Nuclear Installations (Compensation for Nuclear Damage) (Amendment) Regulations 2025

Debate between Earl of Effingham and Earl Russell

Monday 14th July 2025 Grand Committee

[Earl Russell (LD)]

My Lords, we very much welcome these changes and we thank the Government for taking a world-leading approach here. The Government seek a resurgence of nuclear power, both large-scale reactors and SMRs, as part of their plan to decarbonise our energy generation and reach net-zero goals. It is absolutely right that the appropriate compensation be available to any potential victims associated with these undertakings.

We welcome this statutory instrument and recognise its critical role in ensuring that a minimum amount of compensation is available to victims in the unlikely event of any nuclear incident. We also strongly support the principle that claims are channelled directly to the operator of the nuclear installation in the country concerned.

These regulations are a small, technical, yet important amendment to the Nuclear Installations Act 1965. Their primary purpose is to implement the Convention on Supplementary Compensation for Nuclear Damage, known as the CSC, within the UK. The move is particularly significant as the UK is a pioneer in this respect, being the first Paris convention member to seek to accede to the CSC.

At the heart of these changes is a simplification and alignment of our nuclear third-party liability regime. Currently, the UK is a party to the Paris convention and the Brussels supplementary convention. This instrument makes a technical change to align the compensation under the CSC with that of the Paris convention. This means that any claims brought under the CSC, or under both the CSC and the Paris convention, will have a cap of €700 million. Critically, this operator liability aligns with CSC claims.

This approach simplifies the operation of the different conventions and the classification of claims in domestic legislation, and will help bring clarity and certainty to the wider industry operating in the UK. It is important to note that this revised liability remains within the existing financial security provided by operators. Importantly, this means no increase in their liability burden. For potential victims, however, accession to the CSC will increase the amount of compensation available through a shared international fund. With the UK as a member, this fund would currently stand at approximately £120 million, with the UK’s contribution being £7 million.

From a broader perspective, participating in nuclear third-party liability treaties such as the CSC is essential for supporting nuclear developments while safeguarding the interests of potential victims. The extension is intended to remove barriers to participation for inward investment and support UK exports, helping to enhance the UK’s attractiveness for inward nuclear investment, thus supporting the successful delivery of planned projects.

If the Minister does not mind, I have two small questions I would like clarification on. First, the Explanatory Memorandum says that the CSC

“would not impose additional liability on nuclear operators”,

but

“there is a risk that the insurance industry may choose to increase operators’ annual insurance premiums as a result of accession. It is unknown how much premiums might increase by, if at all”.

Given the intention behind the instrument, which I welcome, and the plans to build further nuclear power facilities, what measures will the Government take to ensure that the insurance industry does not take advantage of these changes to unduly put up premiums? What methods will the Government use to monitor any increases in insurance premiums that could come into being as a result of this measure?

Finally, I absolutely welcome the fact that the UK Government are doing this but, since they are now in a world-leading space on this, what action, if any, will they take to encourage other nuclear countries to follow the route they have taken? Will any consideration be given to asking other nuclear countries and their companies that are working in the UK to follow these examples in relation to any contracts they may have with us, currently or in the future, as part of their contracting process?

[The Earl of Effingham (Con)]

My Lords, I thank the Minister for introducing this instrument. As we have heard, it is intended to facilitate the UK’s accession to the Convention on Supplementary Compensation for Nuclear Damage—the CSC—by raising the liability limit for nuclear operators under the regime. Although the change is framed as technical, it raises broader questions that merit further attention.

First, on the process, there appears to have been no formal public consultation on this measure, and although His Majesty’s loyal Opposition recognise that key stakeholders in the industry were consulted, nuclear liability is not just a matter for industry; it is also a matter of deep public interest. We would welcome the Minister’s assurance that the Government will maintain transparency as and when the CSC framework is implemented, particularly in relation to how claims are assessed and public communications are relayed in the event of a nuclear incident.

Contracts for Difference (Miscellaneous Amendments) (No. 3) Regulations 2025

Debate between Earl of Effingham and Earl Russell

Monday 14th July 2025 Grand Committee

[Earl Russell (LD)]

My Lords, before I turn to the SI, I will respond to a couple of the points the noble Lord, Lord Frost, has made. We shared a Select Committee, so I absolutely respect the noble Lord’s right to say what he wants to say. The noble Lord argued for the need to include all costs, but part of the calculations of using or continuing to use fossil fuels is that we do not continue to account for all the consequences of burning fossil fuels. The OBR has just this week said that that far outweighs any cost that we might spend on renewable energy. Prices are going down: solar and wind are the cheapest forms of energy, and they provide constant energy security. The noble Lord knows that gas sets the market price 96% of the time.

