To ask His Majesty’s Government what impact they anticipate reallocating £2.5 billion of Great British Energy’s planned budget for nuclear energy generation development will have on its ability to deliver on its planned objectives.
My Lords, Great British Energy’s mission is to drive clean energy deployment in order to create jobs, boost energy independence and ensure that UK taxpayers, bill payers and communities reap the benefits of clean, secure, homegrown energy. In the spending review, the Government pledged over £2.5 billion for the small modular reactor programme through Great British Energy-Nuclear. This programme will potentially power the equivalent of 3 million homes with clean, secure, homegrown energy. Together, Great British Energy and Great British Energy-Nuclear will invest £8.3 billion in our clean energy future.
My Lords, I thank the Minister for his Answer. The Treasury cut one-third of Great British Energy’s budget and its investment powers, clipping its wings before it could fly. A renaming sleight of hand does not make Labour’s manifesto pledge add up. The promise to fully capitalise Great British Energy with £8.3 billion in this Parliament has clearly been broken. I ask the Minister either to confirm which third of GB Energy’s mission will be scrapped or to give a clear commitment to replace these essential funds, which have been taken away by the Treasury.
I thank the noble Earl for that question but I do not think that the Great British Energy budget has been cut. The £8.3 billion will be spent between the two allied companies. The small modular reactors programme, if we get a fleet of them, will generate enough energy for over 3 million homes and create thousands of jobs. In April, Great British Energy announced £3 million for offshore wind supply chains. In June, we announced another £700 million investment in clean energy supply chains. We are doing everything that we possibly can with this money, and it acts as a catalyst for future investment. All sides of the House welcome the money that we are putting into small modular reactors.
My Lords, the regulations were laid before the house on 19 May 2025 and the Government have published an Explanatory Memorandum alongside them. This instrument makes technical changes to the way the Convention on Supplementary Compensation for Nuclear Damage, known as the CSC, will operate in the UK upon the UK’s accession to this treaty. These changes streamline the operation of the different conventions as well as the domestic implementing legislation.
Nuclear power is central to this Government’s mission to become a clean energy superpower and a key part of our industrial strategy to revive Britain’s industrial heartlands. It provides clean homegrown energy, creates thousands of jobs and complements other technologies by providing stable and reliable electricity to the grid. To drive forward new nuclear and deliver on our mission, the Government made a series of bold commitments in the recent spending review. A £14.2 billion investment was announced to build Sizewell C, ending years of delay and uncertainty and creating 10,000 jobs. The Government have also pledged over £2.5 billion for the small modular reactor, or SMR, programme over this spending review period. Rolls-Royce SMR has been selected as the preferred bidder to partner with Great British Energy – Nuclear to develop these reactors. Together with Hinkley Point C, these announcements represent the biggest nuclear rollout for a generation, delivering more nuclear to the grid than in the past 50 years.
Participation in nuclear third-party liability, or NTPL, treaties is important for supporting nuclear development while also safeguarding the interests of potential victims in the highly unlikely event of a nuclear incident. NTPL treaties ensure that minimum levels of compensation are available to victims of a nuclear incident, that claims are channelled exclusively to the operator of a nuclear installation, and that claims are channelled to the jurisdiction in which a nuclear incident has occurred.
The UK is currently party to two NTPL treaties: the first is the Paris Convention on Third Party Liability in the Field of Nuclear Energy, which is referred to as the Paris convention; the second is the Brussels Convention Supplementary to the Paris Convention on Third Party Liability in the Field of Nuclear Energy, also known as the Brussels supplementary convention. These two treaties are implemented domestically in the Nuclear Installations Act 1965. The Paris convention sets a minimum operator liability amount of €700 million. An additional €500 million of compensation is available above this to compensate victims in a Brussels convention country, together with a shared international fund of €300 million, made up of contributions from Brussels convention members—again, used to compensate damage in Brussels states.
To remove some potential barriers for investors in the nuclear supply chain, and to support exports, we are now pursuing accession to another NTPL treaty, the Convention on Supplementary Compensation for Nuclear Damage, known as the CSC, which is under the auspices of the International Atomic Energy Agency. The UK is the first Paris convention member to seek to accede to the CSC. Accession to the CSC will expand by 11 the number of countries the UK has NTPL treaty relations with. This expansion will remove some potential barriers to inward investment and support UK exports in the future.
