Draft Contracts for Difference (Miscellaneous Amendments) (No. 2) Regulations 2025

Nick Timothy Excerpts

Monday 2nd June 2025 General Committees

[Nick Timothy (West Suffolk) (Con)]

I am delighted to serve under your chairmanship, Mrs Hobhouse, and pleased to respond on behalf of His Majesty’s Opposition.

Today we consider the Government’s plan to go on subsidising Drax. Drax is of course not mentioned in the draft regulations, and Ministers had hoped to sneak through this contract for difference without much scrutiny, but we have a responsibility to examine what is actually a very significant change to our country’s energy system. The draft regulations will push ahead with the Government’s four-year extension of the subsidy scheme for Drax, from 2027 to 2031. Such a major move is being made without proper debate or awareness of all the facts. Ministers and Drax itself have kept vital information hidden from scrutiny, covering up the true costs and business practices of the company.

Concern has been expressed about Drax in both Houses of Parliament in recent months. The Public Accounts Committee says that Ofgem allows Drax to “mark its own homework” when it comes to subsidy claims. The House of Lords Secondary Legislation Scrutiny Committee has criticised the Government for not sharing key documents about the true nature and cost of their dealings with Drax. Just a couple of months ago, the company was taken to court by a whistleblower who claimed that Drax had made attempts to “deliberately conceal” the unsustainable sources of its wood and

“had likely broken its legal obligations owed to its government funders”.

Thanks to the investigations by BBC “Panorama” and others, we know Drax’s behaviour has not been honest. Drax executives have been caught misleading the media, covering up reports and manipulating evidence. Ofgem fined Drax £25 million for inaccurately reporting data about its sources of wood. We have seen evidence that Drax sourced wood from primary forests in British Columbia and elsewhere. There is more than enough cause for many to doubt the ethical integrity of Drax and whether it should receive more public money.

Before presenting the draft regulations to the House, Ministers should have done their due diligence and published this evidence, so I ask the Minister these questions. When will we see the legal documents associated with the recent court case? When will we see the 2022 KPMG report on Drax’s accounts, which the Prime Minister said on the Floor of the House he would look at? When will we see the Ofgem audit? When will we see the NESO modelling justifying the extension of the subsidy scheme?

[The Chair]

Order. Mentioning Drax as a company is not within the scope of the legislation in front of us.

[Nick Timothy]

Forgive me, Mrs Hobhouse, although the main recipient of the subsidy that we are talking about is Drax itself.

[The Chair]

I am being advised by the Clerk.

[The Lord Commissioner of His Majesty’s Treasury (Anna Turley)]

We are debating the legislation, not a company.

[Nick Timothy]

The Government Whip could stand and refer to the names of the companies in receipt of the subsidies, if she so wishes.

[Anna Turley]

We are discussing the legislation; that is the point of principle, and that is why the Clerk has intervened.

[Nick Timothy]

And, as I say, the main recipient of the public subsidy will be Drax.

When will we see the NESO modelling justifying the extension of this subsidy scheme? When will the Government publish details of their new sustainability criteria and means of enforcement to ensure that biomass is properly sourced?

The Minister should also answer why the Department only sought the advice of the Subsidy Advice Unit on its plans last Friday, knowing that we would be voting on the draft regulations today. The SAU is now running a two-week consultation and will not publish its report until 10 July. There should not be a vote on extending the subsidy until Parliament and the public have been able to examine thoroughly the SAU’s findings. These are big questions that should have been answered before the draft regulations were debated.

Beyond those concerns, we must also ask ourselves whether subsidising companies like Drax is good energy policy. The evidence shows that it is clearly not. The company that I have been discussing is an expensive white elephant for which we have been paying ever since the Energy Secretary first held his post back in 2009. Since the ramp-up that he authorised, the company has cut down 300 million trees, six times more than in the entire New Forest. The company has received £6.5 billion of public subsidy. In the nonsensical world of net zero, it has been classed as clean energy, but it is far from being a source of clean energy. It is a plant for burning wood imported from forests across the world. As new forests are planted to offset the emissions from chopping down the trees, turning them into pellets and burning them, we are supposed to believe that it is clean. The truth is that the plant we are discussing produces four times the carbon dioxide emitted from our last coal plant, which itself produced twice as many emissions as gas. The imported wood has come from rare, at-risk and irreplaceable forests and arrives here on diesel-powered ships.

[The Chair]

Order. Again, I remind the shadow Minister that we are discussing the legislation, not a particular company and where it sources its materials. I recognise that this discussion is happening across Parliament, but I remind him to limit his remarks to the legislation.

