ agreement. The exemption reduces the burden on regulators and industry, while still ensuring that we can meet our BBNJ obligations by enabling the new activities to be assessed first, to determine whether they are lower impact or need a full EIA.
Steve Barclay (North East Cambridgeshire) (Con)
What is the maximum fine for a company that does not comply with this regulation?
Mary Creagh
I do not have that figure to hand, but I am sure that the magic of the officials’ box will enable me to give the right hon. Member the figure by the end of the sitting—or perhaps he knows and can enlighten the Committee.
Steve Barclay
My reading last night suggested that it was just £50,000. It is interesting that the Minister does not know what the fine actually is. What does she think the cost of complying with the EIA requirement would be for a company?
Mary Creagh
That would depend on the activity that it was being asked to do. As I said, only two of these licences have actually been allowed under—
Mary Creagh
I am sure that it is expensive. Does the right hon. Member want to tell the Committee what it is?
Steve Barclay
I fear that I may have read the legislation a little more closely than the Minister. Some media reports suggest what compliance with this regulation would involve for a company. We are talking about conducting an environmental impact assessment beyond national jurisdiction and significant further work. The cost of complying with the EIA requirement could run to a couple of million pounds. For me, the question is not the international ambition—of course everyone in the House wants our marine environment to be protected—but why the Minister is today introducing legislation the cost of compliance with which will be 10 or 20 times the cost of the fine for non-compliance.
Mary Creagh
Having been Secretary of State for Environment, Food and Rural Affairs, the right hon. Member knows the what is involved in monitoring activity in areas beyond our national jurisdiction. What we know is that this regulation will apply to British vessels, British persons and activities that are licensed and under our control. As I said, only two of these licences have been issued in the last 15 years.
We want the areas beyond national jurisdiction to be protected. Those are often areas of deep ocean, where we do not understand and have not mapped the seabed. During my extended sabbatical I went to see some of the marine science work, including marine mapping, going on at the University of Southampton. We want the high seas to be open and accessible to all. These controls are about making sure that, under this new convention, British vessels are not in breach of international agreements. With the right hon. Gentleman’s permission—
The Chair
Order. The right hon. Gentleman has a perfect entitlement to contribute to this debate, so perhaps he should wait until the Minister has concluded and then choose to make an incisive but pithy contribution.
Steve Barclay
I thank the Minister for giving way. I will take your steer, Sir John, and make this my last intervention. The Minister has tempted me to intervene once more, because the exact justification that she gave for the cost of compliance being 10 or 20 times the cost of the fine relied on enforcement, but the reason why there have been only two licences granted in the period she cited is that there is so little enforcement because this is beyond national jurisdiction. The Marine Management Organisation has no vessels in the Pacific. There is no impact assessment with this regulation. How will it be enforced in areas beyond our jurisdiction if there is no impact assessment and no additional funding for that enforcement?
Mary Creagh
I will correct the record. The magic of the officials’ box has informed me that the maximum penalty is an unlimited fine, not a £50,000 fine, and/or a term of imprisonment of up to two years. That is significant, so it certainly would be worth a company’s while undertaking an assessment, depending on the activity that it is trying to do. If it were deep sea mining and things like that, it might be financially worth it, but it is certainly worth the company thinking about it.
Of course, we do not need physical vessels to do enforcement, because we have eyes in the sky via satellite, and we can map these things. The right hon. Member for North East Cambridgeshire knows that we have satellites, because he contracted with Earth system satellites, which can map down to 100 or 200 metres. We do not need ships there; we can send ships where they are needed and take enforcement action.
Before the right hon. Gentleman’s question, I was talking about the activities that will not need a marine licence and about reducing the burdens on regulators. An exemption will be introduced for the removal of specified subsea cables carried out in areas beyond national jurisdiction. The removal of these cables has a low environmental impact and is considered to fall consistently below the BBNJ screening threshold.
Alongside today’s statutory instrument, I would like to highlight the Marine Licensing (Miscellaneous Amendment) (Scotland) Order 2026, which makes corresponding provision for activities within Scottish competence—activities regulated by the Scottish Government under devolved powers. The Scottish instrument adds new licensable activities to the licensing regime under the Marine (Scotland) Act 2010 and makes other changes to that regime. That will ensure that the Scottish licensing framework aligns with the United Kingdom’s obligations under the BBNJ agreement. The Scottish order was made in March 2026 and will come into force on the same day that the BBNJ agreement enters into force for the United Kingdom.
To avoid dual regulation, so that a marine licence is not required under both our licensing regime and the Scottish Government’s marine licensing regime for the same activity, this statutory instrument provides for an exemption in relation to certain activities that are regulated under part 4 of the Marine (Scotland) Act 2010. It also makes consequential amendments to ensure that existing exemptions and registration provisions can apply appropriately to activities in areas beyond national jurisdiction.
The statutory instrument implements the necessary changes to marine licensing to enable the ratification of the BBNJ agreement. We are confident that its provisions will improve environmental protections in areas beyond national jurisdiction while avoiding unnecessary regulatory burden.