CSC accession will enhance the UK’s attractiveness as a destination for nuclear investment and support the successful delivery of future projects. This is because the mutual respect of the principles of NTPL treaties will apply to more countries. In the highly unlikely event of a nuclear incident, accession to the CSC will also increase the amount of compensation available to victims. The CSC establishes a shared international fund made up from contributions of the contracting parties to compensate victims of a nuclear incident. A country’s contributions are calculated based on installed nuclear capacity and UN contribution rates, expressed in special drawing rights. At present, with the UK as a member, the shared international fund would be approximately £120 million, with the UK’s contribution being £7 million. To date, there have been no calls on this fund.
As we are the first Paris convention country to seek accession to the CSC, there is no established path for countries seeking participation in both conventions—the UK is a pioneer in this respect. To enable CSC accession, provisions were included in the Energy Act 2023 to amend the Nuclear Installations Act 1965, which provides for the UK’s participation in the various NTPL regimes. Our initial approach has been to reflect the minimum national compensation amount required for claims under the CSC at £300 million special drawing rights, or SDRs, equivalent to €370 million, by setting this as the liability limit for operators. This was to come out of operators’ existing financial security provision.
This instrument makes a technical change to the way the CSC will operate in the UK upon accession to the treaty. This technical amendment will align the operator liability limit under the CSC with that of the Paris convention: that is to say, it will create a single first tier of compensation available under both conventions, with a limit of €700 million. This remains within the existing financial security provided by operators, meaning there will be no increase in the liability burden for operators. For sites with lower liability levels, namely low-level sites and intermediate sites, their financial security requirements will also remain unchanged. This approach will simplify the operation of the different conventions and the classification of claims in domestic legislation. It will benefit the administration of funds by ensuring that the CSC shared international fund comes into operation only once the operator financial security limit of €700 million is exhausted. It will continue to ensure that the additional funds available under the Brussels supplementary convention and the CSC go only to those entitled to make a claim under these conventions.
In conclusion, this instrument makes a technical change to the way the CSC will operate in the UK. We continue to work towards CSC accession, which will support the delivery of new nuclear projects and exports, while continuing to safeguard the interests of victims in the highly unlikely event of a nuclear incident. This Government have been clear on our support for nuclear, and these measures contribute to creating the best possible investment climate. I beg to move.
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?
My Lords, we are very grateful to NESO for the final report on this catastrophic power failure that shut down Heathrow, and we note the deeply concerning findings. A single point of failure detected years ago should not have been able to shut down our largest airport. This was a major incident. Heathrow closed for 16 hours; 1,300 flights were cancelled, impacting 270,000 passengers; and 70,000 domestic users had their energy cut. This presents a valuable learning opportunity, so I thank the Government for the terms of reference and NESO for its excellent and comprehensive report. The quality of the work here shows just how well NESO is establishing itself as a new organisation and how it is adding value.
To summarise, the report found critical maintenance not done for seven years; older transformers in situ not compliant with modern regulations, allowing the fire to spread; any number of possible further unknown maintenance issues; and possible National Grid licence breaches. Heathrow has three independent feeds from the grid but has configured its internal network in such a way that losing just one feed closed the airport. National Grid, in turn, was not aware of Heathrow’s vulnerability and that it was critical national infrastructure. Broken systems and poor communications between organisations come on top of years of underinvestment, both in our grid infrastructure and in our critical national resilience more generally.
These findings are particularly concerning as they come just before the massive period of transition, as we are about to invest over £70 billion before 2030 in achieving clean power. We also face increasing impacts from climate change itself and increasing external threats, from cyberattacks to attacks on our undersea cables, further impacting our national resilience. The report reveals a catalogue of serious failings, the most damaging of which was a catastrophic failure to recognise the imminent fault in the transformer in 2018, the failure to take appropriate action, and further mis-maintenance in 2022. This led directly to the fire. The substation, built in 1968, would have worked well had it been maintained, but it was not positioned in a way that met with modern design standards, which meant that once the fire started, it spread.
The Minister in the other place said that National Grid would look at maintenance backlogs and that he hoped to get an update by the end of last week, so I ask the Minister: are the Government clearer on the scale of any further maintenance backlogs that exist? Heathrow understood its power supply vulnerability yet deemed it low-risk and decided not to do anything about it. What is the Government’s position on this continuing vulnerability at Heathrow Airport? The Minister talked about an opportunity for Heathrow to fix its systems, but surely the Government need to go further before we expand Heathrow, and make sure that Heathrow’s power systems are fit for purpose.
