Universal Credit: Two-child Limit
(1 day, 16 hours ago)
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Lord Farmer
To ask His Majesty’s Government what assessment they have made of the impact on work incentives of lifting the two-child limit in Universal Credit.
The Minister of State at the Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, this Government are determined to lift children out of poverty, and removing the two-child limit is the fastest and most cost-effective way to do so. The benefit cap is still in place, encouraging parents to take responsibility and work towards financial independence. Our approach balances fairness and provides a strong safety net without undermining the incentives to work.
Lord Farmer (Con)
My Lords, recent international evidence found that unconditional cash transfers increase fertility. Families claiming health-related benefits are not capped, so even these workless families will get UC for every child, again affecting work incentives. Research by the Institute for Fiscal Studies found that money-per-child tax credits increased births by 15% and decreased contraceptive use among beneficiaries. Have the Government assessed whether lifting the two-child limit will incentivise more births in benefit-dependent households, and whether many of the 450,000 children this measure intends to lift out of poverty would not otherwise have been born?
Baroness Sherlock (Lab)
My Lords, the Government have seen no evidence that the two-child limit had an impact on family size. For example, 47% of households affected by the two-child limit were not claiming universal credit when any of their children were born. In other words, things happen; people set out, they have children and something happens. Maybe someone loses their job, they are bereaved, their spouse leaves them, or they get sick and cannot work. The welfare state should be there to support people, both into work and in work, but it is also there to support them when they cannot work. We already know that some 60% of households affected by this are in work. Our strategy is to make sure we do all we can to get people into work, get them to develop in work and support them, but we are there as a safety net when they cannot do so.
Baroness Lister of Burtersett (Lab)
My Lords, academic research has found that the two-child limit had no positive employment effect and that parents living in poverty are pushed further from the labour market because of stress, insecurity and the sheer hard work of struggling to get by. Does my noble friend therefore agree that a decent social security system can support effective job-seeking and plays an important role in tackling child poverty, as the child poverty strategy recognised?
Baroness Sherlock (Lab)
My Lords, my noble friend makes a really important point about the scarring effects of poverty. Our aim is to make sure that everyone who can work, does, with all the help they need to do that. That is what this Government have been doing. We are investing heavily in childcare to make it possible to work, making sure wages pay enough so that work is a good thing, and supporting children.
We know that when children grow up in poverty, things get worse for them. They are less likely to work as adults, and they earn 25% less at the age of 30. Even if some parts of the House are not persuaded on the grounds of the importance of the individual child, this is an investment in the future of our country. No other G7 country has a policy like this and there is a reason for it. We cannot compete on the world stage, grow our economy or create prosperous futures for our kids if we do not enable them to grow up thriving and healthy.
Lord Palmer of Childs Hill (LD)
Does the Minister agree that this is not about getting people back to work; it is about improving living standards and making sure children are safe, and that this Question, which tries to link people getting into work with this benefit, is completely ridiculous?
Baroness Sherlock (Lab)
My Lords, I think I have made my views clear on the impact of this policy. It is, in essence, a failed social experiment which has been pushing 100 children a day into poverty. We simply cannot allow that to happen. We want to support families. Most parents want to work to support their kids. Already, 84% of parents are in work—that is what people do. I used to work with single parents, who would say, “Even when it’s really a struggle, I want my kids to see this is what you do when you grow up”, but many people face barriers to work, and it is our job to make that possible. If you cannot afford childcare, how can you get to work? If you are not paid enough to be able to make life even bearable, how can you do that? The social security system should be there to support those who cannot work, but for those who can, to make it possible and to help them have a decent standard of living when doing so.
Baroness Deech (CB)
My Lords, around £450 million is owed to the Child Maintenance Service by absent fathers and some absent mothers. Some 160,000 children would be lifted out of poverty if the defaulting parents paid what they owed to the Child Maintenance Service. Does the Minister agree that is not right for the taxpayer to pick up the burden owed by defaulting parents and that the Child Maintenance Service must get that money from the parents?
Baroness Sherlock (Lab)
My Lords, the great advantage is not an either/or. The wonderful thing about child maintenance is that it does not impact on somebody’s social security, so if someone is working and getting some universal credit, maintenance tops that up further. The Child Maintenance Service does an astonishing job in many, sometimes very challenging, circumstances. Here is one simple statistic: since the Child Maintenance Service was set up in 2012, it has collected 93% of all the maintenance owed, but I am sorry to say that there are some parents who simply do not want to pay for their children. The Child Maintenance Service has astonishing powers. It will go after them, and it will keep after them, but we should encourage everybody to do the right thing: pay for your children, go out there and make it possible for them to have a decent life.
Lord Gove (Con)
My Lords, if this policy is such a good idea, why was the Whip removed from seven Labour MPs in the other place when they voted in favour of it last year?
Baroness Sherlock (Lab)
My Lords, perhaps the noble Lord knows more than I do about the state of the economy that this party inherited when we came into government. We have dealt with all the challenges that his Government left behind. Chief among those was the state of—not just support for children—the welfare state. We had huge numbers of people who had been abandoned. Under the last Government, the bill went up by £88 billion. This Government came in with a budget. We invested £1.5 billion in employment support; we have reformed Motability and universal credit. We are going to make a difference. We care about children.
Lord Winston (Lab)
My Lords, can we come back to the original Question? We have had some very spurious statistics about fertility and contraception. Does the Minister agree that contraception has been hugely important in getting women back to work and earning money?
Baroness Sherlock (Lab)
I am grateful to my noble friend for calling me back to order. The availability of contraception has been transformative for women, and we should all recognise that. Being able to have control over their fertility makes an enormous difference to the choices that women make. For many of them, it means they can work and manage family size most of the time. However, we want to enable mothers and fathers both to have children and to work. That is the job of the state. Mothers should not have to choose between having kids and having a job. Families should never have to do that. The job of the state is to make both possible for the sake of those families and those children.
Lord Londesborough (CB)
My Lords, child poverty is undoubtedly a serious issue, and the steep drop in the number of children being born in this country is perhaps even more serious. Last week, we learned that the average cost of raising a child has now risen to £249,000, according to research by Moneyfarm, which may explain why an increasing number of working parents choose to have just one child or none at all. Down the line, this means a shrinking workforce in an ageing population. What is the Minister’s view on this?
Baroness Sherlock (Lab)
My Lords, the noble Lord makes a really important point, which is that we need as a country to make sure that we prioritise the cost of living and enabling people to earn enough. It should be possible to go out to work and earn enough to support your family, but that is one reason why we think it is important to invest in appropriate levels of social security. Crucially, we have to help people to develop skills. We want people to get into work, but we do not want them stuck on the lowest-paid work. We have increased the national minimum wage and invested in childcare and free school meals—we are doing all the things to make it possible to do the right thing. However, we need to go further. We need to see people in this country in higher-skilled, higher-paid jobs that will help them, grow our economy, and create opportunities for their children in due course.
Viscount Younger of Leckie (Con)
My Lords, can I bring the House back to the original intention behind the two-child limit? It was to make the benefits system fairer to taxpayers who support themselves and their families solely through work. It encouraged parents on benefit to make the same financial choices about family size as those not on benefits. With the Government’s poverty argument in mind, the IFS has said that reversing the two-child limit is “not a silver bullet”. It said that the benefit cap will
“wipe out the gains for some children in the … poorest families”,
as 70,000 more households are affected by the cap. Surely supporting parents into work and into quality jobs is much more important for reducing child poverty. Finally, the IFS says that raising the employment rate to 80% from the current 75% would lift up to 350,000 children out of poverty.
Baroness Sherlock (Lab)
My Lords, that is why the Government have set that as their target. I say to the noble Viscount that the whole point about this is that it is not a choice. It is not a question of either supporting children or helping parents to go into work. Supporting families makes work possible. Most parents want to work. Our job is to make that possible, so we have done that. We have invested in expanding free school meals to everyone on universal credit, including those in work; we have raised the national living wage, and we have put in more help for childcare—30 hours a week for parents of preschoolers—and more help for childcare in universal credit. Children deserve the best possible start in life and their parents deserve the best chance to have a decent life. We want to do both.
Drax
(1 day, 16 hours ago)
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Baroness Jones of Moulsecoomb
To ask His Majesty’s Government what assessment they have made of the environmental credentials of Drax in view of the new investigation by Stand.earth which reported that Drax had purchased logged trees from old growth forests in British Columbia in 2024.
The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)
I have read the report to which the noble Baroness refers with interest, and there are questions both for Drax and for the authors of the report. Compliance with biomass sustainability requirements under Drax’s existing subsidy arrangement is a matter for Ofgem, but we work closely with it to ensure that these arrangements remain fit for purpose. Ofgem’s detailed investigation into Drax in 2024 did not find evidence that unsustainable biomass had been used by Drax, but shortcomings in data governance were identified and Ofgem has required Drax to commission a global supply chain audit, which is currently ongoing.
Baroness Jones of Moulsecoomb (GP)
I thank the Minister for his reply, which goes a bit further than I expected. Drax specifically claims to stop sourcing from old-growth deferral areas and old-growth management areas in British Columbia, but the majority of old-growth forests fall outside those designations. Will the Minister and the Government suggest to Ofgem that it should not accept Drax’s definition of old growth and perhaps exclude the majority of British Columbia old-growth forests from subsidies?
Lord Whitehead (Lab)
There are two points to make in response to the noble Baroness. The report to which she refers talks only circumstantially about old-growth forests and not old-growth forests that are in any way directly sourced by Drax. As regards the new contract for difference for the next four years that the Government have entered into with Drax, the criterion is now 100% sustainability, which obviously excludes old-growth forests.
Baroness McIntosh of Pickering (Con)
My Lords, why is Drax sourcing sustainable wood from abroad when we now have a very intensive tree-planting growth policy in this country? Also, Yorkshire farmers would benefit if we were to go back to sourcing fast-growing willow coppice trees and miscanthus and sending them to Drax to use. Why did we stop doing that?
Lord Whitehead (Lab)
The noble Baroness will know that Drax is the largest single power producer in the UK and is responsible for about 5% of UK power. That means that it uses an enormous amount of biomass in its process, having converted from coal some while ago. The question, then, is where Drax gets its biomass from, bearing in mind that the amount of biomass that is being grown in this country falls far short of the desideratum in terms of sourcing—particularly in view of the length of time that it has taken to grow that biomass. Therefore, sourcing from abroad appears to make some sense, though not necessarily for the long-term future.
Baroness Young of Old Scone (Lab)
My Lords, the Minister’s own department is consulting on sustainability criteria for biomass as we speak, which will inform future subsidy eligibility and reporting requirements for the rest of the market. In addition, the Financial Conduct Authority is still investigating Drax’s biomass sourcing statements. What safeguards have been built into the new Drax contract that covers 2027-31? Will the results of these two inquiries produce changes to the terms of the recently signed Drax contract?
Lord Whitehead (Lab)
I cannot assure the noble Baroness that terms will be changed during the new contract. However, the LCCC will be responsible for making sure that the 100% sustainability criteria that have been entered into in the new contract will be strictly observed. That is a substantial step forward from the previous oversight arrangements.
Lord Birt (CB)
My Lords, the Minister appears to be completely unaware that “Panorama” proved conclusively two or three years ago that Drax does indeed burn old-growth forests. However, the new agreement that the Government have negotiated with Drax for 2027-31 will require Drax not to burn wood from primary or old-growth forests and to enhance the system for an independent audit to monitor compliance with that obligation. What will the sanctions be if Drax is non-compliant?
Lord Whitehead (Lab)
If Drax is non-compliant, the subsidy goes. There is no subsidy in the case of a non-compliant organisation of any kind. If that happens, it will be the end of Drax.
Earl Russell (LD)
My Lords, Drax is under investigation by the FCA regarding its past sustainability claims, which is no small matter. Despite that, the Government decided to put pen to paper to extend Drax’s contract. Why did the Government not choose to wait until the FCA investigation had concluded? What legal advice was taken and what risk assessment was made before the Government chose to extend that contract?
Lord Whitehead (Lab)
We did that because the conclusion of a contract for 2027-31 ensures that Drax continues to produce a very large amount of energy, which is very important for the country; that it does so under enhanced sustainability requirements; and that it moves from being a baseline producer to a dispatchable producer, with a top level of 27% of output within that contract. There is also the implied understanding that the contract will pave the way towards moving to CCS on the back of the contract, making Drax a net-negative producer in the long term.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, in 2021, Drax was axed from the S&P green bond index over doubts that its practices were carbon neutral. That decision seemed to be endorsed by that famous “Panorama” programme. I bow to the noble Baroness, Lady Jones of Moulsecoomb, for her detailed knowledge of forestry, but it appears that Drax has been importing wood pellets from old-growth forests, even before accounting for the emissions caused by transporting the biomass here from abroad. Given that this is patently not a green company, does the Minister agree that the subsidies for 27% of Drax’s generation capacity are unwarranted and should be withdrawn? Further, if Drax is found to be non-compliant and closes down, does he also agree that the land and extensive grid connections could be better used in the Government’s SMR programme?
Lord Whitehead (Lab)
No, I do not agree that the various connections relating to Drax could be better used for an SMR programme, because of the particular location of Drax within the cluster in the north-east of the country, which is particularly important for carbon capture and storage, and, indeed, hydrogen. Drax plays a part in that process in that area. The noble Baroness perhaps ought to read the report that is before us very carefully, because it does not actually say that Drax has sourced old-forest timber. Timber is sourced from third parties, goes into the Drax pellet facility, and may or may not to Drax’s knowledge include old-forest material—which, by the way, is outlawed by the Government of British Columbia. There are a number of questions to answer, but not necessarily for Drax. There are a number of people who perhaps have questions to answer as well.
Lord Hunt of Kings Heath (Lab)
My Lords, on the subject of questions to be answered, does my noble friend not think it surprising that the noble Baroness, Lady Bloomfield, intervened, given that it was the party opposite—the Conservatives—that, in government, signed contracts with Drax? The scale of the subsidies as a result was very large indeed.
Lord Whitehead (Lab)
My noble friend makes a very sound point, in that the new contract that has been signed costs taxpayers half as much as the old contract did. It is on more sustainable terms and, as I have said, makes Drax move towards being a dispatchable plant, which is much more in line with the power grid generally, than any of the things that were done under the previous Administration.
Nuclear Non-Proliferation Treaty Review Conference 2026
(1 day, 16 hours ago)
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Baroness Miller of Chilthorne Domer
To ask His Majesty’s Government what are the priorities for the 2026 Review Conference of the Parties to the Treaty on the Non-Proliferation of Nuclear Weapons.
The Minister of State, Ministry of Defence (Lord Coaker) (Lab)
My Lords, before I answer the noble Baroness’s Question, I follow the Prime Minister in expressing our deepest condolences to the family and loved ones of Lance Corporal George Hooley, who died yesterday in Ukraine. He served his country with honour in the cause of freedom, and all of us in your Lordships’ House will want to affirm that his service will never be forgotten.
The NPT is the cornerstone of international peace and security, and has been for over half a century. The UK is working hard to strengthen the NPT to ensure its continued success. At this review conference we will work across all three pillars: non-proliferation, disarmament and peaceful use of nuclear energy. This will include supporting efforts to create the conditions for disarmament, upholding the IAEA and its safeguards, championing nuclear weapon-free zones, countering attempts to weaken the non-proliferation architecture, and enabling access to nuclear technology for peaceful uses worldwide.
Baroness Miller of Chilthorne Domer (LD)
My Lords, I thank the Minister for his Answer and associate these Benches with his tribute. As he is all too aware, the NPT is in a very fragile state, with nuclear arms states modernising and expanding their range of nuclear weapons. Tactical nuclear weapons increase the risk of escalation, miscalculation and accidents. As was stated in your Lordships’ House a couple of weeks ago during Questions, a nuclear war must never be fought and there will be no winners. As the UK is currently chair of the P5, will the Minister use that position to prepare the ground for the NPT conference next April? Meanwhile, will the Government reconsider their refusal to join the UN panel on the physical and societal effects of a nuclear war?
Lord Coaker (Lab)
My Lords, we will always consider any suggestions, but let me be clear: we chair the P5 as part of the NPT. We are very proud to do that. We established the process. This country has as its goal a nuclear-free world, but we also recognise today’s strategic realities, and to meet these challenges, we have to take the action that we do. We are very proud to be part of the P5 and the NPT, but we also recognise in the strategic context that we are in that the nuclear deterrent and its modernisation are essential to our security and that of the global world.
Lord Howell of Guildford (Con)
The Minister takes this extremely seriously, and so he should. Does he agree that the NPT review now faces the worst challenge in the 50 years since its inception in 1968? Will he assure us that our team, when we go into the review, will press on all three of the pillars he described extremely hard and bring home to people the extreme danger of smaller countries wanting to get in on the act, already applying to see whether they can break the existing five’s monopoly, which, of course, is broken a bit anyway, and bring to the public a much stronger understanding of the intense danger of the proliferation everywhere of nuclear bombs?
Lord Coaker (Lab)
I strongly agree with the noble Lord’s analysis. The NPT is an essential cornerstone of global security. I suggest that in many ways it has been particularly successful. I was looking at the figures earlier on. In 1986, there were an estimated 70,300 nuclear warheads, according to the Stockholm International Peace Research Institute, and the most recent figure I could find was 12,241. Although there are challenges, as the noble Lord points out, we have managed in many ways to control the proliferation of nuclear weapons and to ensure that, as far as possible, the architecture of the post-war world remains the same. However, the noble Lord is right to point out the challenges, and this country, along with our allies and friends, will do all we can to ensure that the NPT remains successful and that all three pillars are pursued.
Lord Stirrup (CB)
I endorse the Minister’s comments about the tragic loss of Lance Corporal Hooley and express sympathy to the lance corporal’s family and friends. What analysis have the Government made of the likely impact on non-proliferation efforts of the wholly inadequate response of the international community to Russia’s violation of the Budapest memorandum through its annexation of Crimea in 2014 and its subsequent war of aggression in Ukraine?
Lord Coaker (Lab)
I thank the noble and gallant Lord for his comments, and I should have thanked the noble Baroness for associating herself with the remarks that I made about the tragic death of our serviceman. The lesson I think we should learn as a country is that it is important for us to reassert and re-establish the principle of deterrence. Part of preventing war is actually preparing for war. The whole success of the deterrent is the fact that the nuclear deterrent is there—the theory of deterrence. I think what happened following the Budapest arrangements, the withdrawal of nuclear weapons there, is perhaps a lesson for us that sometimes a position of strength allows you to negotiate and pursue peace more effectively than in the alternative way.
Lord Callanan (Con)
First, on behalf of these Benches I echo and endorse the Minister’s sentiments on the tragic death of Lance Corporal George Hooley of the Parachute Regiment in Ukraine while observing Ukrainian forces testing a new defensive capability, and we of course extend our condolences to his family on this tragic loss. On the subject of proliferation, what is the Government’s current assessment of Iran’s progress towards nuclear capability? What work is ongoing to discourage Iran from further progress, and what steps is the UK taking in concert with our allies to prevent Iran acquiring nuclear weapons?
Lord Coaker (Lab)
I first thank the noble Lord for the comments that he made and his association with my remarks about the tragic death. It is appreciated by everyone in this House and beyond. The noble Lord will know that there is no difference between us all. We support the work of the IAEA in ensuring that Iran’s nuclear technology is not used for the making or establishment of a nuclear weapons facility; we take action with respect to that. The noble Lord will have seen the action that others have chosen to take. The UK takes this very seriously, and we continue to press Iran to ensure that it abides by the provisions of the NPT.
Lord Bruce of Bennachie (LD)
My Lords, the challenge of the review next year is to prevent the escalation, never mind the reduction, of nuclear weapons, and to ensure that there is no worrying escalation by America, China or Russia of their threats to test nuclear weapons, for example. How can we be sure that we put the process into reverse rather than see it escalate?
Lord Coaker (Lab)
The establishment and existence of the NPT, which involves 191 countries, including all the countries—Russia, China and the United States—that the noble Lord has mentioned, provides a conference and a venue in which much of this can be discussed. All I am saying is that the NPT has been a successful vehicle. We need to continue to support it to try to take this forward.
The noble Lord mentions the comprehensive test-ban treaty; that has been another success. I know the point that he is making about the apparent re-establishment—according to President Trump—of that. That is a matter for America. This country has not tested a nuclear weapon since the early 1990s. We adhere to the provisions of the comprehensive test-ban treaty, and to the provisions of the NPT. We ask and call on other countries to do exactly the same.
Lord Swire (Con)
At the risk of repeating myself—the only thing that I am testing is my memory—can the Minister give us any reassurance that the international community is taking seriously the increase in the production of nuclear weapons, and in weapons capability, by the DPRK? What action is being taken with some of the DPRK’s influential neighbours to contain a potentially lethal situation?
Lord Coaker (Lab)
The noble Lord will be pleased to know that I never repeat myself. On the serious point about the DPRK, we take that challenge seriously. The DPRK announced that it had departed from the NPT in 2003. That is something that the UK and the international community dispute and do not accept. We call on the neighbours to which the noble Lord refers to put pressure on the DPRK to adhere to its responsibilities that it accepted when it joined the NPT in the first place.
Children: Social Media
(1 day, 16 hours ago)
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Baroness Berger
To ask His Majesty’s Government what consideration they have given to introducing a ban on social media for all children under the age of 16 similar to the one to be introduced in Australia on 10 December.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)
We understand parents’ concerns about the impact of social media on children. We have taken some of the boldest steps globally to ensure that online content is genuinely age appropriate. It is important that we protect children while also letting them benefit safely from the digital world. We are closely monitoring Australia’s approach to age restrictions. When it comes to children’s safety, nothing is off the table, but any action must be based on robust evidence.
