Civil Aviation (Consumer Protection and Regulatory Reform) Bill [HL]

Lord Grayling Excerpts

Committee stage
Thursday 18th June 2026 Grand Committee

[Earl Russell (LD)]

My Lords, it is a pleasure to start the second day in Committee on this Bill. I open this group on airspace modernisation, consultation and charging and move Amendment 60 in the name of my noble friend Lady Grender, as she is unfortunately unable to be here today.

The amendment is straightforward and seeks simply to insert a new subsection requiring that, before the Secretary of State makes any directions under Clause 4, three things must happen: a consultation with persons and communities likely to be affected; an environmental impact assessment; and a noise impact assessment. On these Benches, we feel that these additions are a basic requirement of legitimate decision-making where the power may have serious local consequences. The Clause 4 directions on airspace redesign are not merely a technical tidying-up exercise and can be used to alter flight concentrations, runway throughput, and the intensity and timing of overflight experienced on the ground. A ministerial direction made under this clause is capable, in substance, of facilitating additional capacity without ever being labelled as such.

As was said at Second Reading, the Bill is a blueprint; it is not the final product. It provides a framework that leaves the substance to future regulation. In that sense, as we have described, it is paving legislation. The Committee is entitled to ask what safeguards are built into that paving before being asked to drive on it. The Minister has given us reassurances that the Bill will not be used as a vehicle for airport expansion; we note and welcome those, and we accept them in the good faith in which they have been given. However, personal reassurances, however well-meaning, are not a legal safeguard. Ministers change, Prime Ministers change, Governments change, and interpretations can also change. The whole point of us seeking to put this duty into the Bill is to ensure that Parliament and the public can distinguish between a necessary operational change and one that, in effect, delivers additional capacity through the back door of airspace decision-making. Without mandatory consultation and impact assessment, the distinction cannot be realistically made. Even if it could be made, it would happen only after the fact.

Airport change proposals are already assessed through environmental methodologies, noise matrices and statutory directions. This should therefore be aligned with that pre-existing reality. For our communities, these matters are really important. Many, as we know, are already impacted by the noise and environmental impacts of existing airports, and future communities could be impacted by proposals under this legislation. These are real impacts on our communities, from noise late at night to environmental pollution. They should not have to rely on good will, however well-meaningly it is given. If the Secretary of State is to have this power, the Bill should state clearly what the procedural safeguards must be before it is used. That is exactly the point of Amendment 60. We are simply seeking to put a safeguard and some handrails in place around these powers. This is a crucial issue for us in our scrutiny of this Bill.

I turn briefly—I am sorry for speaking to these before others have managed to—to the other amendments in this group. In general, they all seek to do fairly similar things to Amendment 60. Amendment 61, in the name of the noble Lord, Lord Grayling, would require a minimum 28-day targeted consultation with local communities, local authorities and airport operators before any direction on airspace redesign is issued. We have considerable sympathy for this amendment, for exactly the same reasons that I outlined on our Amendment 60. The 28-day objective is not onerous; it is fundamentally achievable. We hope that the Minister sees fit to put our Amendment 60, this Amendment 61 or some combination of them into the Bill.

Amendment 62, from the noble Lord, Lord Tunnicliffe, would add the British Airline Pilots Association to the consultation list. We are broadly supportive of this amendment and recognise the central role that our pilots play, particularly in matters of safety. Their judgment and professionalism are essential in any plans to modernise our airspace and capacity. However, our concern is that the amendment, by its nature, names one organisation and does not, for example, name air traffic controllers. We would prefer it if the amendment was reworded to talk about consultation with representatives of the industry, as opposed to naming only one organisation.

Amendment 63, from the noble Lord, Lord Holmes of Richmond, would require the CAA to establish a blockchain-based audit trail for every airspace change program. We recognise that the underlying objective and purpose of this is to create a tamper-proof, long-term record of what has been decided, by whom and when. That is an entirely legitimate concern. In the past, too many of these decisions have been opaque; it has been extremely difficult for anybody to know what has been happening and what has been done by whom.

The requirements in this amendment, particularly those in proposed new subsection (3) for cryptographic security, 15-year retention and tamper-proof records, are all laudable aims, but we wonder whether naming one specific technology would make this a hostage to fortune in the future. We suggest alternative wording that asks for a secure, auditable and publicly accessible record, without prescribing the exact technology to be used. We feel that that would be a better way forward. It might be that the technology that the noble Lord suggests is the one that is chosen, but alternative wording would at least leave more scope for examination in the round.

Amendment 64, from the noble Lord, Lord Moylan, probes with characteristic precision the rationale for allowing changes to be imposed under Clause 6 on persons who neither use nor benefit from the air traffic services in question. This is a serious point: the Bill should have open scrutiny of who bears the costs for these matters. I hope that the Minister can provide some clarity on those points.

The final amendment in this group is Amendment 65, from the noble Lord, Lord Kirkhope. It would require the Secretary of State and the CAA to have regard to the growth and sustainability of general aviation when setting charges and to ensure that charges on general aviation users are proportionate to the use that they make of air traffic services. General aviation is too often forgotten, and this seems a proportional requirement and a modest and reasonable ask. We look forward to the Minister’s response to it.

[Lord Grayling (Con)]

My Lords, I am grateful to the noble Earl, Lord Russell, for his comments on my Amendment 61. I will speak to it only briefly, because it is pretty self-explanatory.

The legislation rightly gives some power to the Government to intervene and, in effect, act as arbiter when it comes to airspace redesign. Airspace redesign has taken much too long. It started when I was Secretary of State and now, nearly eight years later, we are still not close to bringing it to fruition, yet it is fundamental to the future of the aviation sector in this country. It will unlock extra capacity and use next-generation technology to enable us to provide more respite to communities that are affected by aircraft noise, even though the level of aircraft noise, in the world in which we live, has dropped enormously over the past generation.

The Government rightly believe that they need some degree of arbiter powers in this, but I do not think that they should have those powers just to say, “Right, that’s the decision”. There is an obligation there—nothing at great length, because we know that government consultations can last for ever, take months to be responded to and all the rest, but with a simple process saying, “Look, that’s what we’re going to do. Is there anything we haven’t thought of? Is there something we’re not quite getting right here?” I say to the noble Lord, Lord Tunnicliffe, that the wording of the amendment is what it is, but I would expect pilots’ organisations, air traffic organisations and all the rest to be able to input a view on this point.

I would see this as being not an isolated consultation but a standard government consultation—a short, snappy one—simply so that the organisations and communities that have a vested interest can come forward and say, “There’s something you haven’t thought of. This is going to have an adverse effect that you haven’t thought about. You really shouldn’t be taking this decision”. It would be improper for that process not to exist where the Government have what is, in effect, a pretty absolute power of direction under the legislation as it is at the moment. I very much hope that the Minister will take that on board and perhaps look to include something of this kind on Report.

[Lord Tunnicliffe (Lab)]

My Lords, I shall speak to Amendments 60 to 62; I express a specific concern in my Amendment 62. I thought that I knew about the technology in this debate until I decided to brush up on it yesterday; I have spent most of my working hours since then getting up to date, to some extent.

The essence of the technology, which would allow a much more holistic review of airspace use, is that it is dependent not on aids on the ground but on global positioning systems. That gives great benefits, in terms of what it does for aviation, but I put it to the Committee that it also gives great benefits to those who are concerned about the environmental impact. If your route does not fit with that bit of society and there is a route that can fit with that bit of society, then, with the overarching technology, it can be changed. Up to this point, changing where aeroplanes go close to the ground has been totally dominated by the ground-based aids that they use to land.

The essence of my amendment—as an ex-BALPA shop steward, I thought that I had better represent my old team—is to get pilots involved in this consultation. They are going to face dramatic differences. One of the first things that I would say relates to the point that the noble Lord, Lord Moylan, made the other day, which is that the planes can fly themselves. Normally, you have to drag the plane into the air then tell it to fly itself, and, when you get to the end, you actually have to make a few decisions. It is a very good theory; hopefully, when you press “flight nav” or something like that, that will happen.

The problem facing the modern pilot is that one of their most important tasks is to cope when there are system failures. There will be system failures. There are no big computer systems in the world that do not have system failures, as we all know to our cost. The problem is that the level of knowledge needed by the operative to cope with a system failure is very large but it is not often practised. It will, I am sure, follow the pilot’s standard of continuous checking. I have never flown an airplane with its engine on fire, but, when I was an airline pilot, I flew a plane with its engine on fire many times in a simulator. It was dramatic and great fun, but the whole essence here is that the systems delivering this will intrinsically and inevitably have failure modes early on. The crew are there to look after that, among all the other safety issues that they have to care about.

All the literature on the impact on pilots of a very different system says that it will require if not an almost completely new licence then certainly a substantial licence endorsement to equip pilots to look after these systems. How can their views and their wisdom be taken into account? They are the only people who can envisage the situation, together with a very dramatic change in standards.

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The powers of direction introduced by the Bill therefore come into play only after all these steps have been completed. I welcome the support from the noble Lord, Lord Grayling, for the aim to ensure that the benefits of a properly approved and strategically important airspace change cannot be held up by a single reluctant party. These amendments, while well intentioned, would duplicate existing requirements, introducing unnecessary delay and costs. They would undermine the delivery of approved airspace changes, which themselves deliver major benefits relating to delays, emission and noise. I note the comments from the noble Lord, Lord Empey, on this issue.

[Lord Grayling (Con)]

May I just ask a specific question? If we countenance the situation where, for example, a plan coming from Heathrow to amend the routes into that airport clash with the routes into Farnborough and it has been through extensive process and, effectively, there is a logjam where one says one thing and the other says another, my understanding is that the Government, using their direction power, can say, “Right, we vote for Farnborough, not Heathrow”, or vice versa. In that situation, where the Government say they are voting for Farnborough, is there still a duty to consult on that decision before it is implemented?

[Lord Hendy of Richmond Hill (Lab)]

I will take some advice and respond further. But I note in response to the comments from the noble Lord, Lord Grayling, that both proposals will have been consulted on and agreed, so it is not the case that consultation would not have applied to either of them. I will write to him with the precise answer to his very reasonable question and copy it to other noble Lords.

Amendment 63 is from the noble Lord, Lord Holmes of Richmond, and he is right that information about airspace changes should be secure and transparent. I take the noble Lord’s point about the choice of technology. The Civil Aviation Authority’s CAP1616 airspace change process is designed to ensure transparency throughout. There is already a legal requirement for directions related to airspace change to be published, as well as any steps the CAA takes to enforce them. In addition, both the sponsor of an airspace change and the CAA are required to publish relevant documentation throughout the process, which is held on the CAA’s airspace change portal—a secure platform which acts as a single source of truth. When an approved design is implemented, it is published in the UK Aeronautical Information Publication, as required by international law.