The Marine Management Organisation’s enforcement strategy includes a range of tools, from advisory letters to formal enforcement action, applied proportionately, based on risk and available evidence. Conditions can be placed on licences, requiring licence holders to keep records and make returns or to provide information to the MMO. It will develop intelligence gateways in areas beyond national jurisdiction to assess where there may be non-licensed activity taking place and how to address it. As it is intelligence-based, we would not be expected to say what those methods would be. Having just talked about satellites, I am sure that the right hon. Member for North East Cambridgeshire will know that that may be one of the routes.
Dr Neil Hudson (Epping Forest) (Con)
It is a great pleasure to serve under your chairmanship, Sir John. I thank the Minister for explaining this statutory instrument. It is very appropriate that we are considering it on the day after World Oceans Day.
On our precious planet, we are blessed to have oceans and seas rich in biodiversity. It is an asset that we share in common with the rest of the world—a good in itself that sustains a diverse range of life. From whales to coral reefs, we have a vast array of fish, animals, plants and microorganisms living in our oceans. Our oceans and seas contain more than 80% of the world’s biodiversity.
Biodiversity is vital not only for protecting species and preventing extinction, but for safeguarding human health. Oceans and seas are a key source of the world’s food and oxygen, but they also greatly contribute to our understanding of the natural and life sciences. The UK has long been a global leader in marine research, supported by world-renowned institutions such as the Natural History Museum, the national museums in Wales and Scotland, the National Oceanography Centre and our outstanding universities, many of which hold internationally important repositories of marine biological data.
Marine genetic resources in particular demonstrate the direct link between ocean biodiversity and human wellbeing. Compounds derived from marine organisms have been instrumental in developing new medicines. Treatments for coronavirus, cancer, inflammatory conditions and neurodegenerative diseases such as Alzheimer’s and Parkinson’s all draw in part from genetic material found in our oceans and seas. Protecting marine diversity is therefore not only an environmental imperative but a foundation for future medical breakthroughs.
The previous Conservative Government understood the need to conserve the biodiversity of our oceans and seas. That led Conservative Ministers to commit in the convention on biological diversity to protect a minimum of 30% of global ocean by 2030. In government, we Conservatives took real, practical steps to protect our marine environment. We strengthened England’s marine protected areas regime, establishing 181 MPAs, which now cover around 40% of English waters. Recognising that the UK’s overseas territories encompass 4.4 million square km of marine environment across every major ocean basin, we worked to conserve those precious ecosystems by halting biodiversity loss, supporting sustainable growth and connecting people with these precious natural environments.
We Conservatives also understood that the challenge does not end at our own shores. Around two thirds of the world’s oceans—roughly 61%—lie in areas beyond national jurisdiction: the waters outside any coastal state’s exclusive economic zone. Those vast areas are home to extraordinary biodiversity, yet no single nation can protect them alone. That is why Conservative Ministers championed general international co-operation to safeguard those waters and to support research into marine genetic resources in areas beyond national jurisdiction. As we look ahead, it is vital that we strengthen that co-operation. Safeguarding life in areas beyond national jurisdiction is a shared global responsibility, and only by working with our international partners can we preserve these ecosystems for the benefit of humanity.
The previous Conservative Government played a central role in negotiating the UN’s biodiversity beyond national jurisdiction agreement. Signed on 20 September 2023, that landmark agreement represented a major victory for ocean protection and multilateral diplomacy. As the UK follows a dualist approach to international treaties, Parliament must pass domestic legislation before such agreements can take effect. I am therefore pleased that the current Government have continued the work that the Conservatives began by bringing the Biodiversity Beyond National Jurisdiction Act 2026 into force. That ensures that the UK now has the legal framework required to implement the agreement fully, responsibly and in line with the commitments that we helped to shape on the global stage.
The Minister will recall that during the passage of the 2026 Act, His Majesty’s official Opposition repeatedly raised concerns that while the Government were seeking to champion biodiversity and conservation on the global stage, they were simultaneously threatening to surrender the Chagos Islands, which may have risked the Chagos marine protected area, particularly should Mauritius not be able to enforce the protection. We therefore welcome the fact that the Prime Minister appears to have listened to His Majesty’s loyal Opposition, the Chagossian community and wider public concern, as it appears that they have stepped back from proposals that could have jeopardised both the future of the islands and the integrity of the marine protected area. Can the Minister confirm that that remains the case?
I am pleased to say that His Majesty’s loyal Opposition support the draft order, albeit it is a shame that it has taken so long to be introduced, which has been noted by the Secondary Legislation Scrutiny Committee. Once the agreement is ratified, the onus will shift to implementation. Can the Minister provide some reassurance that the Government will continue to work closely with key stakeholders such as the cable sector and marine scientists? We look forward to further progress from the Government in this vital area.
The Chair
Before I call Tessa Munt for the Liberal Democrats, I want to say that I am happy to have an exchange on the Chagos marine environment, but I do not want a wider debate on the Chagos Islands and their future.
Tessa Munt (Wells and Mendip Hills) (LD)
It is a pleasure to serve with you as Chair, Sir John. The Liberal Democrats support the implementation of the biodiversity beyond national jurisdiction agreement, and welcome the draft order, which enables the United Kingdom to meet its international obligations under the global oceans treaty. We have long campaigned for stronger protection of the marine environment and support international action to conserve biodiversity in areas beyond national jurisdiction, including the global goal of protecting 30% of the world’s oceans by 2030.