Baroness Berger (Lab)
My Lords, our children and young people are living through an experiment imposed on them by platforms that are profiting off their stress, their lack of sleep and their diminished self-worth. I welcome the Australian Government taking action to address the urgency and gravity of this issue. I listened closely to my noble friend the Minister. The impact on teenagers in this country is getting worse, not improving. Will the UK follow Australia, Norway, Denmark, Malaysia and the EU, and impose a ban on under-16s?
Baroness Lloyd of Effra (Lab)
We are taking serious action here in the UK through the Online Safety Act. We are also looking very carefully at the evidence that is available about the impacts of social media, screen time and media use on children’s development. At the moment, we do not see a causal relationship between screen time, social media use and children’s development, but we are committed to improving this evidence base. We are looking very closely at what other countries are doing, particularly Australia, with which we have an MoU.
Lord Hannan of Kingsclere (Con)
My Lords, the Minister thinks that 16 year-olds should not have certain access. The noble Baroness, Lady Berger, if I understand her, thinks that they should be banned from social media. Can I take it as read that both noble Baronesses will oppose 16 year-olds having the vote?
Baroness Lloyd of Effra (Lab)
I do not follow that logic at all. People have different views on online content, and trying to balance the potential benefit that children can have from accessing the digital world with trying to protect them from the harms that they can also see is exactly what joins together many around this House and is exactly what we are trying to navigate through the Online Safety Act.
Viscount Colville of Culross (CB)
My Lords, the social media ban on under-16s in Australia is well-intentioned but is not the right solution to protect children from harms. Does the Minister agree with the Molly Rose Foundation that the ban risks creating a cliff edge for young people who at 16 will suddenly be exposed to a poorly regulated online space? Does she agree that there should be strengthened regulation on social media platforms so they are safe for children rather than excluding them altogether?
Baroness Lloyd of Effra (Lab)
The noble Viscount makes a really good point—one I was trying to make not as eloquently earlier—that there are good reasons for children to be online. Children of all ages can benefit from being online, but appropriate protections need to be in place, protections which do not lead to unintended consequences. I think our approach, which we are putting in step by step and backing Ofcom to enforce, is the right one at this stage. We are looking very carefully at the evidence as it emerges and looking very carefully at other countries’ experience and not taking things off the table if the evidence leads us in that direction.
Lord Mohammed of Tinsley (LD)
My Lords, what steps are the Government taking to ensure that parental controls and education initiatives are keeping pace with the ever-evolving risks that social media poses to our young people right now?
Baroness Lloyd of Effra (Lab)
The role of parents and of media literacy is, of course, critical. Indeed, as technology evolves, as access changes, the department will be supporting parents and carers with media literacy. From next year, there will be some pilot projects to support families navigate the online space, particularly in critical thinking and in trying to understand misinformation, disinformation and so on. We are also working very closely with the Department for Education to establish some parental support and some parental hubs in order to support parents having some of those quite difficult conversations.
Baroness Penn (Con)
My Lords, the Minister talked about support for parents. Last week, the Centre for Social Justice released a new analysis showing that almost 1 million preschool children are active on social media, something that even the platforms, I would say, do not think is appropriate. That number is rising rapidly. What work are the Government doing with platforms, Ofcom and parents and carers specifically to support those who care for preschool children—nought to five-year-olds—to navigate this online world?
Baroness Lloyd of Effra (Lab)
As I mentioned before, we think it is incredibly important to support parents to navigate the online world and support their children’s access. I mentioned the pilot awareness campaign, which is more targeted at eight to 14 year-olds, but I believe the resources that will be available with the Department for Education are more extended. We also support Ofcom’s updated media literacy duties under the Online Safety Act. As part of that, Ofcom is delivering a three-year media literacy strategy that prioritises support for children and families.
Lord Patel (CB)
My Lords, in the Lord Speaker’s lecture given by Dr Vivek Murthy, the former US Surgeon-General, he quoted the evidence of the mental health effect on children, particularly children using social media for over three hours per day. He said that it causes a higher degree of depression and anxiety. That is part of the evidence for why there should be better control for children using any kind of social media.
Baroness Lloyd of Effra (Lab)
The noble Lord cites some important evidence which, along with other evidence about the links between social media use and different cohorts of young people, young adults and so on, is very important. The Government and Ofcom are looking at that carefully. As I said before, we continue to keep open all the issues here to protect children from unsafe content, while allowing them to participate actively in the digital world, which can provide many opportunities to young people and much education.
Viscount Camrose (Con)
My Lords, screen addiction is a growing problem for all ages, but far more so for children. In July, Peter Kyle, the former Secretary of State for DSIT, committed to bringing forward proposals in the autumn to restrict children’s screen time. Since the reshuffles, we have heard no more about those proposals. Can the Minister clarify this point today? Will the Government be bringing forward a package along the lines set out by the former Secretary of State?
Baroness Lloyd of Effra (Lab)
We are focusing on implementation of the Online Safety Act: protecting children from harmful content, backing Ofcom as it goes through the children’s risk assessments of the platform operators, and ensuring that the duties that came in in July are effective. That is the priority for the time being. As I said, we are looking at the evidence and assessing what other measures may be needed. If we need to do so in due course, we will do so.
Baroness Foster of Aghadrumsee (Non-Afl)
My Lords, I absolutely agree with the Minister’s point of view that everything needs to be evidence-based. But can I suggest to the Minister that, when she looks at social media harms to children, she also looks at AI chatbots, which can make harmful suggestions to children online? I believe the Government should take that very seriously, so I ask her to look at this harmful element, which is harming our young people.
Baroness Lloyd of Effra (Lab)
The noble Baroness raises the importance of keeping up to speed with technological developments and looking at their potential impact. Many AI services are already regulated under the Online Safety Act, including chatbots, and so would fall under the purview of the current regime. If there is a risk of harm to users from illegal content, or content that is harmful to children, that would already fall under the regime and there will be duties that apply on it. The Secretary of State has confirmed to Parliament that she is looking to make sure that there are no gaps in the current legislation. She is also looking to make sure that Ofcom is using its existing powers to regulate those AI chatbots that currently fall within the regime.
Procurement Act 2023 (Specified International Agreements and Saving Provision) (Amendment) Regulations 2025
(1 day, 16 hours ago)
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Baroness Anderson of Stoke-on-Trent
That the draft Regulations laid before the House on 21 October be approved.
Considered in Grand Committee on 8 December.
Infrastructure (Wales) Act 2024 (Consequential Amendments) Order 2025
(1 day, 16 hours ago)
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Baroness Anderson of Stoke-on-Trent
That the draft Order laid before the House on 27 October be approved.
Considered in Grand Committee on 8 December.
Occupational Pension Schemes (Collective Money Purchase Schemes) (Extension to Unconnected Multiple Employer Schemes and Miscellaneous Provisions) Regulations 2025
(1 day, 16 hours ago)
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Baroness Sherlock
That the draft Regulations laid before the House on 23 October be approved.
Relevant document: 40th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 8 December.
Judicial Appointments Commission (Amendment) Regulations 2025
(1 day, 16 hours ago)
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Baroness Levitt
That the draft Regulations laid before the House on 30 October be approved.
Considered in Grand Committee on 8 December.
Ajax Armoured Vehicle
(1 day, 16 hours ago)
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Baroness Goldie (Con)
My Lords, I extend my personal sorrow to the family of Lance Corporal George Hooley. His tragic death is a humbling reminder of the risk that we ask all those who serve with such honour to confront on a daily basis.
In relation to the Urgent Question, we have here a story of starkly, indeed darkly, contrasting facts. In the summer, troops were taken ill after using Ajax vehicles. In late November, 31 soldiers fell ill after using the vehicles, forcing a two-week suspension of Ajax’s use while a safety investigation was carried out. Personnel have been limited to spending only one and a half hours inside the vehicles due to health concerns. Their speed has been restricted because of instability, and they cannot fire while moving. Meanwhile, in early November Mr Luke Pollard, the Minister, visited General Dynamics in Wales to mark the initial operating capability of Ajax. The November edition of Desider, an internal MoD publication, lavished praise on Ajax as a “world-class armoured fighting vehicle” and a “transformational capability”.
Given what we now know, I ask the Minister how on earth the MoD could accept initial operating capability. Who signed that off? If this nightmare cannot be fixed, as looks increasingly likely, can the contract be terminated?
The Minister of State, Ministry of Defence (Lord Coaker) (Lab)
I thank the noble Baroness for her remarks about our British serviceman who was so tragically lost. The whole House will join in her remarks.
With respect to the position regarding Ajax, the previous Minister will be well aware of the various reports and representations that have been made to various Ministers over a number of years. All Ministers, past and present, will want answers to the very questions that the noble Baroness has quite rightly put to us. Like all of us, she will be waiting for the results of the various investigations that have been set up. I assure her that—as she will have heard from my colleague in the other place—when we get the results of those investigations, we will consider all available options on how we move forward.
Lord Wallace of Saltaire (LD)
My Lords, we on these Benches also recognise the responsibilities we have with troops now helping to train the Ukrainian army and we send our condolences; we know that we are committed to Ukraine. Now that we are waiting for further comments on what is really happening with the Ajax vehicle, can I ask three quick wider questions?
First, the Minister in the Commons admitted:
“The Army has a number of vehicles that … have been in service for a long period”.—[Official Report, Commons, 8/12/25; col. 58.]
I think that is saying that both the fighting fleet and the logistics fleet are pretty outdated. Does that mean that in this much more dangerous period we should be investing much more into the Army fleet than we currently plan to?
Secondly, the SDR says that we are now in a very different situation but the Treasury, at the Budget, has said that we will do a little bit of extra investment in the next two years and then maybe a bit more in three or four years. Should we not now be talking about a much more serious threat that requires much more defence investment than we are currently planning?
My third question is about strategic partnerships. The Defence Industrial Strategy says:
“It is no longer affordable for NATO Allies, especially within Europe, to develop their own exquisite capabilities at low production volumes”.
That means much closer co-operation and collaboration with others. Given what President Trump is saying about the NATO alliance, that means hard negotiations with our European partners, difficult though it is. Does the Minister agree?
Lord Coaker (Lab)
There was quite a bit in that. I thank the noble Lord for his comments about the bravery and sacrifice of our Armed Forces. He will know that we have paused all use of the Ajax vehicles pending the outcome of the investigations as the safety of our Armed Forces comes first.
On logistics, I think he refers to the fact that large numbers of trucks are having to be repaired. They are being repaired, and we expect that to be completed in the new year. On the SDR and the money, he will see the budgets that have been made available and the increase over a period of time. He referred to the aspiration to move even further with that, particularly by 2035.
On the point he made about strategic partnerships, of course they are crucial. We spend a large amount of time negotiating with European friends and partners. He will have seen the recent Norway deal with respect to the frigates, and the arrangements we have made with France, Germany and Poland. They are just some examples, and I hope it demonstrates to the noble Lord that we take seriously the need to negotiate, work and co-operate with our European friends, most of which are members of NATO as well.
Lord Evans of Rainow (Con)
My Lords, this scandal reminds me of a scandal I worked on when I was a very young man: the airborne early warning system of the 1980s. It started under Labour and was cancelled by my noble friend Lord Trefgarne; it cost millions of pounds. Working within that company, Ministers were deliberately deceived so that they could get payment for costs plus. Can the noble Lord, who is a highly respected Minister in this place, assure the House that Ministers have not been deceived over this contract? Is it possible that we could decide to go for an off-the-shelf product from a manufacturer within this country or one of our allies? My noble friend made the difficult decision, and in the 1980s we took an off-the-shelf product to replace the failed airborne early warning contract. We took AWACS, which still works to this day.
Lord Coaker (Lab)
I thank the noble Lord for the question. Clearly, Ministers from all Governments make decisions on the basis of the advice they receive. Let us see what the investigation tells us about that advice. He will know that there are four different aspects to the investigations. There are the defence, Army and ministerial aspects, then alongside that, which I think the noble Lord will appreciate, we are looking to people outside the MoD—some independent consultants—to look at what is happening so that we get independent advice. I think that was something the former Minister in the other place, James Cartlidge MP, asked for. When we get the result of those investigations we will take the decisions that are necessary at that point, but we need to wait for the results.
Lord Craig of Radley (CB)
My Lords, has any foreign interest been expressed in purchasing Ajax at any stage? If it is not going to be purchased, will it be a UK-only piece of equipment?
Lord Coaker (Lab)
I am not aware of any foreign interest in it, but I will check my facts and come back to the noble and gallant Lord if I am incorrect.
Lord Gove (Con)
My Lords, I have enormous sympathy for the Minister, given the situation in which he finds himself. More than £6 billion has been spent on a fighting vehicle that is more dangerous to our own troops than to the enemy. What steps are being taken to pursue redress for malefaction on the part of the company concerned, General Dynamics? Permanent Secretaries at the Ministry of Defence have been the accounting officers responsible to Parliament for this expenditure. If we find that at the very highest level, Permanent Secretaries and directors-general in the Ministry of Defence have made mistakes that have endangered the lives of our fighting men and wasted millions, will we in this House have the opportunity to ensure that appropriate action is taken to ensure that they cannot play a future role in public life?
Lord Coaker (Lab)
I do not know the absolute answer to the noble Lord’s last point, but at some point there will be a significant number of debates and questions that will explore in much more detail the whole Ajax programme since 2014 up to the present day. As I say, we are in a slightly difficult situation because we are waiting for the outcome of those investigations to inform the way forward. The budget of £6.3 billion was set in 2014 and is the same budget now, but I take the noble Lord’s point. Let us come back to it at a future debate when we have the results of the investigations.
Lord Ravensdale (CB)
My Lords, I declare my interest as a chief engineer working for AtkinsRéalis. We have a difficult history of armoured fighting vehicle procurements in this country. The TRACER programme was a failed procurement, as was the multi-role armoured vehicle, MRAV, and now we have issues with the Ajax programme. What lessons learned from Ajax are being brought forward into future procurements, such as Boxer and Challenger 3?
Lord Coaker (Lab)
Without being flippant, I am fed up with lessons learned from various reports over a period of time. The bigger question is why the lessons learned so often do not translate into something that makes a fundamental difference. The noble Baroness worked in the MoD, and the noble Lord works in the way that he suggested. I do not think that the vast majority of people set out to do a bad job; they work with dynamism, principle and determination to do their best. But somewhere along the line, we do not seem to be able to procure the equipment that we should, at the pace we should and for the price we should.
I hope that the defence reform that the Secretary of State has implemented—the establishment of a new National Armaments Director Group, with a new National Armaments Director at the top who is directly accountable for what happens with respect to procurement —is a reform that, in a year, two years or whenever, the noble Lord will be able to describe as a reform that worked. He will be able to say that lessons were learned and actions taken that made a fundamental difference.
We have to get our defence industry working, whether across Europe or fundamentally within our own country, because the defence and security of our nation depend on the sovereign ability of our own industry to produce and develop the goods, ammunition and war equipment that we need to support our soldiers.
Restriction of Jury Trials
(1 day, 16 hours ago)
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Lord Keen of Elie (Con)
My Lords, the Secretary of State for Justice recently stated, in the context of rape prosecution delays, that 60% of victims pull out of their cases because
“the trauma of waiting is too hard”—
a claim that was repeated in government briefings. The overwhelming response from experienced criminal lawyers is that this figure is misleading and that, as one leading King’s Counsel commented, the Justice Secretary’s remarks were “cynical or staggeringly gullible”. Given that the Crown Prosecution Service’s own figure for those who drop out of rape complaints due to delay is 8%, will the Minister ask the Secretary of State for Justice to correct Hansard and remove his inaccurate statement from the record?
The Parliamentary Under-Secretary of State, Ministry of Justice (Baroness Levitt) (Lab)
My Lords, it is an enormous pleasure to face the noble and learned Lord again, after such a short time, on pretty much exactly the same topic. The statistic given by my right honourable and learned friend the Deputy Prime Minister, Lord Chancellor and Secretary of State refers to, if you like, the journey taken by a victim from the moment of the decision being made to report an offence to the police to the ultimate disposal of the case in the Crown Court. The statistic that over 60%, or roughly around 60%, drop out at that stage is entirely correct. During that process, pre-charge adult rape victim attrition is 58% and post-charge adult rape attrition is 10%. So the statistic is correct, and it is a terrible indictment upon the system that this is happening. Every single one of those figures is a person who did not see justice for what they say happened to them.
Lord Marks of Henley-on-Thames (LD)
My Lords, the noble and learned Lord, Lord Keen, is right to point to the CPS figures and to what was reported in the Sunday Times. The important point is the post-charge attrition, not the journey from reported rape all the way through to prosecution, which is what the Minister relied on. The CPS figures show that only 9% of adult rape cases were lost through victim attrition after charge, which is when trial delays come into play. That was down from 11.4% last year. The remaining cases abandoned were dropped before charge. I repeat the noble and learned Lord’s question: should the Lord Chancellor not apologise for the misleading use of statistics? Can the Minister further explain why the Government believe that the right to jury trial for either-way offences should depend only on the likely length of a prison sentence, so excluding juries for almost all offences of dishonesty, when even a minor conviction for dishonesty could, for many defendants, destroy their careers, livelihoods, reputations, families and even lives?
Baroness Levitt (Lab)
I repeat what I said to the noble and learned Lord, Lord Keen of Elie: it is a pleasure to see the noble Lord, Lord Marks of Henley-on-Thames, on exactly the same topic that we dealt with a short time ago.
I do not understand why it is felt that, from the victim’s perspective, it makes any difference at all whether it is post-charge or pre-charge. A victim dropping out is a victim dropping out and not getting the case that they thought they wanted to see during the court process. The fact is that there are all sorts of reasons why victims decide they do not want to participate in the process any more. There seems to be a suggestion that, in the pre-charge period, those victims are living underneath some kind of rock and not hearing about the problems in the criminal justice system, including the amount of time that victims have to wait to have their cases heard. The fact is that, in any event, even 9% dropping out post-charge is far too high. The statistics show that the average wait in the Crown Court for victims of rape and serious sexual offences is 391 days, which is an awfully long time—over a year—for them to wait.
I turn to the second of the noble Lord’s questions on the length of sentence. The reason for that is that cases that ultimately result in shorter sentences tend to be shorter and less complicated cases to hear, so they are much quicker. It has never been the case, as noble Lords know, that all cases in the criminal justice system are heard by juries; 90% of cases are heard in the magistrates’ court. This Government are proposing simply to move that line a little to ensure that the most serious cases, which are going to get the longest sentences in the Crown Court, are dealt with more quickly.
Baroness Fox of Buckley (Non-Afl)
My Lords, does the Minister not worry that, in waiting and hoping that their case might be brought to trial, the suffering of so many rape victims has been weaponised in an attack on the jury system, one of the fundamental aspects of our democracy and of a free society? Their pain is being used to attack something that matters to all of us. Is that not overly cynical and doing a real disservice to those women, particularly, who are waiting for justice in relation to rape accusations?
Baroness Levitt (Lab)
I hope that the noble Baroness is not referring to the Government I am part of when she says that the experiences of rape victims are being weaponised. This Government did not come into power with the objective of trying to remove jury trials from anybody. The point is that the system is not working for anyone. Some of those most severely affected are those who have made complaints of rape and serious sexual offences, where the length of time that they have to wait can have terrible effects on them. I am not suggesting that it does not have a terrible effect on everybody, but the system recognises that it can be particularly difficult for people in those categories of cases. It is not a question of weaponisation. The one thing I have tried to be very careful not to do is to make party political points about this. This is something of an emergency. It has taken a long time to get to where we are and it is going to take time to alter it. We have to have a radical plan, and this is the plan that was recommended by Sir Brian Leveson. It would be reckless of the Government to commission an independent review and then not act on its recommendations.
Lord Gove (Con)
My Lords, I have enormous sympathy for the Minister in facing the huge backlog that exists in our criminal justice system. I am grateful to her for laying out the thinking behind the Lord Chancellor’s position more clearly than the Lord Chancellor himself has been able to do. Can she update us on work between police forces and the Crown Prosecution Service when it comes to making sure that rape and serious sexual offences are brought to court more quickly? Is it the case that some police forces have been resistant to the idea that the speed with which these cases are processed should be published so that we can hold accountable those police forces that are most reluctant to ensure speedy justice?
Baroness Levitt (Lab)
The noble Lord makes an important point. There are delays between report of an offence and charge. The reasons for those can be very complicated. I used to work for the Crown Prosecution Service and I know how difficult it can be. An awful lot of investigation has to go on. Quite often, such investigations are looking at events that took place an awfully long time ago. It is probably fair to say that everybody thinks that we could and should do better. The Home Office deals with matters in relation to the police, but I will ensure that I write to the noble Lord and answer his question, which is a perfectly proper one.
Lord Young of Acton (Con)
Will the Minister condemn the remarks of one of her colleagues in the other place, who smeared defenders of the right to trial by jury as men in suits defending a Magna Carta myth? In fact, the right to trial by jury dates to before Magna Carta, to Henry II, who, I point out, for the benefit of the Justice Secretary, came after Henry I and not before.
Baroness Levitt (Lab)
Oh dear. I feel that I did not even respond to the point of the noble Lord, Lord Gove, about me explaining it better than the Deputy Prime Minister. I am certainly not going to agree with that, and I am not going to be giving the Deputy Prime Minister any history lessons either.
This Government are completely committed to jury trial. There is absolutely no question of our doing away with jury trials. All we are doing is moving some cases down so that they will be dealt with in the magistrates’ court in order to free up space. We are not the only Government to have done this. The Criminal Justice Act 1988 reclassified three groups of offences—common assault, taking vehicles without consent and criminal damage—that had previously been triable either way as summary only. Does anybody want to take a history lesson on which Government were in power?