This is not an area where there is a lack of trust or accountability requiring a more complex or novel audit mechanism. The CAA operates within a well-established statutory framework with clear oversight and requirements for publication and traceability. Introducing a requirement to store this information in a prescriptive or novel format risks adding complexity without corresponding benefit, given that the core objectives of transparency, accessibility, and auditability are already being met. It would also apply irrespective of any identified gap, creating additional cost and rigidity on how information is managed, so I respectfully ask the noble Lord not to press his amendment.

Amendment 64 from the noble Lord, Lord Moylan, relates to a technical change arising from the proposed expansion of who can pay charges for air traffic services, which will ensure that the “user pays” principle can continue to be fairly applied in future. Air traffic services are provided for all users within a block of airspace. Even when an airspace user does not use a service directly, they may still benefit from it. For example, if two aircraft avoid a collision because one is directed away from the other, both benefit even though one did not directly receive the service.

It is right that the charging framework reflects this. The Bill does not say that charges may be imposed on persons who cannot use or benefit from them. We reassure noble Lords that charges are not set without safeguards and that the Bill maintains them. The Civil Aviation Authority accounts for factors such as efficiency and proportionality and follows an established process, including extensive engagement, statutory consultation and rights of appeal.

A requirement to prove the precise level of use or benefit for every airspace user would be disproportionate and unworkable, particularly as an increasing number of emerging uses, especially drones and other unmanned aircraft systems, are integrated into shared airspace and require air traffic services in future. That issue is what the existing provision is designed to avoid and what the changes in the Bill seek to maintain. For that reason, I ask the noble Lord to withdraw his amendment.

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Moved by

[Lord Grayling]

66: Clause 7, page 7, leave out lines 18 to 27 and insert—
“(a) allocating additional capacity created at an existing airport or a new airport where the affected air carriers have failed to reach a voluntary commercial agreement within a reasonable timeframe;(b) as to the circumstances in which, the terms on which and the procedure by which, slots may be transferred, exchanged or withdrawn where there is no agreement between the commercial parties about the slots;(c) determining the temporary reallocation or suspension of unused slots during a period of international crisis;”Member’s explanatory statement
This amendment strictly limits the Secretary of State’s power to intervene in airport slot allocation to distinct scenarios: managing unused slots during international crises, handling entirely new airports, or distributing newly created capacity where commercial airlines fail to reach an agreement, thereby preventing broader state intervention in functioning commercial slot markets.

[Lord Grayling (Con)]

My Lords, we now move on to the slots regime. My two amendments in this group, Amendments 66 and 68, are designed to press the Government to understand what they are trying to achieve and where the limits to that are.

I had always expected that, when we left the European Union, we would be able to have a less regulated slots regime, particularly once we and the European Union had taken the view that we would not stay part of the EASA. Fundamentally, we are talking about a private sector market, with privately owned airports or airports owned by third-party bodies—such as the local authorities in Manchester—and independent airlines. So the question is this: what do the Government actually need to do? What is the role of the Government in this space? Should the Government be determining how many airlines fly to an airport, how many slots are available to it and the circumstances in which slots can transfer between one organisation and another?

It seems to me that there are three things that the Government should be doing. I see the role of the Government in this as referee rather than regulator. I am concerned that the content of the clauses that relate to the slots regime give the Government extraordinarily sweeping powers. If I have a slight regret, it is that I did not provide for the removal of new subsection (4), which says:

“The regulations may make different provision for different purposes”.


What on earth does that mean? The Government are taking on to their own shoulders blanket powers to manage the whole of the slots regime between a commercially run airport, a commercially owned airport and a commercially owned airline. To me, that feels like many steps too far.

What I have sought to do with these two amendments is, first, on the principal amendment, focus on the things that the Government need. The first is all about acting as arbiter and referee, where there is genuinely a problem. We are talking about our key airports here. Where there is genuinely a problem—a dispute that cannot be resolved—I understand that the Government may, for strategic reasons for the benefit of the United Kingdom, need to have put in place some form of arbitration mechanism. Proposed new paragraphs (a) and (b) are designed to achieve that. It is topical because of the Iran war, as we have seen. We had the debate last week over the change to the slot regime resulting from that conflict and the need to take away from airlines the requirement to use a slot at a particular time. There may be circumstances in which, in a period of international crisis, the Government need to have a role in the slot regime.

I should also say that, on reflection—I look at the amendment of the noble Lord, Lord Empey—I agree that there is an element, although we might not agree about the scale of it, of a need to make sure there is connectivity within the United Kingdom. In part, the market delivers that anyway. If you are a major international airline flying from Heathrow to another part of the world, you need the feeder flights to fill your planes. If you do not have flights from Belfast, Glasgow, Edinburgh and Manchester, you are losing a whole chunk of your market—probably losing a whole chunk of it to Schiphol. It is not, therefore, necessary for the Government to take an absolute view about this. But in much the same way that the Government provide and subsidise key strategic routes within the United Kingdom that may not be economically viable but are socially necessary, I understand that there may be a case, in some circumstances, for making sure that a particular route and slot is available to the airline. Therefore, I am not sure I agree with the full detail of the noble Lord’s amendment, but I have some sympathy with what he is trying to achieve.

What we do not need to do—this is my fear about elements of the Bill—is try to micromanage the market that is the independent aviation sector. This part of the Bill feels like it is treading into that territory. I am looking for the Minister to provide some clear justifications for the steps being taken here. Particularly, Clause 68 is designed to address, effectively, a criminal provision within the slots regime. I do not quite understand that. Why on earth does there need to be a criminal context to the management of the slots regime? I understand that there can, on occasions, be a need for regulatory enforcement or enforcement in the civil courts—but the criminal courts? My amendment would take out that provision. Frankly, I would take some persuading by the Minister before we come to Report that we need a criminal provision in the management of slots at our key airports. That feels like a bridge that goes much too far.

I need to hear from the Minister an explanation for why all this is necessary: why the slots regime needs to be as all-encompassing as it is, and why the Bill comes up with extraordinary provisions of interference. I refer again to proposed new subsection (4). The Bill does much more than is necessary to provide a sensible framework simply for protecting the strategic interests of the United Kingdom. It amounts to interference, not strategy, and should take a step back from where it is.

[Lord Empey (UUP)]

My Lords, I instinctively agree with a lot of what the noble Lord, Lord Grayling, has said but there are situations in extremis that could arise regarding access to hub airports, which is a critical—not only socially but economically—necessity. It has nothing to do with subsidy. There are some modest PSOs in operation. We had them when we were in the European Union. Cornwall was involved at one stage and had a subsidised air route. But that is not what I am getting at here. It is nothing to do with subsidy because all the main regional airports going to hub airports, primarily Heathrow, are perfectly economically viable. It is not a question of subsidy.

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[Lord Hendy of Richmond Hill (Lab)]

My Lords, as we have heard, this group concerns the airport slots regime. I am grateful to noble Lords for their amendments. I will address each one in turn but first note two common points that apply across this group.

The UK slots regime depends on independent, fair, transparent and non-discriminatory allocation by the slot co-ordinator. It also operates within international frameworks, such as the Worldwide Airport Slot Guidelines, the global standard for managing airport capacity at congested level 3 and capacity-constrained level 2 airports. The regime already recognises commercial expectations that require clarity, consistency and timely decision-making. Where I refer to independence, proportionality, flexibility or international alignment, these are the common justifications I have in mind. I also say to the noble Baroness, Lady Pidgeon, that the processes in this Bill do not in themselves allow airport expansion; they are about the efficient allocation of capacity created by expansion, which is a different issue.

I begin with Amendment 66, tabled by the noble Lord, Lord Grayling. I understand the concern that the Government should not interfere in a liberalised and well-functioning sector, and our policy intent is not to interfere in this. These provisions, however, largely replicate provisions previously available through EU legislation. All the Government are doing is replicating the powers we think we appropriately need to continue. I refer the noble Lord to paragraphs 20 to 24 of the Explanatory Notes to the Bill.

Neither the Government nor airlines have a role in the day-to-day allocation of slots. As noble Lords have noted, that is undertaken by an independent slot co-ordinator who must allocate slots openly, fairly, transparently and without discrimination. The amendment would therefore not have the intended effect and would create uncertainty. The temporary reallocation or suspension of unused slots during an international crisis is already addressed by Clause 7. In our view, Amendment 66 is therefore unnecessary and duplicative.

I turn to Amendment 67, tabled by the noble Lord, Lord Empey, which would require sufficient slots at hub airports such as Heathrow to be allocated to flights from UK regional airports. The Government recognise the importance of strong regional connectivity and effective access to hub airports for people and businesses across the United Kingdom.

However, I cannot support the amendment because requiring hub airports to prioritise domestic regional services over international routes could conflict with non-discrimination and fair competition obligations in the UK’s bilateral air services agreements. It could also require the reallocation of slots from incumbent operators that have historic rights where usage requirements are met, raising legal and practical issues. I therefore ask the noble Lord not to press his amendment.

The next amendment, from the noble Lord, Lord Grayling, seeks to remove the ability to create regulations on enforcement of the slots regime through criminal and civil sanctions. Existing assimilated law already contains criminal and civil enforcement provisions, which the Government believe are necessary. Removing this power would freeze the current enforcement regime, meaning that even proportionate updates could be made only through further primary legislation. I do not believe that that is the noble Lord’s intention.

[Lord Grayling (Con)]

Can the Minister illustrate to me the kind of circumstance in which a criminal sanction is required?

[Lord Hendy of Richmond Hill (Lab)]

I will respond to the noble Lord after today.

Clause 7 already reduces the severity of sanctions by removing the possibility of imprisonment for breaches of slots regulations. Any exercise of the power to amend enforcement provisions would be subject to the affirmative procedure, ensuring scrutiny and debate in both Houses. For those reasons, I ask the noble Lord not to press his amendment.

I turn to Amendment 70, tabled by the noble Lord, Lord Moylan, which would place a statutory duty on the Secretary of State to consult airlines, airport operators and others before making any slots regulations under Clause 7. The Government recognise the importance of proper engagement and, where new policy is developed under this power, will carry out appropriate consultation, including with industry and, where relevant, communities. However, an inflexible statutory consultation duty would not be appropriate. The power may need to be used urgently in response to significant disruption, as was necessary during the pandemic. In those circumstances, government must be able to act swiftly and proportionately. I therefore ask the noble Lord not to press Amendment 70.