On the regulations, we broadly welcome this plan to bolster our nation’s energy security and accelerate the transition to clean power. We commend the Government on their intention further to update and reinforce the contracts for difference process that has been the backbone of our nation’s renewable energy transition. These draft Contracts for Difference (Miscellaneous Amendments) (No. 3) Regulations 2025 represent an important update intend to fine-tune the CfD process to bring about a more efficient use of budgets, improve the bid management process and consider extra support for the UK industry.

We particularly welcome the continued focus on boosting our domestic industry through the clean industry bonus, CIB, referred to in these regulations as the “sustainable industry reward”. The first round of the CIB was a success, more than doubling its budget from £200 million to £544 million and leveraging up to £9 billion of investment in UK supply chains.

I agree with the Government: this is an unprecedented amount earmarked for UK factories and ports, particularly in our country’s poorest areas, fostering jobs and growth through the supply chains. We also support the intention for these costs to be accurately included in the Ofgem price cap, as these regulations ensure, which aids future transparency and fair accounting.

The regulations make three main changes. First, they amend the contract budget notice publication process for price and pot notices and the final contract budget notice signing within the allocation framework. Secondly, they amend the information that the Secretary of State has access to. The Secretary of State now gains access to anonymised strike price bids at any time, supported by an estimated budget to improve budget management and help prevent underspend. Finally, they include clean industry bonus payments in the Low Carbon Contracts Company’s calculations.

We generally welcome the spirit behind these notifications. I have some questions for the Minister. The first seeks to ensure that we get value for money and consumer costs. The changes will allow the budgets to be set at a price that balances value for the consumer with the development ambitions. However, given the significant investment involved—allocation round six was a record-breaking £1.5 billion for 127 projects generating 7.2 gigawatts, and AR7 is due to be even larger—how will Ministers ensure that the new-found flexibility generally translates into lower strike prices for offshore wind and ultimately lower costs for consumers? How can we be certain that value for money is not sacrificed in the rush to pursue record capacity?

Turning to competitive tensions and the risk of bid inflation, while the Government intend to review anonymised bid information and maintain anonymity, there is a risk that bidders might aim to obscure true costs and competitive tensions could be perceived as lacking, potentially leading to higher clearing prices, especially if there is a perception of an unlimited budget for AR7. Will the Government clarify what controls there are on the powers to mitigate any possible negative impacts from these changes?

Finally, turning to monitoring, evaluation and swift course correction, the Explanatory Memorandum details plans and processes for evaluations, robust monitoring and a post-implementation review five years after these changes take place. Five years is a long time in a rapidly evolving marketplace. I ask the Minister for reassurance about the specifics on the key performance indicators that will be rigorously tracked to assess the effectiveness of these legislative changes after each allocation round. How will any insights from each round and their implications lead to changes in processes before the next round?

We need to be careful that we do not get any market distortions from these regulations. I do not think that will be the case, but there is a need within the evaluation process to check that that is not happening.

We support the ambition to make Britain a clean energy superpower. This will help bring down bills, provide energy security, green jobs and growth and help get us off the rollercoaster of dependence on international gas markets. The Government need to bring forward proposals to lower energy bills, although that sits outside this SI. I simply seek reassurance on the points I have raised with the Minister.

[The Earl of Effingham (Con)]

My Lords, I thank the Minister for setting out the purpose of this instrument. These regulations make what may be described as technical adjustments to the CfD regime. However, in practice, they signal significant changes to the principles that underpin the scheme’s operation: transparency, predictability and fairness. The CfD mechanism has been a cornerstone of our low-carbon transition, driving record levels of renewable deployment, while securing value for consumers. That credibility depends on its rules being clear, impartial and competitively neutral.

This instrument makes three changes that in His Majesty’s loyal Opposition’s view merit particular scrutiny. First, as highlighted by my noble friend Lord Frost, it allows the Secretary of State to view anonymised bid data before finalising the budget for an allocation round. This breaks the long-standing principle that all participants bid on a level playing field based on pre-published terms. Ministerial discretion inserted into the process after seeing how the market has responded risks undermining confidence in the integrity of the auction.

