Draft Electricity Capacity (Amendment) (No. 2) Regulations 2025

Michael Shanks Excerpts

Wednesday 9th July 2025 General Committees

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

I beg to move,

That the Committee has considered the draft Electricity Capacity (Amendment) (No. 2) Regulations 2025.

It is a pleasure to serve under your chairship, Mr Vickers. These regulations were laid before the House on 3 June 2025, and they make technical improvements and changes to the capacity market scheme—the Government’s main tool for ensuring security of supply in Great Britain. We know that to achieve clean power by 2030, reform of the electricity market is critical. To paraphrase the clean power action plan, we must:

“Reform the capacity market to provide clear and viable routes to decarbonisation for unabated gas, enable low-carbon flexible capacity…and incentivise investment into existing capacity.”

Before I outline the provisions in these regulations, I will briefly provide some context. The capacity market was introduced in 2014, and it is designed to ensure that sufficient electricity capacity is available to meet future predicted demand, to maintain the security of our electricity supply. The capacity market is a well-established and technology-neutral scheme in which existing and new build electricity capacity receives revenue based on the capacity provided. Participants secure agreements through auctions, which require them to make capacity available at times of system stress. It is our main tool to ensure security of supply, and it provides the right incentives for all forms of capacity to be available when needed most. It covers generation, storage, consumer-led flexibility and interconnection capacity.

Through capacity market auctions, which are held annually—one year and four years ahead of delivery—we secure the capacity needed to meet future peak demand under a range of scenarios, based on advice from the National Energy System Operator. Since its introduction in 2014, the capacity market has contributed to just under 20 GW of new flexible capacity needed to replace older, less efficient plants as we transition to net zero.

To date, the capacity market has been successful in ensuring that Great Britain has adequate electricity capacity to meet demand, and it continues to be required to maintain our security of supply and to provide investor confidence. To ensure that the capacity market continues to function effectively, we regularly make adjustments to the implementing legislation based on our day-to-day experiences.

The draft instrument makes technical improvements and changes to nine regulations to support the functioning of the capacity market, and they have been identified and explored through consultation. The changes will ensure that the capacity market regulations remain clear for market participants and that the legislation remains up to date, to enable us to better deliver the security of supply mechanism.

The draft instrument does that by revoking several expired provisions of secondary legislation relating to the scheme, including references to: transitional auctions, which are no longer applicable; the temporary standstill period, which occurred in 2019; and the time-limited relief given to scheme participants in relation to coronavirus. It will also introduce a new process to establish a decarbonisation pathway for unabated gas plants currently in long-term capacity market agreements. That will allow gas plants to exit their agreements without penalty in order to transfer to a dispatchable power agreement, facilitating conversion to gas-fired power with carbon capture and storage once the technology is available. That will better align the capacity market with our clean power objectives, and it will provide gas plant operators with a future route to decarbonise their assets.

The Government carried out two public consultations on this instrument. The first considered reforms to the capacity market to strengthen security of supply and enable flexible capacity to decarbonise. The second considered reforms to modernise the capacity market and improve the participation and delivery assurance of consumer-led flexibility. Both consultations were published towards the end of 2024. Respondents were broadly supportive of the instrument’s proposals. We have also made a number of technical amendments to the capacity market rules that support the regulations, which were laid before the House on 3 June.

This draft instrument introduces a number of technical provisions and changes to enable the continued efficient operation of the capacity market so that it can continue to deliver on its objectives. These reforms will be critical if we are to achieve clean power by 2030. They will improve security of supply by ensuring the modernisation of the capacity market and making legislation as clear as possible for all scheme participants. We need clear routes for the decarbonisation of unabated gas and for the rapid acceleration of low-carbon, flexible capacity. And today, with these regulations, we take another step towards that.

I commend the regulations to the Committee.

--- Later in debate ---

[Michael Shanks]

I will not detain the Committee for long, but I should put on record that the shadow Minister was on the judging panel for the aforesaid awards. I am not quite sure what that says for either of us, frankly, but I thank him for whatever role he played in trying to prevent me from getting the award. It clearly did not work.

I welcome the shadow Minister’s broad support for the regulations, and I welcome his support for building a cleaner energy system, which I have not heard from the Conservative party for some months—I am glad he found his old script from a year ago and is repeating it in this place again, at least up to the word “however.”

Of course, the shadow Minister is right that security of supply is critical, as it is for any Government of any political party. These regulations are part of ensuring that security of supply into the future, and they are part of a series of measures we are taking to build infrastructure for the future, so that we remain resilient long into the future. That investment is important.

The shadow Minister talked about pricing, and I will pick out two points. First, the clean power mission is about reducing the current volatility in the price of gas. The Conservatives supported that move, and I credit them for constructing quite a lot of the renewables we have in the country, but they have since changed tack. At some point, they need to recognise that volatile gas prices are what is causing bills to increase so substantially, and that things like contracts for difference give long-term certainty on consumer bills and bring down the system cost, but the Conservatives oppose those things.

Secondly, capacity market costs have increased over time, not just in the past year but more generally. They have been impacted by a number of factors outwith anyone’s control when they were introduced. But overall, this change will bring about an overall benefit. It is important that we plan the power we might need one year or four years in the future and, of course, the cost of not having a capacity market would be a significant risk to the robustness of our electricity system.

Finally, and more broadly than these regulations, curtailment payments are deeply disappointing to everyone, but the answer is to plan the system strategically so that we build things in a way that makes sense. Secondly, of course, we need to build grid infrastructure to bring the cheaper power to consumers, and to reduce that curtailment payment cost. I hope we will see support from across the House on those questions of building new network infrastructure, although I suspect we will not from the Conservatives.

I warmly welcome, as I always do, the shadow Minister’s wholehearted support for the work we are doing in the Department for Energy Security and Net Zero, and long may that continue. I commend these regulations to the Committee.

Question put and agreed to.

Fossil Fuel Advertising and Sponsorship

Michael Shanks Excerpts

Monday 7th July 2025 Westminster Hall

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

It is a pleasure to serve under your chairmanship, Mr Twigg, for my first petitions debate, which are a great innovation in parliamentary procedure. Like my hon. Friend the Member for Burton and Uttoxeter (Jacob Collier), I thank everyone who signed the petition. I do not think that I have been in a Westminster Hall debate with so many people in the Public Gallery. That is fantastic to see, and I thank them for being here.

I join the shadow Minister, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), in his comments about the Piper Alpha disaster, the 37th anniversary of which was yesterday. It was the worst oil disaster in history, in terms of human lives lost, and it reminds us just how dangerous some of the work in the North sea is. It also reminds us of the importance of the culture of safety, which has changed beyond recognition since that disaster. This is a useful moment to pause and reflect on the lives that were lost.

This is an important debate, and I praise my hon. Friend the Member for Burton and Uttoxeter for his excellent introductory speech. As a Member of Parliament, it is not always easy to give a balanced speech, but he attempted to put forward both sides of the argument very strongly, and I give credit to him for doing so.

I also thank other hon. Members who have contributed to the debate and raised a number of points. My hon. Friend the Member for Stroud (Dr Opher) brought his extensive medical experience to the debate. He rightly spoke about the significant impact that emissions have on people’s health, and about why climate change is a public health crisis as much as an environmental one. I also thank the hon. Member for Bristol Central (Carla Denyer) for her commitment to this issue. What she does in her spare time will now be in Hansard, so I think Wikipedia will be updated—there is no way out of that; it is on the record.

I recognise the strength of feeling on this incredibly important issue; the 100,000-odd signatures on the petition that triggered the debate underline that point. Before I address the specific points in the petition, however, I want to be absolutely clear that the Government are committed to tackling climate change. In fact, the Prime Minister said recently that that is “in the DNA” of the Government. We know it is an urgent threat to life—an existential crisis for our planet—and as I have said on numerous occasions, it is no longer a theoretical future threat, but a very present reality. We do not have to look far around the world to see examples of that.

Even if we did not accept all that as a huge reason to take action, we should recognise that the huge opportunity that swapping fossil fuels for clean, home-grown energy provides is much greater than just tackling the climate crisis: it can deliver our energy security in an uncertain time for our world and create tens of thousands of new jobs. It is also the industrial opportunity of the century. That is why one of the Prime Minister’s five key defining missions in government is to make this country a clean energy superpower with clean power by 2030, accelerating towards net zero. It is also why the Prime Minister has set one of the most ambitious nationally determined contribution targets in the world—to reduce all greenhouse gas emissions by at least 81% by 2035—and a few weeks ago my right hon. Friend the Chancellor set out the most significant investment in home-grown clean energy in British history.

Let me be clear. The Government are committed to this transition because it is the right thing to do for our energy security and to tackle the climate, but we will succeed in this mission only if we bring people with us. The moment that people start to feel that this is something being done to them, not with them, is the moment when we lose the battle. The shadow Minister rightly pointed out that we have been on this transition for a long time now. We have halved emissions since 1990 because of the consensus between Governments of different persuasions. That consensus, as many people will not have failed to notice, has now fractured, which is a great shame.

For us to win the political argument, we have to bring people with us. Instead of banning and blocking, our emphasis needs to be much more on empowering people to make informed choices. As the Prime Minister said before the election, after a period in which Government seemed to tread quite heavily on all our lives, part of this Government’s mission is to deliver for the people of this country, but to tread a little lighter on people’s lives. In this space, that means ensuring that everyone has access to accurate and trustworthy information about the climate crisis and the energy they use and the options available to them to be part of the transition.

In that context, I turn specifically to the petition. The UK has a robust regime in place to regulate the content and targeting of advertising through the Committee of Advertising Practice, which sets the codes that are upheld, and through the Advertising Standards Authority, which enforces the codes. The Government are not involved in the codes or in any of the investigations or enforcement delivered by the Advertising Standards Authority. In 2021, those bodies launched a climate change and environment project to respond to the ongoing climate crisis and ensure that environmental claims made in advertising are not misleading or irresponsible. Those findings have informed their updated guidance on advertising.

As the Government’s response to the petition sets out, we do not currently have plans to go any further on the guidance and ban or restrict fossil fuel advertising. However, that is not to say that we do not recognise that the climate crisis, as I have already outlined, is the greatest long-term global challenge we face. To address that, we need a legal framework in place to help us reduce our emissions, which will contribute to reducing our reliance on fossil fuels.

[Carla Denyer]

I thank the Minister for his patience while I checked a fact. A minute or so ago, he used the phrase “informed choice” to defend why he is not planning to ban advertising for fossil fuels. Is he aware that that exact phrase, “informed choice”, was used by the tobacco companies to campaign against the ban on tobacco advertising? I am reading from a memorandum by British American Tobacco that was submitted to Parliament in 2000.

[Michael Shanks]

I suspect that if we go through all the words that have ever been spoken inside and outside this place, we might find two words that go side by side quite often. In answer to the hon. Lady, no, I do not think that that is the case at all. She makes a persuasive argument, but in my view it is not the argument that applies in this particular case, which I will outline if I can make just a little more progress.

To come to the broader point, it is important that people have the knowledge and information before them to make informed choices on personal decisions, particularly on installing things in their own home. However, as a Government, we have a responsibility to share factual information about the state of the climate. That is why this Government frequently talk about the importance of the climate crisis; I think I have done so three times already in this speech. I am not seeking to pretend that there is not a climate crisis, and I do not think we have hidden from that fact at all.