I will take Amendments 71 and 72, also tabled by the noble Lord, Lord Moylan, together. They would require all regulations relating to slots to be subject to the affirmative procedure. I recognise the desire for parliamentary scrutiny, but the Bill already draws a proportionate distinction. The negative procedure is available only where there is a significant threat to public health, or another substantial reason, and only for temporary changes to slot-usage requirements. Requiring the affirmative procedure in every case could delay necessary action during disruption, where speed may be essential. I therefore ask the noble Lord not to press Amendments 71 and 72.

Amendment 73, tabled by the noble Lord, Lord Harper, would—

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[Lord Hendy of Richmond Hill (Lab)]

If I may, I shall respond to the noble Lord by saying that, if I have not understood his point clearly, I shall indeed go away and have a further discussion with him.

[Lord Grayling (Con)]

My Lords, we have had an interesting debate. Again, some important issues were raised. The noble Lord, Lord Empey, makes an important point. In fact, when reflecting on my own amendment at the start, I thought that what he was saying might be an element missing from mine. I have a lot of sympathy with what he has said.

I want to be frank with the Minister. He knows that I have the highest regard for him; he knows that I regard him as knowing more about much of the transport system than anyone I know, so I do not direct this comment at him, but at the Government. I am really quite unimpressed by the Government’s inability to explain what are relatively simple things, or should be relatively simple, if they had thought this through properly, in the measures that they are taking in this Bill and those in the debate that we had last week over the slot regime. If the Government want to take powers or continue powers to enforce criminal sanctions, they should at least be able to say what kind of issues those criminal sanctions are designed to address, because I do not think that this is simply a replication of existing EU law—and were it so, I would be asking what we can we do less of, rather than more of, outside the European Union.

However, if the Government’s intention is purely to replicate what is there already, they do not need new Section 34A(4), which says:

“The regulations may make different provision for different purposes”.


What does that mean? What it does is create a blank cheque for the Government to expand their remit in the slots regime beyond where it is at the moment. They are also seeking, as I say, to continue with criminal sanctions. That does not feel to me like a Government who are trying to maintain a light touch in what the Minister rightly says is a commercial marketplace with established processes that are part of international agreements that go beyond the European Union. So some of this should not be necessary, and it should not be necessary to continue some of it on from what we had before. Where it is continuing, there needs to be a good explanation for it. I am sorry, but I do not think that the Minister has been able to give that good explanation. The Government need to do a better job on what should be pretty basic questions about what they are proposing.

I will of course seek to withdraw this amendment today, but I give notice to the Minister that these questions need to be answered properly before we get to Report, because I can see no justification for having what are clear Henry VIII powers in the slots regime. There is not even a provision for the affirmative resolution so, frankly, in six or 12 months’ time, another Minister—I am sure that it would not be this Minister—could simply come back and take a much more interventionist approach to the slots regime, which would be absolutely out of kilter with anything that we have done either inside or outside the European Union. For now, I beg leave to withdraw the amendment, but I will not leave this issue untouched when we come back on Report.

Amendment 66 withdrawn.

Civil Aviation (Consumer Protection and Regulatory Reform) Bill [HL]

Lord Grayling Excerpts

Committee stage
Tuesday 16th June 2026 Grand Committee

[Lord Kirkhope of Harrogate (Con)]

My Lords, this is Committee and I do not wish to talk about amendments that will come later, but I want to support my noble friend Lord Davies as another pilot and the honorary vice-president of BALPA.

I raised general aviation with him at Second Reading and I am waiting for answers from the Minister. There will be a specific amendment a little later in today’s proceedings, and I hope my colleagues who have spoken so far on general aviation will be here later to join me when we get to it. In the meantime, I fully support Amendment 113 and look forward to the Minister’s response to my noble friend.

[Lord Grayling (Con)]

My Lords, I support the amendments from my noble friends Lord Moylan and Lord Davies of Gower. This is not a failing market. This is a highly competitive environment, where both domestic and international competition are working aggressively to make it a challenge to run an airline or a freight airline in today’s world.

The need for extensive government regulation, therefore, is limited and questionable. We are not trying to solve a massive problem. There are, of course, specific issues. We will hear more, for example, about disability rights, where, yes, of course we should make sure that airport operators in particular deliver the right environment for disabled people. But first and foremost, we must ensure that the Government do not interfere in this marketplace in a way that damages the competitiveness of one of the UK’s most important economic sectors. That is why my noble friend Lord Moylan is absolutely right. As we go through this debate—not simply on these amendments but on the Bill as a whole—the Minister needs constantly to have in mind the need not to cramp the style of our sector by overregulation, and, where he is regulating, to explain why, otherwise he will not have the support of this Committee.

Finally, on general aviation, the comments made so far are absolutely right. There is a genuine issue around the future of general aviation—the loss of smaller airports, for example, to planning pressures and planning opportunities, and those who own them trying to make money out of them. General aviation needs to be looked after in this country because at a time when, as we hear, there is a growing shortage of young up- and-coming pilots, general aviation is an essential way of developing the skills that we need for the future. It is not simply a way for a few rich people to have a good time.

[Baroness Grender (LD)]

My Lords, Amendment 1 and Amendments 23, 24 and 25 are in the name of the noble Lord, Lord Moylan. As we noted previously, the Bill sets out the framework but leaves a great deal of detail to be determined later, so we welcome these amendments. We have consistently argued that such an approach risks leaving both passengers and Parliament with too little certainty about how the regime will operate in practice. We see these amendments as useful in probing how that framework might be strengthened.

Amendment 1 raises an important issue around transparency and consumer protection: the case for clearer comparable information at the point of sale. In our view, it should be pursued and I look forward to discussing my noble friend Lord Russell’s amendment, which aims to strengthen the Bill in this area, in the next group.

Equally, how compensation is delivered remains a live and important concern. The current system too often places the burden on passengers to navigate complex processes to secure redress. I say to the noble Lord, Lord Harper—I am sure we will keep coming back to this issue of a low-margin industry—that a different way of viewing this is that if £1 million is not returned to a whole group of consumers by a low-budget airline over a long period, it is, in effect, using families who cannot afford it, or can ill afford it, almost as an overdraft facility with no interest. Getting the balance right on that will be important as we investigate some of the amendments and get into the detail.

On Amendments 23, 24 and 25, we find ourselves in close alignment with the noble Lord, Lord Moylan. As the Bill proposes to confer significant new functions on the Civil Aviation Authority, it is right to consider how those powers are to be exercised and scrutinised. A more centralised regulatory role must not come at the expense of transparency, or indeed parliamentary oversight. The noble Lord and I have discussed this issue, which is that unless there is a threat, with teeth, to move a fatal Motion on a piece of secondary legislation, there is a tendency for Governments to plough on regardless—also regardless of previous colours, I would just say. If we are concerned about secondary legislation—and we are concerned about this—there needs to be clarity about what we would do with it. I hope we can get into some of the detail on that.

On Amendment 24, later we propose two amendments that explore a high common denominator between UK 261 and EU 261, and we look at shadowing EU 261. I entirely hear what the noble Lord, Lord Moylan, says about there being no ownership of who has the best, so we want to pursue, on behalf of industry and customers in the UK, what is the best. That may be EU 261, as revised when it cuts, or it may not.

Overall, these amendments highlight two issues. We consider fundamental the need to embed meaningful consumer protections and the need to ensure proper accountability in the exercise of new regulatory powers as the Government move to address the post-EU powers gap. It is essential that this Committee is not asked to accept a blank cheque approach. I therefore look forward to hearing the Minister’s response as we all warm to this theme throughout the rest of today.

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However, that is not actually the case. In its latest report and accounts, its revenues were over £1 billion. The compensation for the largest failure in its history would have been £100 million—not disproportionate at all. As far as its ownership is concerned, it is different in that the Government hold a substantial minority stake, but why should that protect it from claims?

[Lord Grayling (Con)]

Will my noble friend allow me to help him a little? He may have heard of a company called Network Rail, which, if my memory serves me correctly, must pay compensation to train operators if it goes through the kinds of failing that he has identified. Were he to know anybody who used to chair Network Rail, he might have an interesting point to make.

[Lord Young of Cookham (Con)]

My noble friend is a mind-reader; I was going to refer to Network Rail in about 40 seconds. As I said, as far as NERL’s ownership is concerned, it is different, but that should not preclude it having to pay up for claims.

The review then produced another pretext, which, again, does not stand up to scrutiny. This is what it said:

“Such a liability would probably lead to a substantial increase in the annual costs of the ATC”—


air traffic control—

“service, which could in turn lead to increased costs to airlines and passengers”.

What happens at the moment? The compensation liability rests with the airlines and, as such, it has already caused increased costs to passengers. If the airlines did not have the liability their costs would go down, but if NATS then passed back all the increased costs we would be back where we started. Crucially, that assumes that the regulator, the CAA, would allow the costs to be passed on by NATS to customers, instead of taking it out of profits. If, as happens with the water companies, costs were not passed on to consumers but funded out of profits then costs to the airlines and passengers would actually go down, not up—the opposite of what the review suggested.

I come to my noble friend’s intervention. The Minister will understand and, I hope, sympathise with the case I am making because of his previous responsibility for Network Rail. If, as my noble friend said, a passenger is delayed, the train operator pays the compensation. If Network Rail was responsible for the delay, it then reimburses the train operator. That is as it should be, and it is exactly what should happen in air transport. A failure in traffic control is paid for by the traffic controller. My amendment is supported by IATA, which actually wants to go further. It would like the amendment to be extended to airports and other parties that provide air services that can cause disruption yet are not liable for passenger compensation. Airlines currently pay all passenger compensation regardless of who is at fault—for example, the power failure at Heathrow last year.

To sum up and use management jargon, we need shared accountability across the value chain. I hope the Minister can respond positively to the case I have made and put right this manifest injustice.

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My amendment is very simple. It seeks to increase back to where it was before the Employment Rights Act the turnout threshold for ballots undertaken by trades unions that operate in the airline and airport sector. I would have thought that even this Government could accept that this is as valuable a consumer protection measure as any other that we have discussed today. I beg to move.

