Draft Human Medicines (Amendments Relating to Hub and Spoke Dispensing etc.) Regulations 2025
(4 days, 13 hours ago)
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The Minister for Care (Stephen Kinnock)
I beg to move,
That this Committee has considered the draft Human Medicines (Amendments Relating to Hub and Spoke Dispensing etc.) Regulations 2025.
It is a pleasure to serve under your chairship, Mr Stuart. These regulations amend the Medicines Act 1968 and the Human Medicines Regulations 2012 to enable hub and spoke dispensing for pharmacies and dispensing doctors that are not within the same legal entity.
Pharmacies play a vital role in our healthcare system, ensuring that patients have access to medicines and acting as an easily accessible front door to our NHS. This Government recognise the importance of community pharmacies and are committed to supporting the sector. That is why we have increased the core contract for community pharmacy funding to £3.073 billion, with the deal representing the largest uplift in funding for any part of the NHS in 2025-26—over 19% across 2024-25 and 2025-26.
Community pharmacies work hard for the NHS and the patients they serve. In England alone they dispense around 1.1 billion NHS medicines every year, and that number grows year on year. Dispensing of a medicine is not just handing out a package, but covers a number of processes: the receipt of a prescription; clinical and accuracy checks to ensure the prescribed medicine regime is suitable and safe for the patient; sourcing and buying the medicines on behalf of the NHS; the preparation, assembly and supply of medicines; and advising patients to ensure they know how and when to take the medicine. It is complex and important work.
As the number of prescriptions rises, we need to support our pharmacists to focus on the provision of advice and support to patients in order to optimise their use of the medicines on which the NHS spends nearly £10 billion in primary care each and every year. That is why the Government have introduced these regulations to allow all pharmacies, should they choose, to make use of hub and spoke dispensing.
In hub and spoke dispensing, the routine elements of dispensing—such as sourcing products, the preparation and assembly of medicines, and labelling—take place on a large scale in a hub pharmacy, separate from the pharmacy at which the prescription was handed in, which is the spoke. There are typically many spokes to one hub. Existing hubs often make use of automated processes to realise economies of scale and increased efficiencies. Not all pharmacy businesses are able to invest in their own hub, and businesses are currently not able to engage a hub that they do not own. The Government propose changes that would level the playing field in community pharmacy by enabling all pharmacies and dispensing doctors to use hub and spoke dispensing, if they choose.
Hub and spoke arrangements already exist in the UK, but the 1968 Act restricts their use to community pharmacies that are part of the same legal entity. That has limited the use of hub and spoke arrangements to the larger pharmacy chains. The proposed changes to the 1968 Act and the 2012 regulations will remove that legal restriction and allow all pharmacies, including small independents and dispensing doctors, to utilise the arrangement as and when best suits them, levelling the playing field and cutting red tape.
We propose to amend the 2012 regulations and the 1968 Act using the powers in the Medicines and Medical Devices Act 2021. The amendments go beyond simply removing the barrier that currently limits hub and spoke dispensing to pharmacies within the same legal entity, and they include additional elements to ensure the policy’s safe and effective implementation by putting in place provisions to ensure accountability, governance and transparency for patients.
We propose to amend the 1968 Act to remove the restriction that prevents a medicine from being sold or supplied from a different pharmacy from the one at which it was dispensed, unless those pharmacies belong to the same legal entity, and to remove section 131 of the Act, which covers the definitions of wholesale dealing, retail sale and related expressions. The definitions of those terms will now be those found in the 2012 regulations to ensure clarity across the legislation.
The proposed changes to the 2012 regulations create a new model of hub and spoke dispensing. They establish a framework for the sharing of patient information between the hub and the spokes and set the following criteria for the newly permitted arrangements. Both a hub and a spoke must be pharmacies registered with the pharmacy regulator. There must be written arrangements between any hub and spoke that must include a comprehensive statement about their responsibilities to ensure that each party is clear about the process and activities for which they are responsible. The medicine label must include the name and address only of the spoke so that patients know where to address any questions about their medicines. The spoke must conspicuously display a notice on its premises and its online presence about hub and spoke dispensing arrangements, where they are in use.