I also want to talk about the path that the UK is currently on. We need to make a broader argument to the public that goes beyond banning advertising by certain companies. Collectively, we have a responsibility to show the opportunities presented by this transition, counter to much of the misinformation and disinformation that is being put about, including by Members of this House.

The latest report by the Confederation of British Industry shows that the net zero economy is growing three times faster than the wider economy, so there is an economic argument that we have to make. Since we came into government last July, more than £40 billion of private investment has come into the clean energy industries. We believe that the best way to build on that success, bring the public with us and create a convincing argument that this is the right route is by focusing on the economic and social benefits of net zero.

We have therefore been working with industry to explore how we can reduce emissions from high-carbon products, including voluntary eco-labels that help consumers to make different purchasing decisions. We are continually listening to the private sector, local government, trade unions and civil society. That is why we relaunched the Net Zero Council, and we will also publish our upcoming public participation strategy. At the same time, we are doing everything we can to slash emissions while building a more secure and stable future for our country.

The shadow Minister, in customary fashion, reeled off a set of political lines about why this is the wrong choice for us as a country, despite the fact that he believed in it last year when he was delivering speeches from the Government Benches. The truth is that actions speak louder than words, which is why in the past year we have not just said that we are committed to the clean energy mission and to delivering action on climate change; we have delivered.

We ended the onshore wind ban within 72 hours. We set up Great British Energy, the first publicly owned energy company in 70 years. We consented enough clean power for 2 million homes by approving applications that had languished on Ministers’ desks. We kickstarted the carbon capture industry. In the past few weeks, the Chancellor has also announced a significant investment of more than £60 billion in home-grown clean energy, including new regional hydrogen networks for transport, storage, industry and power. We also published our industrial strategy, which places clean energy right at the heart of industrial renewal over the next 10 years.

The wider context of climate action is important, and we want the UK to be a world leader in this space. That is why in 2008, when my right hon. Friend the Energy Secretary held the same role, we backed the Climate Change Act 2008, making the UK the first country to introduce legally binding net zero emissions targets. Since then, we have overachieved against the first, second and third carbon budgets, and we will be setting carbon budget 7 by June 2026, in line with our statutory duties.

[Siân Berry]

Before the Minister winds up, I want to ensure that he tackles the question of sponsorship, which is a key part of the petition. I think that focusing only on advertising ignores the lack of choice that people have if their much-loved sports team, the gallery they want to visit or the theatre company that they support is sponsored by a fossil fuel company. The Minister needs to reflect on why so many people signed the petition, having been put in an invidious position by these sponsorship deals.

[Michael Shanks]

It goes back to what I said earlier. I take the hon. Lady’s point, and I take seriously the number of people who engaged with the petition. I also reflect on the number of organisations and activities across the country that rely on sponsorship. I do not think that we should discount that so easily, because we have incredibly important organisations that may well collapse without some of that sponsorship.

There is a balance to be struck here. It is incumbent on Government to set the tone for what we expect in climate action. It is right and proper to hold private companies accountable where they share misleading information, but where they are supporting organisations that rely on their funding, I am afraid I struggle to say that we should simply withdraw that funding and, with it, the organisations that rely on it. As someone who has run a charitable organisation in the past, I can tell the hon. Lady that there is not an abundance of cash out there in alternatives.

This is about a balance, but I take the hon. Lady’s point on board, and we keep these things under review, as do other Departments that have a closer relationship with the Advertising Standards Authority and deal with questions on such matters. As I say, this is about us treading a little lighter on people’s lives and making the case for taking collective action on the climate crisis, but not being in the business of banning things.

I want to touch briefly on a point that the shadow Minister made, which is not often raised in these debates, about the just transition for the oil and gas industry. It is important to recognise that the industry has long been in transition, but there are many thousands of workers who rely on it for their livelihood and there are whole communities that depend on it for employment and investment. Although it is right that we are looking to the future of the North sea—a future that will include oil and gas for many decades to come, but will inevitably move towards other technologies, including carbon capture, hydrogen and offshore wind—we need to ensure that we are delivering the transition on the principle of fairness. Fairness for households means protecting bill payers from the volatility of fossil fuels, but in the North sea, fairness also means ensuring that workers and communities have a long-term, prosperous plan for their future.

The North sea will play a critical role in Britain’s energy future. For nearly 60 years, people have worked in incredibly difficult circumstances in the North sea, with workers, businesses and communities helping to power our country with oil and gas, and they will do so for decades to come. Although oil and gas production from our own shores will play an important role, as we drive towards clean energy, the North sea gives us an opportunity to show new leadership. That is why in our consultation earlier this year we outlined the role that we want to see the North sea playing long into the future.

I reiterate a point that I made at the beginning: this is an incredibly important subject and an important moment for us to say that the action needed on climate change is not just a question of banning advertising; it is about serious investment in how we push towards our clean energy transition. The Government are playing an active role in driving that forward, reducing emissions right across the country, creating good economic opportunities as part of that, demonstrating global leadership on climate action and delivering opportunities to every part of the country.

We are bringing people with us on this journey, so that when those who stand up and say that the climate crisis is not a priority for us, or that we should not be moving to net zero because it might be too difficult, we can say that we are delivering the economic and industrial opportunities of the 21st century. That is how we bring people with us and deliver on our transition for everybody. It is also how we deliver the action needed to tackle the climate crisis. That is why, although this petition is an important conversation, we think there are already measures in place to tackle many of these issues. They may well need to go further, and that is for the bodies responsible to do themselves. We think that the action needed from Government is to drive forward this transition and to deliver jobs, energy security and climate leadership, and that is what we will continue to do.

UK Onshore Wind Industry

Michael Shanks Excerpts

Friday 4th July 2025 Written Statements

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

I am tabling this statement to inform members of the publication of the onshore wind taskforce strategy and updated community benefits guidance for onshore wind in England.

The Government are committed to delivering a clean, affordable and secure energy system by 2030, and accelerating progress towards net zero. Onshore wind is one of the cheapest electricity generation technologies and will play a crucial role in delivering our decarbonisation goals. Having more low-cost renewables like onshore wind reduces the UK’s exposure to volatile global fossil fuel prices, which protects consumer energy bills against future price shocks. Onshore wind is therefore vital to boost Britain’s energy independence, protect bill payers, support high-skilled jobs and tackle the climate crisis.

Making Britain a clean energy superpower is one of the Government’s five missions. The clean power action plan, published in December 2024, set a target for 27 to 29 GW of onshore wind by 2030. Today’s publications are a significant step forward in delivering the 2030 mission. This mission is about driving economic growth as well as clean power, and industries such as onshore wind present a significant economic opportunity. For example, by 2030 up to 45,000 UK jobs could be supported by the onshore wind sector.

Onshore wind taskforce strategy

The strategy is the main output of a joint Government and industry taskforce established to identify and agree essential actions to mitigate barriers to deployment across the UK and capitalise on the economic benefits. The taskforce was set up following the removal of the de facto ban on onshore wind in England in July 2024 to streamline and maximise the deployment of onshore wind.

This is the Government’s first ever dedicated strategy for onshore wind, committing to 42 actions across planning, grid, workforce, financing and aviation. This will ensure we quickly unlock onshore wind deployment, deliver on the economic benefits, and make progress towards our clean power mission. Highlights of the onshore wind strategy include:

New actions to ensure the planning system is ready for the first English projects to come through the pipeline since the removal of the de facto ban, which severely limited deployment.

Ambitious actions to address interference issues between onshore wind turbines and civil and military aviation systems, to help get onshore wind projects moving.

A range of new commitments, alongside industry, to build the evidence base to support future onshore wind supply chain and skills interventions.

Today we are also announcing the establishment of an onshore wind council to ensure we deliver on the critical actions in today’s publications and continue the excellent collaboration with industry.

Guidance on community benefits for onshore wind in England

Government want to ensure that communities directly benefit from our 2030 goals, and today we have published updated voluntary guidance on community benefits for onshore wind in England, ensuring developments have a lasting positive impact on communities. The guidance includes:

Best practice models for benefits schemes such as community benefit funds, local electricity bill discounts and shared ownership.

Support available to communities when co-designing and administering funds, summarising best practice engagement principles.

A resource kit for communities with detailed case studies and example documentation.

The guidance sets expectations that developers pay community benefits of £5,000 per megawatt of installed capacity per year for the operational lifetime of the project. This would mean a 25 MW wind farm would deliver £3.75 million of funding for communities on local initiatives across a 30-year operating life. If we deliver 29 GW of onshore wind by 2030, we could unlock around £70 million of additional private investment in our rural towns and villages every year.

Scaling up onshore wind generation will be critical to the success of the Government’s clean energy mission. Today’s publications will give a boost to the onshore wind industry and local communities, reduce our dependence on volatile fossil fuels, and improve our energy security.

[HCWS778]

North Hyde Substation Outage Review: NESO Final Report

Michael Shanks Excerpts

Wednesday 2nd July 2025 Written Statements

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

In March 2025, the Secretary of State for Energy Security and Net Zero commissioned the North Hyde substation review, an independent report delivered by the National Energy System Operator. The report was commissioned following a large fire breaking out at the substation, disrupting power supply to over 70,000 customers including Heathrow airport. While power was restored quickly, there were significant secondary impacts to the aviation sector due to the associated closure of Heathrow airport. NESO’s interim report was published in May 2025, and the final report has now been completed and published on NESO’s website.

The review aimed to identify lessons to be learned and actions to take forward for the prevention and management of future power disruption events, and lessons for Great Britain’s energy resilience more broadly. The actions recommended by this review address concerns under the three pillars: resilience of energy infrastructure, response and restoration of energy infrastructure and enhancing the resilience of critical infrastructure to energy disruption, as set out in the terms of reference published on gov.uk.

The report has highlighted key areas for substantial improvement across energy infrastructure management and maintenance approaches, and across the sharing of information and understanding between energy network operators and connected commercial customers. It also has options for improving the power resilience of other critical sectors. These actions will drive improvements to Great Britain’s energy resilience.

The majority of recommendations address improvements to be made across all parts of the energy sector, regardless of their involvement in the incident at North Hyde. In collaboration with NESO, Ofgem and other partners, my Department will ensure the delivery and implementation of these energy sector recommendations. The report findings are also applicable to wider Government policy on energy resilience—both in the energy sector and more widely. My Department, working across Government, will urgently consider the findings and recommendations set out by NESO and publish a response to the report in due course.

[HCWS770]

Heathrow Substation Outage: NESO Review

Michael Shanks Excerpts

Wednesday 2nd July 2025 Commons Chamber

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

With permission, Mr Deputy Speaker, I would like to make a statement on the publication of the report from the National Energy System Operator following its review into the fire at the North Hyde substation on 20 March. NESO’s review was commissioned jointly by the Energy Secretary and Ofgem in the immediate aftermath of the fire, which disrupted power supply to over 70,000 customers, including, of course, Heathrow airport, which closed operations on 21 March. While power from the grid was restored quickly to customers, there were significant secondary impacts to the aviation sector due to the associated closure of Heathrow airport.

My right hon. Friend the Secretary of State for Transport made a statement to the House at the time, where she committed that the Government would update the House as soon as the relevant investigations had concluded. That is why I am making this statement before the House on the day that NESO’s report has been published.

Before I update the House on the key findings of the review, I reassure hon. Members that the Government are taking action in response to the report. We will urgently consider the findings of the review and have committed to publish a Government response that will set out a plan on how the issues identified will be addressed in order to improve our energy resilience.