[Lord Grayling (Con)]

My Lords, I will speak to Amendments 17 and 22 in this group. Following on from what my noble friend Lord Moylan has said, my concern is that the nature of the Civil Aviation Authority is being changed by the content of this Bill. It seems to be going further than simply continuing the protections for consumers that existed under European law—which rightly should remain in UK law. The level of enforcement powers in the Bill cause me a great deal of concern and are not what the Civil Aviation Authority is there to do. It is primarily a safety body. Its big focus, as we left the European Union, was taking over the responsibilities for aviation safety in the UK from EASA. Since then, we have seen dramatic changes in technology, the emergence to a much greater degree of drone technology and different kinds of aviation beginning to appear on the horizon. We are looking at the realistic possibility of air taxis in the very near future. There is a very clear and necessary remit for the Civil Aviation Authority to maintain as the guardian of aviation safety in the United Kingdom.

Of course, there will be occasions when it needs enforcement powers, but as my noble friend rightly says, it is taking over enforcement powers that very much mirror those that already exist for consumers in this sector from the CMA. In doing so, it is creating a whole raft of additional responsibilities for a body that I want to remain a very focused organisation that has safety as its number one priority.

I simply cannot understand why it is necessary to give the CAA what are, in essence, enforcement powers that the police have—for example, the power to kick in a door or to interrogate someone in their place of work or their own home. This is not a simple civil enforcement provision. This is taking the role of the Civil Aviation Authority to another level. The first of the amendments that I have tabled is intended to challenge the need for those powers to exist. I am utterly unpersuaded that they need to exist. Unless the Minister can do a pretty good job of explaining why they are necessary, we will return to it on Report.

We will also need to limit somewhat the CAA’s ability to get into the weeds with these enforcement powers. In effect, we need to concentrate its ability to take such action in a situation where there is clearly a systemic failure. We should not be giving the Civil Aviation Authority draconian powers to deal with relatively minor matters. That simply should not be the case in law. The CMA already deals with minor and significant consumer matters. Amendment 22 simply says that the powers in the Bill should focus on substantial systemic failure only.

I await with interest the Minister’s defence of this element of the Bill. I have addressed two specific areas but, as my noble friend Lord Moylan just set out, there are more. I hope the Minister can persuade us because, unless he does, I am sure we will want to return to this on Report.

[Baroness Foster of Oxton (Con)]

My Lords, I support the thinking behind the comments made by my noble friends.

For clarification, if we are looking at consumer rights, it is the Civil Aviation Authority that has dealt with the public over a number of years when the public have not been satisfied with the compensation for delays or cancellations that they have received from an airline. The CAA is already doing that and playing that role. Do the Government see the CAA continuing with that particular role in such cases? That is one question.

Secondly, when we start to look at the Competition and Markets Authority, I do not see how you can have two authorities basically dealing with the same things. We know that the Civil Aviation Authority has the expertise in these fields, which is quite right, whatever we might object to in terms of powers. I am not sure who came up with the idea of the competition authority coming into decisions that should be made by the CAA as a regulator. I would be very interested to know from the Minister how this thought—that there could be two regulatory authorities dealing with civil aviation, its merits and everything that goes on around it—came about.

[Lord Hendy of Richmond Hill (Lab)]

My Lords, this group concerns the consumer rights powers in the Bill and the scrutiny of those powers. I am grateful to noble Lords for their amendments. The Government’s objective is a coherent, effective and proportionate consumer protection regime for aviation passengers.

Before I turn to the individual amendments, I will make three points that apply across this group. First, Clause 1 does not in itself create new powers of entry or financial penalties; it simply enables regulations to be made, with their scope, safeguards and detail being considered when they are brought forward. Secondly, the Government believe that detailed requirements should be developed through secondary legislation, with consultation, options appraisal and an impact assessment where appropriate. Thirdly, the Bill preserves flexibility so that the CAA, the CMA and the Government can respond effectively to consumer harms that may cut across aviation and wider markets. Where I refer to duplication, proportionality or flexibility, these are the common justifications that I have in mind.

Let me begin with Amendments 8 and 18 in the name of the noble Lord, Lord Moylan, which are supported by the noble Baroness, Lady Foster, and concern the role of the Competition and Markets Authority. Although most aviation-specific enforcement relating to information gathering and powers of entry will sit with the CAA in practice, the CMA has a broader, market-wide role—including in sectors that overlap with aviation, such as travel and holidays. The CAA and the CMA already have concurrent powers in relation to general consumer law. Removing the CMA from this framework could limit flexibility and make it harder to address problems that span aviation and wider consumer markets. Therefore, in the Government’s view, it is right to retain the ability to include the CMA where necessary. The precise role of each regulator will be considered when secondary legislation is drafted. I therefore ask the noble Lord not to press his amendments.

I turn next to the amendment from the noble Lord, Lord Grayling, which seeks to remove the power of entry provision in Clause 1. I am afraid that I cannot support it. The Bill is designed to improve the CAA’s enforcement ability and to reduce reliance on slow, resource-intensive court processes. Clause 2 strengthens the CAA’s direct information-gathering powers. Clause 1 enables those powers to be strengthened further, if needed, including by enabling powers to enter premises or to require documents and information during the course of an investigation. Any such power would be considered carefully, consulted on and include appropriate safeguards when regulations are brought forward.

I also assure the noble Lord that these wide enforcement powers, including powers of entry, fell within Section 2 of the European Communities Act 1972. Much passenger rights law originated in EU law and has now been assimilated into UK law. Since our exit from the EU, primary legislation has generally been needed to amend it. Clause 1 restores the necessary degree of flexibility while preserving parliamentary scrutiny and future consultation. I ask the noble Lord not to press his amendment.

[Lord Grayling (Con)]

I have a simple question. What the Minister has not done is explain why it is necessary. What are the problems that this is designed to solve?

[Lord Hendy of Richmond Hill (Lab)]

I understand the noble Lord’s question. I will come back to him on that.

Amendment 22, also from the noble Lord, Lord Grayling, concerns financial penalties and the circumstances in which the CAA may act. The CAA’s role is to enforce consumer rights where breaches cause collective consumer harm, rather than to resolve individual disputes. Clause 1 does not in itself create financial penalties; it enables regulations to grant such powers in future where that is justified and appropriately framed. Any regulations creating penalties would be subject to the affirmative procedure. Thus the amendment would be unduly restrictive, so I ask the noble Lord not to press it. Having listened to noble Lords on the need for better enforcement, I would not wish to constrain the CAA’s powers in this respect.

I will address Amendments 26 and 27 from the noble Lord, Lord Moylan, together. I agree that future regulations must receive appropriate parliamentary scrutiny. Clause 1 already provides a balanced approach: the affirmative procedure applies to the most significant matters, including criminal offences and financial penalties. Some amendments could be more minor or technical changes, such as updating an organisation’s name. Requiring the affirmative procedure in all cases would not be proportionate and would place unnecessary demands on parliamentary time. I ask the noble Lord not to press his amendments.

On Amendment 28, also from the noble Lord, Lord Moylan, I absolutely agree on the importance of reviewing the impact of regulations. However, post-implementation review requirements are already considered when developing secondary legislation and included where appropriate. Not every regulation will warrant a review, particularly where changes are minor or technical. For the common reason of proportionality, I ask the noble Lord not to press this amendment.

Amendment 33, also from the noble Lord, Lord Moylan, concerns the procedure for regulations on co-operation between enforcement authorities. I do not consider the affirmative procedure necessary. These regulations are administrative in nature. They may cover information sharing, notification arrangements and how direct enforcers determine which authority should act in a particular case. There are precedents for such regulations using the negative procedure, which provides proportionate scrutiny. I ask the noble Lord not to press this amendment.

Amendment 34 in the name of the noble Lord, Lord Moylan, concerns the jurisdiction of the CAA and the CMA in aviation consumer protection. Paragraph 6 of Schedule 1 already enables regulations to set out how the two authorities co-ordinate, decide which is best placed to act and avoid duplication, including through joint working. The CAA will also have regard to the CMA’s rules, supporting consistent enforcement. A fixed approach in primary legislation would reduce flexibility and risk constraining effective enforcement. I therefore ask the noble Lord not to press Amendment 34.

Airports Slot Allocation (Alleviation of Usage Requirements) Regulations 2026

Lord Grayling Excerpts

Wednesday 10th June 2026 Grand Committee

Finally, I want to say that we have to be very careful when dealing with this subject. Although I understand and sympathise with what the Minister is suggesting—and it will certainly help in organising the routes and for the current financial position of the airlines that will benefit from it—I would not like to see this becoming a deterrence to airlines extending their business. One of the greatest things that this country has is the nature and status of those that provide air services.

[Lord Grayling (Con)]

My Lords, I welcome these regulations. This is a core part of the current responsibility of the department in difficult times internationally. It is absolutely the right thing to do to try to ease pressures on airlines in this environment, as the current geopolitical situation has made many routes much less viable than they were and led to cutbacks around the world in the number of planes flying at the time being.

However—and I think we will come back to this at greater length in debates on the forthcoming aviation Bill—that we are having this debate today indicates that this is a heavily regulated area. We inherited a lot of that regulation from the European Union, and I had hoped, and it remains my view, that this sector should be regulated less than it is. It probably should not need a debate in Parliament to enable an airline, in an international crisis, to take a decision to scale back some of its activities temporarily without the risk of long-term damage to its business. So, in my view, this debate should not need to happen but, in the context of the current laws, it is absolutely essential.

I have a particular concern that I want to raise with the Minister about the impact on some individual airlines. The choice of 5% or 10% does not make complete sense to me, in the context of an environment where the most affected routes are those through the Middle East. I will take a practical example: if an airline like Emirates had two flights a day to a UK airport, they would not currently be viable because of the geopolitical situation. The reality is that tourist numbers to the Middle East have dropped very sharply. I had an email myself today from a hotel in Oman that I stayed in some while back begging me to come back and offering me a good deal to do so, so there is no doubt that numbers have fallen sharply. It is therefore very probable that running two planes a day is not viable for the time being and you can afford only, in practical business terms, to run one plane a day. That is a 50% drop. But if you can only cut 5% or 10%, that does not quite work arithmetically. I am slightly concerned that the inflexibility of the numbers in this regulation will not fit with the practical reality facing a number of airlines, and I would be grateful for the Minister’s comments about that.

My final point is that there were a couple of airlines that did not want this to happen. I am very interested to hear from the Minister why that was. There may be practical reasons, or this may be simply anti-competitive pressures—we can imagine one or two airlines that might want to get in the way of sensible changes to ease pressures on their competitors.