The changes also establish an information gateway that includes conditions for lawful sharing of relevant patient data between the different legal entities that operate hub and spoke arrangements. There is potential for this model to increase patient safety. Evidence shows that, where businesses have implemented hub and spoke systems with tracking technology, automated systems in the hub have had a dispensing error rate six times lower than manual processes.
During the consultation on the proposals in 2022, respondents shared evidence suggesting that the working environment in both the hub and the spoke can be calmer and more focused, reducing some of the stresses on our valued pharmacy workforce. Providing space and time at the spoke gives staff more time to deal with complex issues and carry out patient-facing work, including explaining to patients how to get the best outcomes from their prescribed medicines.
All the amendments will come into force in October 2025. They will apply across the UK, and the timescale allows time for secondary legislation to be amended, as appropriate, across the four nations. It also gives the pharmacy sector time to explore the relevance of the new hub and spoke arrangement.
I hope I have explained the rationale behind amending the 2012 regulations and the 1968 Act to enable hub and spoke dispensing arrangements across different legal entities. I commend the regulations to the Committee, and I hope hon. Members will join me in supporting them.
Dr Luke Evans (Hinckley and Bosworth) (Con)
It is a pleasure to serve under your chairmanship, Mr Stuart.
I will not go through everything the Minister set out, but we are amending the Human Medicines Regulations 2012 and the Medicines Act 1968 to enable hub and spoke dispensing.
The regulations before the Committee will improve seven key areas. They will enable cross-business outsourcing; clarify the legal definitions of wholesale dealing and retail sale; extend outsourcing to NHS GPs; establish hub and spoke frameworks, legally defining what the hub and spoke model is and enabling hubs to assemble medicines; tighten up labelling and information rules; introduce data-sharing provisions; and clarify premises-based supply.
The pros of doing that, and the reason why the previous Government were introducing legislation to do so, is that it will provide efficiency gains, improve access, modernise the legislation, and improve patient safety and data protection. There are some cons and concerns, however, particularly regarding the complexity of implementation and whether pharmacies will need to invest in new systems. There are data privacy risks, as the world is seeing an increasing number of cyber-attacks, which is a concern as we are adding more areas for data sharing. In addition, the regulatory ambiguity resulting from removing definitions from the 1968 Act may cause initial confusion during the transition.
Between 16 March and 8 June 2022, the previous Government consulted on legislative proposals to allow pharmacies and dispensing doctors to access hub and spoke dispensing models. Two different models were proposed:
“Model 1 is where the patient presents a prescription to the spoke. The spoke then sends the relevant information on to the hub so that they can carry out their agreed dispensing actions. The hub then sends these dispensed medicines back to the spoke, which may have further responsibilities to perform such as providing advice on the medicine to the patient, before supplying them to the patient.
In model 2, the same pathway is followed in that the patient presents a prescription to the spoke, which then sends the relevant information to the hub. The hub then assembles and prepares the medicine before supplying the completed order directly to the patient.”
On Monday 13 May 2024, shortly before the general election was called just over a year ago, the previous Government published a response to the consultation. The majority of respondents, being medium and larger pharmacy chains, representative sector organisations and other related businesses, supported the proposals. However, a majority of individuals, smaller pharmacies and independent pharmacies did not support the policy change.
At the time, the proposed next step was to make several amendments to the 2012 regulations, including the creation of two new models: spoke-hub-spoke and spoke-hub-patient. The previous Government intended to lay a final statutory instrument before Parliament and the Northern Ireland Assembly with a view to the legislation coming into force on 1 January 2025. However, because of the election, that statutory instrument was not laid.
The Minister reiterated this Government’s position in response to a question from the hon. Member for Warrington South (Sarah Hall):
“A wide range of community pharmacies and representative organisations fed into the public consultation on hub and spoke reform, and I am pleased to confirm that their responses were overwhelmingly positive in support of model 1 of hub and spoke, which we will be going with.”—[Official Report, 25 March 2025; Vol. 764, c. 774.]
There are two problems here—the implementation and the principle—and I will take them in turn.
The impact assessment, which was updated in April 2025, found uncertainty about the potential costs of establishing the hubs, the operating costs and the level of uptake of hub and spoke dispensing. Paragraph 78 stated:
“It has not been possible to determine the initial set up costs for hubs, due to the variety of different hub solutions and because we do not have a concrete assessment of the number and types of hubs that might open due to this policy.”