Having reviewed the report, I am deeply concerned—I am sure hon. Members will agree—that known risks were not addressed by National Grid Electricity Transmission, a key operator of our electricity system. NGET’s own guidance is clear, and based on the elevated moisture samples that NGET took in 2018, the asset should have remained out of service until mitigating actions were put in place, or the asset should have been carefully monitored until it could be replaced. NGET failed to take action appropriate to the severity of the risk at North Hyde. That was most likely the cause of the catastrophic fire on 20 March.

I spoke to NGET this morning and made it clear that the findings are unacceptable and that action must be taken to ensure that maintenance work on critical assets is prioritised appropriately. Fire suppression systems must not be left inoperable.

I am pleased to see that the regulator is taking swift action in response to the findings, announcing today that it is opening an official enforcement investigation into NGET. Ofgem will consider any possible licence condition breaches relating to the development and maintenance of National Grid Electricity Transmission’s electricity system at North Hyde. I spoke with Ofgem yesterday to express my support for that investigation and the planned audit of National Grid’s critical substation assets. That will be essential to understanding any other potential risks on the network and ensuring that those are being mitigated appropriately.

The report also highlights that North Hyde substation, which was built in 1968, is subject to different design standards than newer sites that were built during the 1990s. There was not sufficient distance or a physical barrier between two transformers at North Hyde, which allowed the fire to spread. It is essential that we consider the potential risk created by differing design and standards across the electricity network, particularly as we move towards clean power 2030. That will be a key focus of the Government’s response.

My Department and Ofgem will hold NGET to account for its role in the incident at North Hyde, but the extent of the impact of the incident on Heathrow operations must also come into focus. Heathrow Airport Ltd commissioned its own independent review, the Kelly review, which was published on 28 May and investigated the circumstances that led to the airport ceasing operations for most of 21 March. The review highlighted several recommendations to further improve the resilience of the airport’s internal electricity network. Those align with NESO’s findings that there are options to improve Heathrow’s own power resilience, which is the responsibility of Heathrow and not National Grid, and reduce the risk of further disruption at this scale.

Heathrow benefits from three separate supply points to the electricity network. It is rare for any site to have such a resilient connection to the network. As no energy system can ever be free from disruption, this is an opportunity for Heathrow to consider investing in its internal electrical distribution network to take advantage of those multiple supply points. I welcome the continued effective collaboration between Heathrow and energy operators as part of the review. My Department and the Department for Transport will work to ensure that that collaboration continues across those critical sectors.

Although such incidents are rare and the UK has a robust and resilient system, there are always wider lessons to be learned. The majority of recommendations made by NESO in its report suggest potential improvements that could be considered by operators across the energy sector. In collaboration with NESO, Ofgem and other industry partners, my Department will ensure the delivery and implementation of those energy recommendations. However, the report findings are also applicable to wider Government policy on resilience, both in the energy sector and across other critical national infrastructure sectors.

Ensuring the protection and resilience of critical national infrastructure continues to be a key priority for Government, with action already being taken. The Government’s recently published 10-year infrastructure strategy committed to strengthening resilience standards across critical national infrastructure. Further, the Cabinet Office will imminently publish the UK Government resilience action plan, which will articulate Government’s new strategic approach to resilience and is the outcome of the resilience review announced by the Chancellor of the Duchy of Lancaster in this place last year.

My Department is already taking steps to enhance our current approach to the designation of critical national infrastructure in the energy sector. We recently introduced specific licence conditions that give NESO responsibility for data gathering and technical analysis to independently inform the Government’s decisions on the designation of CNI, ensuring our most critical infrastructure in the energy sector is always as resilient as possible. We will work with the Cabinet Office and wider Government to develop a full response to the North Hyde report and set out how we will tackle some of the cross-sector resilience challenges highlighted, particularly given the importance of the energy sector for the continued operation of so much of our critical national infrastructure.

I want to restate that Great Britain continues to have a resilient energy network. Even though incidents such as this are rare, it is essential that we learn the lessons to maintain and, where possible, improve our resilience. The Government response will set out our plans for how we will continue to do so.

I thank NESO for carrying out such a comprehensive review over the past three months. The report shows the value of learning from past emergencies such as this. NESO’s newly established functions in energy resilience will enable Government, the energy industry and the regulator to truly understand whole energy system risks and mitigations, proactively ensuring that Great Britain continues to have a reliable energy supply, which is critical to the whole of society. I commend this statement to the House.

[Mr Deputy Speaker (Sir Roger Gale)]

Before I call the shadow Secretary of State, may I take this opportunity to welcome her back to her place in the House?

[Claire Coutinho (East Surrey) (Con)]

Thank you, Mr Deputy Speaker. I feel older, wiser and significantly more sleep-deprived.

I thank the Minister for advance sight of his statement. I also thank NESO for its rapid work. The report is clear that there have been serious failings by National Grid to fix an issue that it knew about for seven years. The Minister is right; that is unacceptable. What is most important, though, is what happens now.

I have some questions for the Minister. First, who at National Grid made the decision to defer critical maintenance of the transformer in 2022? He said that he would hold them accountable, so how will he do that? He spoke about breaching licence conditions. What are the penalties for doing that and what accountability mechanisms will he use? Secondly, the report says that the North Hyde site did not meet modern standards on physical barriers between transformers. Can the Minister confirm he has asked National Grid to review substations with transformers built before the current standards were put in place? Thirdly, what steps will he take to look at the resilience of our energy system, particularly in the light of the heightened geopolitical risk that we all face?

The key message that we should take from the report on the Heathrow blackout is the importance of critical national infrastructure to our energy security and our national security. In that regard, it is the Secretary of State for Energy and Climate Change who is playing with fire. A week after the blackout hit Heathrow, Spain and Portugal gave us a stark warning of what happens when countries fail to protect their energy security: public transport down, payment systems down and millions of people unable to cook, travel or contact their families. Tragically, people lost their lives. In the case of North Hyde, the blackout affected schools, the London Underground, Hillingdon hospital and 70,000 customers, some of whom had to move out of their homes. That is the price we pay when we do not take energy security seriously. It is not a nice-to-have—energy is a basic need—and yet this Government are putting our energy at risk.

The national security strategy that the Government published just last week included 12 mentions of climate but not a single mention of the risk that China poses to our energy system. Last year, our intelligence services warned that Chinese state-sponsored hackers were working to disrupt and destroy critical infrastructure in the event of conflict, and yet the Secretary of State is rushing to make Britain dependent on Chinese solar panels, Chinese rare earths and Chinese batteries in just five years’ time. We have just seen China limit the export of critical minerals in its trade war with the US. We have seen kill switches found in Chinese inverters. The US intelligence services have warned us about the risk of surveillance devices in Chinese wind turbines.

I first wrote to the Secretary of State eight months ago, asking him to publish an assessment of what his targets mean for our reliance on Chinese imports. He has not even bothered to reply. If the Secretary of State wants to hand over the keys of our energy supply to the Chinese Communist party, he should come to this House and explain why.

We are lucky enough in this country to be surrounded by our own gas fields, but the Secretary of State does not care. This is a man who would rather import gas from Norway, from the very same fields in the North sea that he is banning Britain from using; who is pouring concrete down our gas wells; and who is blocking off any contingency plan that Britain might need in a crisis. I do not say this lightly, but this is a man who is putting our national security at risk. Today we are talking about the first transformer fire in a decade in this country and he did not even bother to turn up. That is the problem. The Secretary of State might prefer to be in Brazil, Baku, Beijing or wherever he is today, but he should be here to explain himself, because as the former head of MI6 said, he is pursuing an energy policy that is “completely crazy” when it comes to national security.

I want clean energy from nuclear, from small modular reactors and from the next generation of British innovation, but first and foremost I want energy that keeps the lights on and keeps bills down. This Government are going to leave us completely reliant on foreign imports: from China, from Norway, from Qatar—from anywhere as long as it is not Britain. NESO and Ofgem will do their work, but the Minister must do his work too. Alongside the work of the North Hyde report, can he confirm that he will come back and update the House on his plans to protect the energy resilience of this country?

[Michael Shanks]

I was going to start—and I will, regardless of the rest of that speech—by warmly welcoming the right hon. Lady back to her place as the shadow Secretary of State. I will miss sparring with my Scottish colleague, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), although I am sure we will still have opportunities to do so. The right hon. Lady might come to miss the lack of sleep at home compared with the noise in this place, but she is very welcome back. She has obviously taken the last few months to write a wrap-up speech on a whole range of issues, and I am glad to give her the opportunity to pontificate here on many of those things, but let me stick to the questions that related to the statement that I have delivered to the House today.

The right hon. Lady asked about the role that National Grid has played. Ofgem has opened an enforcement investigation into this incident to get to the bottom of exactly what National Grid has or has not done, and whether there are possible breaches of licence. That investigation should now take its course. There are clearly serious questions to answer, and that is exactly the point that I put to National Grid today. I have asked for an immediate response on what action it is taking and for assurances that there are no further maintenance backlogs that it has not acted on, and I expect that by the end of this week. Ofgem has also instructed a wider audit of maintenance work across the energy system, which will identify if there are any similar issues. On the point about being held accountable, clearly I am going to wait for the outcome of Ofgem’s investigation. It is the responsibility of Ofgem as the regulator to determine whether National Grid is in breach of any of its licence conditions and what the appropriate action should be if it is. I will wait for those findings to come through.

The right hon. Lady raised an important point about the physical barriers. Clearly there are differences because the time at which some of our infrastructure was built and the different standards that were in place at different times. We need to make a wider review to see what is actually possible with some of this infrastructure; it was not always possible to build to the standards we now expect, but everything that is being built now is being built to the highest standards. I want the same assurances that she has called for: to know that anything that was built previously is safe.

On the wider resilience questions, I am not going to get into a back-and-forward on the frankly quite ludicrous claims that the right hon. Lady made. I hope this is not an indication of the tone we can expect in the years ahead, because there are some difficult decisions for us all to wrestle with. There is the really important question about delivering our energy security in, as she says, an increasingly uncertain world. We are sprinting towards clean power to remove the volatility of fossil fuels from our system. She opposes all of that investment. There is also a critical role to play in upgrading the network infrastructure across the country, which her party also opposes.

There are some really searching questions for the Conservatives—who were, of course, in charge of this infrastructure for 14 years—about their role and what part they want to play. It is easy to shout from the sidelines with accusations. It is far more useful and important for a party that was in government for 14 years and is now the official Opposition to come up with some credible questions about how we deliver the energy system of the future. We are going to get on with delivering it.

[Mr Deputy Speaker (Sir Roger Gale)]

I call the Chair of the Energy Security and Net Zero Committee.

[Bill Esterson (Sefton Central) (Lab)]

It beggars belief that no action was taken after the risks were identified in 2018 at the North Hyde substation. The NESO report highlights a lack of information-sharing internally at National Grid and externally between organisations. It draws attention to the energy companies not knowing that Heathrow had a 10 to 12-hour arrangement for switching supply, and that National Grid did not appear to know that Heathrow was a customer of the substation. It is a matter of immense luck that the explosion and fire took place at 11 o’clock at night and that no one was present; otherwise, this would have been a very different discussion, with people having died. The Minister highlighted the unacceptable lack of action by National Grid. Will he ensure proper oversight and information sharing internally at National Grid and externally between organisations, so that we have safety and resilience in our national energy system, where it applies to critical national infrastructure and beyond?