--- Later in debate ---

[Nick Timothy]

I certainly will, but we are talking about legislation permitting the subsidy of biomass. It is not cheap to do so; we pay £500 million for the privilege, and the draft regulations will make it even more costly for taxpayers. Every megawatt-hour produced will now cost £160—more than double the cost of gas power—up from £138 before. Burning these trees is raising the cost of wood globally while reducing biodiversity in key areas and eroding natural carbon capture.

It gets worse. The sixth carbon budget demands the removal of 23 million tonnes of emissions to avoid even more painful behaviour changes from the general public. This company is being used as an expensive “get out of jail” card, with more public money potentially coming down the line for carbon capture. It was for those reasons that my right hon. Friend the Member for East Surrey (Claire Coutinho) withdrew Government support for schemes such as this last year, which led the chief executive officer of the company that we have been discussing to call her “reckless and irresponsible”. Cutting down and burning trees in the name of saving the planet is not just reckless and irresponsible, but complete madness.

If Members here today believe that this is environmentalism and a solution to climate change, I have a bridge to sell them. The Climate Change Act 2008 has created a complex web of targets, quotas and regulations, as well as policies set by a monomaniacal and unaccountable quango tying the hands of elected Governments and twisting policy out of shape. It is producing an energy system that is less secure and more expensive, while doing nothing to prevent rising carbon emissions worldwide.

That is why we will vote against the draft regulations. I urge colleagues from all parties to join us and show that they are truly committed to a secure and rational energy system, and not throw more money at the Energy Secretary and his very costly mistakes.

--- Later in debate ---

[Michael Shanks]

We are somewhat through the looking glass with the response from the shadow Minister, the hon. Member for West Suffolk, who seemed to forget in his long list of things that were wrong with the contracts previously that it was his Government that agreed them. This Government have sought to improve every single aspect of the contract: halving the subsidy, improving sustainability, only running on the system when it is required, and delivering security of supply. He talks about being reckless and irresponsible. What would have been reckless and irresponsible is to come here and say that we do not care about the security of supply and the importance of finding the dispatchable power that we need. That is the decision that we are here to allow the Government to take forward—

[Nick Timothy]

If the Minister is interested in the security of supply, why will the Government not allow new licences for oil and gas in the North sea?

[Michael Shanks]

We are considerably off the topic of the draft regulations, but since the shadow Minister makes the point, I will answer the question. We have not said that there will be no new oil and gas. We have said that there will be no new licences to explore new fields, taking into account all the available evidence, which is that the North sea is a declining basin. If we manage it properly, we can have a future energy process in the North sea that delivers on carbon capture, hydrogen, offshore wind and oil and gas for many years to come. There is much more on our oil and gas policy that we can discuss, perhaps in a different debate.

On these particular draft regulations, the shadow Minister asked a number of questions, which I am happy to follow up on. On the KPMG reports, perhaps he did not see, but I wrote on 25 February—as soon as I could following my statement in the House, because I take these things very seriously—and the chief executive of Ofgem responded on 12 March. Both letters are in the Library and the shadow Minister can read them. The KPMG reports do not belong to the Government or to Ofgem; they belong to Drax, and it is for Drax to decide whether to release legally privileged documents.

Clearly, analysis that NESO provides to the Government is sensitive, for very good reasons—a considerable amount of what NESO does in running the energy system must be kept secret, for commercial reasons and so that the Government and NESO can freely exchange information—but it published a summary of its advice on its website, which, again, the shadow Minister can look up.

On the points made by the hon. Member for Thornbury and Yate, first of all, we are back from recess, which means we are back to work. The Government do not have time to waste, hence, I am afraid, we scheduled consideration of the draft regulations for the first day back; we have things to get through. She made the point that there are alternatives to biomass. A number of others have made that point, too, but they have yet to name the alternatives and what can be built within two years to provide the necessary supply.

We do not think that there is a long-term future for unabated biomass—we agree on that—but the crucial point is that we have a short-term security of supply issue that we have to resolve. We need dispatchable power when we need it, and the alternatives—gas, as the shadow Minister says—are considerably more expensive. The Conservative party might want to consign us to much more of the fossil-fuel casino and higher bills for all our constituents. This is a short-term decision for us to move away from that.

We have significantly increased the sustainability requirements and we will appoint an independent sustainability adviser to provide expert advice and challenge to both Government and providers on sustainability policy and delivery. We want to take sustainability much more seriously than the previous Government did, but this is an essential short-term measure to ensure the security of supply across the country. The draft regulations—copies are available in the room if Members have not had a chance to read them—will enable the Government to continue to deliver security of supply at the lowest possible cost for consumers while protecting and enhancing vital sustainability measures, and I commend them to the Committee.

Question put.