Northern Ireland Troubles: Operation Kenova
(1 day, 16 hours ago)
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Lord Caine (Con)
My Lords, a 164-page report really should have been accompanied by an Oral Statement by the Government in Parliament. The report contains much uncomfortable reading, and our sympathies are with those who lost loved ones. We also recognise again the immense role of the RUC, the Armed Forces and the intelligence services in securing peace. Can the Minister reaffirm the Government’s commitment to the “neither confirm nor deny” doctrine as essential for the protection of national security? On legacy, the Irish Government have now promised the fullest possible co-operation with the renamed Legacy Commission. What undertakings have they given that this will mean exactly the same levels of disclosure by them and their agencies as is required of the UK Government and their agencies?
Baroness in Waiting/Government Whip (Baroness Anderson of Stoke-on-Trent) (Lab)
My Lords, I first put on record my sincere thanks to both Jon Boutcher and Sir Iain Livingstone for an extraordinary piece of work. They have set the standard both for gaining the trust of victims and ensuring that we have an Article 2-compliant investigation, which has given us very sobering reading. The noble Lord is aware that, yesterday, we published a Written Ministerial Statement, and he is aware of the ongoing litigation concerning many of the issues in the report. We will be discussing them in more detail once some of that litigation is completed.
On the noble Lord’s points about our security services, I completely agree with him. As he knows, because I have said it from this Dispatch Box, I agree that our security services and all those who wore uniforms during the Troubles ran towards danger to keep us all safe. They continue to do so every single day, both in Northern Ireland and in the rest of GB.
On “neither confirm nor deny”, the noble Lord is right: the first duty of any Government is to protect national security, and we must therefore ensure that sensitive information that is injurious to the public interest, including information that could damage national security or present a real risk of harm to life, is not released. NCND is an important protection, particularly where disclosure of information might otherwise compromise the recruitment and retention of CHIS, but it also covers a broad range of other sensitive national security activities. There will be no change.
On the role of the Irish state, noble Lords are aware that in September we published a joint framework on how we will work together on legacy. We hope and expect to see that delivered in full.
Baroness Suttie (LD)
My Lords, this is an important and detailed report that is a welcome further step in trying to get to the truth of what happened. Like the Minister, I commend its authors. Families have had to wait such a long time for truth and justice. Do the Government accept the finding of serious organisational failure by MI5, as outlined in the report, and can the Minister say whether she is confident that the current legislative framework and oversight provisions will prevent similar lapses in future?
Baroness Anderson of Stoke-on-Trent (Lab)
There is ongoing litigation regarding the first point, so I cannot comment. However, I remind noble Lords that since the Troubles, there has been a new legislative framework that includes both the Covert Human Intelligence Sources (Criminal Conduct) Act 2021 and RIPA 2000, which means that many of the practices outlined in the report could never be repeated.
Lord McCrea of Magherafelt and Cookstown (DUP)
My Lords, does the Minister acknowledge the debt of gratitude that we owe to the intelligence services, our Armed Forces and the courageous members of the RUC? It was by their action, infiltrating the IRA right to the very top of the republican movement, that many lives were saved—including my own. However, when will His Majesty’s Government put the spotlight on previous Governments of the Irish Republic and their role in arming and supporting the IRA in their terrorist activity?
Baroness Anderson of Stoke-on-Trent (Lab)
I am very grateful to our security services for keeping many Members of your Lordships’ House safe and saving their lives, including the noble Lord. Let us be very clear what we are talking about here: the Provisional IRA were responsible for over 1,700 murders, and we need to make sure that that is reflected in these conversations.
On the noble Lord’s comments on the Irish Government, I have been clear that there is a new framework and agreement. This is historic, and the first time we have been able to achieve such. I look forward to working with the Irish Government to make sure that they, as we will, bring forward new legislation.
Baroness O'Loan (CB)
My Lords, I served on the steering group for Operation Kenova.
The Secretary of State said yesterday of the NCND policy that
“in a small number of cases it has been set aside for particular reasons”.—[Official Report, Commons, 9/12/25; col. 172.]
MI5 knew about Stakeknife’s recruitment from the outset. It knew his identity, his role within the IRA and about his involvement in abduction, interrogation and murder. It knew that murders could have been prevented had his activities been terminated earlier and action taken by the state. Families know that their loved ones were murdered by a man who was allowed to carry on murdering by agents of the state. He is now dead. His identity is known worldwide; it is running in newspapers across the world today. Does the Minister agree that this situation constitutes “particular reasons” and that regardless of any judgments yet to come, Stakeknife should be named now?
Baroness Anderson of Stoke-on-Trent (Lab)
First, I thank the noble Baroness for the work she has done with Kenova; it is a truly sobering piece of work and an incredibly important addition.
When any agent—active, living or otherwise—is publicly identified by the state, it calls into question the whole premise of the Government’s “neither confirm nor deny” policy, which is vital for national security. On Operation Kenova’s request to the Government to name Stakeknife, the Northern Ireland Secretary has set out in a letter to Sir Iain Livingstone, which is available in the Library, that the Government will issue a substantive and final response to that request after the Supreme Court has issued its judgment in the Thompson case, which is relevant to NCND policy.
I want to make it clear that the alleged behaviour revealed in this report is deeply disturbing, and such activities would simply not be tolerated today.
Baroness Ritchie of Downpatrick (Lab)
My Lords, I would like to thank Jon Boutcher and Sir Iain Livingstone for the report they have brought forward. The Kenova report contains very disturbing findings. In view of this, can my noble friend the Minister highlight the Government’s intentions to address those very serious findings, including the fact that MI5 tried to restrict the investigation and conceal the truth of IRA crimes it knew all about?
Baroness Anderson of Stoke-on-Trent (Lab)
My noble friend is right that this report contains a range of recommendations; some are outside its original terms of reference, which were in the interim report published last March. Noble Lords will appreciate that many of the issues touched upon are subject to ongoing litigation, so there is only so far I can go in terms of their actions.
I say to my noble friend that the director-general of MI5 again apologised to Kenova for the late discovery of the material in 2024. The House will also note that MI5 itself has initiated an internal review of what happened, and there are the findings of the Helen Ball review, in which she raised a number of points. There is always more to learn, but as I said before, the legislative framework in which these alleged activities happened is not the same as the one that operates today.
Baroness Hoey (Non-Afl)
My Lords, £47 million was spent on the Kenova report, which was made with the benefit of hindsight and makes no mention of the thousands of people who were actually saved from being murdered by the IRA terrorists precisely because of the actions of the intelligence services and brave service men and women. Will His Majesty’s Government rule out immediately the ridiculous call made this morning on the BBC by the former PSNI chief constable Sir George Hamilton for a judicial inquiry into MI5 and its behaviour? Does the Minister agree that despite the endless inquiries, our security forces acted always with the intention to save lives and not, as was the IRA’s intent, to murder innocent men and women?
Baroness Anderson of Stoke-on-Trent (Lab)
The Government have no intention to commission a public inquiry. The Kenova investigation was conducted over nine years and was Article 2-compliant. We are satisfied that Kenova has completed a thorough investigation. We do not believe there is any further requirement.
Lord Lexden (Con)
My Lords, my noble friend Lord Caine and others have referred to the uncomfortable reading in this report. Can the Minister confirm unequivocally that the regime for handling agents is today utterly different from that which obtained when most of the events covered by the report took place?
Baroness Anderson of Stoke-on-Trent (Lab)
The noble Lord is right: the use of covert human intelligence sources is now subject to strict regulation under RIPA 2000 and the CHIS Act 2021. Compliance with this legislation and the related code of conduct is subject to rigorous IPCO scrutiny. The Investigatory Powers Tribunal provides a forum for individuals to challenge the state if they believe CHIS have acted inappropriately or illegally. It is a completely different world that we live in, but we should never forget the context of what we are talking about.
Planning and Infrastructure Bill
Wednesday 10th December 2025
(1 day, 16 hours ago)
Lords ChamberPlanning and Infrastructure Bill 2024-26 View all Planning and Infrastructure Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 153-I Marshalled list for Consideration of Commons Amendment - (9 Dec 2025)
Baroness Taylor of Stevenage
That this House do agree with the Commons in their Amendment 33C.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, it is a pleasure to see the Planning and Infrastructure Bill return to this House for the final time. After today’s debate, the Bill will soon conclude its passage through Parliament and will thereafter become law. It will drive investment and productivity, and facilitate a step change in the delivery of the new homes and critical infrastructure our country so desperately needs.
This legislation will create certainty and speed up the process for consenting nationally significant infra- structure. It will create a new sustainable model for development and nature recovery, and establish mechanisms for effective cross-boundary strategic planning. We can and must do things differently, and this Bill will enable us to do so. That is why we have been so determined to ensure we can make use of its provisions as soon as possible and why I am delighted that, following today’s debate, it will shortly become law.
We have already debated at length the intention behind Amendment 33, proposed by the noble Lord, Lord Lansley. Following our debate last week, the Government tabled an amendment to give effect to this change, which will now see the first set of regulations for the national scheme of delegation be subject to the affirmative procedure. I am pleased to say that, on Monday, the other place agreed to the government amendment which gives effect to that change, removing the unnecessary provisions in Amendment 33 in respect of future regulations, for which there are already powers in the Town and Country Planning Act 1990.
I thank the noble Lord, Lord Lansley, for his continued engagement. This change, alongside existing safeguards built into the legislation, will ensure that an appropriate amount of parliamentary scrutiny is able to take place on these provisions ahead of implementation. Given that this House has already confirmed its agreement with the noble Lord’s amendment, I trust it will now lend its support to Motion A. I beg to move.
Lord Lansley (Con)
My Lords, as the mover of the original Amendment 33, I am grateful to the Government for accepting the substance of that amendment. I therefore agree with Motion A to agree to the Commons’ further amendment. I heartily endorse what Minister Pennycook said in the other place on Monday: it is now about getting on with using the powers that are available under this and previous legislation. I wish the Government well in that endeavour.
Baroness Pinnock (LD)
My Lords, all through the debates on the Bill, we on these Benches have agreed with the principle of what the Government are seeking to do, but had concerns about the balance being created between the necessity to improve construction times, especially with infrastructure, and bearing in mind the needs of our environment and our heritage in particular. We do not think the balance is right at the minute, but we agree that the Bill must proceed.
On Motion A, we wholeheartedly agree with the work done by the noble Lord, Lord Lansley, which we have supported throughout the Bill. With that, I thank the Minister for all her helpful discussions on the Bill and hope that this is the last we have to say about it.
Baroness Scott of Bybrook (Con)
My Lords, I thank the Minister and the Government for accepting the substance of my noble friend Lord Lansley’s amendment —an important step that these Benches strongly support. We now look forward to scrutinising in full the regulations establishing a national scheme for the delegation of planning decisions through the affirmative resolution procedure.
Baroness McIntosh of Pickering (Con)
My Lords, I congratulate the Minister on accepting such a sensible amendment. She was kind enough to write to me about non-hazardous reservoirs. She said in that letter that the regulations and guidance will be kept under review. I urge her to use her good offices to ensure that both Houses will be able to review that. I once again record my huge disappointment that the non-hazardous reservoirs legislation will not come into effect before 2028, which is far too late, given the impact. Reservoirs are operating below capacity already, and the deficit we will face in Yorkshire over the next year especially is deeply regrettable.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank all noble Lords who contributed to this short debate. The question from the noble Baroness, Lady McIntosh, is possibly out of scope of the Motion before us, but I am always happy to meet with her and discuss this further. She has a detailed letter from me today explaining the Government’s position.
I will very briefly address the points made by the noble Baroness, Lady Pinnock. It is vital that, in exercising democratic oversight, planning committees operate as effectively as possible—as I know she knows only too well—by not revisiting the same decisions and focusing on applications which require member input. The Government want to make sure that skilled planning officers in local authorities have the right level of trust and empowerment to resolve more applications more quickly in the service of residents and businesses, and that our planning professionals are fully supported in their role, with their skills and experience put to best use. I know she will be more than familiar with all those issues.
This will be my final time at the Dispatch Box speaking on this Bill. I am not going to say “thank goodness”, but we have had some very long discussions and sittings. I once again place on record my thanks to all noble Lords who have engaged with the Bill and the department through the Bill’s passage. The open and robust nature of our debates has undoubtedly strengthened the Bill.
In particular, I extend my heartfelt thanks to the noble Baronesses, Lady Scott and Lady Pinnock, the noble Lords, Lord Jamieson and Lord Roborough, and the noble Earl, Lord Russell, for the time they have given to engaging so thoughtfully on this critical legislation. I also thank all the civil servants and the staff of the House, who have sometimes had to work very late on the Bill. I very much look forward to working with noble Lords as we take forward the implementation of the Bill, which will be a major step in the Government’s reform programme. The House should be under no doubt that we intend to move quickly over the coming months so that we can realise the full benefits of this legislation.
Employment Rights Bill
Wednesday 10th December 2025
(1 day, 16 hours ago)
Lords ChamberEmployment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: HL Bill 154-I Marshalled list for Consideration of Commons Amendments - (9 Dec 2025)
18:04 - Division on Motion B1 (as an amendment to Motion B) - Ayes: 244 / Noes: 220 - Motion B1 agreed.
18:22 - Division on Motion E1 (as an amendment to Motion E) - Ayes: 219 / Noes: 223 - Motion E1 disagreed.
Baroness Lloyd of Effra
That this House do not insist on its insistence on Lords Amendment 1B in respect of which the Commons have insisted on their disagreement; and do agree with the Commons in their Amendments 1E and 1F in lieu of Lords Amendment 1B.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Innovation and Technology (Baroness Lloyd of Effra) (Lab)
My Lords, I shall speak also to Motions A1 to E1. Given the developments that have taken place since the Bill was last debated by the House, I would like to take some time to set out the context of those changes. I therefore must ask for the indulgence of the House with regards to the length of my speech.
Before to turning to the specifics of the amendments in the name of the noble Lord, Lord Fox, I want to provide a general update. Throughout the passage of this important Bill, which delivers on multiple manifesto commitments, we have gone through careful deliberation, scrutiny and debate. Noble Lords will have seen my statement given to your Lordships’ House last week where I outlined how the Government had convened tripartite discussions with trade unions and business representative organisations. Those discussions were focused on finding a way forward on unfair dismissal. This is an issue which business and many in your Lordships’ House, including His Majesty’s loyal Opposition, told us was their number one priority. Solving it was the only means of breaking the current impasse between this House and the other place.
I am glad to report that we have secured an agreement between trade unions and business representative organisations on that issue which has unlocked a path to get this much-needed Bill on to the statute book without further delay. This is acknowledged in the joint statement made by business representative organisations involved in the negotiations, which accepts that any remaining concerns with the Bill can be dealt with in the regulations to come, which will be informed by open and transparent consultation. This negotiated outcome has now been debated and agreed by the elected House. We will, of course, debate it in detail this afternoon, but I ask your Lordships’ House to endorse the agreement reached by worker and employer representatives.
The success of these discussions sets a clear example of the benefits of working together in a tripartite manner. This commitment was front and centre of the Labour Party’s plan to make work pay, and I am pleased to see it in action as part of these discussions. We must not stand in the way of, and further delay, these long-promised improvements to workers’ rights.
As the recent agreement centres on unfair dismal, I shall speak first to Motion B and Amendments 120G to 120M tabled by the Government in the other place, and Motion B1 and the amendments to the Commons amendment tabled by the noble Lord, Lord Sharpe of Epsom, relating to unfair dismissal.
The Government’s amendments in lieu will reduce the qualifying period for unfair dismissal protections from 24 months to six months, all while maintaining existing day-one protections against discrimination and automatically unfair grounds for dismissal. To further strengthen these protections, the Government have also tabled amendments which will ensure that the qualifying period for unfair dismissal protections can be varied only by primary legislation and that the compensation cap for claims will be removed. That will remove both the 52 weeks’ pay and the £118,223 cap. In practice, few awards get anywhere close to these caps, with the median average award for unfair dismissal being £6,746 in 2023-24. Removing the cap would not impact the methodology for how an employment tribunal calculates these awards.
The amendments from the noble Lord, Lord Sharpe, would change the Government’s amendments and go against the negotiated outcome of discussions between the trade unions and business representatives in November. My colleague, Minister Dearden, confirmed the outcomes of these negotiations in the Commons when debating this element of the Bill on Monday. She said
“I was in the room as part of the negotiations with business representatives and trade unions … I can confirm that the compensation cap was discussed and agreed in the room”.— [Official Report, Commons, 8/12/25; col. 94.]
The Government believe that the current compensatory award caps incentivise claimants to construct complex cases which allege discrimination to access uncapped compensation. These types of claims are more complex and take longer for the tribunal to handle. Therefore, by our removing the compensation cap for ordinary unfair dismissal claims, this incentive will be lessened, making it easier for tribunals to reach a judgment more quickly and decreasing burdens on the system.
Following a helpful meeting with the noble Lord, Lord Vaux of Harrowden, I can confirm that we will publish an enactment impact assessment for the Bill as soon as possible once the Bill secures Royal Assent and prior to commencement regulations for the entire unfair dismissal package being presented to Parliament. The new impact assessment will be publicly available and include an assessment of the impact of the removal of the compensation cap. We are aware of representations made by organisations, including the British Retail Consortium and UKHospitality. The Government stand ready to engage with those and similar organisations to hear their concerns and answer their questions.
Our impact assessments will set out how we will review the Bill and any secondary legislation that follows. Implementing the Bill will take several years, and its full effects will not be realised until long after Royal Assent. That is why our monitoring and evaluation framework will ensure that the real-world impacts are tracked and used to inform future policy decisions.
We will also publish post-implementation reviews to assess the impact of the implemented policies. These will typically occur five years after the legislation comes into force. Additionally, the dispute resolution stakeholder taskforce, which includes business representative organisations and trade unions, is looking at the likely impact of the full suite of measures in the Employment Rights Bill on employment tribunals, including the removal of the compensation cap. I can assure noble Lords that findings from the impact assessment on the removal of the compensation cap will be taken into consideration by the taskforce. This taskforce will help the Government to develop reform measures to ensure that the current system, including ACAS, is more efficient and resilient so it is better equipped to respond to future changes.
I now turn to Motion A and the government Amendments 1E and 1F, and to Motion A1 and Amendments 1G and 1H, which were tabled by the noble Lord, Lord Fox, relating to zero-hours contracts. I take this opportunity to thank the noble Lord, Lord Fox, for his contributions throughout the passage of the Bill. Our conversations have been constructive and productive. While others have sought to oppose measures in the Bill outright, we have appreciated his efforts to understand and accommodate our chosen policy approach while ensuring that the Bill is deliverable in a manner that works for employers and employees alike.
We agree that security of work is of the utmost importance, and it is clear that we align on needing to protect workers from precarious employment. We also agree that future arrangements must not place excessive burdens on employers. We will do this by working with businesses and other stakeholders on the detail of the zero-hours measures, which will be set out in future regulations.
We have tabled an amendment in lieu in the other place which will place a statutory duty on the Secretary of State to consult before exercising powers to set the length of the initial and subsequent reference periods. This consultation will conform to best practice and ensure that all stakeholders can contribute and shape how reference periods are set in regulations. The amendments in the name of the noble Lord, Lord Fox, seek to set the subsequent reference period at no less than 26 weeks. I can reassure him that our amendment places a statutory duty to consult on this detail. As part of the consultation, there will be adequate opportunity for him and others to feed in their representations on the length of subsequent reference periods before the detail is set in regulations.
We recognise that there is a strong business interest in this issue, given the new responsibilities that businesses will have under this part of the Bill, and we are committed to working with them, unions and stakeholders ahead of the necessary secondary legislation. It is important we get the detail right, and we cannot do that without consultation. It would not be appropriate for us to pre-empt that exercise and, therefore, I cannot support the noble Lord’s amendment. However, I look forward to hearing what he says on the matter, and I hope he will agree that our proposed approach is fair, workable and balanced, ensuring that the Government can implement their manifesto commitment with the input of key stakeholders.
Motion C and Amendments 48E and 48F, tabled by the Government in the other place, relate to seasonal work. The Government are fully aware that for some employers, work fluctuates throughout the year. The consideration of seasonal work is built into the right to guaranteed hours provisions and embedded in the Bill. There are several ways in which the employer can approach seasonal demand. In the other place, we tabled a further amendment in lieu, placing a statutory duty on the Government to consult before making these relevant regulations, including with representatives of seasonal workers and representative bodies of employers with seasonal workers.
Therefore, before any such regulations are introduced, employers, trade unions and other parts of civil society with interests in seasonal work will be consulted. This will ensure that they have their say and can directly influence the policies set out in the regulations, enabling the flexibility and security that are needed for the seasonal work sector. I thank the noble Lords on the Front Bench opposite and the noble Lord, Lord Fox, for their engagement on this issue. In our engagement, we provided indicative examples of how the relevant provisions would apply to different types of seasonal worker. I have shared these in an all-Peers letter to noble Lords which we hope will further contextualise these points.
Lord Fox
Leave out from “disagreement;” to end and insert “do disagree with the Commons in their Amendments 1E and 1F in lieu of Lords Amendment 1B; and do propose Amendments 1G and 1H in lieu of Commons Amendments 1E and 1F—
Lord Fox (LD)
My Lords, similarly to the Minister, I beg the House’s indulgence because, if this speech is longer than a speech would normally be for round three of ping-pong, it is because, as she pointed out, there have been developments since we last debated the Bill.
My Motion A1 addresses a major issue that has caused us concern. As I have said repeatedly, we support the principle that workers should have a right to guaranteed hours after completing a period of zero-hours work. Our concern has always lain in the cumbersome administration of that right. After several attempts to make what I think were meaningful improvements without undermining that principle, I must admit I have felt quite frustrated on this issue.