Paragraph 136 said:
“The key uncertainties in this IA are around the level of take up of hub and spoke arrangements and the net level of savings to dispensing costs that could arise”.
And paragraph 137 said:
“Ultimately hubs are private businesses who would need to conduct their own analysis and research into the level of market interest when deciding how much to invest in building hub capacity.”
In the light of that, can the Minister tell us whether there will be any further funding to implement this change? How will he record data on uptake and changes? And what incentive is there for businesses to take this up? Will it be mandated? Given the abolition of NHS England, where will the data be collated, who will collate it, and when will it be published?
I have now addressed the practical part, so I will now focus the Committee’s attention on the other part. The previous Government proposed to take forward both models: model 1, which was patient-spoke-hub-spoke-patient; and model 2, which was patient-spoke-hub-patient. I have been contacted on the latter by Pharmacy2U, which is the largest online distance-selling pharmacy.
Every month, Pharmacy2U dispenses more than 3 million items directly to the homes of 1.5 million customers, so it offers an alternative for patients. It asks why there was no formal consultation on the changes from the previous Government’s position, whether Ministers had considered whether this change excludes the perspectives of distance-selling pharmacies, and what the expected impact of excluding model 2 will be.
Sadik Al-Hassan (North Somerset) (Lab)
It is a pleasure to serve under your chairship, Mr Stuart. I refer hon. Members to my entry in the Register of Members’ Financial Interests as a registered pharmacist, and previously a superintendent pharmacist of a distance-selling pharmacy. Although it is great to hear the hon. Member refer to distance-selling pharmacies in this august place, I remind him that he is representing the views of only one, admittedly large, distance-selling pharmacy, and that there is perhaps a wider range of views among distance-selling pharmacies.
Dr Evans
Of course, and I thank the hon. Gentleman for that point, with his august history as a pharmacist. My job in the Opposition is to raise these issues with Ministers for consideration. At the heart of my point is that, by choosing only one model and not offering two, we are closing down the opportunity for not only patients but businesses. If we want to invent in the NHS, that seems a bad way of doing it. It is why the last Government suggested that having a couple of models allows people to invest in, invigorate and improve our system, because otherwise, innovation will fall behind. That is at the heart of the questions I am posing to the Minister.
That leads me nicely on to my follow-up question. Does this mean that the Minister will choose not to introduce model 2? Is that likely to be in line in the future, and if so, when?
Those questions go to the principle of this. The last Government decided that there were two options to accommodate all different fields, be it dispensing GPs, community pharmacies, large-scale chemists and pharmacies or, indeed, distance-selling pharmacies. It is really important to take into account the whole environment we have in the health service. We will not divide the Committee, but we would like answers to those questions about the practicalities and policies behind the regulations.
Sadik Al-Hassan (North Somerset) (Lab)
I start by reminding the Committee again about my entry in the Register of Members’ Financial Interests, which includes a number of pharmacy-related entries as a registered pharmacist, including my employment by PillTime prior to being elected to the House.
With that out of the way, may I say how genuinely thrilled I am to be here this evening? Although this may seem a very niche issue to many on the Committee, as a pharmacist for nearly 20 years, many of those spent in community pharmacy and latterly in online pharmacy, I can tell Members through first-hand experience of the difference that this legislation will make to thousands of community pharmacies struggling across the country.
Although I am incredibly thankful to the Government for finally unfreezing the funding settlement after a near decade-long squeeze under the Conservative Government, there remains great financial strain upon the sector and thus a clear need for modernisation to improve efficiencies. Innovation such as hub and spoke model 1 is how we enable that modernisation and unlock the efficiencies needed to ensure community pharmacy has a future. Having worked in pharmacies for the last two decades, I know the difference that implementing hub and spoke model 1 could quickly make to my fellow pharmacists not only in enabling greater efficiencies, but in creating the much-needed additional capacity to enable the delivery of Pharmacy First services. As we look at implementing the three big shifts, pharmacy has a clear role in delivering the preventive agenda, but it can only step up and fulfil that role if we give it the funding and capacity to do so.