In particular, I want to press the Minister on the issue of the 5% or 10% figures, because it seems to me that for some airlines, if you have very large numbers of slots for Heathrow or Gatwick, fine, that makes perfect sense, but if you have a relatively small number of slots, then you are worse affected than other airlines by the geopolitical situation and it may very well not work at all. I will be interested in the Minister’s comments on that.

[Viscount Stansgate (Lab)]

My Lords, I rise briefly to support my noble friend and the statutory instrument that he has moved. I understand entirely that it is designed to support a resilient aviation sector, and I just want to ask one question.

The Secondary Legislation Scrutiny Committee referred, as indeed did my noble friend, to the example of 2022, when, as I understand it, there was a 30% hand-back of slots. I just want to ask, if the information is to hand: what happened afterwards, when the temporary provision ended? Did the slots go back in precisely the same way to the airlines that had them at the time? The reason I ask is because I am curious as to whether, in the current conditions, a 10% hand-back will result in these eventually being handed back to the same airlines. It may or may not be the case, but I would be interested if the Minister has anything he might be able to add on this.

--- Later in debate ---

[Lord Hendy of Richmond Hill (Lab)]

I thank all noble Lords for their consideration of these draft regulations and for the thoughtful points that have been raised. I will attempt to answer as many as I can now. On those that I cannot, I will write to the noble Lord concerned and to other noble Lords present.

I thank the noble Lord, Lord Kirkhope of Harrogate, who has considerable experience. I cannot find in the draft statutory instrument any reference to a five-year term. The measure put forward today is about only the summer season and the winter season of 2026. He will find the permanent proposition for slot regulation in the civil aviation Bill, which I have no doubt he is studying more or less as we speak. I hope that will satisfy him, but if not we can discuss it afterwards.

My understanding about the three types of airport and what might trigger a change in categorisation is that it is triggered by the airport itself and by the level of potential use and, therefore, congestion. The company itself, Airport Coordination Limited, is clearly very efficient, with 40 employees, but there is a wider point that goes to some of the questions. A lot of this is about the stability of both the airlines and the airports sector. We are good at this in Britain, and we want the airline sector to prosper. We have to give it some stability in circumstances in which the international situation has destabilised it a bit.

I cannot answer the noble Lord, Lord Grayling, about the impact on individual airlines. He is clearly right that airlines that fly directly to the Middle East will be more affected than those that do not. On the impact of the wider geopolitical circumstances for any potential fuel shortage, I am very happy to confirm that the Government do not currently believe that there is an airline fuel shortage, but there could be in future, and if there is, we need to make adequate preparation for it in advance. It is quite hard to know where that might apply, so we have to apply some general thought to how we manage this. A lot of what is going on here is about giving some stability and certainty to airlines to resume normal business when they can, and it is about what happens, proportionately, to airports that rely on a throughput of passengers.

[Lord Grayling (Con)]

The question I raised with the Minister is absolutely central to the Government’s decision to take a 5% or 10% figure. He said that the airlines wanted more. I explained a very specific circumstance in which one particular airline—there will be many others affected in that way—would need more. He therefore needs to explain why the Government have fixed on this figure when the airlines said that it was not the right figure and common sense says that many would need more.

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord. The answer is that the airlines provided little or no evidence of any figure but would prefer more because that would give them more flexibility in circumstances where airports would have preferred this not to happen.

[Lord Grayling (Con)]

I am not interested in what the airlines said they wanted, because the department took the decision to alight on a particular figure. The Minister has not explained why the department took that decision, when simple common sense says that many airlines would need a different figure because of the basic arithmetic I described to him earlier.

[Lord Hendy of Richmond Hill (Lab)]

The answer to that point, whether or not it satisfies the noble Lord, is that we have to do something in general in these circumstances. Previous circumstances of various sorts have produced different figures. The Covid figure was 30%; I do not know how that was calculated. We feel the need to do something because we have to give some certainty both to airlines and to potential airline passengers. I take his point about the geographical differences and will certainly write to him further about what individual airlines in those circumstances said. I have no evidence that certain airlines proposed huge differences, but I will certainly go away and find out about that.

Sustainable Aviation Fuel Bill

Lord Grayling Excerpts

Report stage
Tuesday 10th February 2026 Lords Chamber

[The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)]

My Lords, I thank all noble Lords for their extensive engagement between Committee and Report. Amendments 1, 2 and 4 in my name will ensure that the Secretary of State can enter into revenue certainty contracts only where the supported SAF is produced at a facility in the United Kingdom. This will provide the industry with a clear signal of support. I hope that this measure reassures noble Lords that I have considered the contents of the amendments tabled in Committee by the noble Baroness, Lady Pidgeon, the noble Earl, Lord Russell, and the noble Lord, Lord Grayling. I thank noble Lords for their constructive engagement in reaching this position. I urge noble Lords to support the inclusion of these amendments in the Bill. I beg to move.

[Lord Grayling (Con)]

My Lords, I apologise to the Minister and the House that I was unable to be here in Committee because of a family crisis. I am very glad to be here today and to welcome these amendments. I have no intention of moving my own amendment since the Minister has addressed my concerns. The important thing was to ensure that nobody could game the system: that we knew that we were supporting UK manufacturing and not somebody playing a fast one on us by shipping mostly complete fuel to our country, polishing it up a bit and claiming it was British. The Minister has done that with these amendments and I very much welcome them. I am grateful to him and I support them.

[Earl Russell (LD)]

My Lords, I am pleased to see the noble Lord, Lord Grayling, back in his place. On behalf of these Benches, I also thank the Minister and the Government for bringing forward these amendments. These important issues were raised in Committee. The Government have listened to the concerns that were raised and we welcome the amendments that have been brought forward. We are grateful that the Government have listened and we are delighted to accept them.

--- Later in debate ---

[Lord Ravensdale (CB)]

My Lords, I remind noble Lords of my interest as a chief engineer working for AtkinsRéalis. For my Amendment 7 in this group, I have simply retabled my amendment from Committee. As a brief reminder, we have targets in the SAF mandate —coming back to what noble Lord, Lord Moylan, said about power to liquid—and an escalating percentage of sustainable aviation fuel needs to be power to liquid. That is clearly set out in the SAF mandate. This amendment is trying to ensure coherence between the SAF mandate and the projects given support under the revenue certainty mechanism.

This comes back to what the Minister set out about support for UK production. The percentages in the SAF mandate could simply be met by importing power to liquid fuel, so it is important that we set out the ambition for the industry to meet in producing all that fuel, which is already legally required under the SAF mandate, in the UK, aligning that with the earlier government amendments. I recognise that setting this out in the Bill may be going too far, but I would welcome the Minister’s comments on how this could be set out in the allocation framework documents to give industry that steer on power to liquid fuel and the expectations for producing it in the UK.

My Amendments 14 and 16 are similar to those I tabled in Committee, and I thank the noble Lord, Lord Moylan, for signing them. I reflected on the Minister’s responses at that point, but I did not hear any compelling reasons why HEFA sustainable aviation fuel products should be included in the scope of the Bill. As the noble Lord, Lord Moylan, said, my amendment and his Amendment 15 are very similar and aim at the same thing. Mine deals more with the base product, using established definitions, and his encompasses the totality of HEFA products.

I welcomed meetings with the Minister’s team of officials. The outcome was that the main rationale for retaining HEFA in the Bill is that that recognises that this is a fast-developing market and it is important to retain that flexibility in primary legislation. I accept that, but I still find it hard to imagine a scenario where the Government want to subsidise HEFA using the revenue certainty mechanism. The whole point of the legislation is to help pump-prime those new industries, not to support the well-established industries that we have to provide HEFA fuel.

The Government are taking broader powers than they need under the legislation, so there is a risk that, as we go forward, subsidies could be given outside that intent. However, I hope that the Minister will be able to say something substantive about this in his remarks, on the exclusion of HEFA, and I look forward to hearing what he has to say in that regard.

[Lord Grayling (Con)]

My Lords, I rise briefly to speak in support of the amendments from the noble Lord, Lord Ravensdale, on crops, and to share many of the concerns raised about HEFA. I declare my interests on the register as an adviser to AtkinsRéalis—there are a lot of us here today.

My concerns are that, first, I do not believe that we should be using crops to make fuel. In a world that does not have enough food and where biodiversity is under threat, where deforestation is happening in areas of the world that provide extra land for agriculture, I do not think that there is any justification for growing food and turning it into fuel. I ask the Minister please to exclude crops. The United States is permitting them, and the European Union is not, and I think that we should fall on the side of avoiding the use of agricultural crops. Agricultural waste is a different thing —the residue from crops, such as straw and corn husks. Agricultural waste is one thing, but actual crops is another, and we should not be using them.

On HEFA, we are where we are, but we have to exercise extreme care, because the truth is that there is not enough used cooking oil in the world to fill the supposed need for that used cooking oil. All too often, the suspicion is that somebody is dumping a chicken wing into a tub of virgin palm oil and saying that it is HEFA—so HEFA is something that we need to move away from as quickly as possible. In any case, we depend on imports from the Far East for it, which may not be sustainable going forwards. Our focus should really be on biowaste and municipal waste and on the technologies that offer a really good path for the future —but let us not use crops and let us be extremely careful with what we do with HEFA. I have a lot of sympathy with what my noble friend Lord Moylan and the noble Lord, Lord Ravensdale, have said. It is far from clear that this is a genuine product that has the full potential to do what is necessary.

[Lord Harper (Con)]

My Lords, before I start, I draw attention to my entry in the register as non-exec chair of RVL Aviation, which is in the aviation sector but not involved in the production of sustainable aviation fuel.

I strongly support this move to make sure that we do not include food crops. I have one caveat, which I raised in Committee, and I wonder whether the Minister can update the House. My noble friend Lord Grayling drew attention to the different position that the United States has taken about including food crops. My starting point, as his, is that we should not include food crops. The only caveat that I raised in Committee was that if, in doing so, that enabled us to ensure that the United States continued to support the development of sustainable aviation fuel, given the importance of the United States in the international aviation sector, there might be a case for that. I would be interested to know whether the Minister can update your Lordships on any discussions that have taken place with the United States. If it is not necessary to do that, I strongly support the amendments that are there to make sure that we rule out food crops because, as my noble friend Lord Grayling said, using land to grow crops for food is what we should be doing, and we have seen, in the renewable energy sector, what can happen when you have policy that then drives behaviours that you had not intended, which have outcomes that are environmentally not welcome.