We note that the statutory instrument introduces a number of licensing exemptions for activities that the Government consider to pose a low environmental risk. While we recognise the need for a proportionate and workable regulatory framework, it will be important that these exemptions are kept under review and do not undermine effective environmental oversight as activity in areas beyond national jurisdiction develops over time. While we support the implementation of this treaty and this statutory instrument, we remain clear that the Government must ensure the new licensing exemptions do not become loopholes and that regulators are properly resourced to enforce the agreement effectively.
Mary Creagh
Allow me to take a moment to reflect on the importance of approving this legislation. Without it, the UK would not be a position to ratify the BBNJ agreement. As the hon. Member for Epping Forest said, the “30 by 30” commitment was signed under the previous Government and that is an international undertaking which this Government take very seriously. It is all very well signing agreements—
Mary Creagh
The difference is that we are actually now saying where the money is coming from, how we are going to meet that target, and how we are going to aggregate the land and seas. An undertaking to do something, without having a plan to deliver it, it is not worth the paper it is written on.
Hon. Members will appreciate that future industry activity is difficult to predict in areas beyond national jurisdiction. Our consultation and previous engagement with stakeholders identified some likely activities in such areas, including telecommunications cable activity, marine scientific research, space flight activity, and deep sea mining, but not all such activities will be in the scope of marine licensing.
The right hon. Member for North East Cambridgeshire asked about licence applications and the costs. There have been only two licences granted for an activity in areas beyond national jurisdiction. One was for the Virgin Orbit launch in 2022—I am not sure if he was the Secretary of State at the time; there were so many in those two years that I cannot be expected to remember who was where at that time. It was before his time, was it?
Mary Creagh
The other was for a dye tracer study in 2015. I am not sure what that means, but perhaps they were putting in chemicals to trace something—currents, for example. We might think, “Well, that’s a bit weird,” but if it is about finding where the currents and tides go, and where the winds are blowing, it all feeds into the brilliant science and weather forecasting we are able to do here in this country. We do not anticipate many activities being covered—I know the right hon. Gentleman is concerned about the volume of activities—although the lack of past case studies makes it difficult to determine the volume of activities that might take place in the future.
The hon. Member for Epping Forest is right to raise the issue of the incredibly important marine environment around the Chagos Islands. It is home to 220 coral species—corals are on the frontline of the climate crisis and we are doing some great work, particularly in Cayman Islands, around tackling stony coral disease—855 fish species and 355 mollusc species, so it is incredibly important. However, I am sorry to say that decisions on what is or is not going to happen with the Chagos Islands are not a matter for Department for Environment Food and Rural Affairs Ministers, and he is tempting me to stray beyond my brief. So with your permission, Sir John, I will leave it there, and agree it is an important protected area.
Mary Creagh
Thank you, Sir John.
This is a once in a generation step forward in ocean governance, which ensures areas beyond national jurisdiction are managed sustainably, transparently and equitably as part of that biodiversity sharing agreement that the hon. Gentleman mentioned. In the absence of this legislation, we would not have the tools to assess and manage activities and their potential impacts.
Chris Vince (Harlow) (Lab/Co-op)
I was not going to intervene, but this is such a fascinating debate that I cannot help but bring in the fact that Harlow has a coral farm. We all agree that the order is important legislation. Despite some of the to-ing and fro-ing, there is cross-party support for it, but does the Minister agree that international support is also important? Does she get the sense that other countries across the world are implementing the same legislation?
Mary Creagh
I congratulate my hon. Friend on his ingenuity in shoe-horning in the Harlow coral farm. I am sure that an invitation for the Minister responsible for water and flooding is in the post and a visit is imminent. It genuinely sounds exciting. Of course, coral farms are important for working out which species are climate resilient and will be the coral reefs of the future. Coral is not just nice to look at when scuba-diving and snorkelling on holiday. In February, I managed to go on a snorkelling trip in Egypt with a broken wrist, for which I think I deserve some recognition. They make them tough in Coventry! Was Nemo swimming one-handed?
My hon. Friend asks a good question about the issue of coral and other states’ involvement. At all the international meetings I went to in 2024, which was my first year in post, people looked to the UK for our leadership on these UN conventions, particularly given the lack of leadership and withdrawal by other large players in the United Nations. We have been encouraged and exhorted to do that, but the Foreign, Commonwealth and Development Office leads on treaties, so the actual treaty could not be DEFRA legislation. We found a spot to bring in the treaty in our second year, but I am sure it will receive great acclaim. The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Kingston upon Hull West and Haltemprice (Emma Hardy), is soon to attend a conference in Kenya at which this SI and the further movement towards ratification will be warmly welcomed. There is also a Commonwealth summit to look at the ocean, as so much of our Commonwealth is affected and is marine facing or marine vulnerable.
The statutory instrument aims to strike the right balance, providing safeguards to protect the marine environment and meet BBNJ requirements, while avoiding disproportionate or unnecessary regulation. I am sure that hon. Members appreciate the importance of the marine environment and the need for effective and appropriate regulation of activities in areas beyond national jurisdiction.
Dr Hudson
I know that the Minister is winding up, and that she has spoken about Ministers going to summits and collaboration, but she spoke about the importance of implementation. I asked specifically about what the Government will do to liaise with key stakeholders in the area, such as the cable sector, marine scientists, merchant navies and so on. The UK has a global footprint, so it is important that this Government take the baton that the Conservatives passed to them and work closely with stakeholders. Can she reassure the Committee that the Government will work closely with stakeholders on the frontline?
