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

Earl of Effingham Excerpts

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.