Alarmingly, the energy system operators, including National Grid, were not aware that Heathrow was critical national infrastructure and did not understand the impacts of the interruption to one of its power supply points. This lack of joined-up thinking and awareness across critical sectors is a grave concern, so I hope that the Government will ensure that energy network operators are fully aware of all the critical national infrastructure customers that they have and the impacts of potential supply operations. Will a mandatory cross-sector communication and operation protocol be established to help resolve these problems? The critical national infrastructure people and the power supply people need to be talking to each other. That this really has to be resolved is one of the key things to come out of this.
Further, what concrete steps will the Government take to mandate a comprehensive review of all the substations to make sure that they fit modern design standards and are sited appropriately? I know the Minister is in conversations with National Grid and with Ofgem. I welcome the commitments in the Statement before us today, but when do the Government expect the Ofgem report to be published, and how will the Minister and the Government further update this House once that has been completed? If further National Grid failures come to light, how will those be resolved, and how will National Grid be held to account if further backlogs of maintenance come to light?
I welcome the inclusion of transformers. I note that there is a 12- to 24-month wait for these things. They are crucial to our transition to net zero, so I welcome that that was done. I call on the Government to do more to update Parliament on the transition to net zero and to produce an annual report on our energy resilience and our transition to net zero.
Finally, this is a valuable learning opportunity, but for the Government to learn, this report needs to not sit on a shelf. We have had other reports about energy resilience, and we have had Mighty Oak, so can the Minister reassure me about the actions the Government will take to ensure that lessons are learned and actions are taken, across the sectors, to improve communication and improve our resilience? We all know that if this stuff goes wrong, the lights go out for everybody and that causes problems, so we do need to act on these things, but I thank the Minister for repeating the Statement.
I thank noble Lords for their questions and comments. We have never had a blackout in this country in the lifetime of the national grid. We are very proud of the resilience of the grid. We had this incident at Heathrow, but the number of problems like that is very small, and we are going to learn from those mistakes.
The noble Earl asked whether anybody will be punished for this. It is the responsibility of Ofgem, the independent energy regulator, to determine whether the national grid was in breach of any of its licence conditions and to take appropriate action. Based on NESO’s findings, Ofgem is opening an official enforcement investigation into the grid to consider any possible licence breaches relating to the development and maintenance of the electricity system at North Hyde. We are on to that and will report back once we know where we are.
I do not have the figures on the maintenance backlog, but I will write to the noble Earl with whatever information we have. There will be an audit of the other substations as part of this review, especially those that date back to 1968, to see whether they are still suitable for the task they have to do.
There were questions about long-term resilience. I mentioned that a resilience statement on critical infra-structure was made today. We take this very seriously. I think this country is a world leader in delivering the development of the critical national infrastructure knowledge base and the UK Government have a world-leading tool that creates an interactive map of all CNI in the UK. This helps the UK Government understand vulnerabilities over the 13 CNI sectors, which include energy, water, nuclear, the chemical industry, et cetera. We are taking this very seriously, not just as a Government but across the nations and across every department. We need to get this right. Whenever anything like what happened at Heathrow happens, we need to learn from it.
There were a couple of general points about net zero, energy security and China. On China, I understand the noble Earl’s comments, but foreign involvement in critical national infrastructure undergoes the highest levels of scrutiny. My department works across government to monitor and guard against any potential security risks in the energy sector and its supply chain. The integrated review refresh talked about having a positive trading relationship between the UK and China and we continue to recognise the importance of trade and investment with China. We are investing £300 million into the supply chain on solar panels, which the noble Earl mentioned, and the turbines we use in this country are manufactured in the West, not in China.
As a general point on energy security, I would have thought that the best way to achieve it is surely to have home-grown energy. That is why it is important that we go ahead and achieve net zero and try to achieve clean energy by 2030, to make sure that we are not reliant on international markets and fluctuating oil and gas prices but can rely on something home-grown that we know will be there for the country.