Mary Creagh
Absolutely. I recognise that there are concerns about specified cable activity remaining exempt from regulation, but that is based on evidence provided in our consultation responses and discussions with other Government Departments, including the Department for Science, Innovation and Technology. I reassure hon. Members that, as a result of that evidence and those discussions, we consider cable-related activity in areas beyond national jurisdiction to be of sufficiently low impact as to fall below the threshold, which is why we are maintaining the current cabling exemption. However, science and industry are evolving in this area, so we are working on it. In the consultation, which we held jointly with the Scottish Government and which was open for four weeks in November 2025, we had only 22 responses from industry research organisations, environmental non-government organisations, consultants and consultancies, public bodies and DEFRA arms-length bodies, which shows that this is quite a niche area.
Eighty-nine other states have now ratified the BBNJ treaty and 145 states have signed it, so there is huge international support. We have only one ocean; although we may call it different things in different places, it is the mantle that wraps around the globe. As the hon. Member for Epping Forest says, we are often blind to the treasures that it holds in its deeps, whether that is the glorious seaweed baths on the Atlantic coast, or the next cure for an ailment or disease. Our ocean is vital to so many of our industries and provides proteins for billions of people, so it is important that we protect it for the future. I commend the order to the Committee.
Question put and agreed to.
Draft Airports Slot Allocation (Alleviation of Usage Requirements) Regulations 2026
(1 day, 17 hours ago)
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The Committee divided: - Ayes: 10 / Noes: 1 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Transport (Keir Mather)
I beg to move,
That the Committee has considered the draft Airports Slot Allocation (Alleviation of Usage Requirements) Regulations 2026.
It is a pleasure to serve under your chairship, Ms Lewell. Airport slots are permissions that allow airlines to take off and land at specific dates and times. They are a valuable resource at capacity-strained airports. The UK currently has nine such airports: the main five London airports as well as Birmingham, Bristol, Leeds Bradford and Manchester. The regulations are deemed necessary in the context of the ongoing conflict in the middle east, which continues to create disruption and uncertainty for the aviation sector. The Government have therefore designed a slots hand-back measure for the summer and winter 2026 seasons that allows airlines to return a proportion of their slots without losing the right to the same slots the following year. The regulations provide flexibility to manage genuine operational challenges and reduce the risk of last-minute cancellations.
The ongoing conflict in the middle east has created significant disruption to aviation. Airlines face longer flight paths, increased fuel costs and in some cases shifting passenger demand, particularly on routes affected by regional instability. Those developments remain unpredictable and continue to place pressure on the aviation sector. These pressures are outside the control of airlines but nevertheless affect their ability to operate as planned. Without intervention, airlines would not be able to respond effectively to known risks to their operations, and passengers could face last-minute cancellations and disruption at departure gates. The regulations respond directly to that uncertainty by providing limited, targeted flexibility while maintaining the overall integrity of the slot allocation system.
The regulations allow airlines to hand back up to 10% of their allocated slots at slot co-ordinated airports across the United Kingdom. Those are the UK’s busiest and most capacity-constrained airports, where demand for take-off and landing times exceeds available capacity. Airlines will be able to hand back slots without losing their historical entitlement to those same slots in the following equivalent season.
The 10% flexibility is split into two stages. Airlines may return up to 5% of their slots by a specified date in each season and a further 5% throughout the remainder of the season. To return slots under the regulations, airlines must give passengers at least 14 days’ notice if a flight is cancelled. This approach strikes a careful balance: it provides airlines with flexibility to adjust schedules in response to the impacts of the conflict in the middle east, while keeping passenger protections at the forefront. Importantly, the measure is strictly time-limited.
The draft instrument applies to England, Scotland and Wales. Airports are a devolved matter in relation to Northern Ireland, and there are currently no slot co-ordinated airports in Scotland, Wales or Northern Ireland.
The Government are grateful to the Secondary Legislation Scrutiny Committee for its careful consideration of this instrument. It raised some comments that I will briefly address. The 10% hand-back provision was consulted on and a range of views were received. Although many airlines argued for a higher threshold, no substantive evidence was provided. Ministers therefore concluded that 10% represents an appropriate and proportionate balance supported by the available evidence.
On passenger impact, the 14-day notice period aligns with previous slot alleviation measures. Where airlines return slots, passengers are protected under UK law and are entitled to a refund or re-routing. Wider rights, including compensation in some cases, are set out in aviation consumer protection rules. The existing justified non-utilisation of slots regime is reactive and does not support forward planning, increasing the risk of late cancellations, but this measure addresses that gap.
On the final points that were raised, the Government continue to monitor fuel supply closely and engage with industry, with UK airlines reporting no current shortages. The powers underpinning this instrument expire on 23 June 2026 under the Retained EU Law (Revocation and Reform) Act 2023. Replacement powers are being sought through the Civil Aviation (Consumer Protection and Regulatory Reform) Bill and any future use will depend on prevailing circumstances.
The Joint Committee on Statutory Instruments considered the regulation informally through the pre-laying scrutiny period. It will be considered by the Committee this Wednesday, and we are not expecting concerns to be raised.