In late March, Minister Kinnock ensured that community pharmacy received the largest uplift in funding across the whole of the NHS. Today, the Committee can deliver hub and spoke dispensing and thus create additional capacity. Having worked with innumerable stakeholders in the pharmacy sector to get this legislation moving again after its derailment last September, I can say with confidence that there is widespread support within the community pharmacy sector for hub and spoke model 1. It will finally provide the beloved village pharmacy a level playing field with the larger chains, which have been able to utilise these technologies for decades.
The benefits of the model extend far beyond the efficiency savings, with robust evidence of greater levels of patient safety by providing access to automation in the dispensing process. I thank the Minister for acting with haste greater than many in the sector expected when the implementation of hub and spoke was indefinitely delayed last September. Although I apologise for the interminable stream of letters, conversations in corridors and questions I have since sent his way, I am afraid I still have one more point that I would appreciate clarification on.
As I understand it, the VAT status of hub and spoke services is still to be explained. Could the Minister elaborate on what exactly the VAT status will be for any fees or charges between hub and spoke? From my understanding, it is currently treated as zero-rated,and there exists some uncertainty within the sector over whether that will still apply under model 1, and if not, what elements might be subjected to VAT and at a higher rate.
The Chair
It is worth noting that Members should refer to colleagues by their constituency, as opposed to their name, even when they are an august Minister.
Robin Swann (South Antrim) (UUP)
It is a pleasure to serve under your chairship, Mr Stuart.
The regulation of medicines is a reserved matter for England, Wales and Scotland, but a devolved matter for Northern Ireland. The amendments aim to enable the same opportunities for hub and spoke provision across the whole of the Union, and as a former Northern Ireland Health Minister, I welcome that step. When I was Minister, I published and stood over the Northern Ireland community pharmacy strategic plan 2030, which aimed to maintain and modernise systems for the safe and reliable supply of medicines and professional advice from community pharmacies.
In that regard, I have a question for the Minister. The decision has been made to enable only model 1 hub and spoke arrangements at this stage and then to revisit model 2 once the model 1 arrangements have been established. I notice that the consultation responses raise significant concerns about model 2. They outline the potential to undermine the relationship between pharmacies and patients, as well as the risks in sharing accountability for the supply of medicines and risks to patient safety. Although the spoke and hub model covers the supply of medicines, there is a danger of losing the professional advice that community pharmacists can supply to patients, which takes pressure off our health service and others. Before there is any further progress on model 2, which will be a devolved issue in Northern Ireland, will there be further engagement with the Minister of Health in Northern Ireland, the chief pharmaceutical officer and community pharmacy representative organisations?
Stephen Kinnock
I will endeavour to answer all the questions that have been asked, but there may well be some that I am not able to. I will be more than happy to write to hon. Members accordingly.
Let me say a word on the rationale for choosing model 1. The main driver was the view that the most important aspect is the interface between the pharmacist and the patient. We felt that the spoke-to-hub-to-spoke-to-patient model best ensured the connection, at high street level, between the pharmacist and the patient, whereas the spoke-to-hub-to-hub-to-patient model would somewhat cut the high street pharmacist out of the loop. That was a balanced judgment—it was not a slam dunk.
That leads on to one of the questions asked by the hon. Member for Hinckley and Bosworth, which was about whether the Government are still open to looking at model 2. We certainly keep things under review, and we want to see how model 1 goes. If there is a feeling that it needs to be reviewed, we would be happy to do so. However, as things stand, we do not have any plans to do anything other than go with model 1, for the reason that I set out.
The hon. Member also asked about further funding. We have set out a pretty substantial uplift— £3.073 billion—for the pharmacy sector. We are hopeful that that will go some way to easing the tremendous pressures that the sector is facing. We also feel that the hub and spoke model will drive productivity, which we hope will enable pharmacies to do more with less. That will be a good way to address some of the funding challenges.
On recording data and where the data will be held, I will write to the hon. Member. I do not have that technical information to hand.
On the incentives, we are clear that this is a flexible business arrangement. All we have said is that we need to see set out in writing how the relationship between the hub and the spoke will work. That is in the draft regulations. Letting that business relationship work with the greatest possible flexibility—rather than trying to micromanage it too much with incentives set from the centre—is the best way for it to work. As I say, however, every time we will want the assurance of a clear written relationship between the two.