[Michael Shanks]

First, on the point about joining up, my hon. Friend is absolutely right. The response that I have seen from National Grid identifies that as one of the points it will take away. It will look at information sharing and joining up the data in various systems, and at how to ensure that is followed through on. It is important to say that there is also learning, not just for National Grid but across the energy system, through looking at what other transmission owners do and at what the Government do around sharing information where we can. There is a lot of learning and a lot of recommendations will be taken forward.

On the question of Heathrow, much was identified in the Kelly review, which looked specifically at these operations. On the question of whether there was a single point of failure at Heathrow, the airport is one of the biggest consumers of electricity in the country and one of our most important pieces of critical national infrastructure. It is important that those at Heathrow reflect on this report and take some lessons from it.

The report has shown—this is a lesson for everyone—the importance of investing in electricity resilience and preparing for the worst, even if we think there is a low chance of the worst actually happening. I completely agree with my hon. Friend’s final point: it is in all our interests to spend time, effort and investment in making sure that our energy system continues to be as resilient as possible.

[Mr Deputy Speaker]

I call the Liberal Democrat Front-Bench spokesman.

[Luke Taylor (Sutton and Cheam) (LD)]

This report is an utterly damning assessment of our national resilience, this time through decay but also through a lack of readiness as the climate crisis changes the dynamics, with old equipment operating at higher temperatures just as the loads for climate control and air conditioning are at their peak. The British people will rightly be alarmed that the problem that caused this substation failure was known as long ago as 2018, but there is a much wider point here. Beyond the technicalities of this failure, the resilience of critical national infrastructure has been neglected for far too long.

As an engineer, I came to this place for precisely this reason: we are too short-termist and too narrow in our vision. We cannot possibly expect to remain a world leader in infrastructure if we cannot future-proof and seriously invest in the resilience of our assets. Building and maintaining infrastructure might not get pulses racing. There is no ribbon to cut when something just continues to operate efficiently, but that long-termism is an ideology that we should all get behind if we are serious about Britain’s future. The report outlined the many missed opportunities to fix the issues at the substation, and we will all have to look seriously into Ofgem’s consequential investigation into National Grid once it is published.

This is not just about grid resilience, though. This time it was a fire caused by a fault, but next time it might be a deliberate cyber-attack or an act of terrorism, which could have a more disastrous impact. We must look beyond the short term, with a strategic and long-term plan to join up national infrastructure and make it safe and reliable for all. The Government must bring about a strategy and act quickly to review the resilience of all similar assets, including every UK airport—they are all critical to our national economy and our society.

With that in mind, can the Minister confirm whether an assessment has been made of the likelihood of a repeat of this incident, at Heathrow and at all other pieces of critical national infrastructure? Also, are the Government taking this opportunity to finally pick up the National Infrastructure Commission reports from 2020 and 2023, which were ignored by the previous Government, and the report from 2024, which was not implemented quickly enough, and to implement standards and frameworks for resilience in key sectors such as aviation, telecoms, water and energy, which will future-proof our ageing infrastructure to make it reliable and safe?

[Michael Shanks]

The hon. Gentleman is absolutely right to broaden this beyond the electricity system and North Hyde to take in wider questions around critical national infrastructure. He is also right about investing in the future. I always think that grids and networks set the heart racing a little faster, but that is just me. This is important, and this Government are investing in this infrastructure; just this week Ofgem announced record investment in it. I hope, given the importance of this statement, that Members on all sides of the House will recognise the importance of that investment.

On the points around wider resilience, the Cabinet Office is leading on trying to bring together what I think it is fair to say has been too fragmented a landscape in resilience across Government. My Department is responsible for a number of key risks in the national risk register. It is right that the lead Departments have expertise in certain areas, but if that information is not shared coherently across Government, we increase the chance of not getting the answers right. A lot of work is being done in that regard. We are also looking at how we share data across all sectors of critical national infrastructure within Government. We will say more about that in the resilience action plan, which the Cabinet Office is working on at the moment. Of course, the 10-year infrastructure strategy is also about how we will invest for the long term in the infrastructure that keeps our country running.

[Mr Deputy Speaker (Sir Roger Gale)]

I call the Chair of the Science, Innovation and Technology Committee.

[Dame Chi Onwurah (Newcastle upon Tyne Central and West) (Lab)]

Speaking as a chartered electrical engineer and as the Chair of the Science, Innovation and Technology Committee, I am absolutely amazed that such an important and large part of our critical national infrastructure in the National Grid was not properly maintained for seven years and that Heathrow—the busiest airport in the world—had a single point of failure. The Minister has outlined some of the processes and procedures that will follow, but will he say how he intends to improve the standards of engineering maintenance culture and excellence in our critical national infrastructure, which have clearly been allowed to fall significantly under successive Conservative Governments?

[Michael Shanks]

First, it is important to say that Heathrow had multiple routes into its electricity network—three in fact—which is unique. This report and the processes identified in the Kelly review will give Heathrow Airport Ltd pause for thought on what it needs to do on how its network is configured and how it can adapt in such situations. Of course, this is an incredibly rare circumstance, but the whole point of resilience planning is to plan for eventualities that we think are extremely unlikely to happen but that would have a significant impact if they did. Heathrow closing is clearly one such circumstance.

Secondly, my hon. Friend is right to highlight standards and systems. I want to be careful not to prejudge the review that Ofgem has announced, because there is something to be said about standards changing over time. Maintenance backlogs obviously then have to be met, and if the issue is that maintenance that should have been carried out has not been, that is clearly an issue we will take forward. But if it is just that pieces of infrastructure were subject to standards that have changed over time, we have a wider question of how we can adapt some of that infrastructure for future standards. We will look at all those points. I repeat to the House that our electricity system is incredibly robust in its resilience. We need to do everything possible to make it even more robust, so that such instances do not have quite so significant an impact as this one did.

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

May I follow up on that and ask the Minister whether he will undertake to have a full, frank and open discussion with the relevant directorates within his Department about what it has learned from this disaster? In particular, what exercises, tabletop or virtual, must be undertaken to practise resilience in the event of future such failures? My right hon. Friend the Member for East Surrey (Claire Coutinho) is right to warn about the increasing fragility of energy security in this country. There is plenty of informed opinion that supports that view.

[Michael Shanks]

I have spoken to colleagues across the Department on these questions. They are rightly constantly looking at how we review our processes. Importantly, they are also working outside of Government and trying to break down some of the silos, so we are co-ordinating with different parts of Government that have different responsibilities. But the right hon. Member is right, and we will constantly push to do more of that.

The question of exercises is important. We had a really significant exercise under the previous Government, which looked at the Government’s response to a significant power outage. We are putting in place many of the recommendations from that exercise, which are important to take forward, but more exercise is useful.

I would slightly separate the response from the infrastructure itself failing, which is what we need to investigate quickly. The Kelly review set out that Heathrow’s response to the incident was in line with its response plan. Although the outcome was clearly not what any of us would have wanted, it goes to a wider question about the infrastructure at Heathrow, not so much the actual plan put in place when the incident did occur. Those are two slightly different things, but they are both extremely important.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

I, too, thank the Minister for making this statement, and NESO for this damning report. Heathrow Airport Ltd’s power set-up internally virtually guarantees hours of disruption in a scenario like this. On 21 March, that meant over a quarter of a million passengers were affected; airlines lost significant revenue, for which they will not be compensated; and countless time-critical freight loads were also affected. Yet in Spain and Portugal, airports did not close when those countries had full power outages. By any definition, surely Heathrow airport counts as critical national infrastructure as it undeniably requires operational continuity. I note that the Minister confirmed the airport’s responsibility for its own power resilience, but does the Government have a role in ensuring that end-to-end power supply to critical national infrastructure is robust and that risks like power outages are managed adequately?

[Michael Shanks]

I thank my hon. Friend for the question and for her thanks to NESO, which has done a comprehensive job on this report in a fairly short space of time. There are lessons to be learned for Heathrow, and it will be learning those lessons. I am in communication with the Transport Secretary, who of course has immediate responsibility for Heathrow as a piece of critical national transport infrastructure. It is worth saying that its back-up generators did operate in the way they were supposed to, but Heathrow is a huge piece of infrastructure, and it is not intended that those back-up processes would continue to run normal operations in a huge airport beyond the immediate situation of being able to land planes safely and ensuring other critical systems within the airport.

The question Heathrow has to answer is on having three points of electricity generation coming into the airport. It clearly needs to look at the way the network is configured and take forward the wider question of its resilience and ability to adapt to such situations. The Government have an incredibly important role, as my hon. Friend rightly says, and we will do all we can to ensure that National Grid is doing its bit, that the distribution operator is doing what it needs to do, and that Heathrow Airport Ltd is also meeting the expectations that we would expect from our most important piece of transport infrastructure.

[Mr Deputy Speaker]

I call the SNP spokesperson.

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

The report by NESO has clearly uncovered serious structural failings at National Grid, but let us not forget that the Government’s response to the outage was severely wanting as well. On the Monday following the outage, the Transport Secretary confirmed that she was relying on the contents of a three-day-old conversation with Heathrow, with no assessment from the Government and no conversations with National Grid. Can the Secretary of State assure the House that sufficient lessons are being learned in Government to ensure that, when the power supply to critical national infrastructure is affected in the future, the Government are not left without answers again? Additionally, Members will understand the phrase “Quis custodiet ipsos custodes?”, meaning “Who guards the guards?” Why did it take such a serious outage for the National Grid to be audited like this? Surely better oversight may have identified the shockingly poor risk management.

[Michael Shanks]

Since I did not realise in my statement earlier this week that the hon. Gentleman is now the SNP’s energy spokesperson, I welcome him to his place—I hope he will bring the same customary sunshine that his predecessor in the role did to our deliberations in this place.

On the incident itself, clearly there are lessons to be learned from the way the energy infrastructure worked on 20 and 21 March, and for Heathrow on the configuration of its internal network and how that worked. The incident itself is clearly one we want to avoid at all costs, but actually the process was carried out safely, passengers were informed and the disruption was kept to an absolute minimum, but if an airport such as Heathrow closes, there will be disruption. I am not sure that I take the hon. Gentleman’s criticism of the handling of the incident. He is right on the broader point about how we ensure we are regularly auditing the processes of maintenance work going forward. The three transmission owners in the UK have a responsibility for doing that, and that is regulated by Ofgem, which regularly checks on this. The second part of Ofgem’s review announced today will look specifically at whether those maintenance backlogs and any other long-standing issues have been resolved, and look at the lessons we can learn on ensuring that those processes actually happen and that we do not just have things sitting on a list but not actually delivered.

[John McDonnell (Hayes and Harlington) (Ind)]

The substation is located in my constituency and I was there on the day the incident happened. It was a massive fire and 200 of my constituents were evacuated from their homes during the night, and there was smoke flowing down the street. It could have been a much bigger disaster had it not been for the courageous firefighters who went on to the site, the help they got from the council, the back-up services and the NHS. I place on record the House’s congratulations to them and our admiration for what they did.

My constituents want to be reassured, but the report demonstrates a catalogue of failure. The problem was identified in 2018—we are now seven years on. I welcome the right hon. Member for East Surrey (Claire Coutinho) back to her place, but sleep deprivation can affect the memory: her party was in Government for most of that period.

I am worried that sites like this could be easily targeted by terrorist activity, so we need a process of reassurance. The recommendations set out in the review, about what we do from here to ensure resilience, have to take into account that the Government have a role in driving through the programme. We have to recognise that we cannot rely on some of the other agencies without a real Government thrust of leadership, but also securing accountability, because I do not want other areas to experience what we experienced that night.