The second point that I raise is that I support the amendments to rule out the use of the revenue certainty mechanism for subsidising HEFA. As my noble friend Lord Grayling said, it is important that we move away from that and develop the new technologies, as my noble friend Lord Moylan said from the Front Bench. The danger of allowing subsidy of things that we are trying to get rid of is that you never get rid of them; any subsidy that there is should be used for the development of new technologies and processes. That is the rationale for having a subsidy regime in the first place. Setting that framework is very welcome.

My final point is on power-to-liquid technology. My noble friend Lord Moylan set out his view that that technology is probably not yet at a point where this Bill would be of any use. My starting position and his is that you have to justify carefully the need for subsidy, so it would not be a bad thing, if that technology is some way away from development, to force the Government to come back to Parliament to rejustify subsidy for power-to-liquid. That would be very welcome. If the Minister can update the House that providing subsidy to develop the technology and get it into production would have a much nearer-term outcome than my noble friend suggested, I might think again. However, in the scenario that my noble friend Lord Moylan set out, his amendments would be very sensible and helpful in testing the Government and forcing them to put on record the state of that technology.

--- Later in debate ---

Moved by

[Lord Grayling]

8: Clause 6, page 4, line 19, after “contracts” insert “in respect of sustainable aviation fuel manufactured in the United Kingdom”
Member’s explanatory statement
This amendment seeks to ensure that the levy is raised for the purposes of manufacturing sustainable aviation fuel in the United Kingdom. Connected with another amendment in the name of Lord Grayling, it seeks to prevent the government from diverting the levy funds to other broader aviation or climate-related policies.

[Lord Grayling (Con)]

My Lords, I will speak to a series of amendments that I tabled. I have given the Minister advance notice, and I hope he is going to be able to reassure me on them. I will take them in turn.

Amendment 8 is simply to try to avoid the Government pulling a fast one, raising money from air passengers and spending it on something completely unrelated. I am looking for a cast-iron, on-the-record assurance from the Minister that that cannot happen under the terms of the Bill. We know that on occasions government departments try to slip things under the counter, and I am simply seeking absolute assurance that that will not happen in this case. Amendment 9 basically seeks to achieve the same thing.

Amendment 10 addresses what is still the crucial operational point for this legislation: where and how do you actually apply the levy? The Minister knows that I have had serious misgivings, as have many people, about the plan to try to apply a mechanism that relates to market share in the previous year, to do it the year after and the rest, which I think would be completely unworkable and, of course, distorts the market if you have new entrants or people leaving the market.

The one thing we do not want to do is to end up undermining the existing producers of aviation fuel, which are carrying an extra cost. We do not want to have them closing and going elsewhere because we have not got this right. I remain persuaded that the way to do this is to levy a charge at or around the time of delivery—the time at which it is delivered from the refinery or the terminal to the airline. I appreciate that it may be something you do one month in arrears, looking at the previous monthly invoice accordingly. I do not have a problem with that, but I have a problem with anything looser than that.

I am looking to the Minister to explain tonight how this is going to work. I know the Government are still working on all the details, but we cannot have some abstruse mechanism that tries to refer back years in the past. We need something current and relevant that reflects changes in the marketplace and applies the costs in a timely way to those producing the fuel, so that there is no distortion of the marketplace.

Amendments 17 and 18 are really about the timing of the legislation. We know that we are maybe four or five years away, I hope slightly less, from the first significant SAF plant being operational in this country. We cannot have a situation where the levy starts to be applied now and is just piling up in the background with nothing to spend it on. I am looking for an explanation from the Minister as to exactly how the commencement of this legislation will work. I have proposed in these amendments that it should be six months before the first manufacturing facility comes on stream—the Minister may have an alternative suggestion—but we cannot have a situation where commencement is imminent but the operation of the Bill is years away. Again, I am looking for assurance and explanation from the Minister on this, so that we know we are not charging air passengers today for something that is years in the future. I beg to move.

[Lord Moylan (Con)]

My Lords, I have Amendment 11 in this group, which substantially coincides with Amendment 10 in the name of my noble friend Lord Grayling. I will just take a minute to explain, in my perhaps rather more simple terms, what mischief these amendments seek to address. I gave some idea of the mechanism when we spoke on the last group. It will work like this: contracts will be entered into by a counterparty and a fixed price will be guaranteed under a contract for the difference. That means that if the prices are below a certain price, the counterparty will collect money by way of the levy, and if they are the other way around, it will pay out to ensure that the producer receives a fixed price. We know that economically, ultimately, the levy will be paid by the passenger on the flight, but who is going to be charged the levy?

The Government have decided—we are not disputing this—that the levy should be charged at the highest point in the supply chain, which is the producers of standard aviation fuel, essentially kerosene. They have to mix in the SAF to the required amount, whichever type of SAF it is, and they should be the ones that will pay the levy if a levy is required—that is, if prices are such that a levy has to be paid. We do not object to them being the levy payers, but how is the levy calculated and then applied to them?

The Government’s proposal is that the levy should be calculated a year in arrears and then applied to them as a charge which they have to pay in arrears at that point according to the market share that they had in that year. That is all very well, you might say, and very convenient from the Government’s point of view, because at that point they know exactly how much they have to charge, so there will be no difficulty and no question of having the wrong charge paid and having to make up bits later, or of the counterparty being out of funds by a penny. They will know exactly by the end of the year what should be charged and they will distribute it to the producers according to their market share during that year, which will also be known by that point.

The difficulty for the producers is that they will not know during the year in which they are selling the fuel what they should be charging the airlines to cover the cost of the levy. It is accepted that they should charge the airlines, because that is the way it trickles down to the passenger. They will not know during the year how much levy they are going to have to pay at the end of the year, so they will not know how much they should be charging per litre of fuel that they sell.

They would prefer, as it is easier for them and avoids this complexity, if they were told a price per litre which they should charge. The charge of the levy in addition to the base kerosene fuel could even be apparent on their invoices. Of course, if the Government were to do that, it would expose the counterparty to some financial risk—I see that—because they would have to work on the basis of estimates. They would have to estimate the prices during that period and therefore would be exposed to some financial risk. I imagine that, behind the Minister, there is a middle-ranking official in the Treasury saying, “You cannot take any financial risk that will fall upon the Government or any entity associated with the Government”.

What the Government are proposing is fundamentally unworkable, because the only way the producers can handle this is to protect themselves by overcharging. They will overcharge to compensate themselves for the levy, and so the transparency of the levy travelling through the chain of command, so to speak, down to the ticket payer will be obscured. The producers leave one in no doubt when one speaks to them that this is the only mechanism they will have. There is a real point of workability about the Bill which has not been addressed.

I imagine the Minister will respond by saying, “Oh, but we are having a consultation”. This is a futile protest, but I want to raise this point of protest as I have the opportunity: would it not have been better if the Government had done the consultation and then brought forward the legislation? Why is it that we have to have the legislation before we know the results of the consultation with the industry, so that we do not actually know what is workable? I suspect the Minister will say that, but I am afraid it is not satisfactory that we are asked to pass this legislation with that important question of workability still outstanding. I may be wrong, and it may be that the Government can explain that it is perfectly workable, but nobody has been able as yet to establish what that workable solution is.

--- Later in debate ---

[Lord Hendy of Richmond Hill (Lab)]

My Lords, I thank noble Lords for this debate. Amendments 8 and 9, tabled by the noble Lord, Lord Grayling, seek to address how funds from the levy are used. I am happy to reassure the noble Lord from the Dispatch Box that money raised through the levy will be used only to support eligible SAF plants in the United Kingdom, and that that is already set out in the Bill.

Clause 6 restricts the costs incurred by the counterparty under the revenue certainty contracts and in carrying out its functions under the Bill. Under this clause, the levy funds will be used only to meet the cost of the revenue certainty mechanism scheme. It is important that the counterparty is able to recover its costs, which include the cost of administering the contracts, the levy and the payment of surpluses.

Amendment 10 intends to ensure that there is a specific mandatory point at which the supplier becomes liable to pay the levy. The Government agree with the intention of the amendment but believe that it is unnecessary because Clause 6(7) already provides that a person becomes liable to pay the levy at the same point when they become liable to an obligation under the SAF mandate.

On how individual levy contributions are calculated, it is important that the Bill provides sufficient flexibility to ensure that final levy design decisions deliver our design principles, including simplicity, solvency, affordability and fairness. The Government are currently reviewing responses to their recent consultation on the detailed design of the levy and engaging with stakeholders to deliver these objectives. I remind noble Lords that the regulations made under Clause 6(1), to set out how the levy will work, will be subject to scrutiny under the affirmative procedure, which will give Parliament the opportunity to continue to consider the approach.

Amendments 17 and 18, tabled by the noble Lord, Lord Grayling, seek to prevent the levy being imposed until a domestic sustainable aviation fuel producer is approaching readiness to receive payments under the Act. I reassure the noble Lord that the purpose of the levy, as set out in Clause 6, is to meet the costs of payments made by the counterparty to SAF producers and to cover the counterparty’s administrative costs. The costs of payments under RCM contracts will be insured only once eligible SAF is being produced and sold by producers who have entered into RCM contracts, which is the outcome sought by these amendments.

The Government are currently reviewing responses to their recent consultation on levy design. Some stakeholders have expressed a desire to build up a reserve fund prior to the first producer payments, which could help smooth out the costs of the scheme and help manage risks of underforecasting required payments. As the Government consider their response to the consultation, it is important that the Bill retains a degree of flexibility around levy design, which will be set out via secondary legislation and will be subject to parliamentary scrutiny.

Amendment 11, tabled by the noble Lord, Lord Moylan, intends to introduce a standardised rate for the levy. We are currently reviewing responses to our recent consultation on the detailed design of the levy and continue to engage with stakeholders to help inform the drafting of levy regulations. Within the consultation, we sought views on the publication of a forecast levy rate, expressed in pence per litre, which could help provide greater transparency for the supply chain.

The Bill as drafted does not specify a particular mechanism and allows the Secretary of State to consider a range of options for calculating the levy paid by individual companies. It is important that the Bill retains a degree of flexibility around levy design, which will be set out via secondary legislation and will be subject to parliamentary scrutiny. Therefore, I do not consider the amendment to be necessary.

To reassure noble Lords, the Government are live to the potential impacts of different levy designs and recognise industry’s desire for certainty and transparency, while ensuring fairness and affordability for the consumer. We recognise that the levy must be dynamic and responsive to the changing market, while ensuring that the counterparty has funds to make payments under the scheme. But, to be clear, this levy will not be used to generate unnecessary funds and will raise sufficient money to cover only the counterparty’s costs under the revenue certainty scheme.