I thank my hon. Friend the Member for North Somerset for his kind words. I have absolutely welcomed his relentless lobbying during various Divisions over the past few months—I promise him that is the truth and nothing but the truth. On VAT status, however, I will dodge the question, because of course decisions on VAT are the responsibility of His Majesty’s Treasury. I strongly encourage him to ask his question of my ministerial colleagues in the Treasury.
Finally, I thank the hon. Member for South Antrim for his engagement. We have had excellent engagement with his colleagues in the Northern Irish Government. He has my absolute, 100% assurance that we will continue that engagement and, given the time available, which I set out in my speech, we will ensure that all nations are able to take this legislation on board and make the necessary changes in a way that works for devolution and for the entire system across the UK.
Question put and agreed to.
Draft Contracts for Difference (Miscellaneous Amendments) (No. 2) Regulations 2025
(4 days, 13 hours ago)
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The Committee divided: - Ayes: 11 / Noes: 4 - Question accordingly agreed to.
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 Contracts for Difference (Miscellaneous Amendments (No. 2) Regulations 2025.
It is a pleasure once again to serve under your chairmanship, Mrs Hobhouse. The draft regulations were initially laid before the House on 11 March, but they were re-laid on 2 April to correct very minor drafting errors.
On 10 February, I made a statement to the House confirming that, following a public consultation, the Government intend to introduce short-term support for large-scale biomass generators to ensure the UK’s continued security of supply. As set out in our response to that consultation, legislative changes are needed to enable the Government to provide support to existing biomass generators through a new low-carbon dispatchable contract for difference. I stress that, while the draft regulations will allow for new support to be provided, the final decision will be taken following the conclusion of internal assessments and commercial negotiations, which are ongoing.
Before I cover the provisions of the draft regulations in more detail, I will briefly set out the Government’s position on large-scale biomass generation, which provides around 5% of the UK’s annual electricity generation. Current support for these generators under CfDs and the renewables obligation ends in 2027. It is critical to the Government that we maintain security of supply, even if that means making hard decisions.
I will briefly set out the range of factors that we considered before deciding whether to provide further support for these generators. First, we took analysis from the National Energy System Operator and concluded that, without further support for large-scale biomass, the country could face security of supply risks between 2027 and 2031. Relying on alternative options, such as newly built gas plants, to come online in that timeframe would carry significant risks. The Government will not take chances on our energy security. Secondly, we undertook comprehensive analysis of the costs of biomass against the alternatives. Our central projections show that, on the right terms and if playing a much more limited role in the system than today, biomass generation can be the lowest-cost option for bill payers during that period. Lastly, we will introduce strengthened sustainability requirements from the outset of any new agreement. Importantly, the draft regulations will also allow the sustainability measures to be enhanced throughout the duration of the contract, in line with the latest scientific evidence or global best practice.
Those factors represent a substantial shift from past arrangements on sustainability and value for money. However, we recognise the strength of concerns about the use of unabated biomass. It is not a long-term solution. We are determined that, the next time these decisions are made, the Government will not be left in the circumstances that we were this time. We will therefore do the work that was not done by the previous Government to build strong and credible low-carbon alternatives, so that we have proper options in four years’ time.
During my oral statement earlier this year, I also confirmed that the Government had agreed heads of terms for a new CfD with Drax. The draft regulations will enable that CfD, if a final decision is taken to provide it, but they will also enable similar agreements with any other biomass generators. I remind the Committee that the draft regulations are about ensuring only that we have the option available to respond to security of supply needs and to deliver low-carbon electricity to the grid at the lowest cost to the consumer.
I know, however, that many Committee members are interested in the details of a potential agreement with Drax, the largest biomass generator in the UK. The proposed agreement with Drax would limit generation to times when the system and, in turn, consumers most require it. When renewable power is abundant, Drax will not generate, and consumers will benefit from cheaper wind and solar instead. That means that Drax will only be supported to operate less than half as often as it currently does.