Secondly, as also flagged by my noble friend Lord Frost, by delaying the publication of the final budget until after that review, the Government will have the ability to shape outcomes post hoc. However well-intentioned, that is potentially a slippery slope. It introduces uncertainty, opens the doors to perceived political interference and may ultimately deter long-term investors who value predictable rules-based frameworks.

Thirdly, the decision to reclassify the costs of the sustainable industry reward so that they are now recovered through Ofgem’s price cap means that these costs will be passed directly on to consumers. At a time when the cost of living is rising and households are under pressure, the perception is that a stealth measure introduced without full parliamentary scrutiny or a fully transparent impact assessment should not be made. What safeguards will be put in place to ensure that this new discretion over budgets does not distort the process or erode trust among participants? Has the department undertaken any modelling of how these changes might affect bidding behaviour, strike prices or project delivery timelines? What assurances can be given to consumers that the inclusion of new costs in the price cap calculation will not place additional upward pressure on their energy bills?

In conclusion, although these changes may be framed as flexible and technical, they represent a shift in the balance of power from an impartial auction model to one in which Ministers can influence the outcome after bids have been seen. That raises fundamental questions about fairness, efficiency and consumer protection. We urge the Minister to explain why such discretion is necessary and how its use will be accountable to Parliament.

Environmental Targets (Public Authorities) Bill [HL]

Debate between Earl of Effingham and Earl Russell

Committee stage
Friday 13th June 2025 Lords Chamber

[Earl Russell (LD)]

My Lords, I rise to speak in support of this Bill, as I did at Second Reading. I too will oppose the amendment put forward by the noble Lord, Lord Hamilton of Epsom, because it removes crucial provisions relating to climate adaptation and environmental recovery objectives.

The truth is that, despite having really good environmental legislation, the Government are largely off track to meet their legal obligations, particularly on nature recovery, as we heard from the noble Baroness, Lady Coffey. The Office for Environmental Protection has concluded that the Government are largely off track to meet their nature goals; the Climate Change Committee has stated that the UK is not on track to meet its 2030 emissions targets; and in the recent report of the Adaptation Sub-Committee of the Climate Change Committee, not a single delivery plan for adaptation was rated as good. This is an alarming situation, and this Bill will help to resolve some of those problems.

The trouble is that nothing is joined up. I thought the noble Lord, Lord Krebs, put it really well at Second Reading when he said that the Government have all the levers, but they are not actually attached to anything. The Government are like a general in a military campaign who fails to tell the troops what the strategy is. Government needs to be interconnected, and these targets and ambitions need to go to the bodies, local authorities and people on the ground who are taking these decisions daily, to help make sure that government policy is joined up from top to bottom and united in its purpose and aims. That is what this Bill seeks to do.

As others have said, we sought to amend the Crown Estate Act, and we succeeded; we also succeeded in amending the Water (Special Measures) Act, but it wastes a lot of parliamentary time having to do this. I will be tabling an amendment to the Planning and Infrastructure Bill to put such a duty on the Forestry Commission as well. The Government need to do these things.

On Amendment 1 in the name of the noble Lord, Lord Hamilton, I too was a little bit confused by it; there was a disconnect between the wording of the amendment and the speech he gave. It would remove the requirement for public bodies to deliver the adaptation programme. Just yesterday evening, we had a debate in Grand Committee on the impact of wildfires, and the threat is ever-growing. If we do not adapt, people will suffer and we will face increased costs and damages. We need to prepare: the reality of climate change is here, and it is going to be disastrous for people and our economy. We need to do something about it.

Amendment 1 would also remove the nature recovery duty. However, we have to do this. Climate change and biodiversity losses are interconnected and interdependent. Government public bodies own 6% of the land in the UK, so why would we not seek to improve our biodiversity by making use of those bodies and the land under their control?

Councils, as we have heard, also have an important role. I will challenge some of the remarks made because, in Scotland, councils do have a duty to make climate-related improvements. In fact, where they do so, they are making real improvements. Lots of councils want a greater ability to do these things. I therefore reject the amendment because, if passed, it would rip the heart out of the Bill. I will however address some of the points the noble Lord, Lord Hamilton, has made.

I do not think it appropriate to talk about our climate targets as being arbitrary. They are set by scientists and are reviewed by the Climate Change Committee; they are real targets with real purpose. I agree with the noble Lord about the cost of energy bills. More must absolutely be done to bring down the cost of energy, but we need to remember that it is the cost of gas that sets the electricity price in the UK 98% of the time. I know that the Government are looking at energy market reform, but more needs to be done on that. The green economy grew by 10.3% last year, according to the CBI. In fact, it is one of the very few parts of the UK economy that is showing real growth.