Although final decisions will be informed by the consultation, we are exploring options that deliver this and many of the proposals, and options set out in that consultation could help provide greater certainty and transparency. As I have said, the levy regulations will be subject to the affirmative procedure, which will allow further parliamentary scrutiny. I hope noble Lords will note the steps the Government have taken in the levy design and that they therefore will not press their amendments.

[Lord Grayling (Con)]

My Lords, I am grateful to the Minister for a detailed explanation of the situation. I am greatly reassured by what he said. What matters in all this is that we provide the right balance. This is something the airlines are calling for, but we do not want it to unduly penalise fare payers, and to end up with disinvestment in conventional aviation fuel. I am reassured by much of what the Minister said, but I am looking to him and his colleagues to ensure over the coming months that that balance is properly found, so that we do not end up with legislation that has unintended consequences.

The Minister made a point about the reserve. I proposed six months because I believe it essential to have a short period of reserve building, but it must be short—it cannot be year after year. That was the point of my amendment. I am reassured by what he said, and I shall watch with interest what the Government do, but in the meantime, I beg leave to withdraw my amendment.

Amendment 8 withdrawn.

--- Later in debate ---

That does not seem to me a very joined-up approach. On the one hand, the Liberal Democrats are arguing that my noble friend Lord Moylan’s quite modest amendment—to have transparent information in a very consumer-friendly way about the impact on ticket prices—is very difficult to do and very complicated, but, on the other hand, a Liberal Democrat colleague is suggesting a much more expansive form of reporting and proposing that the Government should do that. Perhaps there has been a lack of joined-up communication on the Liberal Democrat Front Bench. I am really confused, given the two diametrically opposed positions they have taken on the Bill, which is not welcome, because I think that, just as we are, they are broadly in favour of having more sustainable aviation. It is odd that they have taken two diametrically opposed positions on two different amendments in two subsequent groups on the Bill. I fear, therefore, that I will not be able to support the amendment if the noble Baroness presses it to a Division and seeks to test the opinion of the House.

[Lord Grayling (Con)]

My Lords, I rise both to support what my noble friend Lord Harper has just said and to add a caveat. I have great respect for the noble Baroness, Lady Pidgeon, and I find we agree on a lot of things, but it worries me more broadly—and this is not specifically just about this amendment—that when one passes an amendment like this, one creates huge bureaucratic demand. If we look at the practicality of what will be needed, as my noble friend Lord Harper has just described, we are talking about putting together, in effect, an inspectorate, because that is what this would entail—an inspectorate to talk to airlines, an inspectorate to talk to producers, and an inspectorate to have a pretty close watch on the flow of feedstuffs, the supply chain of feedstuffs and the sourcing of feedstuffs.

What we are looking to achieve here is to build a UK industry so that we do not simply end up buying SAF from abroad. The truth is, right now, the limited amount of SAFs used in this country are coming from United States and potentially elsewhere. We do not want that to happen; therefore, we want to create as investor-friendly an environment as possible in the United Kingdom. That is what this Bill is all about. It is what the purpose of the revenue certainty mechanism is, and I am very glad that the principle behind the Bill has attracted cross-party support. To try to put together now a mini-inspectorate—and maybe not that “mini” an inspectorate—to look at all the things covered by this amendment would cost taxpayers’ money and push up the cost of the revenue certainty mechanism.

We talked earlier about how the funds would be used. Certainly, the funds would be eligible to be used for the monitoring of all this, so that is an extra cost on the revenue certainty mechanism and an extra cost ultimately therefore to airline passengers. It is an extra level of complexity for investors, putting a whole range of bureaucratic requirements on them. And, of course, for government, it opens the doors to judicial review. Very often, a broad-ranging amendment that seeks reports and clarifications ends up in the courts, being used by somebody who has a particular point to prove against government. It opens the door to too much activity within the courts and not enough freedom for government to get on with the job. That would be a negative step for the legislation, given that we all want this to happen, want it to work well and want the investment to flow in the country. To create a monitoring mechanism on this scale would not in any way be the right thing to do.

As my noble friend Lord Harper rightly pointed out, simply monitoring the impact on the cost of an airline ticket is one thing, but covering the range and dimensions of activity in this amendment would create too much extra cost and too much complexity and it risks being a deterrent to investment in the UK. So, with apologies to the noble Baroness, I cannot support her amendment.

[Lord Moylan (Con)]

My Lords, perhaps I may welcome the noble Baroness, Lady Pidgeon, to this debate. She is much missed. Normally, when there is legislative matter that calls the noble Lord, Lord Hendy of Richmond Hill, to the Dispatch Box, there is a well-established team that assembles opposite him, consisting of me in my humble capacity and the noble Baroness. It has been a puzzle to me in the course of this afternoon why she appears to have been elbowed aside by the dour but noble Earl, Lord Russell, whose mantra appears to be “Mr No” throughout, whereas now that the noble Baroness, Lady Pidgeon, has landed, if I may say that, at this very late stage in the debate, we find that she is here with her customary positivity and proposals for something useful that the Government might do.

The noble Baroness’s proposal is that the Government might usefully produce a report which tells us what the effects of this measure in front of us are. It would not be an easy report to assemble, and I am sure the Minister will explain its impossibility. It would, however, be no less easy for the Government to produce the report I was asking for, to say what the effect would be on ticket prices, but, as my noble friend Lord Harper so clearly explained, that was ruled out completely by Mr No sitting at the other end of the Bench. It has been most entertaining and instructive this afternoon listening to what the Liberal Democrats have had to say, but we are now in a position where splits within the Liberal Democrats are apparent. I say this to offer some consolation to noble colleagues on the other side of the Chamber to know that it is not only the Labour Party that is riven by dissension and uncertainty about the future and that these qualities can be found among the Liberal Democrats as well. I am delighted—

Nationalised Passenger Rail Services

Lord Grayling Excerpts

Monday 2nd February 2026 Lords Chamber

[Lord Hendy of Richmond Hill (Lab)]

I travelled this morning and it was pretty good.

[Lord Grayling (Con)]

My Lords, I have asked the Minister a couple of times about transition payments made during the renationalisation process by the Government to the private operators, and the way that happened previously when franchises changed hands. Is he yet in a position to tell us—this is nearly 12 months later, so he really ought to be—how much money has actually been paid in transition payments to the private operators so far?

[Lord Hendy of Richmond Hill (Lab)]

I should have foreseen that the noble Lord would ask that question. I will have to write to him because I knew he would ask it, but I forgot to research the answer.

Buses: Safety and Security

Lord Grayling Excerpts

Thursday 8th January 2026 Lords Chamber

[Lord Hendy of Richmond Hill (Lab)]

I refer my noble friend to the Road Safety Strategy that has just been published—the first for many years—which sets out a whole variety of actions to be taken with vehicles, drivers, pedestrians, other road users and infrastructure, which he refers to, in order to reduce deaths and serious injuries on the roads. Nevertheless, travelling by bus is a very safe mode of travel.

[Lord Grayling (Con)]

My Lords, given the current weather conditions, buses on icy roads are obviously an issue. Does the Minister know whether we mandate bus companies to have winter tyres on buses? If we do not, should we do so?

[Lord Hendy of Richmond Hill (Lab)]

I have never heard of any mandate for winter tyres. The speed at which the weather changes, given the climate change just discussed in this Chamber, would make changing tyres overnight a seriously impractical activity. What is needed when the roads are frosty and temperatures are below freezing is adequate gritting and care by local transport authorities. Ministers in my department in the other place have this week been looking into the adequacy of gritting across the country.

South Western Railway

Lord Grayling Excerpts

Thursday 20th November 2025 Lords Chamber

[Lord Grayling (Con)]

My Lords, a few months ago I asked the Minister about the transition payments that were previously paid when a franchise ended and a new operator came in. He was not at that point able to answer the question about SWR, so I ask him again now, as a few months have passed: have the Government paid any money to FirstGroup as a result of the transition from private to public, and have any further payments been made since the time of the transition?

[Lord Hendy of Richmond Hill (Lab)]

The Government are very reluctant to pay any money to the previous owners, bearing in mind the condition in which the service was left. That discussion is still carrying on, but I am not aware of any money so far being paid and I would not be keen to pay any in the future.

Sustainable Aviation Fuel Bill

Lord Grayling Excerpts

2nd reading
Thursday 20th November 2025 Lords Chamber

[Lord Grayling (Con)]

My Lords, it is a particular pleasure to follow a very well-articulated tribute to the right reverend Prelate, to whom I also offer my congratulations on a very well-made, thoughtful and appropriate maiden speech. He will undoubtedly make a major contribution in this House, and I think all of us welcome him to this place.

I start, ironically, by referring to my entry in the register as an advisor to AtkinsRéalis as well as to Hutchison Ports. It is a particular pleasure for me to speak in this Second Reading debate. Two years ago, I was responsible for an amendment to the then Energy Bill which mandated the Government to set up a revenue support mechanism for sustainable aviation fuel in the UK. I stopped after getting 56 Conservative signatures to the amendment, which proved enough, just about, to finally jolt the Government, particularly the Treasury, into action and starting a process which has brought us to this point today. I am glad that I will be speaking alongside my noble friend Lord Harper, who followed that by playing a significant part in delivering us to the point we are at today. My noble friend is another example of why this is a genuinely bipartisan Bill. There are debates, differences and discussions about the detail, but there has been strong support across all sides for the principles that underlie the Bill today.

I was very pleased at the time that Ministers then recognised that they needed to do something and I am very pleased that Ministers in the current Government have continued the work that we started and have delivered this piece of legislation, which I strongly support, albeit with some caveats and questions which I want to push the Minister on today, in Committee and subsequently. I think there are some things that need to be tightened up and some questions that need to be answered, but the principle is absolutely right.

For me, the reason this all matters is very simple. The aviation industry is under growing pressure over its carbon footprint. Whether you are an opponent or a supporter of net zero is, to my mind, completely irrelevant to this debate. This is actually about the market pressures on the airlines themselves, particularly from a younger generation of potential customer among whom flight shaming has become more visible. The industry has to address those concerns, and we have to help it address those concerns and its impact on the environment.

It is not just about politics, it is actually about what is commercially necessary for what is one of our most important economic sectors. Of course, that is why Virgin Atlantic, Boeing and Rolls-Royce collaborated on the ground-breaking transatlantic pioneering flight using sustainable aviation fuel two years ago. We were on that flight and it was a very unique experience. It is why I know that most of the industry strongly supports this legislation. It is why the last Government brought forward plans for the SAF mandate and why this Government continued to introduce the mandate at the start of this year.