As a result, the deal would halve the amount paid in subsidies, compared with existing arrangements—that is equivalent to a saving of nearly £6 per household in annual bills—and, when compared with the alternative of procuring gas in the capacity market, it would save consumers £170 million in subsidies each year. The agreement also introduces tough new measures on sustainability, and we will appoint an independent adviser to support the development of policy and practice in biomass sustainability and ensure that they keep pace with the emerging science and international landscape.
The draft regulations will amend the Contracts for Difference (Definition of Eligible Generator) Regulations 2014 such that a person is eligible for a CfD in respect of a “biomass station” where it is intended that the existing biomass station will continue to provide electricity. Simply put, this will enable a new low-carbon dispatchable CfD to be signed with existing biomass generators, which is not currently possible. As is the case today, the Low Carbon Contracts Company will be the counterparty to any new CfD.
The second part of the draft regulations relates to sustainability. The Government support the use only of sustainable biomass, and we continue to review sustainability requirements so that we can remain aligned with the latest evidence. The draft regulations will amend the Electricity Market Reform (General) Regulations 2014 to allow the Secretary of State to direct the LCCC to implement amendments relating to sustainability obligations within the new CfD. That will mean that the Government can make changes to sustainability requirements within the new contract, to ensure that they keep pace with the latest evidence.
Before I conclude, I want to thank the Public Accounts Committee for its review and report on wider biomass policy. My Department is carefully considering the contents of that report and will respond in due course.
The Government will do whatever it takes to deliver energy security and to protect bill payers now and into the future. The draft regulations support that commitment. They make the necessary amendments to enable support to be provided to biomass generators when existing schemes end in 2027. That will enable us to maintain the UK’s security of supply, deliver value for money for consumers and enhance sustainability requirements. I commend the regulations to the Committee.
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 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.
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.
Claire Young (Thornbury and Yate) (LD)
It is an honour to serve under your chairship, Mrs Hobhouse.
In 2009, the then Climate Secretary, the right hon. Member for Doncaster North (Ed Miliband), announced his plan to ramp up the use of wood-burning power stations while also ensuring sustainability. Fast forward to today and the right hon. Member—now the Secretary of State for Energy Security and Net Zero—is attempting to paper over his legacy by forcing through an extension of subsidies until 2031. That is being done despite broad cross-party opposition to the move, as the previous Government took the decision to refuse the extension. There are alternatives.
Since that so-called ramping up 15 years ago, six times more trees than in the entire New Forest have been cut down. Disapproval is so strong that it undermines trust in the Government’s entire package of net zero policies. Key investments in our energy infrastructure will be squeezed if we persist in chopping down North American forests and shipping them across the Atlantic in diesel freighters. There are far better and smarter ways to power our homes. We have already heard about the comments from the Public Accounts Committee, and this month the Lords Secondary Legislation Scrutiny Committee agreed that this is not value for money. It also expressed deep concerns about the true purpose of the draft regulations and stated that Parliament needs to see key documents about them, including legal evidence, the National Energy System Operator report and the Ofgem audit.
Rather than reflect on those grave issues, the Government chose to announce on the first day of recess that they would convene a Delegated Legislation Committee on the first day back. That is despite the fact that the draft regulations would enable Ministers to extend the subsidies to burn trees for four years from 2027, when the current subsidies run out, to 2031. Liberal Democrats strongly believe that biomass is not a form of renewable energy and should not be subject to any exemptions or Government support. It is an incredibly inefficient method of producing electricity, and there are far better methods we should be investing in.
We note the concerning comments in the Climate Change Committee’s seventh carbon budget recommendations, which confirmed that there is
“no role for large-scale unabated biomass generation at high load-factors in the pathway beyond the expiry of existing contracts in 2027.”
Yet the Government are choosing to go ahead with just that. Liberal Democrats want to see the contracts for difference scheme used to benefit renewable energy production and reduce the UK’s dependence on fossil fuels in the hands of authoritarian regimes. Investing in renewable energy will cut bills, lower emissions and improve our energy security.
We have been calling on the Government to keep the cap on the dedicated biomass plants and end support for all new biomass plants. We want to ensure that 90% of the UK’s electricity is generated from renewables by 2030, with biomass not a part of that because the wood often does not come from renewable sources and in many cases the emissions are worse than coal. We therefore oppose the draft regulations and urge the Government to think again.
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.