The policy intent behind the measures is clear: to support a resilient aviation sector while protecting passengers and the environment. The regulations reduce the risk of unnecessary flights and remove the pressure to operate services purely to retain slots. They also help to protect connectivity, as airport slots underpin route networks built up over many years. Allowing airlines to retain their historical rights despite temporary disruption ensures that those connections can be restored when conditions stabilise. Finally, they support the financial stability of airlines. Without these measures, airlines could be forced to operate loss-making flights or risk losing valuable slots, neither of which would be beneficial for the sector or for passengers. I therefore commend the instrument to the Committee.
Jerome Mayhew (Broadland and Fakenham) (Con)
Thank you for chairing the Committee, Ms Lewell. I am grateful for the Minister’s explanation of what is essentially a pickle of the Government’s own making. We will not divide on the regulations because we recognise that there is a real problem that has to be solved. But rather than fiddling around with emergency statutory instruments to plug a gap, the real problem is the Government’s running down of the domestic energy sector and our ability to refine jet-grade oil and supply our airline industry.
We need to rejuvenate our energy sector, encouraging the investment and business conditions that will allow refineries to reopen. That is essential to manage the challenges posed by fuel shortages—I am thinking of Stanlow, Fawley, Pembroke and others. We have the ability to refine jet fuel in this country; we just need to expand it. The problem with the Government’s other policies on energy is that they are making it so expensive to operate energy-intensive businesses such as oil refining in this country that the industry has voted with its feet and left in a large percentage. We do not actually need less jet fuel than before the conflict in the middle east began. In fact, the spiralling cost of the carbon tax has meant that refineries are struggling to remain open. That will only increase our reliance on imports and make us vulnerable to geopolitical concerns around the strait of Hormuz.
If we want to support our oil refining sector, we must start by removing the additional costs, such as the carbon tax, while backing our North sea oil and gas industry to support the energy ecosystem that we rely on. That includes licences for new exploration and drilling. However, we have seen little evidence of that—in fact, quite the opposite in the case of the North sea, with the Government’s baffling legislative proposal on new licences.
Given the Government’s lack of commitment to tackling the fundamental issue, they have turned to these regulations, which have had the unfortunate consequence of dividing the opinions of airlines and airports. While airlines broadly support the proposals, we should acknowledge—as I hope the Minister will—the ongoing and significant concerns of airports. Those concerns have increased over the near two years of this Government’s rule, because of their mix of anti-business mandates and enormous increases to business rates, which have imposed significant costs on airports, even if they have managed to avoid the preposterous increases that were originally set out. The increases will create further challenges for regional airports, which face some of the steepest charges. We only have to look at Heathrow, which had an initial proposal of a 350% increase in its business rates.
The combination of measures has made airports wary, so it is unsurprising that they have concerns about the concept of an increased number of flights being cancelled under a new regime, with the cost of those empty slots being borne by the airports. I understand that this goes to the winter of 2027, though I think the Minister said June 2026. I may have misheard him, so perhaps he could clarify—
Jerome Mayhew
If we could have a bit more clarity on that, I would be grateful.
The director of the Airports Council International Europe went so far as to say:
“The UK Government is effectively handing airlines a carte blanche to cut services and not deliver their schedules, leaving passengers, communities and airports to bear the full brunt.”
Although I appreciate that there is a balance to be struck, that is a strong argument and deserves a direct response from the Minister about how he will maintain the balance through these regulations.
We all appreciate the importance of airport slot alleviation, particularly if there are significant fuel shortages, so I will not oppose the regulations today. Nevertheless, the proposals have been introduced in such a way that I think it is incumbent upon the Minister to address a few of the issues. That includes whether there are sufficient protections for travellers under the 14-day window, and whether he is confident that the system will work as intended and we will not see people’s holidays more disrupted than necessary over the summer period. In addition, I would be interested in hearing his rationale for extending the period into the winter when the peak period for flights is during the summer. Would it have been feasible to make changes at a later date, particularly if the Government get around to passing their Civil Aviation (Consumer Protection and Regulatory Reform) Bill in a more timely manner than they appear to be doing at the moment?
Ultimately, the Government are right to ensure that there is flexibility when there is a crisis, but we have been repeatedly told that there is not a jet fuel shortage. That is always liable to change, but those comments raise fair questions from the sector about the appropriateness of the regulations that the Government propose. I hope that the Minister can answer some of the concerns of airports, and, frankly, my concerns about the risk posed to the travelling public, so that there can be clarity about the necessity of these measures beyond the existing alleviation rules.
Luke Taylor (Sutton and Cheam) (LD)
I think it is helpful to look at the consultation responses from airlines and airports when changes were announced. Only two out of 38 airlines opposed the changes, whereas airports were unanimously opposed to the measures. Airlines argued that, without a hand-back mechanism, they would not be able to adjust their schedules early enough to provide passengers with meaningful notice, even where known risks to operations existed. Airlines also considered the 10% limit on hand-backs too low and pushed to increase that to 20%-plus; generally speaking, we support the restriction to 10%, to reduce the potential impact on consumers.