However, as we heard just now from the Minister, it is reassuring that the Government have taken these concerns on board. As she partially explained, the reference period is crucial in setting how often the employer must make a new offer of guaranteed hours to an employee. I point out that the employee does not necessarily have to want that offer; there is merely an obligation on the employer to make it. Clearly, if this offer has to be made every month, it is much more burdensome than if it has to be made once or twice a year. That is the nature of the amendment that I have tabled.
I understand that this is subject to consultation, and I am reassured by the description of the consultation that the Minister has just given. My choice of 26 weeks was, first of all, in a sense, to emphasise the point between a month, 26 weeks or 12 months, but also to spark the sort of response that I have just had from the Minister. In that respect, I am satisfied.
A joint press release issued after the negotiations by the business organisations noted:
“We remain committed to working with government and unions to dealing with this in the necessary secondary legislation to implement the Bill. We must ensure that it supports opportunity for workers while avoiding damage to economic growth”.
We subscribe to that view, and I think the Minister gave her support to the nature of the consultation that will follow.
I will now move on to the unfair dismissal issue. As we heard, the government amendment in lieu creates a six-month qualifying period for workers’ rights. It also, crucially, removes the section that would have enabled secondary legislation to alter that qualifying period. That was good news. It will therefore come as no surprise that we welcome this compromise. It represents success for the tripartite discussions that led to its breakthrough, and all three parties should be commended for the good faith that they brought to that meeting.
The Bill’s previous position on day-one rights would have significantly held back the employment prospects of anyone who would have represented the slightest risk to an employer. This avoids that risk. As the British Chambers of Commerce, the Chartered Institute of Personnel and Development, the Confederation of British Industry, the Federation of Small Businesses, the Recruitment & Employment Confederation and Small Business Britain put it in their press release that heralded this deal:
“This agreement keeps a qualifying period that is simple, meaningful, and understood within existing legislation. It is crucial for business confidence to hire and to support employment, at the same time as protecting workers”.
That is a strong endorsement from the employment side for this part of the deal.
I feel sure that one factor that helped concentrate minds during negotiations was the need to meet a deadline. If the Bill does not gain Royal Assent by the end of the year, key benefits that we have discussed, and that many of us support, to be created by the Bill will not be enacted for workers across the country for a further year. I feel proud of those on our Benches who helped create the pressure and who held firm while that decision was in the making. I thank my Liberal Democrat colleagues for turning up, every time, to help the Government, alongside the other two parties, come to the compromise that we now have. It is a credit to this side of the House and the rest of the House.
I move to Motion B1, in the name of the noble Lord, Lord Sharpe. As well as containing good news on day-one rights, the government amendment in lieu contained a surprise, or a surprise to us. It is clear that removing the compensation cap for unfair dismissal has generated unease since the amendment was tabled. This is not something your Lordships have discussed. As we heard, it was discussed during the tripartite negotiations, but there has been some confusion. I suggest that the ambiguity of the word “lift” has contributed to this in no small measure: “lift” can mean both remove and increase, and I suspect there may have been some confusion.
Some employers, while welcoming the shift from day-one rights to a six-month qualifying period, have expressed concern about the possible implications of potentially unlimited financial exposure. Your Lordships should note that, as the Minister said, the average unfair dismissal award for the year 2023-24 was under £7,000, with a ceiling of more than £118,000. Clearly, the cap did not influence the awards being made. I asked the Minister to confirm—and she has—that the criteria that are used to set the award are not changed by the contents of this Bill. This being the case, it seems that the main beneficiaries of this change will be those who earn considerably more than the average wage in this country. It will be those who are paid more, but, in my anecdotal experience, the very highest paid rarely use employment tribunals; their deals are set in boardrooms, usually with NDAs. I genuinely do not believe that SMEs will be disadvantaged by this. However, I think we can all agree that the process was poor.
In my discussions with the Government, I pressed for a meaningful impact assessment. We have just heard the Minister confirm that there will be consultation and a meaningful impact assessment that will be published. This will be completed and published before the clause that lifts the cap is enacted, so if something really bad comes out of that IA then there will be time to act on it. After that, as the Minister noted, ongoing monitoring of the effects of these changes will be essential, and corrective action should and must be taken if negative trends emerge. In any case, I remain unconvinced that Motion B1 would provide the analytic value that we would get from a proper impact assessment. Even in the event that I was supporting the noble Lord, I do not think the route that he seeks to take is one that would be of benefit. It seems more symbolic than meaningful.
Lord Sharpe of Epsom (Con)
My Lords, I will speak principally to Motion B1 in my name. The Government’s introduction of a six-month qualifying period, one that can be amended only through primary legislation, was, I am happy to acknowledge, a very welcome concession and we thank the Government Benches opposite for it. Angela Rayner spoke of disruption, but the truth is that this House was simply doing what it is supposed to do and what it does best—scrutinising legislation diligently and ensuring that our small businesses and our young people retain at least some chance of building a bright future. Those are our vested interests.
However, what followed was the very opposite of proper scrutiny. Without consultation, assessment or, as far as we can tell, any precedent—and without even the courtesy of signalling the change to either House—the Government brought forward at the 11th hour a wholly new measure to abolish entirely the compensation caps for unfair dismissal. These issues had not been discussed at any earlier stage in the Bill’s passage. The constitutional implications of introducing major new policy at ping-pong are profound. This is not responsible government; it is unnecessary, inappropriate and constitutionally troubling.
Motion B1 in my name accepts almost all of the Government’s amendment. It seeks only a modest and responsible safeguard that the Government conduct a review of the compensation limits before abolishing them. I acknowledge that an impact assessment has been promised after this becomes law, but what use would that be? It would already, by definition, be somewhat redundant.
This is not obstruction. It is the bare minimum that a competent Administration should undertake. When Tony Blair increased the cap in 1999, there was consultation. When the coalition Government introduced the 52-week cap in 2015, there was consultation. Why should this Government be exempt from the same cross-party accepted standards of good practice? The Government claim that this change reflects an agreement between business groups and trade unions but I wonder whether this is true.
Neil Carberry, chief executive of the Recruitment and Employment Confederation, was explicit. He said:
“For the employer side of the table last week ‘lifted’ did not mean ‘abolished, right now’. We agreed that the 52 week cap should go—protects ordinary workers better—as part of the deal that retained the qualifying period. We anticipated a further discussion about the future of the cash cap, too. But the decision to go for abolition, now is political”.
The Federation of Small Businesses said on Times Radio this week: “In the agreement between us as business groups and the unions, we agreed that there would be a lifting of the cap. We didn’t suggest it would be both caps abolished. So that’s broader than the agreement, and it helps a very small number of very, very rich people working for corporates”.
When those alleged to have agreed to this package say plainly that they did not agree to abolish both caps, the government rationale collapses. It is rumoured that there are minutes of these various meetings and, to clear all this up, perhaps, I ask the Minister whether that is the case and, if it is, will they place a copy of the minutes in the Library?
Let us also have a look at the possible practical consequences of this. The Government appear not to have considered even the most basic scenarios. For example, what happens when a board is faced with an underperforming CEO on £1 million or more? Today, many boards reach a clean exit. Notice is given, a payment to cover the maximum unfair dismissal award is made and a swift settlement is agreed. It allows the organisation to move on. But under an uncapped regime, the entire risk changes. Will a board now be expected to conduct a full six-month performance improvement plan, offer formal warnings, objectives, documented support and staged reviews, simply to reduce the risk of defending a seven-figure tribunal sum? In answer to the question from the noble Lord, Lord Fox, the incentives have now changed, so we would expect behaviour to change. They will now be incentivised to use the tribunal system, even if they were not in the past.
Let us consider a particular bête noire of your Lordships’ House: the water company executives, those who have overseen sewage being pumped into our rivers and seas. Are these individuals really now to be entitled to multimillion-pound payouts for so-called unfair dismissal? Is that the policy intention? Are noble Lords opposite truly comfortable becoming the party defending corrupt water bosses, while ordinary claimants are pushed further back in the queue? This policy is a recipe for the rich and a wrecking of justice for working people.
On Motion C, we are glad that it has taken the persistence of the Official Opposition to ensure that the Government now concede the need to consult our farmers and our other seasonal businesses. After the jobs tax, the tax on family farms and the business rates increase that are crushing the hospitality and retail sectors, and with the construction sector shrinking at the fastest rate since the pandemic, it is rather vital that such industry concerns are taken seriously.
On Motion D1, I agree with the noble Lord, Lord Burns. He has been entirely reasonable and constructive throughout these discussions. The noble Lord has engaged with the Government in good faith, seeking sensible middle ground rather than conflict. It is precisely because his approach is so measured that the position taken by the noble Lord, Lord Collins, opposite is so remarkable, because it was the Collins review of 2014 that argued that the old model of automatic political fund enrolment was no longer acceptable. It was the Collins review that insisted that workers must give explicit individual opt-in consent before contributing to political activity, and which championed transparency, choice and the principle that democratic legitimacy cannot rest on inertia. We agree with the noble Lord, Lord Collins; dare I say that he is U-turning, and is possibly not the first on those Benches to do so?
In our previous debate, the Minister suggested that the recent wave of industrial action somehow demonstrates that the existing legislative framework is inadequate. The rise in strikes in 2022 and 2023 occurred against a backdrop of the sharpest inflation shock in 40 years, global economic turbulence during and after the pandemic, and the profound wage erosion that followed the peak of the Russia-Ukraine conflict. These are extraordinary economic circumstances, not failures of the Trade Union Act 2016. In 2017, 2018 and 2019—the first full years after the Act was implemented—working days lost to strike action fell to historic lows. In 2018, the 273,000 working days lost represented the sixth-lowest annual total since records began in 1891, according to the ONS. Industrial action in the public sector was at its lowest sustained level for decades.
I turn to recent events. Just over a week ago the BMA announced yet another round of industrial action. These strikes will undoubtedly put patients at risk and place even greater strain on our already overstretched National Health Service. Let us also recall that it was the Government’s own Health Secretary who accused the BMA of behaving like a cartel—and you cannot negotiate with a cartel. We have all heard, purely through the most reputable Westminster whispers, of course, that there may be a measure of tension within the Government on this—a hint of disagreement between the Health Secretary and other Ministers, perhaps even the Prime Minister himself. I would never suggest that Ministers are briefing against one another or that competing ambitions are shaping policy, but the murmurings grow louder by the day.
The Government have a splendid opportunity this afternoon to dispel all such unhelpful chatter. They can prove to the House, and perhaps even to themselves, that they are a united operation. They can put all doubts to rest with one simple gesture, by accepting what we are calling the Wes Streeting amendment before your Lordships today. His Majesty’s Official Opposition remain firmly and unapologetically on the side of Britain’s businesses, large and small.
Lord Burns (CB)
My Lords, I will speak to Motion D1. In recent years, there has been an extraordinary and significant interest in what has become known as choice architecture. This was popularised by the book Nudge and by one of its authors, Richard Thaler, who received the Nobel Prize for Economics in 2017, partly for his work on it. One key point which is so relevant to the issues I have been raising is that he highlighted that when individuals are presented with a choice, any default option has a very important influence on their decision and should be taken into account in designing the process of choice.
My previous amendment aimed to eliminate the impact of the default option, in one direction or another, when members wish to take advantage of the right not to pay the political contribution. It proposed that new members should be required to make an active choice between two options displayed on the application form: to pay or not to pay. This would eliminate the need for a default option, and potentially reflect more closely the true preferences of members. This proposal has not found favour in the House of Commons: clearly, the Government and the trade unions with political funds want to influence the decision of members in favour of paying the political contribution. They want as many members as possible to pay the contribution, and of course I understand the motivation.
Lord Vaux of Harrowden (CB)
My Lords, I thank the Minister and the noble Lord, Lord Collins, for meeting with me earlier today. It allowed us to sort out some misunderstandings, for which I am very grateful.
I will speak only to Motions B and B1. I somewhat regret that this is not the speech that I had originally intended to make—in fact, I had written it. I had intended to make a very short speech thanking the Minister and the Government for listening to the House, almost every business group, the Resolution Foundation, the Tony Blair Institute and their own impact assessment, and reaching a sensible compromise based on what this House proposed.
I was very pleased that the Government held talks between the business groups and the unions, and that all had agreed that the compromise was workable. Contrary to some of the more irresponsible comments that we have seen in the press—some coming from the other place, sadly—this was not a case of out-of-touch Peers blocking a government Bill. It was a good example of this House doing its job of scrutinising legislation and asking the other place to think again. We do not block legislation; we seek to improve it. I do not underestimate how difficult it was for the Government to make the important concession on day-one unfair dismissal rights that they have made.
Sadly, though, I cannot end my speech there. The Government set out the compromise they reached in an announcement on 27 November. It said that agreement had been reached on a six-month qualifying period, which would be changeable only by primary legislation —so far, so good. It also very briefly mentioned the lifting of the compensation cap, something that has never been discussed during the passage of the Bill. Then I saw the actual amendment, which goes somewhat beyond lifting the compensation cap. The amendment abolishes it altogether so that compensation for unfair dismissal will be unlimited, which I suggest is different from lifting.
As we have heard from the noble Lord, Lord Fox, it is at best ambiguous. I note that the Minister is now referring to removing the cap, which I think is more accurate. As we have heard, this does not appear to have been equally understood by every party to the agreement between the employer organisations and trade unions. A number of employer organisations are still expressing concerns about it.
Does this late change matter? The amendment removes the current cap on what can be claimed in an unfair dismissal claim. Currently, it is the lower of 52 weeks’ pay or £118,223. While it might be true that few claims go over that, that may well be because higher-paid people will generally reach agreement, knowing that the cap exists, rather than taking the matter to the tribunal. This change may incentivise more higher-paid people to turn to the already overburdened tribunal system. There is no downside to them doing so with the hope of a higher payout, or at least a strengthening of their negotiating position. As we have heard, the irony of this is that the main beneficiaries are likely to be senior employees on high salaries who are moving towards the end of their careers, not the workers the Government claim to be helping.
The noble Lord, Lord Sharpe, gave the example of the water industry. I was trying to think of an example and one rather closer to this House occurred to me. When the noble Lord, Lord Mandelson, was fired from his position as ambassador to the United States, there was a lot of speculation in the press that he might be able to claim for unfair dismissal due to the summary nature of his dismissal. Obviously I do not know the details of his contract, what has been agreed or anything else—it would be interesting to know what was agreed—but is this really the sort of situation the Government want to give the possibility of unlimited compensation to? It would certainly strengthen the negotiating hand of the employee in any such situation.
The truth is that we do not know what the effect will be or whether this matters. It has been introduced without warning at the last possible moment in the Bill, with no consultation, no impact assessment and no scrutiny. Whatever one thinks about the merit of removing the cap on compensation, this is not the right way to do it. I would go as far as suggesting that it is testing our constitutional processes to the limit. Legislation should not be decided in—I do not think I am allowed to say “smoke-filled” any more—darkened rooms as a deal between a limited number of interested parties. It is not the way we do things. This is a material change, and it deserves to be properly consulted on, impact-assessed and debated. It should have been introduced much earlier.
The amendment proposed by the noble Lord, Lord Sharpe, is admirably constructive; I thought it would go further. Rather than remove this new clause altogether, it proposes a review of unfair dismissal compensation to take place within three months, and sets out that the review
“must include a consultation with … employers’ organisations … trade unions … employment law practitioners, and … such other persons as the Secretary of State considers appropriate”.
That is a fair and constructive approach.
However, we must be pragmatic. This is the third stage of ping-pong. Whatever we do at this stage is unlikely to move in the other place, and I am conscious that I do not want to see the key concession of a six-month qualifying period being unpicked as a result of our actions. As I said, I accept that that was a big step for the Government to make.
I thank the Minister for her confirmation that there will now be an impact assessment, which will be published as soon as possible. I did not hear clearly that there will be a full consultation with other parties. Currently, this has been consulted on by six organisations and I do not know how many unions. That is not a wide consultation on such a big change. Will there be a proper consultation process on this before it comes into effect?
Assuming the answer to that question is to the positive, reluctantly, and while protesting in the strongest possible terms that introducing such a significant change at such a late stage runs a coach and horses through the proper process of scrutiny of legislation, I am minded to bring this to an end and accept the Government’s amendment. But, as I said, I will listen to what the Minister says before I make that final decision.
I have one final request. This late insertion of a material change to legislation in the third stage of ping-pong must not become a precedent. Can the Minister confirm that the Government see this as a one-off, extraordinary case, and not something to be repeated?
Lord Sentamu (CB)
My Lords, I thank the Minister, who is new at the Dispatch Box, for explaining things quite clearly. I am thankful for the Government accepting that amendment, which has clearly enabled the country to feel, when people take on jobs, that there is a qualifying period, although not an indefinite one. I said in your Lordships’ House that I was like a gramophone playing a record that was stuck in a groove. The Government have given me a new needle and I am out of that groove, so I thank them very much.
Lord Cromwell (CB)
My Lords, I will speak fairly briefly in support of Motion D1 from the noble Lord, Lord Burns. This has become known as the hokey-cokey amendment—opt in, opt out, opt in, opt out, through the chain of amendments that have been put down. I support the vital role of trade unions, but I find it hard to understand why legislation should be used to steer—or, if you prefer, nudge—employees towards funding political causes.
The noble Lord, Lord Burns, has shifted a very long way from his original amendment. All the amendments now require is a checkbox at the start to allow employees to opt out if they so wish. This is surely the absolute minimum that should be available to them. I would have preferred asking trade union members if they wished to opt in, as a positive statement, rather than to opt out, which is a negative that would perhaps attract black marks in the membership list of their union. It does the Government no credit to seek to deny employees this opt-in choice. However, like the noble Lords, Lord Fox and Lord Vaux, I am reluctant to extend ping-pong, and I will be guided by the noble Lord whose amendment this is.
Lord Barber of Ainsdale (Lab)
My Lords, the subjects covered by these amendments have been more than extensively debated already, so I do not need to rehearse all the arguments around each issue. Nor do I need, I hope, to remind the House that this whole Bill represents the fulfilment of a hugely important manifesto commitment and, by long-established convention, it must ultimately be recognised and accepted by this House.
As a former chair of ACAS, I will briefly focus on what is new since our previous debate on the Bill: the unprecedented agreement between the TUC and unions and the major employers’ organisations in this country. I say “unprecedented” because, although there have been agreements on some issues over the years between the TUC and the CBI—I think of the joint work that was excellently done developing the furlough scheme during the Covid crisis—I cannot recall such a grouping of the representative organisations of employers ever coming together to seek and to reach an understanding with the TUC. I do not need to list all those organisations on the employer side in this process; the noble Lord, Lord Fox, has done that for me already. This is a historic development and, to my mind, a very positive one. I warmly congratulate those on all sides who gave leadership, for the Government, the unions and the employers, to make this possible. All the parties needed to move from their original positions to make this possible.
As is clear, the centrepiece of this agreement is moving from a right to protection against unfair dismissal from day one of employment to after six months in the job. This proposal was championed by many noble Lords in our earlier debates, speaking up, as they have, for what they have seen as employers’ most important concern about the different provisions in the Bill. But, of course, this agreement is more ambitious than that, in also clearing the decks for the Bill to move swiftly to Royal Assent. As the joint statement by all the employers’ organisations makes clear:
“This change addresses the key problem that must be sorted in primary legislation”.
That statement acknowledges that other issues covered by the Bill, on which those organisations may have concerns, will be consulted on in due course after Royal Assent. This reflects a widely shared view that, rather than leaving continued uncertainty and dragging this debate out further, it is now better for all parties to get the Bill passed so that we can all move on to the next stage of bringing some key provisions into force, in line with the published timetable, and the planned consultations on other issues covered by the Bill.
My ACAS and TUC experience has taught me how difficult it can be to find intelligent compromise on issues that may have been hard fought. It has also taught me the vital importance of agreements being honoured when a deal is done. If the passing of this Bill is further delayed it would frustrate one of the key objectives of this agreement.
As the employers’ organisations said in their statement, this shows that dialogue works. I truly hope that the positive spirit that underpins the agreement continues to the next phase—I mean in the changes to be made across the workplaces of this country, not just the consultations on detailed aspects of the Bill. My ambition has always been for unions and employers to find constructive ways of working together in order to build successful organisations. In that spirit, I hope all noble Lords will now get on board and show—dare I say it—solidarity with the employers of our country in the compromise that they have reached. I hope noble Lords will not just support the changes in unfair dismissal arrangements but now pass the Bill through to Royal Assent without any further delay.
Lord de Clifford (CB)
My Lords, I will speak on Motions B and B1 and register that I speak on behalf of SMEs and as a small employer of 130 people. I thank the Government for listening to businesses and this Chamber with regard to the change to unfair dismissal. Six months is certainly enough time for businesses to assess employees.
I thank the Opposition, the Liberal Democrat Front Bench and my noble friend Lord Vaux of Harrowden for persisting in trying to change Clause 23. This change could have had the effect of allowing employers, especially SMEs and micro-businesses, to take a chance on a prospective employee who shows the skills and talents for a particular role when the employer, for whatever reason, may have doubts. This could be due to a lack of experience, the different ways in which some individuals need to work nowadays, or an employment gap. This change certainly would help that.
However, the Government’s introduction of the change to lift the compensation cap will potentially significantly dampen down employers’ enthusiasm to take this chance. This is especially true for micro-businesses. The regulatory burden and the risk of starting to take on employees is significant, and the removal of a cap will add to the real fear about starting to employ people. All those businesses hear is an unlimited cap, which is what the focus will be in their minds. They will not know about the average limit being just £7,000 or £8,000. The thought of an unlimited liability if you get the dismissal process wrong will either stop businesses taking on employees or mean that some employee issues are not tackled for fear of the possible amounts. This will have a negative impact on productivity and, possibly, the culture that people work in.