[Michael Shanks]

I thank the right hon. Gentleman for his remarks and for the way he made them. He is absolutely right to recognise the heroic role that our emergency services played on the night—I am sorry that I did not say that at the start of my statement—as well as the engineers, who worked in incredibly hard in difficult circumstances in the hours that followed the fire to try to get services reconnected as quickly as possible. There are very serious questions to answer, and I hope that came through in my statement—it certainly came through in the conversation I had with National Grid earlier. We are seeking urgent assurances that the work that should have been done is being done, and that there are no other similar situations. Ofgem is taking the matter seriously, with two reviews, one into National Grid and the other into the wider energy system, to see if there are any further lessons to learn.

However, the right hon. Gentleman is right and I completely agree with his point that the Government need to be front-footed and take a leadership role in driving the work forward: we cannot leave it to individual companies to mark their own homework. We are doing that partly by bringing together our resilience work across Government, and I will soon be chairing a new group that brings together everyone who has responsibility for critical national infrastructure in our energy system, to ensure that energy security, cyber-security and other threats to our infrastructure are taken seriously, so that action is taken at the highest level of Government to ensure that we do not have a repeat of the incident in future.

[Richard Tice (Boston and Skegness) (Reform)]

The substation by Heathrow is probably one of the most important in the country, yet this damning report says that there was a “catastrophic failure” of maintenance. Given that National Grid also failed to recognise how close we came to a national blackout earlier this year, we have to ask: is National Grid grossly negligent and does the Minister still have full confidence in its management?

[Michael Shanks]

The hon. Gentleman may be confusing two things. The National Energy System Operator is no longer part of National Grid, as it was made into a publicly owned company by the previous Government, which was introduced by us when we came into Government. So the National Energy System Operator is responsible for managing the energy system and it is different from National Grid, which is a private company that operates the electricity network in England, so those two organisations are slightly different. Of course, he is right to highlight the scale of the failure. That is why I have given a statement today and why a number of serious actions are being taken, which will be followed up in a serious way.

We did not come close to a blackout earlier this year. It is important to repeat that, because there is a lot of misinformation about a particular set of statistics that were misunderstood by some people. We have never come close to that and we have never had a national power outage in our history. The aim of all the work that we do is to build as safe and resilient an electricity system as we can, so that when circumstances like this happen—because fires and accidents do happen—we will have done everything that we could have done to have mitigations in place. When such a fault is down to a failure of maintenance, we must ensure that is taken account of and never happens again.

[Tom Collins (Worcester) (Lab)]

Like any serious incident, this one had multiple causes, both operational and relating to design. I urge the Minister to ensure that the lessons learned are applied not only to electricity transmission and distribution sites, but to energy storage sites, for which we have an absence of standards. He rightly mentioned the need for redundancy and flexibility in our electricity systems, and the need to avoid having single points of failure. That applies well to large pieces of essential infrastructure, but is harder with our distributed critical infrastructure, for example around telecommunications, so we need diversity in our energy system as a whole. Does he agree that in our energy system, we need widespread availability from multiple parts of the energy sector, with electricity being backed up by, for example, hydrogen and ammonia?

[Michael Shanks]

My hon. Friend always reminds me how much he knows about many of these issues; it is hugely welcome. He is right: there are wider lessons to be learned across the system, and not just for large critical national infrastructure. As he says, we have a grid that has many more power stations, of different forms, than we have ever had in the past. There are also lessons to be learned for storage, which is rightly becoming increasingly important for our energy mix.

On his wider point about telecoms, in the wake of the storms earlier this year, we took a number of actions to make our electricity system more resilient. Our use of telecommunications equipment in this country is changing. Very few people now have access to traditional copper wire phones, so when telecoms equipment goes down, there is an immediate significant impact on people’s lives. I recently met the Minister for Data Protection and Telecoms in the Department for Science, Innovation and Technology to discuss this issue. We will work with Ofcom and the operators to ensure that the telecoms infrastructure is as resilient as it can be.

Prax Lindsey Oil Refinery: Contingent Liabilities

Michael Shanks Excerpts

Tuesday 1st July 2025 Written Statements

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

Today I am notifying the House of the steps taken by the Government with regard to the insolvency of Prax Lindsey oil refinery and related subsidiaries.

We know that this will be incredibly worrying news for workers at the refinery, as well as the wider community in Lincolnshire. The Government stand with the workers, their families and the community at this difficult time. Given the Energy Security and Net Zero Committee’s interest in this, we are updating on the action that the Government are taking.

There have been long-standing issues at the company since it was acquired in 2021. Prax Lindsey oil refinery’s financial reports indicated that it has recorded losses of around £75 million up to the financial year ending February 2024 since its acquisition in 2021.

At the end of April, the Government were informed of ongoing commercial difficulties. We repeatedly asked the company what the financial gap was, to work out whether the Government could help bridge that gap, but the company was unable to share that basic information.

As a result of today’s decision by the company, an official receiver and an administrator have been appointed to take over different parts of the business. The Government will ensure supplies are maintained, protect our energy security, and do everything we can to support workers.

The company has left the Government with very little time to act. The Government are supporting the official receiver to carry out his statutory duties, including managing the situation on the Prax Lindsey site to determine next steps. This will include urgently reporting back on all potential uses of the site, prior to a wind-down of the refinery.

As to the wider business, there are extensive operational and financing interdependencies within the Prax Group which mean that the refinery’s parent company, State Oil Ltd, has also been placed into administration today along with a small number of other group entities.

However, other parts of the group—including the group’s retail business in the UK, which provides oil trucks, logistics and forecourt services at a number of filling stations—have not gone into administration. The retail business is profitable, and is not solely supplied with fuels from the Lindsey refinery. This means that alternative supplies for the group’s retail network can be sourced as necessary and the administrators will seek to do that and trade the business as normal while they look to secure a prompt sale of the retail operation in due course.

The Energy Secretary has written to the Insolvency Service to demand an immediate investigation into the conduct of the directors and the circumstances surrounding this insolvency.

The Government’s immediate priority is to ensure that affected workers are supported through this difficult time. We will urgently work with the company and trade unions to explore what further support can be offered for workers.

I have laid a departmental minute today notifying the House of two contingent liabilities associated with the Government’s intervention. I regret that, due to compressed timings and the rapid response the Government have had to prepare, I have not been able to follow the usual notice period of 14 parliamentary sitting days. These liabilities relate to:

Legal indemnity

A legal indemnity has been offered to the official receiver to protect it against financial loss or legal claims incurred in the course of carrying out its statutory functions. The indemnity is a standard mechanism in high-risk or complex insolvencies where appointees are expected to act in the national interest without undue risk to the appointees. Crystallisation is expected to be limited.

Operating cost support

The Government will provide short-term funding to cover the essential operating costs of the refinery. This is required to maintain safe site operations to ensure our energy security during the initial phase of liquidation and to facilitate a controlled shut down or potential sale as a going concern. The funding acts as working capital to ensure the secure transition of the site as well as allowing the fuel sector enough time to adapt supply chains and commercial arrangements so that fuel remains available to end users. The final operating cost support will depend on market conditions and the strategy adopted by the official receiver, and this will be subject to close scrutiny and governance by the Government and the insolvency office holders.

Together, these contingent liabilities are necessary to provide the official receiver and special manager with the necessary tools to fulfil their duties in a beneficial way for creditors and taxpayers. If the liability is called, provision for any payment will be sought through the normal supply procedure. The Treasury has approved the proposal in principle.

I will update Parliament on any developments in this contingent liability.

[HCWS761]

Solar Road Map

Michael Shanks Excerpts

Monday 30th June 2025 Written Statements

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

I am tabling this statement to inform Members of the publication of the solar road map.

The Government are committed to delivering a clean, affordable and secure energy system by 2030, and accelerating progress towards net zero. Solar is a mature and cheap source of power, which will play a crucial role in decarbonising our electricity and ensuring that Britain is insulated from volatile global gas prices.

Making Britain a clean energy superpower is one of the Government’s five missions. The clean power action plan, published in December, set a target for 45 to 47 GW of solar power by 2030. This mission is about driving economic growth as well as clean power. By 2030, up to 35,000 UK jobs could be supported by the solar sector, up from around 17,000 today. The Government will work closely with industry to ramp up generation capacity. Today’s publication fires the starting pistol on five years of rapid deployment.

The solar road map— https://www.gov.uk/government/publications/solar-roadmap —begins with a statistical analysis of likely deployment scenarios. It projects that the clean power action plan ambition of 45 to 47 GW is achievable, but that significant action will be required to facilitate the necessary deployment. It estimates that ground mount solar alone could power around 9 million homes. It estimates that—even in these ambitious scenarios—solar would occupy up to only 0.4% of total UK land.

The following chapters deal with salient issues for the solar sector. The first of these is on rooftop solar. It sets out actions which will enable Government and industry to unleash a rooftop revolution. This includes information on the role of Great British Energy, the warm homes plan, the future homes and buildings standards, a call for evidence about solar car parks, and tackling contractual and financial barriers to rooftop solar installations.

The electricity networks chapter addresses the lengthy and complicated process of securing a grid connection for solar. It highlights the impact of the Government’s radical connections reforms and Ofgem’s end-to-end review of connections. It also includes a range of actions to remove barriers for new-build and domestic solar, and to standardise service levels across the sector.

The supply chain and innovation chapter focuses on making the solar supply chain resilient, diverse, and sustainable. It provides details of legislation and guidance to ensure businesses take action against modern slavery in the supply chain. It also explains our support for engagement with supply chain standards, such as the solar stewardship initiative. The chapter also details how the Government intend to encourage the development and commercialisation of innovative solar technologies.

The skills chapter sets out the action required to increase the number of solar jobs in the UK. These include recommendations on improving understanding of current training opportunities, launching regional careers fairs, and clarifying the routes to competency for solar installers.

The planning and support schemes chapter deals with actions to remove other barriers, including planning reform; reform of financial support mechanisms; and support for floating solar. The final chapter, on working together to deliver our ambition, identifies the different stakeholders who will contribute to delivering 45 to 47 GW of solar power. It discusses the Government’s proposals to make it mandatory for developers to provide community benefit funds for the local areas hosting new infrastructure.

Finally, today we also announce that a Solar Council will be established to monitor delivery of the Roadmap’s actions, and to provide a forum for industry representatives to engage directly with Ministers. Scaling up solar power will be critical to the success of the Government’s clean energy mission. We hope that today’s publication gives a boost to industry as they help us reduce our dependence on volatile fossil fuels and improve our energy security.

[HCWS754]

Prax Lindsey Oil Refinery

Michael Shanks Excerpts

Monday 30th June 2025 Commons Chamber

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

With permission, Madam Deputy Speaker, I will make a statement about the Prax Lindsey oil refinery. Today its owners have declared insolvency at the refinery, and the Government are urgently acting in response to that deeply concerning news. I know that will be extremely worrying news for workers at the refinery, as well as for the wider community in Lincolnshire. Let me say very clearly that the Government stand with the workers, their families and the wider community at this difficult time. They have been let down by the company, but we will ensure that they are supported.

Let me take the House through the chain of events leading up to today, and the actions that we will take in response. There have been long-standing issues at the refinery since it was acquired in 2021. At the end of April, the Government were informed of ongoing commercial difficulties, and the Energy Secretary met the chief executive on 13 May to see how the Government could provide support. The Secretary of State was reassured by the company that there was no immediate closure risk at the refinery.