Airport respondents opposed the proposal; they were not against alleviation in principle but against the hand-back mechanism specifically. They argued that the existing justified non-utilisation of slots provisions are sufficient to enable cancellations where operational constraints, including fuel shortages, arise. For instance, JNUS has already come into effect, providing slot alleviation to operators because of airport and airspace closures from the disruption in the middle east.
It is worth noting that, given that there is no fuel shortage now and none is expected according to Government data and airline bosses, this approach risks appearing to be unjustified, disproportionate and not entirely required, given that the measures in place are already helping with those issues. There is a risk that, instead of ensuring reliable services as stated, it could undermine consumer confidence and growth and investment opportunities.
The Liberal Democrats recognise that flexibility during this tumultuous period is important; as we have seen, events can move very quickly in the middle east. We want to protect the long-term financial sustainability of the airline sector. We do not want airlines using slots for empty or near-empty ghost flights, where demand is insufficient, in order to maintain the historical rights to slots, but these changes would result in flight cancellations with little notice, with huge disruption to consumers.
The proposal to allow hand-backs with as little as 14 days’ notice is contrary to the stated aim of preventing disruptive late cancellations, and it is unnecessary given that JNUS can be used at this late stage if a genuine fuel shortage occurs. In a cost of living crisis, with flight prices already through the roof, customers will be forced to spend more money on replacement flights at the last minute or lose money on hotels or onward travel.
It is also the case that 14 days’ notice is too short a period for airports and other users to make effective use of the vacated slots, as airports typically need six weeks’ notice to reallocate slots commercially. This means that we would likely have unused slots, which reduces income to airports and reduces investment in passenger and freight infrastructure.
Slot alleviation on its own cannot be considered the solution to fuel resilience issues; other action is needed. The Government must outline what other steps they will take to ensure the continued, resilient supply and availability of jet fuel in the UK. That includes going further and faster on the adoption and scaling up of sustainable aviation fuel projects, so that the UK is able to secure supplies of SAF and both ensure the lack of disruption to flights and enable further decarbonisation of aviation.
Will the Government commit to formally monitoring hand-backs under the flexibility offered by this legislation in order to ensure that they are the result of genuine fuel shortages, are undertaken in a timely manner and are not being abused? I also echo the concerns of the Conservative spokesperson, the hon. Member for Broadland and Fakenham, about the impact on consumers. I will be voting against the draft regulations.
Keir Mather
I thank the shadow Minister, the hon. Member for Broadland and Fakenham, and the Lib Dem spokesperson, the hon. Member for Sutton and Cheam, for their remarks. I will deal with each point they raised in turn.
First, on the question about timing asked by the hon. Member for Broadland and Fakenham, I confirm that the slot alleviation measures will be extended to winter 2026. I find his link to broader questions on the refining sector admirably creative, but I am not sure that they have a direct bearing on the measures that we are considering. Our domestic refineries are still able to produce kerosene and jet fuel to a solid and viable extent. I remind him that we are not passing these measures directly in response to a shortage of jet fuel, but to pre-empt any future shortages that may arise, even though we believe that the supply is currently as it should be.
I also remind the hon. Member that we implemented a similar pre-emptive framework during the covid-19 pandemic to deal with similar disruption. This is a measured approach to be able to manage any potential fluctuations in supply as they occur.
The hon. Members for Broadland and Fakenham and for Sutton and Cheam are right to point to the concerns raised by airports through the consultation and to consumer protections for the travelling public. I will address both of those points together. We very much recognise airports’ concerns about the potential impacts. That is why these measures are strictly temporary, limited in scope and affect only a small proportion of slots—up to 10%.
The hon. Member for Sutton and Cheam pointed to the fact that a lot of airlines thought that the figure should be higher. The Government took a different view to make sure that the impact on the airports sector is contained.
Allowing these regulations to reallocate slots that are handed back ensures that airport capacity is not wasted. That provides flexibility for airlines while ensuring that we have efficient use of airport infrastructure. We believe that 10% strikes the right balance.
On passenger protections, airlines are required to provide passengers with at least 14 days’ notice of any flight cancellations, but that is not the intention of this policy. It is designed so that airlines have a longer lead-in time to be able to see where potential disruption might lie, and to be able to reallocate those slots efficiently to protect the travelling public and ultimately give them more security and better forewarning about disruption, where it may occur.
Where UK law applies, if a flight is cancelled by the airline, passengers are entitled to a choice between a full refund or being re-routed under comparable transport conditions to their final destination at no extra cost.
The shadow Minister asked why winter, and why the measures do not extend just to the summer. There is an important point about using the retained EU law functions that we have now to ensure that we have a long-term approach to managing disruption across the rest of the year. As he pointed out, measures in the Civil Aviation (Consumer Protection and Regulatory Reform) Bill will provide us with greater flexibility on slot reform, which we can use going forward.
On the Lib Dem spokesperson’s points on JNUS—I have never said JNUS out loud before—the justified non-utilisation of slots is triggered when a fuel shortage is materially occurring. The regulations give us a forward look that allows us to build in contingencies well in advance, and not just when a fuel shortage reaches its bite point. That is why a longer-term approach is necessary, but he is right to hold my feet to the fire.
Luke Taylor
There is an interesting dynamic between the impact of a fuel crisis, which is likely to have quite a short lead time, and these regulations, which give almost a six-month warning. Does the Minister recognise the need for oversight of how the rules are used to ensure that this happens in response to a fuel crisis and not for business reasons, or to expand the flexibility given by the existing JNUS rules?