I have listened to the Minister and welcome the impact assessment and consideration, but I ask the Government to reconsider this change and put some limit on the compensation, so that small businesses can assess the liability and not have the fear, even if unfounded, of paying a large fine that could put those businesses or business owners at risk.
Lord Hendy (Lab)
My Lords, I will make two points. The first relates to Motion B and the removal of the arbitrary statutory limit on compensation. My noble friend the Minister mentioned the tribunal statistics for 2023-24, published by the Government, and the fact that the median award for unfair dismissal was £6,746. That is the median award, not, as the noble Lord, Lord Fox, mentioned, the average award. It means that 50% of all awards for unfair dismissal are less than £6,746.
But those statistics reveal something that I found even more startling: in that year, 2023-24, the tribunals disposed of 31,000 single-claim cases and 2,000 multiple-claim cases; of those, only 646 awards were made in respect of compensation for unfair dismissal. Of course, one accepts that many cases were settled through ACAS or between the parties and then approved by the tribunal, and that would count as a disposal. But 646 cases out of 33,000 means that this jurisdiction of unfair dismissal is little used.
Of those awarded compensation, the latest government survey, which dates from 2013 and has never been updated, found that only 49% of claimants had been paid in full, a further 16% had been paid in part and 35% of successful claimants receiving a tribunal award had never received a penny of their awards. In 2016, the then Government sought to address this lamentable state of affairs by establishing the employment tribunal penalty enforcement and naming scheme to penalise companies that do not pay within 28 days of the tribunal order and, since 2018, by publicly naming them.
However, the BBC and the Bureau of Investigative Journalism published research two months ago showing that of the 7,000 unpaid claimants using the scheme, no less than 5,000 had failed to obtain any recovery. Some 4,800 penalty notices had been issued, with a combined value of £9 million of unpaid awards, but government records show that only 109 of those notices were actually paid, and none of the employers in question was named, despite nearly 4,000 requests for naming as well as compensation. These are the issues that the Government need to confront, not whether highly paid executives and others who are found to have been unfairly dismissed are entitled to the full measure of compensation for their losses.
My second and final point relates to Motion D, the amendment to it from the noble Lord, Lord Burns, and the discussion there has been, on this occasion and on the previous one, which my noble friend Lord Barber was involved in, about the compromise that was reached in 2016. I will go back a little further in the history of trade union political funds. In 1871, the Trade Union Act gave unions, for the first time in British history, legitimacy under the law. A trade union was materially defined as
“such combination, whether temporary or permanent, for regulating the relations between workmen and masters”.
The Act protected such organisations from illegality, in particular for restraint of trade, what is now called anti-competitive activities, of which collective bargaining as the means of regulating relations was the paradigm example. With various tweaks, the essential element of regulating relations between workers and employers remains the essential element in the current legislation for the definition of trade unions.
The point I want to make is that before the 1871 Act and for 40 years afterwards, trade unions continued to spend money promoting parliamentary Bills for the benefit of working people, such as on health and safety, national insurance, restoration of the right to strike after the Taff Vale judgment of 1901, and so on. At the end of the century, they came to the conclusion that they needed representation in Parliament. The Labour Representation Committee was founded by the TUC in 1900 and became the Labour Party in 1906. All this was largely financed by the unions from their general funds, just as employers financed the Tories and the Liberals. But in December 1909—
Lord Hendy (Lab)
Thanks for bearing with me. In December 1909, all this changed. The Judicial Committee of this House held, in the Amalgamated Society of Railway Servants v Osborne, that the statutory definition was exhaustive and it was therefore unlawful for a union to spend money on any object other than the regulation of industrial relations. That decision was not a foregone conclusion. Three years earlier in the High Court, in a case called Steele v South Wales Miners’ Federation, Mr Justice Darling had held that the statutory definition —I am getting to the point here, bear with me—
“was not intended to be exhaustive, or to prevent an association from lawfully doing other acts beyond those there mentioned. It is significant that the section is silent about providing benefits for members, which is one of the recognised branches of trade union business. So that even if the purposes mentioned in the rule do not come within those specified in the section, there is nothing to render them illegal. But, further, I am of the opinion that they do fall within those specified in the section. It seems to me that one of the ways of regulating the relations between workmen and masters … is to get laws passed by Parliament for their regulation, and that one of the first steps towards getting those laws passed would be to send a representative to Parliament to promote a Bill for that purpose”.
Lord in Waiting/Government Whip (Lord Leong) (Lab)
Will my noble friend speak more specifically on the points raised? Perhaps he could wind up his contribution.
Lord Hendy (Lab)
I am coming to the conclusion. The Trade Union Act 1913 changed the definition of a trade union to allow it legitimately to spend funds on other objects beyond industrial relations and, if approved by a ballot of the members, a union could have a political fund to be used for specified political purposes. Each member had to be given the opportunity to opt out of payment of that part of the subscription earmarked for the political fund. That was the compromise. In seeking to maintain, in this Bill, the outdated compromise of 1913, the Government have gone further than they needed. What they should have done—and what they could do, if objection is still maintained—is repeal the modern form of the 1913 Act and allow unions, like all other clubs, corporations, partnerships and co-ops—
Lord Londesborough (CB)
My Lords, I am going to speak, in mercifully brief terms, about SMEs, but I will spare noble Lords the history of SMEs in the UK from 1910 to 2026.
My point, in relation to Motions B and B1, is that lifting the cap on unfair dismissal without warning and at this very late stage fundamentally undermines the claims of careful consultation with employers. My email inbox, like those of many others in this place, is awash with anger and indignation from SMEs in particular. The question they keep asking is: how can we trust this Government, coming as this does after punitive and disproportionate hits on employers’ national insurance contributions and inflation-busting increases in the minimum wage, who are sneaking in this clause on uncapped compensation? SMEs will not be persuaded by the data we have heard in this debate on medians and modes. Frankly, we are creating yet more uncertainty, piling up the risks of employing new staff and fuelling unemployment that much further. It is anti-entrepreneurial, anti-enterprise and, I fear, a job destroyer. In my view, it has no place in a free, growth-driven economy.
Lord Pannick (CB)
My Lords, there is one short point that the House should bear in mind in relation to Motion B1. There is already no cap on the award of compensation in employment tribunals for race discrimination, sex discrimination and disability discrimination cases. The House may therefore think that the concerns that have been expressed about the impact of the removal of the cap are perhaps rather exaggerated.
Baroness Lloyd of Effra (Lab)
My Lords, I thank all noble Lords for their contributions today. This continues the robust discussion that we have had throughout the passage of the Bill.
I come first to some of the constitutional points, or those that go to the way that we do business. As I outlined in my opening speech, the tripartite talks and the amendments resulting from them were context- and Bill-specific. They were really a demonstration of the way in which we listened very clearly to the views expressed in this House through many exchanges, which led to a very productive tripartite discussion. However, they are very context- and Bill-specific. The noble Lords, Lord Vaux and Lord Cromwell, will be familiar with discussions with the Leader of the House on how she and other Members would like to conduct business more regularly.
I will address some of the points made. Again, coming back to the nature of it all, these were discussions between business representative organisations, trade unions and the Government. Specifically on the question of the minutes, there are Civil Service contemporaneous notes of the meetings, but they have not been shared with participants or more widely. We think that it would be impolite and inappropriate to share the meeting notes without the agreement of those who attended the meetings. The Government’s statement and update on the Employment Rights Bill, released on 27 November, and the subsequent Written Ministerial Statement laid in both Houses provide the public summary and conclusion of that meeting. Although it was a slightly different process, we laid that Written Ministerial Statement as soon as we could to give as much clarity as possible to the House on the developments that were happening, which were, as I said before, in response to concerns raised here.
On the question of lifting or removing, that is indeed something that I have also given some thought to. The word “lift”—lifting embargoes; lifting bans—is used very commonly in that manner to mean “remove”. When asked this question in the other place, my colleague, Minister Dearden, confirmed the outcomes of the negotiations and said
“I was in the room as part of the negotiations … I can confirm that the compensation cap was discussed and agreed in the room”.—[Official Report, Commons, 8/12/25; col. 94.]
I was not in the room and I therefore give weight to the comments that she made on that.
To address the comments and interventions made by the noble Lord, Lord Vaux, and my noble friend Lord Barber, this is, in total, a pragmatic way forward. The opposition amendment would not enable us to move forward because it would remove the cap and replace it with the report. It is not something that can be encompassed, and we should continue with the package as negotiated; it is not consistent with the agreement that was reached and which we have brought to your Lordships and encapsulated in the Bill. I just underline that it is not something that we can accept.
Points have been made about the actual substance of the cap. The noble Lord who spoke just before me made the extremely pertinent point that there are already areas of the law that have uncapped areas, and we do not think that removing the cap will mean that compensatory awards will necessarily increase in the way that others have set out. Tribunals have well-established ways of calculating the compensation that might be awarded for particular types of losses resulting from unfair dismissal. As the figures cited today show, those methodologies lead to awards that are, on average, under £7,000. Employment tribunals will continue to focus on claimants’ actual losses when determining awards. I think that some of the fears are unwarranted but, in any case, we will publish the impact assessment and we will engage with business organisations continuously. The last month has shown how productive it can be to engage with business organisations and trade unions together to advance all the measures here. I think that I have dealt with all the points made by Members on the cap.
I come on to the political funds and the question of whether it is an active choice or whether we are trying to restrict people from making an active choice as to whether to contribute to a political fund. When joining a trade union, new members are taking an active choice to voluntarily join a collective organisation that has decided, via a democratic ballot of members, to establish a political fund. We do not see these as two distinct decisions—a decision to join a democratic organisation that has a political fund and a decision to opt in to a political fund—but one active decision. I remind noble Lords that all we are proposing to do is to restore the position as it was for 70 years—I will perhaps not give quite as much detail as my noble friend—before the Trade Union Act 2016 came into force. This simplifies the political funds process to ensure that a balance is struck between protecting trade unions from administrative burdens and ensuring that members continue to have a choice on whether they wish to contribute to a political fund.
Crucially, we agree with the noble Lord, Lord Burns, that members who, for whatever reason, choose not to contribute, should and will be able to do so easily and without detriment, and can exercise that right to opt out of contributing. We will continue to require trade unions to make new members aware of their right to opt out of the political fund. The unions will have to explain to members on the application form that opting out will not affect other aspects of their membership and they will not face any disadvantage. Members will be able to easily inform unions of their decision to opt in or out, including by post, email, completion of electronic form or by any other electronic means.
I was asked about the guidance or regulations in this area. The Secretary of State will be under a duty to issue the guidance within three months of the relevant section coming into force. This guidance will set out expectations as to how quickly unions should action opt-out notifications and will state that unions should, as a matter of best practice, give effect to opt-out notices at the earliest feasible opportunity. This will help to ensure that unions action the opt-out notices promptly. As I stated earlier—I can commit to this again—the guidance will also be clear that opting out must be properly available and practically possible for members who wish to exercise that right. We want to make sure that members are able to opt out in that way, and the guidance will be clear on how that is effected. On the question of the rebate, that will be effected at the earliest time possible once the opt-out notice has been given.
On the question of ballot thresholds, I noticed the attempt to recontextualise the recent year’s industrial action, but the fact is that a threshold of 50% has not led to less industrial action. All strike action recently has taken place with a turnout of more than the 50% threshold, so we do not think that this will inhibit good industrial relations. In fact, we think that the 50% level is unnecessary. It is inhibiting the democratic right of union members and unions to demonstrate their will. It does not take place in other areas—for example, local government or parliamentary elections. Therefore, we do not think it should continue. However, to reiterate, we will not repeal the 50% threshold until we have assessed the impact of e-balloting. The Secretary of State will have to have regard to the impact of that, and he will lay a Statement explaining what the effect of e-balloting is before the 50% threshold is rescinded.
To conclude, we now want to move forward with purpose, guided by our manifesto commitment to work constructively with stakeholders.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
My noble friend is coming to the end. We should hear her remarks and then we will go to the votes.
Baroness Lloyd of Effra (Lab)
I emphasise again that the Government’s convening of recent discussions and our willingness to compromise on the issue of unfair dismissal should signal to parliamentarians and stakeholders that we want to get this right. I emphasise that the Government’s work on this agenda is far from over. There will be opportunities for further debate and scrutiny, and I look forward to these discussions. I therefore hope that noble Lords will join business representatives and trade unions in supporting the position reached in recent discussions and backing the Government’s Motions today.
Lord Fox (LD)
My Lords, there was a moment when I was engulfed in shame that I had misunderstood the difference between median and average. Fortunately, the noble Lord, Lord Hendy, distracted your Lordships quite quickly, so I have recovered.
Nobody in this House is pretending that this is perfect. We are at a point of pragmatism and, I remind your Lordships, at the third round of ping-pong. The noble Lord, Lord Vaux, has made some important points. All of us go into this. If it was perfect, I would press Motion A1 and I would want to keep on iterating. I know that now is the time for this Bill to pass. Therefore, I beg leave to withdraw Motion A1.
Baroness Lloyd of Effra
That this House do not insist on its insistence on Lords Amendments 23 and 106 to 120 in respect of which the Commons have insisted on their disagreement; and do agree with the Commons in their Amendments 120G, 120H and 120J to 120M in lieu of Lords Amendments 23 and 106 to 120.
“Right not to be unfairly dismissed: qualifying period and compensatory awards
Part 10 of the Employment Rights Act 1996 (unfair dismissal) is amended in accordance with subsections (2) and (3).
In section 108 (qualifying period of employment)—
(a) in subsection (1), for “two years” substitute “six months”;
(b) in subsection (2), for ““two years”” substitute ““six months””.
(3) Omit section 124 (limit of compensatory award etc).
(4) In section 209 of that Act (powers to amend Act), in subsection (5), omit “108(1),”.
(5) Schedule (Minor and consequential amendments relating to section (Right not to be unfairly dismissed: qualifying period and compensatory awards)) contains minor and consequential amendments relating to this section.”
“SCHEDULE
MINOR AND CONSEQUENTIAL AMENDMENTS RELATING TO SECTION (RIGHT NOT TO BE UNFAIRLY DISMISSED: QUALIFYING PERIOD AND COMPENSATORY AWARDS)
Employment Rights Act 1996
1 (1) The Employment Rights Act 1996 is amended as follows.
(2) In section 92 (right to written statement of reasons for dismissal), in subsection (3), for “two years” substitute “six months”.
(3) In section 108 (qualifying period of employment), in subsection (3)—
(a) after paragraph (h) insert—
“(ha) section 4(3)(b) of the Rehabilitation of Offenders Act 1974 (read with any order made under section 4(4) of that Act) applies,”;
(b) omit paragraphs (k) and (o).
(4) In section 117 (enforcement of order for reinstatement or re-engagement and compensation), in subsection (2), for “Subject to section 124, the” substitute “The”.
(5) In section 118 (compensation: general), in subsection (1)(b), omit “124,”.
(6) In section 123 (compensatory award), in subsection (1), omit “124,”.
(7) In section 205A (employee shareholders), in subsection (10), for the words from “where” to the end substitute “where—
(a) the dismissal is by reason of any requirement or recommendation that is referred to in section 64(2), or
b) the reason (or, if more than one, the principal reason) for the dismissal is, or relates to, the employee’s political opinions or affiliations.”
(8) In section 209 (powers to amend Act)—
(a) in subsection (2)—
(i) in paragraph (e), omit “section 124(1), (2) and (5),”;
(ii) in paragraph (j), omit “, 124(2)”;
(b) in subsection (5), omit “92(3),”.
(9) In section 226 (rights on termination), in subsection (3), for “, 121 or 124”
substitute “or 121”.
(10) In section 236 (orders and regulations), in subsection (3), omit “124(2),”.
Employment Relations Act 1999
2 (1) The Employment Relations Act 1999 is amended as follows.
(2) In section 34 (indexation of amounts, etc)—
(a) in subsection (1), omit paragraph (c);
(b) omit subsections (4) to (4B).
(3) In section 37, omit subsection (1).
Enterprise and Regulatory Reform Act 2013
3 In the Enterprise and Regulatory Reform Act 2013, omit section 15 (power to increase or decrease limit of compensatory award).
Coronavirus Act 2020
4 In Schedule 7 to the Coronavirus Act 2020, omit paragraph 17.
Power to make further consequential amendments
5 (1) The provision that may be made under section 151 (power to make consequential amendments) by any regulations that amend a relevant provision in consequence of the repeal of section 124 of the Employment Rights Act 1996 by section (Right not to be unfairly dismissed: qualifying period and compensatory awards)(3) includes (among other things)—
(a) provision amending section 34 of the Employment Relations Act 1999 for the purpose of applying that section to a relevant sum;
(b) provision conferring power on the Secretary of State by regulations to vary a relevant limit, in the same manner and to the same extent as the power conferred by section 15 of the Enterprise and Regulatory Reform Act 2013 to vary the limit imposed by section 124(1) of the Employment Rights Act 1996 (but see sub-paragraph (4));
(c) provision that is consequential on provision within paragraph (a) or (b).
(2) For the purposes of this paragraph—
(a) “relevant provision” means—
(i) a provision listed in sub-paragraph (3), or
(ii) any other provision that limits the amount of compensation payable by virtue of the provision by reference to the limit imposed by section 124 of the Employment Rights Act 1996;
(b) “relevant sum” means a sum specified in a relevant provision, in consequence of the repeal of that section, for the purposes of limiting the amount of compensation payable by virtue of the provision;
(c) “relevant limit” means a limit on the amount of compensation payable by virtue of a relevant provision that is specified in the provision in consequence of that repeal;
(d) the reference in sub-paragraph (1)(b) to section 15 of the Enterprise and Regulatory Reform Act 2013 is a reference to that section as it had effect immediately before the coming into force of paragraph 3.
(3) The provisions referred to in sub-paragraph (2)(a)(i) (each of which limits the amount of compensation payable by virtue of the provision by reference to the limit imposed by section 124 of the Employment Rights Act 1996) are—
(a) section 67 of the Trade Union and Labour Relations (Consolidation) Act 1992 (right not to be unjustifiably disciplined by trade union: remedies for infringement);
(b) section 140 of that Act (remedies for refusal of employment, etc on grounds related to union membership);
(c) section 176 of that Act (right not to be excluded or expelled from trade union: remedies);
(d) paragraph 160 of Schedule A1 to that Act (trade union recognition: enforcement of right not to be subjected to detriment);
(e) section 49 of the Employment Rights Act 1996 (protection from suffering detriment in employment: remedies), so far as relating to subsection (5A), (7), (7A) or (7B) of that section;
(f) section 24 of the National Minimum Wage Act 1998 (enforcement of right not to be subjected to detriment), so far as relating to employment tribunals in Great Britain;
(g) section 56 of the Pensions Act 2008 (pension scheme membership: enforcement of right not to be subjected to detriment);
(h) regulation 4 of the Exclusivity Terms in Zero Hours Contracts (Redress) Regulations 2015 (S.I. 2015/2021) (enforcement of right not to be subjected to detriment);
(i) regulation 9 of the Exclusivity Terms for Zero Hours Workers (Unenforceability and Redress) Regulations 2022 (S.I. 2022/1145) (enforcement of right not to be subjected to detriment).
(4) The power that may be conferred by provision made by virtue of sub-paragraph (1)(b) includes power to specify different amounts in relation to different descriptions of persons by whom compensation is payable by virtue of a relevant provision.
(5) The power to make regulations under section 151 is to be regarded as including power to make provision amending section 49(7A) or (7B) of the Employment Rights Act 1996, as inserted by paragraph 9 of Schedule 2, in consequence of the repeal of section 124 of the Employment Rights Act 1996 regardless of whether that repeal comes into force before or after the day on which that paragraph is brought into force for any purpose.”
“(3D) Subsection (1) does not apply in relation to an employee if on the effective date of termination the employee has not yet started work.”
“(2A) Subsection (1) does not apply in relation to an employee if on the effective date of termination the employee has not yet started work.”
Baroness Lloyd of Effra (Lab)
My Lords, I have already spoken to Motion B. I beg to move.
Motion B1 (as an amendment to Motion B)
Lord Sharpe of Epsom
At end insert “and do propose Amendment 120N as an amendment to Commons Amendment 120G and Amendments 120P to 120S as amendments to Commons Amendment 120H—
“(3) In section 124 (limit of compensatory award etc.), after subsection (5), insert—
“(6) The Secretary of State must, within three months of the day on which the Employment Rights Act 2025 is passed, conduct a review of the limit imposed by this section on the amount of the compensation awarded or compensatory award made.
(7) A review under subsection (6) must include a consultation with—
(a) employers’ organisations,
(b) trade unions,
(c) organisations representing employment law practitioners, and
(d) such other persons as the Secretary of State considers appropriate.””
Lord Sharpe of Epsom (Con)
My Lords, in view of the manifest constitutional impropriety on display, I do not think we have a choice. I beg to move Motion B1.
Baroness Lloyd of Effra
That this House do not insist on its insistence on Lords Amendment 48B in respect of which the Commons have insisted on their disagreement; and do agree with the Commons in their Amendments 48E and 48F in lieu of Lords Amendment 48B.
“(9A) Before making the first regulations to be made under subsection (9)(c) the Secretary of State must consult—
(a) such persons representing the interests of seasonal workers as the Secretary of State considers appropriate,
(b) such persons representing the interests of employers of seasonal workers as the Secretary of State considers appropriate, and
(c) such other persons as the Secretary of State considers appropriate.”
“(7ZA) Before making the first regulations to be made under sub-paragraph (7)(c) the Secretary of State must consult—
(a) such persons representing the interests of agency workers who do seasonal work as the Secretary of State considers appropriate,
(b) such persons representing the interests of hirers to whom agency workers are supplied to do seasonal work as the Secretary of State considers appropriate, and
(c) such other persons as the Secretary of State considers appropriate.”