A week ago, the business changed its position, and said that it feared that it could no longer be a going concern. We repeatedly asked it, at an official and ministerial level, what the financial gap was, to work out whether the Government could help to bridge that gap, but the company was unable to share that basic information. As a result of today’s decision by the company, an official receiver and administrators have been appointed to take over different parts of the business. The Government will ensure that supplies are maintained, protect our energy security, and do everything we can to support the workers, including engaging with trade unions and industry bodies.

Let me update the House on the Government’s response. First, we will work with the official receiver over the coming days and weeks to manage the situation at the Lindsey oil refinery site, and to determine the next steps. The official receiver will take immediate steps to ensure safe operations at the site, ensure continued fuel supply and explore all credible options for a sale. Unfortunately, the refinery has consistently failed to make a profit since it was bought by the current owners from Total in 2021; it has recorded a total of around £75 million of losses between its acquisition in 2021 and the financial year ending February 2024. That has left the refinery in very bad shape, and the company has left the Government with very little time to act.

We are supporting the official receiver in carrying out its statutory duties, including managing the situation on the site to determine next steps. That will include urgently reporting back on the steps, including all potential uses of the site, prior to the wind-down of the refinery. As to the wider business, extensive operational and financing interdependencies in the Prax Group mean that the refinery’s parent company, State Oil Ltd, has also been placed into administration today, along with a small number of other group entities. However, other parts of the group, including its UK retail business, have not gone into administration. The retail business will trade as normal, while the administrators look to secure a sale in due course.

Secondly, there are questions that must be answered about how the owners allowed this situation to happen. That is why my right hon. Friend the Energy Secretary has today written to the Insolvency Service to demand an immediate investigation of the conduct of the directors and the circumstances surrounding that insolvency.

Thirdly, as we engage in this work, our immediate priority is to ensure that affected workers at the Prax Lindsey refinery are supported through this difficult time. The Government believe that the business’s leadership has a responsibility to the workers and the local community. We call on it to do the right thing and provide support to the workers through this difficult period. The wealthy owner cannot wash his hands of his obligations to the workers and their families. That is why we call on him to put his hands in his pockets and deliver proper compensation for the workers. The Government will now urgently work with the company and trade unions to explore what further support can be offered to the workforce, including the maximum possible help to ensure that workers can pursue new job opportunities if the refinery cannot be sold.

Fourthly, we are committed more widely to securing the long-term future of the UK’s refinery sector. It is important to say that the UK has a refining sector with a number of well-run operators. I met the refining sector earlier this month for a ministerial roundtable, and it told me that it had not had such a meeting with Government for 13 years. The reality is that the previous Government left the UK’s refining sector facing significant long-term challenges. We know that there are global challenges too, including competition from larger refining operations in the middle east, India and Africa. We have already seen the effects of years of negligence from previous Governments, and this Government have been left to pick up the pieces.

The UK Government are determined to work with industry, workers and trade unions to ensure that we safeguard our refineries for the future. That is why we are reviewing the methodology for the energy-intensive industries compensation scheme that we inherited from the last Government. The refineries sector is not covered by that scheme, and the review will help assess whether sectors such as this should be covered in the future, and whether more can be done to help their competitiveness. That is not all: in less than 12 months in office, we have invested in carbon capture, usage and storage, which can help key refineries, such as Phillips 66 and Stanlow, through Viking and HyNet. We have funded Project Willow at Grangemouth—a project that can help all refineries meet future challenges—and we are driving forward with the sustainable aviation fuel mandate, to help the refining sector maximise the opportunities created by the clean energy revolution.

From the moment we were informed of these issues, the Government have been focused on securing the future of the Prax Lindsey oil refinery site and supporting its workers. Today, those workers have been badly let down by the company, but we are committed to supporting them and the wider community during this difficult time. The Government are absolutely committed to a long-term future for the UK’s refinery sector, and over the weeks and months ahead, we will provide further updates on the steps I have set out in this statement. I commend this statement to the House.

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[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

I thank the Minister for advance sight of his statement, and for taking the time to speak with me on this issue earlier today.

Today, hundreds of jobs are at risk, and a strategically significant asset is in jeopardy. The Lindsey oil refinery has a capacity roughly equivalent to 35% of British petrol consumption and 10% of British diesel, and it supplies aviation fuel to Heathrow airport via a pipeline. Refineries represent a core strategic interest for the United Kingdom. We are reassured that the oil and gas fields to the west of Shetland are not at risk, nor is the network of petrol stations affected by today’s announcement —I would like to reiterate that that side of the operation is not at risk. The refinery has been loss-making since it was acquired from TotalEnergies in 2021, and we are aware of long-standing financial issues with the Prax group, including its being unable to provide accounts to the Government. As such, we support the Government in ordering an investigation into the conduct of the directors and the circumstances surrounding this insolvency.

However, despite the management issues facing the company, which, as the Minister has said, are multiple, it is clear that the refining industry as a whole is being driven into the ground by the high cost of energy in this country. In the late 1970s, Great Britain had 17 oil refineries; if the Lindsey refinery in the Humber closes its doors, only four will remain. Energy is the single largest cost of operating a refinery, so the sky-high cost of energy to industry in the UK is pushing manufacturers in energy-intensive industries such as refining out of business. As Sir Jim Ratcliffe at INEOS has said, the chemicals sector is “facing extinction” because of

“enormously high energy prices and crippling carbon tax bills.”

Industry in the United Kingdom is uncompetitive, with two oil refineries closing within six months. It is quite clear that we need a rethink. If our route to lowering emissions in the UK comes at the price of deindustrialisation, and costs jobs, livelihoods and economic growth—if it means impoverishing the UK and increasing dependence on imports, and a fragile supply chain for fuel and essential oil products—then we must rethink. If the Secretary of State brings refineries within the scope of the energy-intensive industries compensation scheme, he will be providing only a sticking-plaster response. Exempting specific industries from policy costs such as the renewables obligation, the feed-in tariffs, the contracts for difference subsidies, and capacity market payments does not fix the foundations. This piecemeal approach simultaneously accepts the devastating consequences of green levies for the industry and abdicates responsibility for fixing the root problem.

We are already seeing the real impact on working people’s livelihoods and communities of not taking action. Some 400 jobs have been lost at Grangemouth; 60 have been lost at Moorcroft pottery in Stoke; over 1,000 have been lost at Vauxhall in Luton; and 250 have been lost at Nippon Electric Glass Fibre Works in Wigan. Now we see the same at the Prax Lindsey oil refinery, where 440 people are employed. Unite the union has warned the Government that their policies

“have placed the oil and gas industry on a cliff edge”.

This Government are driving up the cost of energy, increasing our reliance on imports, and offshoring our carbon emissions. That is not good for the climate, and it is very bad for Britain.

Refineries have consistently raised the issue of the existential issues that the sector faces, including the cost of the emissions trading scheme and eye-wateringly high energy bills. Since the closure of Grangemouth, this Government have taken no action to tackle the fundamental problem: the need to reduce the burden on businesses, make UK manufacturing more competitive, and back British industry. I have some questions for the Minister. What are the Government’s plans for the Lindsey refinery? Does he expect to find an operator? How long will the Government support the refinery, and what plans do they have for the refinery if no buyer is forthcoming? What action will the Minister and his Government take to ensure that the situation is not replicated at Britain’s four remaining refineries? How many petroleum refineries does he expect to be left by the time the Labour Government leave office in 2029, and what will the Government do to bring bills down for all industrial energy consumers, not just those covered by the energy-intensive industries compensation scheme?

[Michael Shanks]

I thank the shadow Minister for rightly reiterating the fact that it is not the whole of the business we are discussing that has gone into administration today. It is really important to say that there is certainty in other parts of the business—we will be able to outline more of that in the days and weeks ahead. I also thank him for his and his party’s support for the investigation into the conduct of the directors that the Secretary of State has launched. Clearly, something has gone badly wrong here, and it is important that we get to the bottom of it.

The shadow Minister asked three specific questions. First, the Government have backed the official receiver, who is now running the refinery in the short term. We will use that time to see whether there is a possibility of finding a buyer—clearly, our very first option is to see whether someone wants to take on the refinery as a going concern, and we will put every effort into trying to find one. If that is not possible, we will look at what the wider future of the site might be and what possibilities exist for other industries on that site.

Turning to the shadow Minister’s wider questions, he spoke about fixing the root of the problem. I have to gently say to him, though, that he and his party oppose the action that will fix the root of the problem, which is our continued exposure to volatile fossil fuel prices that have driven up the cost of electricity. As he rightly said, households and businesses right across the country are paying the price for that. We have an answer to that, which is to move much faster towards a clean power system including renewables and nuclear that brings down costs and delivers that power here in the UK, rather than relying on the casino for volatile fossil fuels. However, the shadow Minister opposes that plan. He cannot call for us to fix the root of the problem—as he puts it—while opposing the very action that will do so. We have outlined a credible plan for how we will deliver cheaper electricity for all consumers across the country, including businesses, and we are getting on with delivering it. The Conservatives oppose all those initiatives.

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[Bill Esterson (Sefton Central) (Lab)]

My hon. Friend the Minister recognises the importance to our energy security of securing the fuel supply at Lindsey. He also recognises the importance of engaging with the trade unions to attempt, at least, to reassure the workforce. I thank him for those actions and congratulate him on them, and indeed on the engagement that the Government have had with the sector since the election.

Refinery operations are increasingly challenging, not least because of the volatility and uncertainty in international fossil fuel markets that the Minister just mentioned, but also because of the competition across the world. Phillips 66 and Stanlow, which he mentioned in his statement, are adapting to the changes in our energy system, taking advantage of carbon capture and the production of sustainable aviation fuel and biofuels. Will the Minister ensure that the UK refinery sector is part of the energy transition and a key part of our energy and industrial strategies, so that refineries play a key part in the future for the communities and workers that depend on those jobs at the moment, and so that we do not see a cliff edge?

[Michael Shanks]

I thank my hon. Friend for his question. First, he is right to restate what I said in the statement—when I brought in the refinery industry for a roundtable, it was frankly extraordinary to be told that it was the first time in 13 years that that had happened. That is an extraordinary state of affairs. I am glad that we have now held that roundtable, but what it has highlighted is just how much engagement with the sector is now necessary. I am determined to drive that engagement forward.

My hon. Friend is also right about the nature of the transition. Refineries will be important at all stages of the transition. Clearly, they are critical to delivering our fuel security today, and they will play a really important role in that area in the future—in sustainable aviation fuel, biofuels, and the wider work we need that sector to do. We will support refineries to transition into some of those future technologies.

The bottom line in this case is that we seem to have had a business that was far from doing that—it was not driving forward the investment that was necessary. We will now, at pace, try to get to the bottom of what the directors were doing with this company. It is a shocking state of affairs and a sad day for the workers, but I genuinely believe that there will be a strong refining sector in the future.

[Madam Deputy Speaker (Caroline Nokes)]

I call the Liberal Democrat spokesperson.

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[Pippa Heylings]

In conclusion, many thanks, Madam Deputy Speaker.

[Michael Shanks]

I think I got all the hon. Lady’s key points down. Importantly, I agree with many of them. First, I echo the point that she makes about this being shocking news for the workers, as it always is. Given how quickly it has happened, it has been as much a surprise to us, but for the workers it will be particularly shocking news.

I will reiterate two things that the hon. Lady said, just to be clear. She mentioned the upstream business west of Shetland. That is not filing for insolvency. The petrol forecourts will continue to operate as normal, and the administrators are exploring the prospect of a sale of those retail operations. There is no need for anyone to be concerned about any of that.