Keir Mather
The Lib Dem spokesperson makes a valid point. The data shows that a lot of the cancellations we have seen, which so far have not been above average for UK aviation, have arisen to a large extent from people re-routing away from the middle east. We would expect these measures to be used only when disruption occurs directly in relation to fuel, but he is right to say that the Government need a proactive approach to monitoring hand-backs and how they are used. We will of course do that through consultation with industry stakeholders, such as airlines and AirportsUK. We will certainly keep a close watch on the implementation of the measures and make sure that that is done in the interests of the travelling public.
The regulations represent a practical and proportionate response to a period of uncertainty for the aviation sector. They protect passengers by enabling greater certainty and earlier communication. They will support airlines in maintaining viable and realistic schedules and will help to ensure that scarce airport capacity is used efficiently and responsibly. Above all, they demonstrate a forward-looking approach, acting early to prevent disruption rather than responding reactively. I hope that the Committee has found my answers informative and that it will join me in supporting this instrument.
Question put.
Draft Contracts for Difference (Allocation) (Amendment) Regulations 2026
(1 day, 17 hours ago)
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The Minister for Energy (Michael Shanks)
I beg to move,
That the Committee has considered the draft Contracts for Difference (Allocation) (Amendment) Regulations 2026.
The draft regulations were laid before the House on 20 April. They make several minor and technical amendments to improve the operational efficiency of the contracts for difference scheme during the assessment of applications. Subject to the will of Parliament, the Government intend to introduce those targeted and practical measures in time for allocation round 8, which opens on 20 July.
For the interest of Committee members, the CfD scheme is the Government’s flagship policy for supporting new low-carbon electricity generation in Great Britain. CfDs are awarded through annual competitive auctions, with the lowest-priced bids being successful. In March, in response to events in the middle east, my right hon. Friend the Energy Secretary outlined a package of measures to go further and faster on clean power, including bringing forward the opening of AR8 to July to provide certainty for clean energy investors.
The most recent allocation round, AR7, alone secured 14.7 GW of clean, home-grown generating capacity across 201 new projects. AR7 built on the success of AR6—out in September 2024—which secured more than 7 GW of renewable capacity across Great Britain. AR7 was the most successful renewables auction in European history. The reforms we introduced for AR7 boosted competition and investor confidence, and secured renewable capacity at strike prices 40% lower than the cost of building and operating a new gas power plant. Such achievements show how the CfD scheme—our key path to deliver on our mission of clean power by 2030—strengthens Britain’s energy security.
The regulations that govern the scheme are kept under review to ensure that they remain fit for purpose. The draft regulations will make the following three targeted amendments to improve the future operation of the scheme. First, they will enable the National Energy System Operator to correct certain types of error it makes during the assessment of applications by issuing new or amended qualification decisions, where evidence supports that. NESO, in its role as the CfD delivery body, assesses applications against the eligibility criteria and determines whether applicants qualify to participate in the competitive allocation process. As the CfD scheme has grown in popularity, the volume of applications has increased significantly, with several hundred submitted in recent allocation rounds. Eligibility checks are always robust, but larger numbers of applications increase the risk of errors in assessment decisions. This amendment will ensure greater consistency and fairness in how the eligibility requirements are applied.
Secondly, the draft regulations will enable NESO to consider additional information or documentary evidence submitted by applicants when examining appeals from non-qualification decisions. That change will help to avoid projects being disqualified for minor or trivial omissions from their applications. It should streamline the process and ultimately increase the number of participants in the auction, which will help us by driving greater competition and better value for money for bill payers.
Thirdly, the regulations clarify how NESO is to treat applications where eligibility has not yet been decided by the point at which the regulations require NESO to proceed with the auction. In the light of operational experience from AR7, this amendment will remove some ambiguity in existing regulations.
Finally, the draft regulations provide for procedures or information relating to the implementation of several of the measures that I have just described to be set out in the contract allocation framework—a statutory document that contains the eligibility criteria and rules governing how NESO must allocate CfDs in an allocation round. The Government published a draft of the framework setting out the proposed requirements for AR8 on 1 June, and invited stakeholder views. The final version will be published in early July, before the round opens to applications.
These amendments received strong stakeholder support in a recent public consultation, which showed broad recognition that the changes will improve the experience of applicants during the assessment process, support more effective competition and secure better value for money for consumers. This approach reflects our continued close engagement with industry in the development of the CfD scheme. By building on the foundations that we laid in AR7, the draft regulations will strengthen the procedures and simplify the operation of the scheme, which will drive progress towards clean power by 2030, while of course helping us in our No. 1 mission of securing value for money for bill payers. I commend the draft regulations to the Committee.
Greg Smith (Mid Buckinghamshire) (Con)
It is always a pleasure to serve under your chairmanship, Mr Stringer. The lens through which we must view any legislation on contracts for difference, including the draft regulations before us, is one that asks: what do contracts for difference mean for all our constituents who ultimately pay the energy bills?