Baroness Lloyd of Effra
That this House do not insist on Lords Amendments 72D to 72H, to which the Commons have disagreed; and do agree with the Commons in their Amendments 72J and 72K in lieu of Lords Amendments 72D to 72H.
(i) a day specified in, or determined in accordance with, the rules of the union, and
(ii) ”
“(7) The Secretary of State must, before the end of the period of three months beginning with the day on which this section comes into force, publish guidance about the kind of provision which the Secretary of State considers it is appropriate for the rules of a trade union to make for the purposes of subsection (4)(b)(i).
(8) The Secretary of State—
(a) may from time to time revise guidance published under subsection (7);
(b) must publish any revisions of that guidance.”
The Deputy Speaker (Baroness Fookes) (Con)
Before I call Motion D1, I should alert the House to a typographical error in Amendment 72P. The reference to “page 37” should be to “page 87”. If the amendment is agreed to, it will be corrected by printing point.
Motion D1 (as an amendment to Motion D)
Lord Burns
Leave out from “disagreed;” to end and insert “do disagree with the Commons in their Amendments 72J and 72K in lieu of Lords Amendments 72D to 72H; and do propose Amendments 72L to 72N and 72P to 72R in lieu of Commons Amendments 72J and 72K—
(i ) a check box allowing the member to opt out of being a contributor to the fund from the start of their membership of the union,”
Lord Burns (CB)
My Lords, I have listened closely to the Minister and I have had several conversations with the Front-Bench team. I remain very disappointed with the determination to go back towards the 1945 arrangements. I fear that, unless we can make further progress and improve how this Bill works in practice, in time it will end badly; I cannot believe that it has a great shelf life.
I was involved in the 2016 discussions, which were very fraught and there was a lot of ill will. We compromised on that occasion with the greatest of difficulty. The chances of reaching compromise in the same circumstances on another occasion will be very difficult. I hope that, whatever further discussions take place about how this works in practice, we are going to get something that is much nearer to what I describe as a real, effective and active choice for those who wish to opt out.
However, I recognise that I have reached the end of the road on this. I got involved in this issue by accident back in 2016 and I will not press my amendment. I beg leave to withdraw it.
Baroness Lloyd of Effra
Moved by
That this House do not insist on its insistence on Lords Amendment 62 in respect of which the Commons have insisted on their disagreement; and do agree with the Commons in their Amendment 62E in lieu of Lords Amendment 62.
Baroness Lloyd of Effra (Lab)
My Lords, I have already spoken to Motion E. I beg to move.
Motion E1 (as an amendment to Motion E)
Lord Sharpe of Epsom
Moved by
Leave out from “House” to end and insert “do insist on its Amendment 62, and do disagree with the Commons in their Amendment 62E in lieu of Lords Amendment 62.”
Sustainable Aviation Fuel Bill
Wednesday 10th December 2025
(1 day, 16 hours ago)
Lords ChamberSustainable Aviation Fuel Bill 2024-26 View all Sustainable Aviation Fuel Bill 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 138-I(a) Amendment for Committee (Supplementary to the Marshalled List) - (9 Dec 2025)
Lord Ravensdale
Member's explanatory statement
This amendment is consequential on Lord Ravensdale’s amendments adding new sections “Further provision about power to liquid fuels” and “Further provision about the direction to offer revenue certainty contract”.
Lord Ravensdale (CB)
My Lords, I shall speak to my Amendments 1, 5 and 6, and Amendment 3 in the name of the noble Baroness, Lady Bloomfield. I declare my interests as a chief engineer working for AtkinsRéalis and as co-chair of Legislators for Nuclear.
Turning first to Amendment 5, I listened carefully to what the Minister had to say at Second Reading on this matter and was pleased to hear some clarification on competitive allocation. Of course, to get the market moving, most contracts will initially be likely to be bilateral between the counterparty and the SAF provider, but the legislation must be future-proofed.
We had a lot of discussion in the other place and at Second Reading here on the effect on air fares of this legislation. The way to bring costs down and deliver value for money is, of course, through competition. In the longer term, we need a mechanism similar to offshore wind whereby a strike price and an auction are put in place. That would apply the right competitive pressure to the markets and put downward pressure on costs. All other similar government legislation—for example, the Energy Act 2023 for hydrogen carbon capture and storage, and the Energy Act 2004 for offshore wind—include such provisions, but the Bill does not. Clarity on how this competitive process will be set out is important, so I propose this amendment.
Amendment 5 is based upon Section 76 of the Energy Act 2023, but it has been tweaked so that, rather than spelling out all the things regulation might cover, I give the Secretary of State the power to make rules. This reduces the complexity of the other Acts by avoiding the need to table complex secondary legislation and instead covers this through a rule-making power. Through the framework, the amendment also allows the Secretary of State to make decisions on aspects such as the process of producing SAF, the outputs and, critically, the location of production, which feeds into some of the amendments in the next group.
Overall, Amendment 5 is an opportunity for the Government to clarify the overarching strategy of the Bill in moving from bilateral negotiation to competitive allocation by embedding competition within the Bill. This would clarify the Bill and ensure that the benefits of competition in lowering costs are taken forward.
Turning to Amendment 6, there is another opportunity here for the Government in aligning the Bill with the SAF mandate order. The strategic nature of power-to-liquid fuel, or third-generation SAF—eSAF—has been recognised by the Government. In the SAF mandate order, there is a table that specifies by calendar year the percentage of SAF that must be in power-to-liquid form.
It is crucial that the revenue certainty mechanism secures enough eSAF production capacity to meet the SAF mandate in the UK; otherwise, there is a real risk that the mandate will not be able to be met due to global scarcity. Analysis from the Transport & Environment NGO shows that the UK cannot rely on eSAF imports from the EU, for example, to meet the SAF mandate, as planned EU production capacity is just enough to meet EU regulations. That shows the importance of aligning the revenue certainty mechanism with the SAF mandate order.
In Amendment 6, I am proposing to take aviation fuel demand in the UK, which is around 10 million tonnes per year—that figure is at the lower end of aviation fuel demand over the past couple of decades and is taken from ONS data—and multiply that figure by the percentages in the SAF mandate order.
The amendment would help the Government to ensure that the revenue certainty mechanism and domestic SAF production delivers the quantities of power-to-liquid fuel that are required to meet the SAF mandate. Critically, it would ensure that we have join-up between these two parallel pieces of legislation and that the revenue certainty mechanism is joined up with the SAF mandate order.
I will also speak to Amendment 3 in the name of the noble Baroness, Lady Bloomfield. This amendment, which is very straightforward, proposes a modification to the SAF revenue certainty contract having a default length of 10 years in that it would extend it to 20 years. This is particularly of interest for nuclear-derived SAF. If a SAF offtake is to support the investment in a nuclear power station like an electricity offtake agreement does today, revenue certainty beyond 10 years is highly likely to be required. Ten years’ offtake of SAF is too short to be bankable and is likely to block a SAF developer from supporting investments in nuclear new-build projects, as they would need to do in order to comply with the SAF mandate. This amendment is to probe whether a change to the 10-year period is required for certain classes of projects or whether the option of longer-term contracts is open in the existing legislation. I beg to move.
Lord Harper (Con)
My Lords, I rise to speak briefly to this group of amendments. I strongly agree on the importance of having a proper framework for these contracts and a competitive process. The lesson from the energy market is that that competitive process is important to make sure that we achieve the policy objective, which is the production of the fuel, but at the lowest possible cost, which in the end will be passed on to consumers, so having some sort of competitive process is very important.
Two amendments in this group are potentially conflicting. I understand the argument in favour of allowing a longer contract period, particularly for nuclear-derived power-to-liquid fuel, as the noble Lord said, but equally, I would not want that to be the automatic default for all these contracts. I was struck by the amendment from my noble friend Lord Moylan about making sure that it is possible for the Government to exit from these contracts. From my point of view, the attraction here is just to make sure that we learn one of the lessons from the energy market. There is a balance to strike here. We want long-term contracts to give the certainty to the investors and those going into first-to-market plants in the UK to produce this, but we do not want to lock in contracts longer than necessary but potentially at a point where the market price is lower and we are effectively holding the price higher than it needs to be. We have learned some lessons from how that works in the energy market. The amendments on the paper may not be the right way of doing that.
The Minister referred in his speech at Second Reading to the contracts for difference models from the energy market. When he winds up this group, I would be interested to hear what the Government have learned. What detailed work has been done about getting these contracts right at the outset but also enabling them to be flexed as the circumstances change, so that we get the right level of price protection which is necessary to get the initial investment and produce investor certainty but do not keep it going past the point at which investors are making returns above what was necessary to get them to invest? Obviously, you cannot change those rules retrospectively, so it is about getting the right level of certainty. I will be interested to hear what the Minister has to say there.
I am supportive of the thrust of the noble Lord’s Amendment 6 on power-to-liquid fuels. The only thing I would quibble with is that it has a “must” in it; I do not know the likelihood of this, but I would not want to force the Government to enter into revenue certainty contracts that were not necessary to produce. If we had producers producing enough of that third-generation sustainable aviation fuel, I would not want to force the Government into having to enter into unnecessary revenue certainty contracts. Therefore, I support the thrust of the noble Lord’s argument, which is to make sure that enough of the third-generation SAF is produced to meet the requirements in the mandate, but I would not want the Government to be forced to do that. So the wording in the amendment just needs something which says that they only have to do that if not doing so would not allow that level of fuel to be produced for the market.
Lord Ravensdale (CB)
I thank the noble Lord for his comments on the amendments. I would certainly be open to what he is saying about the wording in that amendment. I will just say that the way we have structured this amendment is to provide 1 million tonnes of oil equivalent figure. We have tried to do it using a floor mechanism, so we looked at the total aviation fuel demand in the UK over the past 20 years or so, took the lowest figure and simply multiplied that by the percentages in the SAF mandate order. I hope that by providing that floor mechanism, there is that flexibility there, but I certainly take his point about the wording.
Lord Harper (Con)
I am grateful to the noble Lord for that clarification. As I said, I certainly agree with the thrust of his amendments; I just would not want there to be a legislative mandate for the Government to do something that proves to be unnecessary. Again, I think we need to understand from the Minister what is the appropriate amount of flexibility for the Government to have in practice, because we want the Government to use the lessons from those contracts and to have the appropriate level of negotiating space to strike the best deal for aviation consumers. However, we also want to make sure that the Government do not give away unnecessary amounts of consumers’ money that is not necessary to produce the results.
Overall, the amendments in this group are helpful in enabling us to have that debate and to just test what lessons we have learned from the way these sorts of contracts work in the energy market, but also the amount of negotiating space that Ministers will need when they are directing the counterparty to strike the best possible commercial deal.
Baroness Pidgeon (LD)
My Lords, this group of amendments is trying to tease out the details around revenue certainty mechanism contracts.
Amendment 2 from the noble Lord, Lord Moylan, says that the contracts must not exceed 10 years and must have a no-cost break clause at five years. Amendment 3 from the noble Baroness, Lady Bloomfield, on the other hand, wants the contracts to be increased from 10 to 20 years—we have already heard the reasons around that. So there is a difference in thinking from the two Members. However, what is key here and clear from the debate so far is that flexibility is needed, depending on the type of industry involved here. The Minister briefed Members about the thinking behind the 10-year contracts at a recent meeting, so I hope he can explain from the Dispatch Box to reassure Members that the Government have in mind the right length of contracts for this emerging area.
Amendment 5 in the name of the noble Lord, Lord Ravensdale, as he outlined, is trying to put flesh on the bones of the revenue certainty contracts by developing an allocation framework similar to contracts for difference for energy. Although Amendment 6 looks at the role and amount of revenue certainty contracts for power to liquid fuels, both of these are really important points which I hope the Minister can address, as well as whether this is the right stage for such detail or whether some of that should be coming through at secondary legislation stage.
Lord Moylan (Con)
My Lords, I have listened with great interest to this short debate. It is almost certainly my fault, and I will probably need to be mildly humiliated as I am corrected on the topic, but we have discussed the length of contracts by reference to Clause 1(7) and it seems to me that it says nothing at all about the length of contracts. The Minister now has the opportunity to correct one or both sides of this question.
Clause 1(7) states:
“No direction may be given under subsection (1) after the end of the period of 10 years beginning with the day on which this Act is passed”.
Following on from that immediately, subsection (8) gives the power to the Secretary of State by regulation to amend subsection (7) so as to extend the period for a further five years. This is saying when the counterparty can enter into contracts, not when the contracts start. It is not saying when the contracts end. As long as the contract is awarded in the first 10 or 15 years, it could be for 100 years. Nothing that has been tabled by noble Lords in relation to this clause would affect that.
However, in my Amendment 2, I have bitten firmly on the question and said that no contract, whenever it is awarded, may last for more than 10 years and that it must contain a break clause after five years. I am talking in my amendment about the length of the contract, but the other noble Lords who have talked about longer contracts are not talking about longer contracts at all. I may have got that completely wrong—
Lord Harper (Con)
I am grateful to my noble friend for giving way for two reasons. First, despite having asked the clerk for advice, I omitted to declare an interest at the beginning of my speech, which I will now correct. I draw the attention of the Committee to my entry in the register as the non-executive chair of RVL Aviation, as I did at Second Reading. Secondly, on my noble friend’s specific question, I referred in my speech to his amendment. I had the misfortune of supporting his amendment before he had so ably spoken to it, but I agree that it is the contract length that is important and not just the period from when the Bill becomes law.
Lord Moylan (Con)
We are all agreed that we should be talking about contract length, but my amendment is the only one that refers to it. That is the point that I am trying to make.
The noble Lord, Lord Ravensdale, in respect of competition, says that there must be at least an opening in the future for these revenue certainty mechanism contracts to be awarded competitively. He seeks to put this in the Bill now and appeared to say that, if this is not done now, through a device such as that which he is proposing, there would not be in future an opportunity for competitive procurement. If I have misrepresented him, I will give way and be corrected—I see that he is about to rise, so I might as well complete the point before he corrects me. My understanding is that there is nothing to prevent competitive procurement taking place from day one under these arrangements. Therefore, it is not necessary to put in place an arrangement to secure it. I am open to being corrected on all hands about this, because I am groping my way in the dark through this thicket.
Lord Ravensdale (CB)
I agree with what the noble Lord has said. The Minister provided the clarification at Second Reading that there is nothing in the Bill that prevents competition. However, for consistency with the other legislation that I outlined that has such direction on similar competitive processes in the energy Acts, and for clarity on the strategy, it would be beneficial to have that process set out in the Bill.
Lord Moylan (Con)
I am grateful to the noble Lord for explaining that. I am glad we are broadly ad idem, but he helps me to my third point.
The assumption by the noble Lord, Lord Ravensdale, appears to be that the procurement of all future SAF, including non-HEFA SAF and potentially at some stage power to liquid, will have to depend upon or be supported by a revenue certainty mechanism, or at least some form of subsidy or support from the state. That appears to be the assumption. I wholly deprecate that assumption. It is appalling that we should embark upon this project with a view to a regime of perpetual subsidies. If SAF is not rapidly producible on a commercial basis in this country then, as I shall come to in other amendments, the whole project should be reconsidered at this stage.
However, I am comforted in thinking that the Government do not envisage perpetual subsidy by my reading of Clause 1(7) and (8). These are the subsections that I referred to before, so I will not read them out again, but why would the Government put in place what is, in effect, a sunset clause if they envisaged a need for perpetual subsidy? The Minister may want to confirm this, but subsections (7) and (8) taken together are a sunset clause. At the end of 10 or possibly 15 years, no more contracts can be awarded without further primary legislation. There is a degree of confusion, which I may have participated in, concerning what we are discussing. We are giving the Minister the opportunity to bring a blast of fresh air to clear the fog and explain it all to us, so that we know what we are talking about, because up to now I am not entirely sure that we all do.
My Amendment 2 has been explained very well by the noble Baroness, Lady Pidgeon. I do not need to elaborate on what it says, but I have not yet given any rationale for why it should commend itself to the Committee. Amendment 2 seeks to limit the length of contracts. The reason is very simple. This Bill is a large slice of corporate welfare. Having given to the industry, through the SAF mandate which we approved last year, a guarantee of uptake of SAF so that you know that your product is going to have to be bought, this is not enough for them, and we are now going to give them, in addition, a guaranteed price. That is what they are demanding.
I do not blame them for demanding that. Let us have guaranteed demand and a guaranteed price—that is a very pretty place to be in. Let us transfer all the risk somewhere else. Who is going to pay that guaranteed price? Not the Government, because it is not a subsidy. They have discovered from the electricity market the contract for difference, which the noble Lord, Lord Ravensdale, has referred to as a model—a structure which has given us the highest electricity prices in the civilised world. This points to the cost of SAF falling on the airlines and, potentially and ultimately, on the passenger. We will come to this later, but the Government have assessed what that might mean in pounds per ticket. That is the subject of a later amendment which I will not trouble your Lordships with now.
Recognising the large element of corporate welfare in the Bill and the need to get away from that and to incentivise competition, I suggest that there should be some basis for limiting the contract, and therefore the benefits that accrue to the producers of SAF. I am grateful to my noble friend Lord Harper for supporting this. I have suggested 10 years, which is of course an arbitrary number—it might be six years, it might be seven years, or it might be eight years. I have also suggested including a break clause, which I put at five years, so that if the Government saw that this was all going well and that the thing was becoming commercial, they could walk away—which must be their ambition. I put that break clause at five years, which is an equally arbitrary number. If the Minister agreed on the principle, I am sure that he and I could sit down and rapidly agree a maximum length of contract and an appropriate term for the break clause.
It is in that direction that we should be looking if we are not to burden young people. There are not so many young people in the Committee this evening. Many of us are getting to the point where our best flying days are behind us, but when you look to young people who perhaps work in other parts of the House and say, “You are going to be paying for this for the next 20 years. You and your wives and children, and even potentially your grandchildren, are going to be paying for this slice of corporate welfare, so if we don’t get it right the burden falls on you”, and one thinks about that, then of course one is moved very strongly, and is surely moved in the direction of supporting my Amendment 2.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, I thank noble Lords for this group of amendments. Amendments 1 and 6 would require the Secretary of State to enter into at least one revenue certainty contract with a SAF producer that is using power-to-liquid technology. The Government recognise the potential that power-to-liquid fuel may have. These fuels will have high greenhouse gas emissions reduction potential, with a low risk of environmental issues such as land use change.
However, adopting these amendments would limit the Government’s allocation flexibility by setting criteria in advance, which could ultimately reduce value for money in the contracts agreed. It is important that the allocation strategy is able to reflect different technologies as they develop. The Government will establish a fair and transparent process to assess each project’s key costs, benefits and risks. This process will be developed over the coming months and will involve consultation with stakeholders.
The decisions on contract allocation will be determined during the contract allocation process. The noble Lord, Lord Moylan, is right that we do not want perpetual subsidy, but we have to establish over time the opportunity for different technologies to develop.
The noble Lord, Lord Moylan, is right in his remarks about contract lengths; there is no humiliation there at all. The length of contracts is not set out in the Bill, and the amendments other than his Amendment 2 would extend the time in which the contracts could be entered into, not the length of the contracts themselves. We are engaging a range of stakeholders on contract length because it obviously makes sense to talk to the market about that. No final decisions have yet been made.
Contracts issued under similar schemes are generally for a period of 10 to 15 years, which reflects a standard debt repayment period. Limiting the contract to 10 years may not be sufficient to attract the investment necessary to construct these plants, and I contend that it is premature to decide the contract length until the market has advised what it would need to construct the plants that would make the fuel.
The Bill allows the Secretary of State crucial flexibility to adjust any standard contract length in between allocation rounds in the light of emerging market evidence. It also preserves optionality for the potential needs of emerging pathways—for example, nuclear-derived SAF. The addition of a no-fault break clause would, of course, undermine the certainty provided by the contract and seriously risks losing the investor confidence that the Bill aims to increase.
In respect of the point made by the noble Lord, Lord Harper, the learning from the energy market is that the contracts need to be long enough to secure the investment that we are talking about. The noble Baroness, Lady Pidgeon, asked what the right contract length is. I think we have to establish that by talking to the market, so it is premature to determine it now.
On the contrary, Amendment 3 seeks to extend the time in which revenue certainty contracts can be allocated from 10 years to 20 years. The purpose of the Bill is to kick-start the industry in this country. The revenue certainty mechanism is intended to be a time-limited measure and to stimulate the early market. Once investors have confidence in the market price and the first-of-a-kind technology has proved itself at commercial scale—to the point made by the noble Lord, Lord Moylan—the mechanism should no longer be needed.
The Government contend that Amendment 3 is not the right way to go. However, if the Government find in due course that it is necessary to extend the provision, Clause 1(8) will allow the Secretary of State to extend the period by which contracts can be allocated in five-year increments by making regulations by the affirmative resolution, so that Parliament can take a view about the applicability of that extension at the time that it is proposed.
Amendment 5 from the noble Lord, Lord Ravensdale, seeks to include a contract allocation framework in the Bill. The Government will need to carefully consider and work with industry on the specifics of contract allocation. This will ensure that there will be a fair and transparent allocation process that evaluates the key costs, benefits and risks of each project. This will be developed over the coming months and will be rightly subject to consultation with stakeholders. The amendment as it stands would reduce the Government’s leverage in negotiations by setting criteria in advance and limit the ability to secure the best value for money in the contract signed.
The noble Lord, Lord Ravensdale, referred to the Energy Act 2023. The allocation framework was included in the Energy Act 2013 and the Energy Act 2023 to ensure that the Secretary of State could effectively regulate the activities of an allocation body where one is appointed under that legislation. In this Bill, the Secretary of State will carry out the allocation process, so it is not necessary to set out an allocation framework to govern the activities of an allocation body.