I therefore have to say that I do not think the amendment is useful. I am not able to support it, but we do support the Bill.

[The Earl of Effingham (Con)]

My Lords, I thank the noble Lord, Lord Krebs, for his commitment to environmental issues and, as a result, bringing forward this Private Member’s Bill. The noble Lord’s expertise and dedication have long contributed to the strength of debate in your Lordship’s House, and we thank him for his continued leadership on this front.

I turn to Amendment 1 in the name of my noble friend Lord Hamilton of Epsom, and acknowledge the concerns that he has raised in putting forward this amendment. While we recognise the intention behind this Bill—to ensure that public bodies play their part in meeting our ambitious environmental targets—we need to offer some words of caution, particularly on the issue of overreach. I am sure that all noble Lords agree that our most cherished landscapes—our national parks and areas of outstanding natural beauty, now called national landscapes—must do everything they can to aid in the recovery of wildlife and biodiversity. That ambition is shared across your Lordships’ House and, indeed, the country as a whole.

Recognising that, Defra has already put in place the Farming in Protected Landscapes programme. This grant scheme allows farmers to receive support where they actively contribute to climate resilience, nature recovery and the protection of the character and cultural heritage of our landscapes. This is a targeted and thoughtful policy, which encourages both practical and local delivery. We therefore caution against laying on additional statutory duties that might potentially cut across these already established aims. The public bodies listed in the Bill are not environmental regulators, nor are they designed to be. Asking them, for example, to assist in meeting targets for particulate matter or broader air quality may stretch them beyond both their remit and their expertise.

Turning to local authorities, I remind your Lordships’ House of the substantial steps already taken through the Environment Act 2021, which amended the Natural Environment and Rural Communities Act 2006 to create a duty not just to conserve but to enhance biodiversity. Public authorities must now actively consider what action they can properly take, consistent with the proper exercise of their functions, to further that aim. This is a significant evolution in environmental governance. The key question, we believe, is whether we should be adding yet more duties on these authorities. We must consider not just what is desirable but what is feasible. Many public bodies, particularly the smaller local authorities, lack the resources and technical know-how to contribute meaningfully to the targets set out in the Bill. There is a risk that we distract those authorities from their essential services and dilute the impact of the environmental work already under way, as was so eloquently illustrated by my noble friend Lord Jamieson.

To take one example, Great British Nuclear, which I will speak to further in group 2, was established to help deliver nuclear energy projects in support of government policy. Its objectives are clear and technical. Of course, it goes without saying that it must adhere to the rules and regulations already set for environmental safety, but expecting it or other bodies to contribute to these environmental targets risks undermining their principal duties and weakening delivery across the board.

--- Later in debate ---

[Earl Russell (LD)]

My Lords, I will speak very briefly. I thank the noble Lord, Lord Evans of Rainow, for his amendment proposing to add the Canal & River Trust to the list of public bodies in Clause 2 of the Bill of the noble Lord, Lord Krebs.

While I have every sympathy for his case, the truth is that the Canal & River Trust is a charity that was set up in 2012. My understanding is that, as a charity, it is not a public body, and it is therefore simply not possible to add it to the list of bodies covered by provisions in the Bill.

[The Earl of Effingham (Con)]

My Lords, I will speak to Amendment 3 in the name of the noble Lord, Lord Evans of Rainow, on the inclusion of the Canal & River Trust in the list of public bodies subject to duties under the Bill.

I thank the noble Lord for his scrutiny and diligence in drawing attention to what is undeniably an important point of principle and practice, as was referenced by the noble Baroness, Lady Young of Old Scone. The Canal & River Trust, as the noble Lord rightly noted, is responsible for an extensive and significant network of inland waterways. These assets contribute not only to heritage and recreation but to the health of our natural environment.

There is no question but that the trust plays a role in environmental outcomes. Its custodianship of over 2,000 miles of canals and rivers and the biodiversity that supports is of considerable public interest. It is worth emphasising, as the noble Lord, Lord Evans, has, the persistent and ever-increasing problem of littering in our canals. Litter not only blights these beautiful and historic waterways, diminishing the enjoyment of walkers, boaters and anglers: crucially, it also harms wildlife and contributes to the broader degradation of aquatic ecosystems.