There is an argument that it is critical, whatever the outcome, that the company takes some responsibility for the actions it has taken up to this point and for the workers who were employed in its business and kept it running for a long time. I have been clear in my statement today, and we will continue to reiterate it, that we expect the owners to put their hands in their pockets and provide the support that those workers deserve.

Finally, I was in Aberdeen last week talking to people about a comprehensive plan, and I will continue to do that, because it is right that we put in place a comprehensive plan for the future of those working in oil and gas. There is a bright future for that workforce in oil and gas for many decades to come, but increasingly they will transition into new industries. We are determined that we will deliver those jobs. A plan is crucial, and I am working on it at pace.

[Melanie Onn (Great Grimsby and Cleethorpes) (Lab)]

I thank the Minister for his statement, and he is right that this news has sent a shock reverberating around our local area. Back in April, I visited the Prax site, which sits in the constituency of my neighbour, the hon. Member for Brigg and Immingham (Martin Vickers). I spoke with the staff and trade union reps about the importance of their work, and I was impressed by their commitment to the company. There was absolutely no hint of the scale of difficulties—beyond how challenging it is in the refining sector anyway—or how deep and uncomfortable the company’s financial situation was. It is astonishing that the company could not answer basic questions about its finances when the Government asked for those details.

The decision taken by State Oil puts more than 400 local jobs at risk, with around 65% of those workers living in north-east Lincolnshire. I appreciate the efforts that the Government are making to support our workers, and I hope to work closely with the Government to help find a new buyer to preserve the jobs and support domestic fuel production as a strategically important asset. However, as things stand, I understand that State Oil is required only to make statutory redundancy payments to those workers. Does the Minister think that the billionaire owner of the refinery could do more to better support those workers in the event that they lose their jobs? Surely that is the least they could do, after what appears to be gross mismanagement.

[Michael Shanks]

I thank my hon. Friend for her questions. By talking of her recent visit to the refinery, she underlines the issues that have come to light in such an incredibly short space of time, although the truth is that in uncovering some of this, we have discovered that it goes back some time. That is why my right hon. Friend the Secretary of State has announced that he has asked for an inquiry into the decisions that have been made. We need to get to the bottom of this and learn any lessons that we can.

My hon. Friend is right that we have to do everything we can to support the workers. We will continue to do that, and we will look at what support we can provide for them. At the moment, these are jobs at risk rather than redundancies that have been announced. We are doing everything we can to see whether someone is interested in buying the refinery as a going concern, in which case the workers would be retained. We will do everything we can to support those workers should that not come to fruition.

My hon. Friend is right to point out that under the current process, those workers will be entitled to statutory redundancy only. It is clear that the business’s leadership have a responsibility to those workers, not only because it is right and prudent for all owners of businesses like this to take responsibility for the workforce, but because, particularly given how this business has ended, they should take responsibility for the workers and the local community. We call on them to do the right thing and support the workers through this incredibly difficult period.

[Martin Vickers (Brigg and Immingham) (Con)]

I thank the Minister for his statement and for the briefing he gave me earlier today. It is disturbing that when the Government reached out to the company for additional information, it was not forthcoming. The shadow Minister, my hon. Friend the Member for West Aberdeenshire and Kincardine (Andrew Bowie) asked some pertinent questions, one of which was how long the Government are prepared to support the workers and the refinery. It would be reassuring for many of my constituents who work there if the Minister could give some indication that there will be support at least in the medium term.

[Michael Shanks]

I am grateful to the hon. Gentleman for his time earlier today. This will be a distressing issue in his constituency, so it was good to have the chance to speak to him about it. He is right. With this decision having been made last night in the courts and made public this morning, we have not had much time to fully work through the timeline of what will happen in the coming weeks. The Government are funding the official receiver to continue the safe operations of the refinery. The first priority will be to make sure that safe operations proceed, but then we will see whether a buyer is interested in the site. We will then move as quickly as possible, if that is not possible, to see what alternatives there are for the site.

I cannot give the hon. Gentleman assurances on exact timescales at this point, but he can be assured that the Government are determined to do the right thing, and we will do whatever we can to get either a buyer or a sustainable future for the site. I reiterate to the House that this is a difficult set of circumstances with little time to prepare, and the refinery has been loss-making since it was taken over from Total some years ago. It is a difficult position, but we will do everything we can.

[Brian Leishman (Alloa and Grangemouth) (Lab)]

I am glad that the root cause of the problems that we face has been identified. We have touched on it, but this is what happens when private capital is in charge of such a key piece of infrastructure. We saw that play out at the Grangemouth refinery in my constituency, and it is good to hear my hon. Friend the Minister in agreement with me in condemnation of the owners of the Prax Lindsey refinery. It gives me hope that the Government will learn important lessons and assume at least some form of ownership in the future industries that will be come at Grangemouth and potentially at other sites. Can we get an update on that, please?

[Michael Shanks]

My hon. Friend is right to highlight the work that the Government are doing following our £200 million commitment to support the future of Grangemouth through the national wealth fund. There have been 84 serious and credible inquiries about projects there, and I have been meeting those involved in some of those projects to discuss what more the Government can do to ensure that they are delivered. We will say more about that in due course, but we are working collaboratively with the Scottish Government and Scottish Enterprise to bring the projects forward. As we have said since day one, we are determined to deliver a sustainable, viable industrial future for Grangemouth. The difference between Grangemouth and the Prax Lindsey refinery—I want to separate the two slightly—is that while we may have issues with the owners of various sites across the country, an 18-month redundancy package was put in place at Grangemouth and that is not the case in this instance, which is why the Government are particularly calling on the owners of this refinery to do the right thing for the workers there.

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

Westminster’s mismanagement of the energy sector is clearly being felt across these islands, and the Government were right to arrange a statement today to address the possible closure of the Prax Lindsey oil refinery. However, that is not a courtesy that the Labour Government have ever extended to Grangemouth in Scotland: they have not once come to the Chamber to make a statement about it. We have seen Labour pull out all the stops for Scunthorpe and now begin that process for Lindsey. Will they think again and do the same for Grangemouth?

The Shetland gas plant is also owned by Prax, and is also a significant employer. What steps are the Government taking to secure the future of this site, and why did the plant not feature in the statement, if only for the purpose of an assurance?

[Michael Shanks]

Let me deal with that on two fronts. First, we have come to the House repeatedly to talk about Grangemouth. I have had meetings with a number of Members over the past year to discuss Grangemouth, probably more than I have had to discuss any other issue, and I have weekly meetings with Scottish Government Ministers, businesses or others to discuss Grangemouth’s future. No one wanted the outcome that we got from Grangemouth, but we have done everything in our power to turn that around and deliver a viable economic future for the site, so I do not entirely accept the hon. Gentleman’s criticism, which I think is misplaced.

Secondly, I apologise to the House for being unable to give explicit details about every part of the business, but one of the problems is that we have not been able to obtain clarity from the company about all the interdependencies within its own business group. We will discuss more of this in the coming days as we engage with the official receiver. It is important to separate the issue of insolvency for the refinery—the specific issue that we are discussing today—from the wider group issues, but I have no doubt that we will return to some of those in due course.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

The shadow Secretary of State mentioned Moorcroft in Stoke. A small glimmer of light in what is otherwise a rather gloomy story is the rescue of that company by Will Moorcroft, the grandson of its founder, and the jobs that are potentially coming back. However, those jobs were put at risk, much like the jobs at this refinery, because of the eye-watering industrial energy costs that we face in this country. The Government have announced the British industrial competitive scheme, but it will not come alive for industrial energy prices until 2027, which is two years away.

I thought I heard the Minister say that the Government would consider the potential for changing the criteria for the energy intensive industry compensation scheme to bring in new sectors that could be offered some immediate help and some respite between now and the introduction of that scheme. If that is the case, will the Minister be clear about it at the Dispatch Box, and if he is able to look at the EIIC criteria, can he also look at the existing energy supercharger scheme, which would give ceramics companies in my constituency access to the support that they need in order to continue to thrive?

[Michael Shanks]

My hon. Friend is right to mention the impact of high electricity costs across industry. Since we came to office we have been doing everything possible—through the industrial strategy, and through other work that my colleagues in the Department for Business and Trade have been doing—to try to drive down energy costs, and we are doing wider work across the energy system to deliver clean power by 2030, and to bring down bills and reduce the volatility in bills that affects too many households and businesses throughout the country. We are looking at all the possible options, and I have said to the refinery sector that we are willing to look at all the schemes on a case-by-case basis. There is no easy answer to many of these questions, but we will, for example, consider eligibility for the industrial competitiveness scheme following the consultation that will open shortly, and it will be reviewed in due course.

I understand that the question relates to how fast we can move on some of these matters, but we need to ensure that we get this right, and we are doing everything we can, where we can, to move faster with some of the decisions.

[Harriet Cross (Gordon and Buchan) (Con)]

The Government stood in to secure British Steel, citing national security and protecting jobs; now they are standing in to support Prax Lindsey, citing the need to protect energy security and workers. As the Minister knows, tens of thousands of jobs and many, many companies in north-east Scotland are nearing a cliff edge because of the Government’s policies. To prevent the need for another eleventh-hour standing in by the Government, will he now support the North sea by ending the energy profits levy and allowing new licences there?

[Michael Shanks]

I should avoid straying into taxation policy, which is not in my brief. However, I will say that we are doing everything we can to issue a speedy response to the consultation on the future of energy in the North sea, which is all about how we strategically plan the future of oil and gas in this country to ensure that we are building up the future industries at the same time as supporting existing oil and gas supply chains and jobs, and we are moving that work forward.

Let me be clear about what the official receiver does. The official receiver is in post with statutory duties, but that is not in the same bucket as nationalising an industry. It would not be right for the Government to underwrite failing businesses, but we have a responsibility to ensure that an active refinery is wound down in a way that is safe, or that we can find a buyer to continue it.

[Carla Denyer (Bristol Central) (Green)]

I stand in solidarity with the workers in the oil industry who are facing such uncertainty and fear. This incident illustrates perfectly why a carefully managed worker-led transition away from oil and gas is so desperately needed to avoid a chaotic collapse in which workers pay the price. Will the Minister agree to implement my Energy and Employment Rights Bill, whose proposals include the publication of a plan for the redeployment and retraining of oil and gas workers, paid for by oil and gas companies across the industry rather than piece by piece and crisis by crisis?

[Michael Shanks]

I do not agree with the hon. Lady’s proposed piece of legislation, so I will not be supporting it. I think that that is the wrong approach, although she has highlighted the right problem. We are moving as quickly as possible to plan the transition properly, although we should have been doing that many years ago when it started, and as a result we have lost a third of the workforce in the past 10 years. More than 70,000 people have lost their jobs because we failed to plan for this.

I recognise the problem that the hon. Lady has described, but I think that the answer is for us to do two things: to manage the existing fields and support the industry for the lifetime of those fields, and to build up, at speed, investment in the industries that come next. In the spending review the Government supported industries in respect of carbon capture and storage and hydrogen, and, of course, significant investments in the supply chain through Great British Energy to ensure that we are building infrastructure in this country again and securing the jobs that come with it. The transition is important, and we are doing all that we can to ensure that workers are at the heart of it.