I hope that my explanations have answered the concerns and that noble Lords feel able not to press their amendments.
Lord Ravensdale (CB)
The Minister’s response to Amendment 6 is appreciated, but there is a risk that if the amount of third generation SAF or power-to-liquid that needs to be produced is not set out, then the Bill would not, in effect, align with the SAF mandates, which have clear percentages on power-to-liquid fuel requirements. Does he accept that there is a bit of a gap between this legislation and delivering the SAF mandates, in that one does not support the other?
Lord Hendy of Richmond Hill (Lab)
I thank the noble Lord for his intervention. If he is willing, I will take that point away and contemplate it further.
Lord Ravensdale (CB)
I thank the Minister. This has been an excellent short debate and the noble Lord, Lord Moylan, and the Minister, certainly provided the clarity on contract length that we were missing. I was pleased to hear that the allocation process will be fleshed out through a consultation. For now, I beg leave to withdraw my amendment.
Lord Moylan
“(9) A direction given by the Secretary of State under subsection (1) may only require the designated counterparty to enter into a revenue certainty contract with a producer in respect of sustainable aviation fuel that is, or is projected to be, manufactured at a production facility located within the United Kingdom.(10) For the purposes of this Act, no sustainable aviation fuel producer shall be eligible for a revenue certainty contract if any certified component fuel or precursor which constitutes more than ten per cent of the final sustainable aviation fuel volume is not also manufactured at a production facility located within the United Kingdom.”Member’s explanatory statement
This amendment seeks to legally ring-fence the financial support provided under the Act, preventing the levy raised from UK aviation fuel suppliers from being used to subsidise sustainable aviation fuel production facilities located outside the UK.
Lord Moylan (Con)
My Lords, it may be for the convenience of the Committee if I move Amendment 4 in the name of my noble friend Lord Grayling, who has taken the deepest and most knowledgeable interest in the Bill but has had to excuse himself from the Committee because of pressing family matters. However, it is not my intention to speak to his amendment; I wish simply to create an opportunity for other noble Lords who may wish to speak to it to do so. I will say in regard to it, speaking, if you like, from the Front Bench, only that it raises very interesting questions about the potential beneficiaries of the revenue certainty mechanism and whether they are tied to production within the UK itself. I will be interested to hear what the Minister has to say in response to the questions implicit in the amendment. For now, I beg to move.
Lord Harper (Con)
My Lords, I support Amendment 4 in the name of my noble friend Lord Grayling and the similar Amendment 18 in this group in the names of other noble Lords. They both have the same intention, which is to make sure, as set out in the Explanatory Notes to the Bill, that the point of the revenue certainty mechanism is to support UK SAF production, not SAF production that takes place elsewhere. I think my noble friend Lord Grayling had two purposes in tabling the amendment: first, to make that point explicit; and, secondly, to test with the Minister what definition of UK production the Government are going to adopt in their contracts. What does that mean for the components of the fuel, and where do the different stages of production have to take place? What will be the lines about what qualifies as UK production?
Clearly, what we are intending to do, certainly with the plants that have received capital support from the Government, is to have the end-to-end process here in the UK, the plants here in the UK and effectively all the value created in the UK. But there may well be businesses that do only part of that in the UK. It is important for the Government to be clear about where the lines are going to be and what they are going to insist on in the contracts, so that the money coming from UK consumers is going to support UK jobs as part of that industrial policy. That is, after all, the point of this. There is no point in having a revenue certainty mechanism if all it is going to do is deliver SAF production elsewhere in the world. We could just let it get on with it, frankly, and not be too worried about it.
The point is to make sure that we produce that fuel here for two reasons, as I understand it. One is the industrial policy argument of making sure that we develop the technology here, but there is also the learning from what happened during the Covid pandemic when countries resorted to holding on to essential fuel supplies for their own industries. During that period, the international trade in some of these internationally traded commodities gummed up, and we found that some of those strategic supplies were not available. UK production is important for both those reasons, and I think it would be of benefit to the Committee to hear from the Minister exactly how the Government are going to deliver that.
Baroness Jones of Moulsecoomb (GP)
My Lords, my name is attached in support of Amendment 18, but I did not ask for it to be. I asked for it to be attached to a different amendment in the name of the noble Earl, Lord Russell, but I think this is a great amendment anyway and I am fully in support.
Earl Russell (LD)
My Lords, I welcome the noble Baroness’s support. I am sorry to hear that the noble Lord, Lord Grayling, cannot be here, and I wish him and his family well. I thank the noble Lord, Lord Harper, for speaking to his amendment.
My Amendment 18 in this group is on UK SAF production. I thank my noble friend Lady Pidgeon, the noble Lord, Lord Ravensdale, and the noble Baroness, Lady Jones, even if it was the wrong amendment, for adding their support to it. This amendment seeks to ensure that the Government’s support for sustainable aviation fuel translates into genuine homegrown industrial capacity, as we have heard. We support the Bill and its aims, and we want to see it move forward. Other countries are moving forward, such as the United States through its Inflation Reduction Act, and across Europe progress is being made. We need to act decisively to make sure that we do not become a passive importer, and we welcome that the Bill seeks to prevent that.
We believe that this reporting mechanism would help to strengthen the Bill to make sure that these issues are defined and reported on. There is an important distinction between manufacturing and simple operations such as blending, trading or storage. Too often, limited progress is repackaged as domestic production when it is not, so in this amendment we have sought to define what UK production means: that the main chemical or biological conversion processes take place here. We believe that clarity is essential, and having it is in the Government’s interests as well as ours. The amendment does not seek to tie the Secretary of State’s hands. It provides a clear framework for defining what counts as UK production. It also allows flexibility to set out more detailed rules by regulation on the extent of processing ownership and the evidence required for compliance, while maintaining robust accountability.
Lord Ravensdale (CB)
My Lords, I rise briefly to support Amendment 18, to which I have added my name, and the other amendment in this group. As has been said, it is important for the Government to consider setting out the definitions in the amendments of what manufacture means and how it is going to be supported in making sure that this is all UK-based. As the noble Lord, Lord Harper, said, that is the point of the Bill.
Lord Hendy of Richmond Hill (Lab)
I join the noble Earl, Lord Russell, in sending the noble Lord, Lord Grayling, our good wishes for him and his family. I congratulate the noble Earl on his recent nomination for a life peerage. That is an odd sentence to say, but there you go. The noble Baroness, Lady Jones, has got lucky by signing this amendment, as she will shortly hear.
The revenue certainty mechanism is intended to support only eligible SAF plants in the UK, and this will be ensured through the allocation process. This Government are committed to supporting the UK SAF sector through our advanced fuels fund, which is supporting projects across the UK, and through the revenue certainty mechanism. The UK SAF sector will create jobs and growth opportunities in the UK, help secure a supply of SAF for UK airlines and enhance energy security.
On Amendment 4, SAF projects that use imported precursors still offer significant economic benefits to the UK because of the investment needed to construct them and the employment that they would provide. I fully recognise the strong points made by noble Lords this evening around UK production being in the Bill, and I will seriously consider this point ahead of the next stage of the Bill. I will invite noble Lords who have spoken tonight—or rather those who tabled the amendments—to meet me and my officials ahead of the next stage. I therefore invite the noble Lord to withdraw the amendment.
Lord Moylan (Con)
My Lords, I beg leave to withdraw Amendment 4 in the name of my noble friend Lord Grayling.
Lord Moylan
Member’s explanatory statement
This amendment seeks to ensure that the levy is raised for the purposes of manufacturing sustainable aviation fuel in the United Kingdom. Connected with another amendment in the name of Lord Grayling, it seeks to prevent the government from diverting the levy funds to other broader aviation or climate-related policies.
Lord Moylan (Con)
My Lords, for the convenience of the Committee, I rise to move Amendment 7 in the name of my noble friend Lord Grayling. While I am on my feet, I congratulate the noble Earl, Lord Russell, on his demotion to a mere barony. I assure him that it will pass, and his family will be able to resume their Earl-like status, I hope for many generations to come.
I wish to speak to my Amendment 11 in this group. I will try to put this in language that I understand—that is, fairly simple language. The levy has to be allocated. If the contracting party has to make payments to the producers of SAF, it will fund this by a levy, and the levy will be applied high up the supply chain; it will be applied to the producers of fuel. The people who produce aviation fuel will be adding a certain amount of SAF to their kerosene—an increasing amount each year—before then selling it to the airlines. As I understand it, that is the mechanism.
The question is: among the competing producers of aviation fuel, how is the levy to be allocated from one period to the next? I will assume for the sake of simplicity that the allocation period is a year. There is no necessity that it should be a year—it could be done six-monthly or monthly—but the Minister can say whether the Government have a clear intention about that.
My understanding is that the Bill envisages that the allocation will be based on market share. Market share can be measured only in retrospect. You can know what a company’s market share was last year or in the last six months; you will not necessarily know what its market share will be for the year to come. But, of course, companies are selling aviation fuel in the year in which they are acquiring market share, so they will not know what their levy is until the end of the year, or period, in which the levy is allocated to them, according to their market share. It will be impossible for them to have a clear notion of what they should be adding to the price of the fuel to compensate themselves for the levy. It is envisaged that they should compensate themselves for the levy through adding to the price of the fuel and selling it on, which is how the airlines and ultimately the passengers pick up the cost.
This is presented by the industry—to me, at least, and maybe to other noble Lords —as a very serious practical difficulty. The tendency will be to overcompensate and add more to the price of fuel than is strictly necessary to cover a levy which companies can only vaguely guess at. I accept that their market share is unlikely to jump wildly from one year to another. That does not happen in mature businesses; I do appreciate that. But the levy is quite sensitive even to modest adjustments in market share from one year to another. To get an accurate price to pass on to the customer, relying on retrospective market share is simply not going to cut it and the result may well be that customers end up being overcharged.
It would be better if the counterparty were able to calculate the levy on a transparent pence-per-litre basis. Another point of capital importance is that this could then be added to invoices so that anyone buying aviation fuel—which would normally be airlines, of course—would see clearly on their invoice how much had been added in respect of the levy. There is a suspicion in the industry, which I am sure the Minister wants to dispel, that the Government would rather obscure the additional cost of the levy, and that a system whereby it was written plainly on the face of an invoice would be unwelcome to them.
It would be useful if the Minister were to dispel that view, but I will leave aside that issue. Even if it were not a consideration, there is the important practical consideration of how this will be calculated by companies which will not know what their levy is going to be. This is an extremely serious issue about the implementability of the Bill. It is bound to come back on Report, because the Bill will not work unless this is sorted out; at least, it will not work in the way that the Government intend.
With that, I recommend my Amendment 11. I will be interested to hear what the Minister has to say about it.
Lord Berkeley (Lab)
My Lords, I will speak mainly to my noble friend the Minister’s Amendment 20. This is perhaps an odd order in which to speak on these things, but it does enable my noble friend to respond to me after I have spoken rather than before; I am sure that he would welcome that.
I want to talk about the relationship between sustainable aviation fuel and the production of renewable liquid fuels that could be used in home heating. I raised this at Second Reading and highlighted what I thought was a key point. The production of sustainable aviation fuel, particularly through the HEFA process, generates hydro-treated vegetable oil—HVO—as a by-product. In fact, HVO accounts for around 30% of the output—a significant quantity, I believe.
In the consultation on alternative heating solutions published a couple of weeks ago, the Government rightly acknowledged the role that HVO could play in decarbonising off-grid homes. I declare that my home is off-grid and relies on oil. Indeed, the Government highlighted that it would be the most cost-effective option for consumers of all the options considered. However, the consultation still questioned the feedstock availability of the fuel. What really pleased me was that, in the last few days, a Written Answer has been given to a Member of Parliament in the other place. It states:
“As of the 1st of January 2025, a market for low carbon fuels for use in aviation and road transport has been supported under two separate schemes”—
the SAF and the RTFO. It continues by saying that targets under both these mandates
“are set considering global availability of feedstocks and competing demands between transport modes and across sectors of the economy”.
It basically says that there is enough material for both aviation and home heating. I think that is a major step forward.
When my noble friend comes to discuss his Amendment 20, I hope he will include a consultation with me, a few colleagues and our noble friend Lord Whitehead, the Minister for Energy Security, to discuss the significant benefits of working together for these two uses given that we have this Bill and a DESNZ consultation. I hope that this is just the right time to have such a discussion because it is a sensible strategic step towards meeting our decarbonisation goals.
Lord Harper (Con)
My Lords, I will speak briefly in support of my noble friend Lord Moylan’s Amendment 11. He set out the point of it in great detail so I will not repeat what he said but will just emphasise two of the points.
The first is about transparency. It is very important that we are transparent about what we are doing here. Having sustainable aviation fuel and making aviation more sustainable is an important policy goal. It is one that we supported in government and the present Government support, and the principle of it was also supported by the Liberal Democrats. We should just be open about the cost involved in doing it. There are two reasons to be transparent. First, that is how you generate confidence among the public as they can see that aviation is becoming more sustainable. There is a cost involved but that cost is sensible and one they are prepared to pay. Secondly, transparency enables there to be competition or downward pressure on the costs, which is easily missing if the costs are obscured. Having the costs transparent is very helpful and will also mean that different suppliers are not able to hide these costs in their invoicing.
The second point is that I am still unclear about how a mechanism based on market share would work. As well as the lack of clarity and the risk of that leading to overcharging, there is a risk of being backward-looking and looking at historic market share. I am also not clear whether the intention is that different suppliers would, in effect, have different costs being added to what they have to charge, which would seem to have an adverse competitive effect. We want people to bear the cost of the levy, but do not want different suppliers to be picking up a different proportion of that based on their historic market share and then having to charge a different price per litre to competitors. That seems to me to lock in a previous competitive structure and outcome. Part of what we are trying to do here is to encourage new producers and new people to come into the marketplace with new fuels and to enable that competitive process to take place. It is that competitive process that will make sure that we get SAF produced at the lowest possible cost, which is important for consumers. I would welcome some clarity from the Minister and would urge for that clear price per litre of fuel that can be placed on people’s invoices and for transparency.
I also want to speak briefly to Amendment 26 in the name of my noble friend Lord Grayling. It would place a sunrise clause or a commencement period on Section 6 so that it does not come into force until the first SAF producer is six months away from producing that sustainable aviation fuel in the UK. I think what my noble friend is driving at in this amendment is to make sure that the costs of producing SAF do not start being paid until a domestic plant is almost ready to go and payments to that producer ready to go—that, in effect, we are not starting to charge people in advance and saving up the money on the basis that at some point many years down the road a producer is going to start producing. There is merit in this amendment. Six months may not be the right period but it would be helpful to understand whether the Minister is broadly supportive of the principle and for him to set out the Government’s view on that. That may be an issue that the Government can return to on Report, as the Minister has indicated he will on the earlier group of amendments, or he may have a different way of dealing with the issue raised by my noble friend.
Earl Russell (LD)
My Lords, my Amendment 10 and my consequential Amendment 12 are in this group. This amendment to Clause 6 would replace subsection (3) with a requirement for a standardised levy on aviation fuel, uniform across suppliers, publicly displayed on invoices and expressed in pence per litre.
At the outset I want to make two quick points. First, on these Benches we support this Bill and the principle of the revenue certainty mechanism. Our concern is in relation not to the levy but the method of its deployment and use. As drafted, our worry and the worry of industry is that it is not clear and, in some cases, it creates burdens and frictions in this process for industry, which it would be useful to find a way to avoid. Secondly, my amendment comes from conversations I have had with Valero Energy, one of the UK’s major aviation fuel suppliers. I have no connection with the company. It came to me after the amendment from the noble Lord, Lord Moylan, was tabled. It believes that the proposed text that I have tabled here offers the most effective remedy to the Bill’s flaws.
Having said that, I support the noble Lord’s amendment, and my amendment is very similar. I do not want to repeat the arguments that have already been made here, but I will just reinforce a couple of them. Industry is concerned about this. It feels that it creates fiction, is an inefficient way of doing these things and could slow down investment in the market. It will discourage new entrants, and suppliers will have difficulty planning as they will not have certainty and will need to settle bills at later dates. The department says that this is administratively simple. It might be for government, but industry feels that the opposite is the case and that disincentive is enough that some companies are thinking about the levels of investment they want to make. That, I know, is an outcome that we do not want and the Government do not want either.
I am extremely grateful to the Minister and his officials for having a quick meeting with us. I am fully aware that consultations on this matter are ongoing and was greatly reassured by the conversations we had with Ministers. I know that officials are working extremely hard to find a way forward. I am hopeful that between now and Report, with this amendment, a government amendment or some fresh thinking, these issues can be looked at again. This is genuinely to help make sure that the Bill works not just for the Government but for industry and does so in a way that does not create unnecessary friction.
I turn to the other amendments in this group. We are generally supportive of Amendments 7 to 9 tabled by the noble Lord, Lord Grayling, and would be interested in the Minister’s response to them.
However, we have concerns with Amendments 24 and 26, which were spoken to by the noble Lord, Lord Harper. As he said, they would include a sunrise clause in the Bill. These are very large investments that we seek these companies to make in large and substantial plant in this country. I do not think that I would make that level of investment with such conditions attached. I would worry that delaying the payments will create uncertainty and fear for those who want to invest in the jobs and growth we need in this country. It could create a downward, damaging spiral for the investment we need.
However, there may be a need for the Government to have a bit of a further think about how the early days of the levy will operate, and how to talk about reporting back on those processes of early investment—we have already discussed reporting—to show that investment is happening and is on track. That could show that that investment is being monitored and going towards the end process that we all want, with the plants being set up and running, and producing the fuel.
Before I sit down, I point out that we support the Government’s own amendments that have been tabled. If the Minister could just give an update in relation to Scotland, we would welcome that.
Lord Hendy of Richmond Hill (Lab)
I thank all noble Lords for the brief debate on this group of amendments.
Amendments 7, 8, 9, 24 and 26 seek to address how funds from the levy are used. I first reassure noble Lords that moneys raised through the levy will be used only to support eligible SAF plants in the United Kingdom. The purpose of Clause 6 is to provide a power to place a levy on aviation fuel suppliers to meet the costs of payments made by the counterparty to SAF producers and to cover the counterparty’s administrative costs.
Clause 6 restricts the costs incurred by the counterparty in carrying out its functions under the Bill and, under this clause, the levy funds will be used only to meet the costs of the RCM scheme. The majority of the costs will be incurred only once SAF is being produced and sold by producers who have entered into RCM contracts. It is important that the counterparty be able to recover its costs, which include the costs of administering the contracts, the levy and the payment of surpluses. I hope noble Lords will agree that the counterparty should be self-sustainable.
Amendment 9 intends to ensure that there is a specific mandatory point at which the supplier becomes liable to pay the levy. However, the Government’s view is that it is unnecessary, because the Bill already provides that a person becomes liable to pay the levy at the same point when they become liable to an obligation under the SAF mandate. This aligns the levy to the point at which aviation fuel is eligible for certification under the SAF mandate. The Government think that this simplifies the process for fuel suppliers. I remind noble Lords that the regulations made under Clause 6(1) to set out how the levy will work will be subject to scrutiny under the affirmative procedure, which will give Parliament the opportunity to continue to consider the approach.
On Amendments 10, 11 and 12, as has been noted this evening, we are currently consulting on the detailed design of the levy, including the length of time—it certainly will not be years—which will help inform the drafting of levy regulations. The current levy design consultation will conclude on 8 January 2026, which is of course before any levy regulations are laid in Parliament. Final decisions on the levy design will be informed by this consultation and, to be clear, the Bill as drafted does not specify a particular mechanism and allows the Secretary of State to consider a range of options for calculating the levy paid by individual companies.
To reassure the Committee, the Government are alive to the potential impacts of different levy designs. We are working closely with stakeholders to develop a levy design and engage with them regularly to understand their concerns. We recognise industry’s desire for certainty and transparency. We are looking to design the levy in a way that ensures this, while also ensuring fairness and affordability for the consumer. We recognise that the levy must be dynamic and responsive to the changing market, while also ensuring that the counterparty has funds to make payments under the scheme.
The Government are clear that the levy will not be used to generate unnecessary funds and will raise only sufficient moneys to cover the counterparty’s costs under the revenue certainty scheme. While final decisions will be informed by the open consultation, we are exploring options that deliver this. Many of the proposals and options set out in that consultation could help provide greater certainty and transparency. As I have said, the secondary legislation will be laid by affirmative procedure, allowing both Houses to scrutinise its contents.
In addition, as a consequence of the short debate we have just had, I commit to noble Lords that I will brief them before then on what the levy is and how we currently believe it will work. That is in advance of the consultation closing and the noble Earl, Lord Russell, is right: it will have closed by Report. I think we will then be clearer on how it will work. I hope that I have provided sufficient reassurance on these points for noble Lords not to press their amendments.
Lord Moylan (Con)
My Lords, I beg leave to withdraw Amendment 7 in the name of my noble friend Lord Grayling.
Member's explanatory statement
This leaves out the duty to consult about levy regulations under clause 6 since I am proposing a new clause that brings together (and extends) consultation requirements under the Bill. See my new clause to be inserted before clause 15.
Lord Moylan (Con)
My Lords, since we were congratulating the noble Earl, Lord Russell, earlier, may I take this opportunity—it may surprise him a little—also to congratulate the noble Lord, Lord Addington, on his new peerage and continued membership of your Lordships’ House?
In rising to resist, for the moment, that Clause 6 stand part of the Bill, I am moved simply by the letter and comments of the Constitution Committee. The Constitution Committee wrote on 5 November to the Minister to say that, while it understood that
“a degree of flexibility is required”,
it regards
“the lack of specificity in the Bill”
about the levy, which is set out in Clause 6,
“as a potential inhibitor of detailed legislative scrutiny”.