I thank the noble Lord for his question. We welcome Unite’s continued engagement in the long-term clean energy future of the site, and long may that involvement continue. The Prime Minister is committed to creating many more green jobs. The Government share Unite’s ambition to secure a viable, long-term future for the site, which is why the National Wealth Fund stands ready to invest £200 million once an investable proposition has been identified, which could include sustainable aviation fuel.
My Lords, on these Benches, we believe in a just transition, and I know that the Government do too, but, more broadly, what action are this Government taking to be proactive and not reactive in this space? The truth is that a blizzard of ideas, policies and proposals, just coming too late, do not work to save the jobs. It is important that we help those people to make sure that they have a living and that we do not sacrifice workers. Can I ask the Government to do more in assessing risk?
I welcome that question and agree with the noble Earl. If we look at the oil refinery industry, we see that refineries that are doing well are investing in the future; for example, looking at sustainable fuels. The Prax refinery unfortunately went into insolvency at the beginning of the week, but the refinery across the road, Phillips 66, is doing really well, because it is doing exactly what we want to see, which is investment in sustainable fuels for the future.
My Lords, these regulations were laid before the House on 23 April and were debated and agreed by the House of Commons on 20 May. I am most grateful for the opportunity to join the Grand Committee’s proceedings.
Before outlining the provisions made by this draft instrument, I will briefly provide some context. The DESNZ Offshore Petroleum Regulator for Environment and Decommissioning—OPRED—minimises the impact of the offshore sector on the environment by controlling air emissions and discharges to sea and by reducing disturbances over the life cycle of operations, from seismic surveys through to post-decommissioning monitoring. OPRED recoups the eligible costs of its regulatory functions from industry in the offshore oil and gas sector—which I shall refer to as the offshore sector—rather than from the taxpayer.
OPRED’s recoverable costs are covered in two ways: first, by using regulations that are covered by the fees regulations; and, secondly, by five charging schemes that do not require legislative change and will be amended administratively. OPRED’s average annual fees income is about £6.7 million and is recovered from around 100 companies. Currently, the fees that it charges are based on hourly rates of £201 for environmental specialists and £104 for non-specialists. Environmental specialists are technical staff who carry out the functions of the Secretary of State and non-specialists are support staff.
I turn to the details of this instrument. The current hourly rates have been in force since June 2022. Having reviewed the cost base, OPRED concluded that the existing rates need revising to reflect today’s costs for regulatory services. The fees regulations will therefore amend the charging provisions by increasing the existing hourly rate for environmental specialists to £210 and increasing the hourly rate for non-specialists to £114. This will allow OPRED to recover its costs but not to make a profit.
OPRED’s fees are determined by adding together the recorded number of hours worked per person on cost-recoverable activities, multiplied by the hourly rates for both environmental specialists and non-specialists, respectively. The new hourly rates were approved by His Majesty’s Treasury in December 2024 and calculated in line with the Treasury’s Managing Public Money guidance. They cover the expenditure on all resources used by OPRED to support its activities—for example, staff salaries, accommodation, IT and legal services.
There is no formal requirement to consult on the proposed changes. However, OPRED informed the offshore sector of the planned revisions to the hourly rates in February 2025, and no representations were received. OPRED’s fees regime guidance will be revised to reflect the new hourly rates.
I conclude by emphasising that the revisions to the hourly rates introduced by the fees regulations will allow OPRED to recover the eligible costs of providing regulatory services from those who benefit from it, rather than passing those costs on to the taxpayer. I beg to move.
My Lords, we are in favour of and support these proposed changes. The original regulations allowed the Department for Energy Security and Net Zero’s Offshore Petroleum Regulator for Environment and Decommissioning—OPRED—to recover the eligible costs of providing regulatory services from the offshore sector rather than the taxpayer. It is entirely appropriate that those who benefit from these services bear the associated costs.
The regulations before us simply propose to increase the hourly rate for offshore workers: for environmental specialists from £201 to £210, and for non-specialists from £104 to £114. As the Minister said, the current rates have been in force since June 2022 and these regulations have been updated in the past. OPRED has reviewed its cost base and concluded that these revised rates are necessary to reflect today’s costs for regulatory services, calculated in line with His Majesty’s Treasury’s Managing Public Money guidance.