The Opposition oppose forcing families and businesses to pay even more money to subsidise wind and solar developers, which I am afraid is precisely what happened in the last allocation round for contracts for difference, which the draft regulations amend. My Conservative colleagues and I warned Ministers for months that wind and solar developers would take advantage of the Government’s blind commitment to building more clean power, regardless—I repeat, regardless—of the cost. What was the result? Prices that were far higher than those agreed in the previous allocation round, higher than the average cost of electricity the year before, and the highest in over a decade.
The Government are locking in uncompetitive electricity prices for decades to come. Britain already has the highest electricity prices in the world, and it is now clear that it is the cost of the excess capacity, curtailment, batteries, storage systems and interconnectors, as well as the imports of gas needed to offset the intermittency of renewables and the subsidies that developers are extracting to pay for this, that are driving up prices in the long term. It is a reality that seemingly everyone but the Government have come to accept, with energy bosses giving a pointed warning to Parliament last year that the price of electricity could be higher in 2030 than it is now even if gas were free, because of these rising network and policy costs.
If the Government believe that their policy will lower energy bills in the long term, can the Minister promise that the maximum strike prices agreed in allocation round 8 will be lower than the price of gas-powered electricity last year, and lower than the strike prices agreed in previous allocation rounds? If the Minister cannot answer those straightforward questions, how can the Government continue to claim that their policy is lowering the cost of energy, when the available evidence suggests otherwise?
Today’s draft regulations may involve just a number of minor technical amendments, and His Majesty’s official Opposition will not divide the Committee today, but the bigger picture to which the draft regulations speak should be of concern of all members of the Committee, and all Members of the wider House.
Edward Morello (West Dorset) (LD)
It is a pleasure to serve with you in the Chair, Mr Stringer. I will leave the Minister to respond to all the inaccuracies in the shadow Minister’s speech. The purpose of the draft regulations is not to alter the underlying policy objectives of the CfD scheme but to improve the administration and operation of the allocation process. As the number of applications has increased significantly in recent allocation rounds, the complexity of assessing those applications has also grown.
The three principal changes introduced by the draft regulations are all positive. Allowing NESO to correct certain administrative errors that it may make during the assessment of an application should reduce the risk of projects being incorrectly assessed due to procedural mistakes. Permitting NESO to consider additional documentary evidence or information when reviewing first-stage appeals from applicants whose projects have initially been deemed to be non-qualifying should ensure that decisions are based on the fullest possible information and that applicants are treated fairly. Finally, the draft regulations clarify how pending applications should be treated where eligibility decisions remain outstanding at the point at which the allocation process must move forward. This follows operational experience from allocation round 7 and provides greater certainty for future rounds.
The Liberal Democrats support reforms that strengthen and improve the operation of the CfD scheme and accelerate the transition to cleaner and cheaper renewable energy. We will continue to support the expansion of fixed-price renewable contracts to break the link between electricity prices and gas prices, but although we support the draft regulations, we believe that further reforms of the CfD framework should be considered, including extending the lifetime of CfD contracts from 15 to 25 years, and moving all older renewables obligation contracts on to the CfD scheme.
Michael Shanks
I welcome the comments of both hon. Gentlemen, in particular those of the hon. Member for West Dorset, who spoke to the actual draft regulations. I thank him for his support. I also thank the official Opposition for their support for all that we do in energy policy, or so it seemed from the speech of the shadow Minister, the hon. Member for Mid Buckinghamshire.
The hon. Member for West Dorset spoke about increasing the CfD lifetime, but we did extend the CfD from 15 to 20 years. We recognised the impact on the cost of investment, which brought down—or played a part in bringing down—some of the bid prices into the auction. We will maintain those changes into AR8 before we open the round.
On the more general points that were made, I think that there is a moment here to reflect. AR7 was the most successful renewables auction that we have ever had. Crucially, however, it was an auction that brought in prices 40% lower than those for building and operating new gas. That was before the situation in the middle east arose. I do not have the actual figure for what the difference would be now, but we can all safely assume that with the price of gas where it is today, it would be a significantly higher saving now than it was then.
That is the truth of the hon. Member for Mid Buckinghamshire saying that he opposes forcing families to pay more; what he is proposing is to force families to pay for gas, which is significantly higher in price right now, and is often much higher. He is gambling that at some point in the future gas prices might come down, so everything will be okay. We are determined not to drive forward our energy system in that way. From an energy security point of view, there has never been a clearer argument than what we are facing right now. Only four years ago, we faced exactly the same question with Russia’s invasion of Ukraine. We have to learn the right lessons, not continue to make the same mistakes.
The last point that I would make—with your patience, Mr Stringer, because none of this is in the draft regulations—is on curtailment and storage. The hon. Gentleman is right to highlight the cost of building the grid, but as much as I would love to take credit for this Government for building the renewables projects that are generating clean power in this country, the truth is that most of them were built under the previous Conservative Government. I give the Conservatives credit for that, even if they do not wish to give it to themselves. What they did not do, however, was build the grid to connect those projects up. We were left with generation right across the country and a grid that was completely out of phase.
A lesson for us to learn from the 14 years of Conservative Government is to build the grid to connect the clean power to households, to connect the economic growth opportunities that we need badly, and to get us off the fossil fuel rollercoaster as fast as possible, so that we are not forcing families to pay sky-high prices for gas, which we can never control. That is what the draft regulations help us to achieve, and I commend them to the Committee.
Question put and agreed to.