Why then do we need a revenue certainty mechanism of the kind set out in the Bill? Our airlines could just buy SAF from overseas. The initial product being used in this country will almost certainly come principally from the United States. There are two very good reasons why the Bill remains necessary. First, our aviation sector is, as I say, a key part of our economy; it is the strongest sector in Europe, it is fundamental to our regions and to the economy of so many different parts of the country. Do we really just want to import the fuel it needs for the future, or is it better to encourage serious investment here, of the kind that companies such as alfanar are planning for Teesside—a part of the country that clearly wants and needs investment?

Even in a world of free markets, sometimes I really think we need to make sure that we do some important things for ourselves. I think we can have a successful SAF sector in the UK that brings investment and creates jobs, but SAF plants require a very large amount of capital, and investors are always cautious about new markets and developing technologies. The truth is that the first SAF plants in the United States, of which there are just a handful, received investment support from the Biden Administration. The EU is poised to introduce its own revenue certainty mechanism. The Minister was right to say that ours is the first in the world, but it is not going to be the last, so for me it comes down to a straightforward choice: do we want a SAF industry in the UK or do we just have to depend on imports? I do not think we have to. My view is that we need that industry in the UK and I strongly support the Bill as a result.

There is another reason for caution about buying SAF from elsewhere: I think the UK approach is much smarter and much better. In the United States, SAF is being produced primarily from corn. In the EU, SAF will be produced, as we have heard, from what is called HEFA—basically, used cooking oil. I absolutely do not support growing fuel in fields that could be used for growing food. I have long been uneasy about the practice of growing crops for purposes other than food, but I think it is mad to use the space that the world needs to feed itself to grow aviation fuel. The UK is right also to accept for now, I think, that HEFA will be needed for the time being, but we need to understand that it is not going to be there for ever, and it is right that its future use is capped.

There are serious question marks about the availability of HEFA and there is also the suggestion that it is often not really used cooking oil at all but near-virgin oil that has been doctored to create the semblance that it has been used in a kitchen. Of course, much of it comes from the Far East, and SAF mandates are going to spread there too, so there is absolutely no certainty of supply going forward. The UK’s approach, which has been to push quickly towards SAF produced from biowaste, of which we have quite a lot here already, and then in due course from municipal waste, has to be the right one. To me, this really is the nirvana of sustainable aviation fuel: if we can turn our waste—what we put in our black bins each week—into fuel oil, removing the impact of landfill, incineration and the rest, that has to be a good thing.

I have a question for the Minister, and this is the first of the points I want to put to him. There are rumours around that the Government want to allow first-generation SAF from crops here. I really hope that is not true and I ask the Minister to set that to rest by confirming that there are no such plans. We should not be growing agricultural crops to turn into fuel. We have taken a much smarter approach in this country to delivering aviation fuel that has a positive environmental impact. We must not see that compromised in any way.

There are a number of other issues I have with the Bill that I want to put to the Minister. I want to see these issues addressed in the debates ahead, and there is at least one that I am very committed to asking the Government or this House to put in the Bill.

My first concern is about how the levy is applied on conventional aviation fuel manufacturers. I know that the Government’s initial intent was to assign the levy based on the previous year’s market share. I genuinely do not think that approach is viable. It misses out the impact of changes in the composition of the market, which could mean that a new player faces a period without charges and is able to undercut the existing market. The levelling-up process would then come way down the track, after a long period of time when there had been a real price discrepancy between the two and a competitive advantage to the newcomer.

Also, if someone disappears from the market—and we have seen two refineries close in recent times—such a delay will also cause complications for the counterparty. So, the mechanism to apply the levy has got to be immediate. I do not understand why it cannot just be done per barrel of fuel as it leaves the refinery or the terminal. I think the Minister needs to explain to all of us why that cannot happen. I appreciate that that is going to come in the secondary legislation, but we need to understand how it is going to be applied, and it has got to be done in a timely way. It cannot happen way after the event.

I was grateful to the Minister for spending some time with me and allowing his officials to spend some time with me. I know they have thought about this, but I ask him to now put some of the Government’s thinking about this on the record, so we can understand where it is going as we go through the Bill.

My second concern is there has got to be a direct link between the commencement of the levy and the opening of the first SAF plant. We do not realistically expect the first SAF plant in the UK to be operational much before 2030. So, the levy cannot start until close to 2030, otherwise we would be raising money—which passengers are paying more for—and just leaving it sitting in the bank. It is important that there has to be a clear linkage between the arrival of SAF manufacturing in the UK and the application of the levy.

On the timeframe, there is one other thing I would just ask the Minister to consider. At the moment, because there is not an awful lot of SAF capacity anywhere in the world, we must not apply the mandate on a ratchet scale up to 2030 in a way that is detached from the reality of the availability of SAF in the marketplace. I would ask him to keep monitoring the mandate as we go towards 2030 and make sure we are not actually out of kilter with the availability of SAF for the airlines to put in their planes.

The third concern I would ask the Minister to address is there has got to be no legal doubt whatever that the proceeds of the levy will be used only to support investment in the manufacturing of SAF in the UK. There has just got to be a proper safeguard against any other part of Government going, “Oh, there’s some money there. We’ll have that for something else”. It does happen; it has happened in other countries in similar areas. We need that certainty in the Bill.

I think the most important addition to the Bill—and I would ask the Minister to go away and think about this, because it must be in primary legislation, so there is no doubt in the courts going forward—would be to make it absolutely certain that the revenue support mechanism is going to be used only to support the production of SAF in the UK. There has got to be no legal doubt about this and no loopholes whatever.

The Government already know that there are loopholes out there and there are people trying to take advantage of them. The Government have already had to stop one multinational in the hydrogen marketplace from benefiting from UK financial support while planning to produce part of its product in the Middle East. It would be relatively easy for a manufacturer of SAF to import an intermediate fuel into the UK, process it at a SAF plant and claim the benefits the RCM would offer. The legislation has got to be absolutely categoric: that cannot be allowed to happen.

I would like the Bill to say very explicitly that any certified fuel that is a component of SAF has to be manufactured in the UK and that only the feedstock can be imported. Of course, there will be times when we buy biowaste from other European countries—that is perfectly reasonable. But you cannot be allowed to produce a three-quarters-finished fuel that you just adjust, turn into SAF at the end and claim that that should benefit from the revenue support mechanism. I would only countenance the feedstock as being imported, and hopefully, as we see the move towards urban municipal waste and even sewage turned into fuel, even that will not be necessary.

It is really important that we have that in the Bill, because courts do strange things. They interpret laws in different ways, sometimes in ways that those in Parliament do not expect or do not want to be the case. We have got to have absolute certainty on that in primary legislation. I mention this now to the Minister ahead of Committee to give him advance warning that I really want to explore this in detail.

I believe the Bill to be essential to the UK, benefiting from a new industry that we have ourselves mandated as essential to one of our most important and oldest sectors. It makes no sense to tell airlines to buy SAF but then ignore the opportunity to produce it here and let other Governments incentivise their own investments and industries instead.

I am very glad that both the last Government and this one accepted the intent behind that amendment two years ago, and I look forward to seeing the Bill pass into law. Our job in this House is to make sure it leaves no loopholes and then to encourage the Government to get on with the secondary legislation, so that contracts and the constructions can begin as quickly as possible.

Airport Expansion

Lord Grayling Excerpts

Tuesday 11th November 2025 Lords Chamber

[Baroness Pidgeon (LD)]

My Lords—

[Lord Grayling (Con)]

My Lords—

[Lord Swire (Con)]

My Lords—

--- Later in debate ---

[Baroness Boycott (CB)]

My Lords—

[Lord Grayling (Con)]

My Lords—

--- Later in debate ---

[Lord Hendy of Richmond Hill (Lab)]

Well, what can I say to my noble friend, who not only asks this question but gives all the answers as well? I think that will do.

[Lord Grayling (Con)]

My Lords, the Government are absolutely right to be pressing ahead with the expansion of Heathrow Airport; it is long overdue. The Sustainable Aviation Fuel Bill will, I hope, answer some of the questions about the environmental impacts.

However, I am concerned about the debate between a short runway and a long runway. Whatever the outcome in the medium term, may I seek assurance from the Minister that we will at least still go ahead with the DCO for the full plan? If we do not, we are going to end up short-changing ourselves again. In the end, Heathrow needs to expand, and it needs to expand properly. Please ensure that that is what happens.

[Lord Hendy of Richmond Hill (Lab)]

I thank the noble Lord for that. That is a premature request, because he will know—and maybe the rest of the House does as well—that the two schemes being taken forward are different, and the length of the runway proposed is different. A decision such as the one he suggests ought to be taken as we go forward with one of the two schemes.

Open Access Rail Services

Lord Grayling Excerpts

Wednesday 22nd October 2025 Lords Chamber

[Lord Hendy of Richmond Hill (Lab)]

My noble friend is correct. Both the east coast and west coast main lines are now heavily constrained, and under the current arrangements the regulator, the Office of Rail and Road, has recently declined most of the additional applications for train paths simply because there is no room. He is also right to suggest that we need to leave room for increased freight operations. There is a general consensus that more railway freight is good for the economy and the environment, and it would be right to leave paths for freight expansion.

In respect of his question about profitability, it was recently reported that FirstGroup’s open access business achieved a 32% operating profit in the 2024-25 financial year. These profits arise because open access operators do not pay the full cost of accessing the track, and nor do they have to meet public service obligations to operate the services that most people need. This allows them to offer reduced fares and provide journeys only between the most profitable locations. Currently, Lumo is the only open access operator that contributes towards fixed costs via an infrastructure cost charge, which leaves taxpayers to fill the shortfalls. The railways Bill will propose to change the arrangements for access and will consider what needs to be done further in respect of charging.

[Lord Grayling (Con)]

My Lords, the Minister just said that the ability to grow open access is constrained by the lack of capacity on the network, yet he says that the Government intend to increase rail freight by 75%. How are both of those true?

[Lord Hendy of Richmond Hill (Lab)]

I am surprised that the noble Lord does not know the answer to that, as one of the many former Secretaries of State for Transport in the Chamber. The answer is that there are protected freight paths on all the main lines that are likely to carry freight, in order that freight operators can respond to short-term demand measures—which they do frequently, changing trains on a daily and weekly basis—and have room for expansion. It is important that they are left to do that. Otherwise, there is no chance of freight expansion and the commercial freight businesses would be damaged.