I have had a chance to look through the statutory instrument, the methods used to calculate the costs and the chargeable hours calculations, and they all look fine to me. This is basically an inflationary upgrade, and we are happy to support it to ensure that people who fulfil these specialist, vital jobs are adequately recompensed for their work. I made the mistake of looking at the debate in the other place on this, and I was a little surprised that a simple fees increase managed to be described as ideological and destructive madness driving us closer to economic decline. I wish to make it clear from these Benches that nothing could be further from the truth.
Since we are here, I will ask the Minister a couple of very quick questions. The changes are minor. I recognise that there was no need to consult this time, that industry was informed and that there were no responses, but can I confirm that there is a process for consultation if there are larger changes in future? I notice that a lot of micro and minor industries are associated with this, so will the Minister confirm that, as far as the Government are concerned, there is no cumulative impact of such fee increases on them? I assume that there is not, but I take the moment to check. However, these Benches fully support this basic upgrade in people’s wages.
My Lords, this may appear to be a narrowly focused measure but it speaks to some wider strategic choices being made—or not being made—by this Government on energy, the environment and industry. It revises the fees charged by OPRED for its regulatory oversight. The current fees have been in place for a while and are being updated in line with revised cost assessments and Treasury guidance for full cost recovery, with the new rates being £210 for specialists and £114 for non-specialists, with the aim of ensuring that the industry, rather than the taxpayer, bears the cost of its own regulation. We on these Benches accept the principle that the polluter pays, and we recognise the importance of cost recovery where it is applied fairly and transparently.
However, although we do not oppose the principle of updating these fees, there are several areas where greater clarity from the Government would be welcome in the broader sense. First, there is strategic clarity. This comes at a time when the Government are shutting down the North Sea oil and gas industry. A windfall tax remains in place and the long-term future of the basin is uncertain. In this context, even modest fee increases risk sending mixed signals. How do these changes align with the Government’s stated ambitions on energy security, net zero and investment in our own homegrown energy?
Secondly, there is investor confidence. The Government may argue that this is a minor adjustment but, for businesses already navigating a complex mix of fiscal and regulatory pressures, predictability matters. Offshore Energies UK has said that the sector could invest up to £200 billion this decade across offshore wind, hydrogen and carbon capture. Can we be confident that the regulatory framework and its associated costs are evolving to match that ambition?
Thirdly, there is the role and future of OPRED. OPRED was designed to regulate the offshore hydrocarbons industry, yet its remit is expanding to include the regulation of net-zero activities, such as offshore wind, hydrogen storage and carbon capture. How will OPRED be restructured and resourced to meet this broader role? Are the cost recovery mechanisms fit for that future?
Fourthly, on fairness across the sector, the Government invoke the “polluter pays” principle, and rightly so, but is this principle being applied consistently across the offshore space? Are our non-hydrocarbon actors, such as offshore wind developers or electricity interconnectors, contributing equitably or is the hydrocarbon sector being left to shoulder a disproportionate share of the regulatory cost?
Fifthly, on employment and skills, the offshore energy sector supports approximately 120,000 jobs across the UK. To preserve and grow the workforce through the energy transition, we need continuity not just in investment but in regulation. What assurance can the Government give that the fee policy is not operating in isolation from the broader industrial skills strategy?
Finally, on transparency, the Explanatory Memorandum notes that OPRED reviewed its costs and consulted with the industry in February 2025 but no responses were received. Should this be interpreted as assent, or does it point to confusion—even disengagement—from an industry uncertain about what to expect from the Government?
In conclusion, although the SI may be modest in scope, it prompts important questions about how we fund and structure environmental regulation in a rapidly evolving energy system. We on these Benches do not oppose the measure, but we urge the Minister to place it within a broader strategic vision—one that balances accountability with long-term investment, climate ambition and energy resilience. I look forward to hearing the Minister’s response.
That is a good question, and the Government keep this under review at all times. We find ourselves in very difficult times; since the fuel crisis in 2022, we have been dealing with a very difficult situation, and this is under review all the time.
My Lords, some 16% of our energy bills are made up of levies, which the MCS Foundation has found could be costing bill payers some £300 per year. Does the Minister agree with the call of Make UK, Energy UK and the Climate Change Committee for policy actions to remove levies from electricity bills to better incentivise people to switch to low-carbon energy? What actions are the Government taking on this?
There is a levy for the warm home discount, but that works out at only £1.50 a month per household, which is not that high considering how many people it takes out of fuel poverty.