[Charlie Maynard (Witney) (LD)]

I appreciate the Minister’s words of support for the workers who are facing such horror and shock, and the Liberal Democrats will work hard to hold him to those words. I have two questions for him. The carbon border adjustment mechanism leaves UK refineries at a disadvantage when it comes to the trade in international fuel. Will the Government now consider including that trade in CBAM so that our UK refineries can be level pegging with the rest of the world? Secondly, the UK now has only one refinery left facing the North sea. How many refineries is it okay for us to have when it comes to maintaining fuel security? Can the Minister be precise in telling me how many more can fall after Grangemouth and the one that we are discussing?

[Michael Shanks]

I thank the hon. Gentleman for his questions and his promise to hold us to account; I look forward to that. He was right to reiterate the point that I made at the beginning about the importance of support for the workers, and we are calling for the company’s owners to do the right thing. As for the carbon border adjustment, we have looked at three factors: the UK emissions trading scheme, the carbon leakage risk, and the feasibility and effectiveness of inclusion. The refining sector does not currently meet all those criteria and is therefore not included in scope at present. We are looking beyond 2027 and also considering whether there is more we can do in the short term, but clearly there are questions about carbon leakage and other matters that we need to work through. That is partly why I got those in the sector together—the first time that had happened for 13 years, as it turns out—to talk about some of those issues, and about their own views.

I am not going to answer the hon. Gentleman’s second question with a specific number, because I do not think that is the right way to look at anything around business planning. What I can say is that refineries are incredibly important to this country. They are crucial parts of our energy infrastructure, and they are important businesses, but businesses have to operate as successful businesses. While some refineries are absolutely doing that, this one is clearly an example of where that has not happened. We will do everything we can to support the sector, but I am not going to put a specific number on how many refineries we should have in the future.

[Sammy Wilson (East Antrim) (DUP)]

Whatever the specific reasons for the company’s failure, the fact of the matter is that the refining industry has been squeezed for decades as a result of Government policy. When the Secretary of State for Energy Security and Net Zero stands up and demonises fossil fuels, it is hardly surprising that there is not investment in the refining sector. If we add the energy costs, the carbon taxes and all the other impediments, of course we will see businesses disappear. Given the fact that we have seen aluminium, steel, oil and now oil refinery disappear from the scene in the UK, does the Minister not understand that as long as we pursue this demented net zero policy, we will have regular announcements of job losses, greater insecurity in our fuel supplies, and the loss of heavy industry?

[Michael Shanks]

I do not agree with the right hon. Gentleman on any of his assessment—it will not come as a huge shock to him or the House for me to say that. Aluminium and steel have not disappeared from our industrial landscape in this country, but he is right to read out a number of things that this Government inherited and have had to fix. We had 14 years of failure in industrial policy, and that is why we recently announced an industrial policy, which I am sure the right hon. Gentleman has read and supports.

We are not agnostic about our industrial future. It matters that we build things in this country again, and we need a credible plan to do that. That is what we have outlined in the industrial strategy, but I will make a wider point: the right hon. Gentleman is against all the investment in the clean power that will give us the energy security that he talks about, which will take us away from the volatility of fossil fuels. I repeat this point to him, as I have done before: that investment will deliver the re-industrialisation of our communities, and will give certainty to the industries he talks about that bills will be under control and falling, rather than subject to the ups and downs of an international fossil fuel marketplace. That will drive forward economic growth and investment, and he opposes all of that.

[Richard Tice (Boston and Skegness) (Reform)]

I understand that Lindsey oil refinery has gone bust because it was uncompetitive because of high energy prices, just months after Grangemouth closed. We are witnessing the disappearance of the oil refining sector in this country because of high energy costs. We are witnessing the deindustrialisation of Britain because of high energy costs because of this Government’s obsession with net stupid zero—that is the harsh reality. That is the simple fact, and thousands of jobs are disappearing in front of our eyes. The Minister accepts that our energy costs are too high, and the Government promise that energy bills will come down, so could he tell the British people when?

[Michael Shanks]

I am always delighted to give the hon. Gentleman an opportunity for his soundbite. Of course, the problem with soundbites is that one needs some detailed, credible proposals underneath them, and they are in short order from the Reform party at the moment—it has no credibility whatsoever. He seems to have concluded a whole series of things about why this refinery closed. If he is party to information that the Government do not have, I would be grateful if he shared it with us, because we have not concluded the investigation that the Secretary of State only launched today.

The refinery has not made a profit since 2021, so for the hon. Gentleman to say that the situation is the responsibility of this Government’s energy policy is quite misguided. The truth is that while the Reform party chooses to oppose the investment that will drive forward jobs and opportunities across the country, including in his own constituency, we are determined to deliver that, because it is the right plan for re-industrialisation, for economic growth, for bringing down bills, for energy security and for tackling the climate crisis, which he might not care about, but children across this country, who will have to face this planet in the future, do care about it.

[Sorcha Eastwood (Lagan Valley) (Alliance)]

I thank the Minister for his responses so far. I, too, stand in solidarity with workers at the Prax Lindsey site. Whenever big companies are responsible for the stewardship of our energy, and sometimes for its generation, I worry that the cost will be passed on to consumers. I am also worried that workers at the Tata Steel site in my constituency of Lagan Valley, who are currently engaged in industrial action, have had their meeting cancelled by management. Does the Minister agree that these jobs are important and key to our transition for the future, and that those workers should not be left behind?

[Michael Shanks]

That is a very powerful and well-put point that I am very happy to agree with. Workers are right at the heart of our entire economy and will be at the heart of the transition in the future, and we need these skills to power the future industries that we are driving forward at the moment. We cannot afford to lose them, and the hon. Lady is right to make that point. I did not quite pick up on the cancelled meeting, but if she wants to write to me, I will happily look into it.

Xlinks Morocco-UK Power Project

Michael Shanks Excerpts

Thursday 26th June 2025 Written Statements

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

Making Britain a clean energy superpower is one of the Prime Minister’s five defining missions of this Government.

The mission is made up of two pillars: to deliver clean power by 2030 and to accelerate to net zero. The mission focuses on the long-term challenges we face and seeks to capitalise on the huge growth and energy security opportunities that our net zero transition can bring.

Successful delivery of the mission and its objectives will be a shared endeavour requiring extensive engagement and investment from citizens, business and industry. As part of this we have been considering the Xlinks Morocco-UK power project—a private sector-led proposal —to supply clean power to Great Britain via subsea HVDC cables.

Xlinks approached Government requesting support for the project, including a bilaterally negotiated 25-year contract for difference under section 10 of the Energy Act 2013, that would guarantee a set price per MWh of electricity supplied for the life of the contract.

A team of officials within the Department for Energy Security and Net Zero has engaged with Xlinks closely to understand the details of the proposal and has been working across Government to evaluate the viability and merits of the project. This evaluation has considered if and how the project could support the Government’s strategic objectives and the risks which could impact its successful delivery.

The Government have concluded that it is not in the UK national interest at this time to continue further consideration of support for the Morocco-UK power project.

The Government have concluded the project does not clearly align strategically with the Government’s mission to build home-grown power here in the UK.

This would be a first-of-a-kind mega-project with a high level of inherent, cumulative risk—delivery, operational, and security). We acknowledge Xlinks’ excellent work in trying to mitigate these risks where possible but, nevertheless, this remains a factor in decision making.

Ultimately, we have determined that we should focus our attention on stronger alternative options to meet the Government’s plans to decarbonise the power sector and accelerate to net zero at the least risk to billpayers and taxpayers.

The Government also believe that domestic alternatives can see greater economic benefits, whether that through jobs or supply chains.

The Government would like to put on record our thanks to Xlinks and its team for their innovative proposal and their constructive and patient engagement with my Department.

The Government are grateful to the Kingdom of Morocco for its willingness to consider this innovative, first-of-a-kind project, and for the assistance its Ministries have provided my Department over the course of this evaluation. The United Kingdom is committed to further strengthening our partnership and sees Morocco as an increasingly vital trade and investment partner for the UK. Earlier this month, the UK and Morocco entered into an enhanced strategic partnership which saw the Foreign Secretary visit Morocco to sign a series of agreements covering trade, green growth, and security.

The United Kingdom believes Morocco to be an attractive and innovative investment destination and is a key strategic partner for the United Kingdom in the areas of clean energy, decarbonisation, and tackling climate change. UK companies, supported by the UK Government, are looking to increase their investment in the Kingdom. The Government’s decision regarding the Xlinks Morocco-UK power project is not, nor is it indicative of, a reflection or judgment upon the Kingdom of Morocco as either a strategic partner or as a place to do business by the United Kingdom.

The United Kingdom is proud to work with Morocco as a breakthrough agenda partner, where the United Kingdom and Morocco co-lead the power workstream, and to continue supporting its ambitious renewable energy targets through the COP26 Energy Transition Council. The United Kingdom looks forward to identifying and developing new avenues for co-operation in these exciting, and increasingly significant, sectors with the Kingdom of Morocco in the future.

[HCWS745]

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

Michael Shanks Excerpts

Tuesday 24th June 2025 General Committees

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

I beg to move,

That the Committee has considered the draft Nuclear Installations (Compensation for Nuclear Damage) (Amendment) Regulations 2025.

It is a pleasure to serve under your chairship, Mr Betts. The draft regulations, which were laid before the House on 19 May, make technical changes to the way in which the convention on supplementary compensation for nuclear damage, known as the CSC, will operate in the UK on accession to the treaty. The changes streamline the operation of the different conventions, as well as the domestic implementing legislation.

Nuclear power is central to the 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, home-grown energy, creates thousands of well-paid, skilled 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, and we pledged £2.5 billion for small modular reactors, or SMRs, over the spending review period. Rolls-Royce SMR has been selected as the preferred bidder to partner with Great British Energy—Nuclear to develop the reactors. Together with Hinkley Point C, those announcements represent the biggest nuclear roll-out for a generation, delivering more nuclear to the grid than in the past 50 years.

Participation in nuclear third-party liability—or NTPL—treaties are 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; claims are channelled exclusively to the operator of a nuclear installation; and claims are channelled to the jurisdiction in which the nuclear incident occurred. The UK is party to the Paris convention on third-party liability in the field of nuclear energy and to the Brussels convention supplementary to the Paris convention on third-party liability in the field of nuclear energy, known as the Brussels supplementary convention. They are implemented domestically in the Nuclear Installations Act 1965.

The Paris convention sets a minimum operator liability amount of €700 million, with an additional €500 million of compensation available above that to compensate victims in a Brussels supplementary convention country. Finally, there is 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 and the nuclear supply chain, and to support exports, we are now pursuing accession to another treaty, the convention on supplementary compensation for nuclear damage. The CSC is another international nuclear third-party liability treaty, 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 the number of countries that the UK has NTPL treaty relations with by 11. The expansion will remove some potential barriers to inward investment, and support UK exports in the future. Accession will enhance the UK’s attractiveness as a destination for nuclear investment and support the successful delivery of future projects. That 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 for potential 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 set at £7 million. To date, there have been no calls on this fund.

As the first Paris convention country to seek accession to the CSC, there is no established path for countries seeking participation in both conventions, and the UK is therefore 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 various NTPL regimes. Our initial approach had been to reflect the minimum national compensation amount required for claims at 300 million special drawing rights, 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. The technical amendment will align the compensation available under the CSC with that of the Paris convention, which is to say it creates 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 no increase in the liability burden for operators. For sites with lower liability levels, namely low-level 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 operator financial security limits under the Paris convention are exhausted. It will continue to ensure 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, the 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. The Government have been clear on our support for nuclear, and these measures contribute to creating the best possible investment climate. I commend the regulations to the Committee.