The Minister made certain remarks that relate to this in the last group. He was very bland and reassuring in explaining that we must not know anything about the levy at this stage, while we have a chance to scrutinise it, because it is all being consulted on and will look absolutely wonderful by the time it comes out. But that was not enough for the Constitution Committee, and it is worth making a marker at this point that it is not necessarily enough for noble Lords.
At the very least, I would have thought that the Constitution Committee deserved a reply to its letter, but I understand that it has not received one. The Minister might want to give an assurance that he will reply to the letter to explain why this lack of specificity is justified and what compensates for the fact that legislative scrutiny is not being permitted in relation to the levy.
Baroness Pidgeon (LD)
My Lords, this stand part notice is interesting, and the point made by the noble Lord, Lord Moylan, explains why it is tabled. It seems to be almost wrecking the Bill if you are trying to remove the mechanism. The purpose of this Committee is to look at the concerns and issues, and to try to find the best system in this complex area. I will be interested to hear the Minister’s response to this, because our view is that it is important to keep the mechanism in the Bill. Clearly, a committee has expressed some concerns, and it will be useful to hear from the Minister.
Lord Hendy of Richmond Hill (Lab)
My Lords, I also congratulate the noble Lord, Lord Addington, on his forthcoming appointment as a life Peer.
The noble Lord, Lord Moylan, raises the correspondence from the Constitution Committee. I did in fact reply; the copy of my reply does not have a date on it, but I did reply because it has been reprinted. A full reply was sent to the Constitution Committee, and it referred to what we were just talking about—the current levy design consultation, concluding on 8 January 2026. As the noble Baroness, Lady Pidgeon, says, without a levy we would not be able to deliver the revenue certainty mechanism. We continue to work closely with industry on the details of the levy’s operation. The current levy design consultation will conclude on 8 January 2026, before any levy regulations will be laid in Parliament. Final decisions on the levy design will be informed by this consultation.
It is appropriate that the levy provisions are set out in regulations made by the Secretary of State, so that there is flexibility to respond to changes in the sector. Flexibility is required so that the levy is set at the appropriate level to ensure that the RCM can be delivered effectively and the counterparty’s costs are recovered. The Government have set out the potential costs and benefits that may arise from the RCM scheme, including the levy and the cost-benefit analysis published in May 2025. The Government will actively monitor and control scheme costs, including through the setting of strike prices and by controlling the scale and number of contracts awarded. I assure noble Lords that the regulation under this clause will be subject to the affirmative procedure, so there will be further opportunities for scrutiny as to how this power is used.
We have engaged with the Constitution Committee; I now have the date of my letter, which was sent on 17 November. Following this debate, I will ensure that copies of both the Constitution Committee’s letter to me and my reply are sent to all noble Lords who participate in this debate.
Member’s explanatory statement
This leaves out the duty to consult about regulations under clause 10 since I am proposing a new clause that brings together (and extends) consultation requirements under the Bill. See my new clause to be inserted before clause 15.
Earl Russell
“Report on UK sustainable aviation fuel production(1) The Secretary of State must, in respect of each reporting period, prepare and publish a report on sustainable aviation fuel (“SAF”) produced in the United Kingdom.(2) The report must include—(a) the total volume of SAF produced in the United Kingdom during the reporting period;(b) the types of SAF produced, including the feedstocks and production pathways used;(c) the volume produced for each type identified under paragraph (b);(d) an assessment of the conversion of UK production sites for SAF manufacture;(e) an estimate of the greenhouse gas savings resulting from SAF produced during the reporting period;(f) information reported by air travel providers in relation to their use of SAF;(g) any other information the Secretary of State considers relevant to understanding the United Kingdom’s SAF production capacity and trends.(3) The Secretary of State must lay the report before Parliament within six months of the end of each reporting period.(4) In this section “reporting period” means a period of three years beginning with 1 January 2026 and each subsequent three-year period.”Member’s explanatory statement
This amendment requires the Secretary of State to publish a report on the production of SAF in the UK and for related purposes.
Earl Russell (LD)
My Lords, this group of amendments is on reporting and impact. My Amendment 15 might seem like a straightforward reporting amendment with a duty on the Secretary of State, but I believe it goes to the heart of what we are trying to do here. It will help to support the Government’s own commitment to help us to decarbonise our aviation sector, and to build a credible and sustainable fuel sector here in the United Kingdom.
Knowledge is power, and it is important that we know the impact of the legislation that we pass. It is important, with the revenue certainty mechanism, that we know how it is working in practice, that we have these reports, and that they are available to Parliament and to the public. This will also help to ensure that sufficient volumes of SAF are being produced to meet the mandate and to ensure the transparency of the monitoring mechanisms. The Government’s “jet zero” strategy recognises that SAF could deliver 32% of the emissions reductions needed by 2050, yet we have no consistent public data on how much SAF is already being produced, the types that will be developed, and where the bottlenecks might lie in the future system.
This amendment does what it says on the tin. It seeks to help answer some of those questions and to help the monitoring process. It would give Parliament and the public the evidence that they need to hold this policy to account. It would also help the sector to have confidence that the transition is coming, and that in turn would provide greater confidence for those who wish to invest in this sector. Reporting is a common requirement—we see it in the renewable energy sector, in the transport sector, and in the electric vehicle update—yet it is missing in this Bill. I believe it is important to put it in, and I do not believe that it would impose undue bureaucracy on the Government or their officials. Indeed, it would help to deliver clarity to everybody. That is all I want to say on the amendment: it speaks for itself.
I turn to the other amendments in this group. I support my noble friend Lady Pidgeon’s Amendments 16 and 17; I will let her speak to them. Amendment 19A, tabled by the noble Baroness, Lady Jones, calls for a report no later than three years after the day on which the Act is passed. That report will assess the impact of the revenue support mechanism for sustainable aviation fuel on deforestation outside the United Kingdom, and land use change outside the United Kingdom arising from the cultivation, harvesting or production of feedstocks for sustainable aviation fuel.
I am pleased to support Amendment 19A. It is sensible and essential to the Bill. Without proper monitoring, there is a risk that the UK’s incentives for SAF could inadvertently drive deforestation or damaging land use changes overseas, undermining our climate and biodiversity goals. By requiring the Government to report on international land use impacts, this provision would introduce transparency and accountability into the policy framework. It would help to ensure that the public subsidies truly create sustainable fuels and would help to drive us away from using feedstocks. This is a useful amendment. We cannot have our own decarbonisation at the expense of others. Therefore, it is important that these matters are monitored. I beg to move.
Baroness Pidgeon (LD)
My Lords, as we have been debating, this is an emerging field in terms of technology and production in the UK. That is why the Bill is here: to introduce the revenue certainty mechanism for the sector to help support its development and growth. Alongside this, it is important that we have transparency throughout the implementation of the Bill and about the reality in the sector. We have heard much the same from my noble friend Lord Russell and other noble Lords in this debate.
Baroness Jones of Moulsecoomb (GP)
My Lords, I support Amendment 15, which is absolutely vital. Every time I look at the Title of this Bill, I get irritated because there is no such thing as sustainable aviation fuel, and we really ought to accept that. Too often, we have these grand promises that are never backed up— I would argue that carbon capture and storage is another one. But if the Government are to press ahead with so-called sustainable aviation fuel, the very least we should expect is full transparency about what is being produced, where it is coming from and what the real impacts are. Reporting on UK sustainable fuel production would give Parliament the ability to see whether this industry is genuinely delivering any climate benefits or whether we are simply shifting emissions, land pressures and environmental harms elsewhere.
As one expert put it:
“We’re not about to start eating more chips, so we will have to start importing more waste oil”.
What if rising European demand for so-called waste oil is being met with virgin palm oil fraudulently passed off as waste? If that is happening—studies suggest it is—then any emissions savings vanish, replaced by deforestation for palm-oil plantations. Plus, most of our waste cooking oil is currently used in road transport fuels, so diverting it into aviation simply shifts emissions elsewhere and nothing actually shrinks.
Parliament should not be expected to take the Government’s optimism on trust. We need to see what is really happening, and Amendment 15 would provide at least a little transparency, accountability and a dose of realism—three things that are too often missing from aviation policy. If the Government believe that sustainable aviation fuel will play a meaningful role in decarbonising aviation, they should have no hesitation in reporting openly and regularly on its progress.
My Amendment 19A asks the Secretary of State to do something that should already be at the heart of a Bill such as this: to acknowledge that what we do here—what we incentivise, what we subsidise and what we label as sustainable—has real consequences for land, forests and communities here and far beyond our shores. Sustainability does not stop at the white cliffs of Dover. Protecting land over here while outsourcing environmental destruction over there is not sustainability; it is hypocrisy.
Supporting crop-based aviation fuels risks taking land away from food and from nature. It risks fuelling deforestation, especially in the global South, where communities are already living with the impacts of land grabs and ecological collapse. Yet this Bill encourages exactly that. We are using or talking about land as if it were an infinite resource, and it most definitely is not. Land is already under enormous pressure from farming, housing, biodiversity loss and climate breakdown. Turning that precious land over to growing crops for climate-destroying fuel makes absolutely no sense.
My amendment would require the Government to publish an assessment of how the revenue support mechanism for so-called sustainable aviation fuel is affecting land use internationally, including whether it is driving deforestation or other damaging land use change. Parliament deserves to know if we are simply shifting environmental harm on to other countries while congratulating ourselves on green progress.
Even if we overlook the land use impacts—and we should not—this Bill will not do anything to actually reduce air travel emissions. Sustainable aviation fuel, as described here, is at best a drop in the ocean—a rapidly rising ocean. A clever accounting trick will not cool the planet, nor will a marginal fuel switch deliver any sort of the emissions reductions we need. One analysis of sustainable fuels shows that carbon emission savings are almost entirely wiped out by the rising demand for air travel. As Professor Bill Rutherford of Imperial College said:
“The only way you can make aviation any more sustainable is to do less of it”.
Every hectare of land used to grow fuel crops risks locking us further into a system that protects the freedom of frequent flyers, rather than the future of the planet.
I apologise; I did not thank the noble Earl, Lord Russell —soon to be Baron—for his support for my amendment.
Lord Harper (Con)
My Lords, since they are both still in the Chamber, I add my congratulations to the noble Lord, Lord Addington, and the noble Earl, Lord Russell, on their life peerages so that they will remain with us. I will not get into the ranking thing we got into earlier, but it is very good they will both still be with us.
On the substance of these amendments, transparency is broadly a good thing. As I said in response to an earlier amendment, being transparent about this is very helpful. Given that Amendment 15, tabled by the noble Earl, Lord Russell, talks about reporting on progress, this might be a suitable opportunity to ask the Minister, when he winds up this group, to respond to the question I asked him at Second Reading and provide the Committee with an update on the plants we hope to see in the UK and where they have got to. The Minister very kindly responded to some of the questions Members raised at Second Reading in his recent letter of 2 December, including one or two that I raised. I am very grateful to him for being courteous and doing that as he said he would, but he did not touch on where we were at with those plants. Given the significant amount of money in the various rounds of support that we have given—both through the Aerospace Technology Institute and directly from government—it would be helpful for the Committee to have an update on some of the timeframes. We have been contacted directly by some of the providers with updates on when they think their plants will be ready, but it would be helpful to have that wider picture.
Although the noble Baroness, Lady Jones of Moulsecoomb, knows that I do not agree with her overall view about aviation—we had that exchange at Second Reading—I will take the opportunity, as it does not happen very often, to support the thrust of her amendment. Transparency is very helpful. She will know from my comments at Second Reading that I generally do not support the use of food crops being grown specifically for this purpose, but she will also know I have one potential exception: if, by doing so, we can keep the present United States Government focused in this space, it would be a win.
I am grateful for two points the Minister made in his reply. First, he confirmed that the Government were working closely with the US Administration and wanted to keep them on board. That is helpful. Secondly, he confirmed—I hope this was welcomed by the noble Baroness, Lady Jones—that the Government set very high sustainability standards for SAF in the UK and were looking to make sure the revenue certainty mechanism was in line with that approach and did not trespass on it.
The noble Baroness is absolutely right that there is no point in us doing great things in the United Kingdom if the result is that we just drive poor behaviours elsewhere, so having some transparency on that would be very helpful. The specific amendment may or may not be able to be improved, but I would welcome the Minister’s comments on whether the Government intend to add extra transparency to the Bill on Report, or whether we will need to return to that ourselves and use the collective set of amendments here to do some sensible reporting.
We have to make sure that it is balanced and that we do not put undue burdens on people, but transparency in this space would be helpful for the industry in explaining what is going on, as well as for consumers. Given that there is a cost to this, showing consumers what is happening, and the cost of that, would be helpful in demonstrating the trade-offs that we are having to make in this space. I am broadly supportive of this group of amendments.
Lord Moylan (Con)
My Lords, generally speaking, monitoring is good, and reporting is better. If the noble Earl, Lord Russell, and the noble Baroness, Lady Pidgeon, want to engage over the next few weeks on the drafting of amendments that could achieve that in a way that is not overly burdensome to those charged with doing that reporting, or overly expensive, I am sure we would be happy to discuss that with them.
On Amendment 19A, tabled by the noble Baroness, Lady Jones of Moulsecoomb, I will save my comments for the last group, in which the noble Lord, Lord Ravensdale, and I have some interesting amendments on precisely these questions of what the source and feedstock of the sustainable aviation fuel are going to be, and what constitutes sustainable aviation fuel. I would be repeating myself if I were to address those questions now and again later.
Lord Hendy of Richmond Hill (Lab)
My Lords, the Government contend that Amendments 15 and 16 are unnecessary as they duplicate measures that already exist in the SAF mandate.
There are existing statutory powers in Sections 124 to 132 of the Energy Act 2004 that enable the Secretary of State to amend obligations under the SAF mandate, subject to consultation with those affected and scrutiny by Parliament. Maintaining certainty throughout each obligation period is vital so that suppliers can properly prepare to meet their requirements. It is essential that those impacted by any changes to the mandate are given the chance to be involved and have adequate time to adapt, especially considering the early stage of the sector. This would need to be taken into account when considering any amendments to the obligations under the SAF mandate. The Government already publish annual SAF figures, with a comprehensive report for each year typically released in the winter following the reporting year. A formal review of the SAF mandate legislation is required, with the initial review scheduled to occur by 2030.
The Government also consider Amendment 17 to be unnecessary. Many airlines already publicly disclose information on their decarbonisation initiatives, and we will continue to encourage them to do so. The Government will publish data on the supply of SAF under the mandate, including information on the proportion of SAF relative to the total aviation fuel supply.
In answer to the point made by the noble Lord, Lord Harper, about an update on plants in the UK, I will certainly write to noble Lords who have taken part in this debate on where we have currently got to. I apologise to the noble Lord for not having included that in my previous letter.
On Amendment 19A, I certainly recognise the concern of the noble Baroness, Lady Jones, about land use and deforestation. However, the amendment duplicates existing measures in the SAF mandate. SAF supplied under the SAF mandate cannot be derived from crops and must adhere to strict sustainability criteria. Sustainability criteria in the RCM will align with the criteria in the SAF mandate. The SAF mandate already makes provision for the publication of detailed statistics on the supply of SAF, including feedstock, country of origin and carbon and sustainability data.
We will continue to review the evidence and update the eligibility and sustainability criteria on a regular basis. In line with this commitment, this Government recently published a consultation on the development of a common biomass sustainability framework, which includes proposals for strengthening existing biomass sustainability criteria, including those for woody biomass, in line with the latest evidence. The SAF mandate will be subject to regular reviews to help ensure that it is delivering on sustainability outcomes, with the initial review scheduled to occur by 2030. I hope my explanations are sufficient for the noble Earl to withdraw his amendment.
Earl Russell (LD)
My Lords, this has been an interesting and important debate. It is informative that the whole of this side of the House believes—as I think the Minister does as well— in the importance of transparency, reporting and data. I have listened carefully to the Minister’s response, and I recognise the work the Government are doing in various places to publish the relevant information.
Having said that, I have two issues. First, this information is not necessarily collected together in one place as a coherent whole, where it would be possible to review the impact the Bill is having and how it and the revenue certainty mechanism are operating in practice. Secondly, there are the broader issues relating to the impact of different types of fuel and their possible impact on other countries.
I welcome the offer that has been made; it is one for all of us to think a bit more about between now and Report. I would not want to duplicate information that was already gathered; on the other hand, I would not want information to exist in lots of disparate places and not be a coherent and usable whole, or for there to be any gaps in that information. This is one for all of us to go away and think about further, but I am grateful for the Minister’s response, and I beg leave to withdraw the amendment.
Lord Moylan
“Impact of this Act on the price of airline tickets(1) Within one year of the day on which this Act is passed, the Secretary of State must publish a report to assess the impact of the sustainable aviation fuel revenue certainty mechanism on the price of airline tickets.(2) The report under subsection (1) must include an assessment of whether the impact of the sustainable aviation fuel revenue certainty mechanism on ticket prices is greater than £1.50 per ticket per year.(3) The Secretary of State must lay the report under subsection (1) before Parliament.”Member’s explanatory statement
This amendment seeks probe the impact of the sustainable aviation fuel revenue certainty mechanism on airline tickets. In particular, it seeks to probe whether the impact is in line with the Government’s analysis as set out in the Department for Transport’s ‘Revenue Certainty Mechanism Cost Benefit analysis’, which suggests that the likely impact on ticket prices is between -£1.50 and £1.50, on average, per year.
Lord Moylan (Con)
My Lords, I will speak to Amendment 19 and the other amendments in my name in this group. These amendments cover two topics, and I will try to deal with them fairly briefly, but they are very important. Even if the speech is short, the resonance and consequence of the amendments is long.
There will be a cost to the revenue certainty mechanism that will be distributed to airline passengers through their air fares. How much is it going to be? We are not in the dark on that subject, because the cost-benefit analysis produced by the department makes a stab at this. Paragraph 4.23 says:
“Overall, the Revenue Certainty Mechanism, when covering a limited but reasonable amount of non-HEFA SAF volumes, is likely to result in a small impact on ticket prices. Depending on non-HEFA SAF prices and whether the levy costs are offset by fuel cost savings, the likely impact on ticket prices is between -£1.5 and £1.5, on average, per year”.
The only things of absolute fixity in that sentence are the numbers and the phrase “per year”. Almost everything else consists of a caveat, although I accept that a forecast of this type will have to be caveated to some extent. I want to explore some of the caveats in the next group as well, not merely here. What are we talking about when we refer to non-HEFA SAF? I have an amendment in the last group to explore that.
However, at this stage, I want to know how far the Government are willing to go to commit themselves on the £1.50 cost—let us take the upside—per ticket. Bear in mind that this £1.50 per ticket is the cost not of SAF but of non-HEFA SAF produced using the revenue certainty mechanism in this Bill. SAF is already in use. It is being paid for by airlines and it is painfully expensive —much more than it was expected to be. It is already having a significant impact on airlines’ fuel bills. That is not included in the £1.50, which is purely for the mechanism that sits in the Bill.
How firm are the Government willing to be on this? This is of crucial significance to the public at large, who would like to see more sustainable aviation fuel. I accept that the noble Baroness, Lady Jones of Moulsecoomb, who is no longer in her place, regards that as a chimera. The public are happy to see it, but they want to know what it will cost them. If we are going to hold out a prospect, as the Government are, of a maximum cost of £1.50 per ticket for this—that is a significant sum for a family of four going on holiday—they would like to know that the Government stand behind it. Airlines that I have spoken to suggest that the cost will be much closer to £10 a ticket, so the Government need to give some justification for the £1.50. That is one of the two topics these amendments cover.
Moving on to the second, I have to apologise in a sense to noble Lords because it is of a more general character. In some ways, it would have been nice if it could have been contrived to come at the beginning of our debate this evening, but the rigidities of our system of numbering and marshalling amendments means that it appears at this late stage. I appreciate that not everybody is interested in it, but I assure noble Lords that, outside this Committee, there is a large audience that is very interested in this question—an audience of people who still believe, to some extent, in capitalism, the principles of Adam Smith and the notion of comparative advantage.
This is asking that the Government make some stab at assessing our comparative advantage in wishing to be a leader in this field. This is, after all, a measure designed to make us a domestic producer, rather than an importer, and a globally leading producer of non-HEFA SAF, compared to the rest of the world. It is, as I said at Second Reading, an industrial policy Bill rather than a net-zero Bill. The SAF mandate was a net-zero measure; this is an industrial policy measure. It is a decision by government that this stuff has to be produced here and not imported—a decision by government that we should be a leader in this field.
The question is: what on earth do we have by way of comparative advantage that means the Government should have alighted upon this particular economic activity as one in which we are to be—or in which we can be, or it is suitable that we should be—a leader in the field? Do we have access to particularly rich streams of feedstock, for example? If non-HEFA SAF—some of it at least—is to be produced from old cabbages collected from people’s kitchens, are our cabbages better than somebody else’s cabbages? Do our wood cuttings and so forth have a particular advantage or a greater richness of oil-bearing quality that puts us ahead of the field? I suspect that the answer to that is no.
Is our refining capacity cutting edge and world leading for turning these things into a usable fuel? I do not know a great deal about that—I see that there are noble Lords in the Committee who, I suspect, know a great deal more about it—but what I do see, as an ordinary reader of the newspapers, is that we are closing down our refining capacity as fast as we can. Far from being a leader, we are falling behind. Of course, this process will be very heavy on electricity usage; I think nobody denies that. Yet we have contrived, no doubt in the interest of saving the planet—I will not go into that further at the moment—to have the most expensive electricity in the civilised world. Do we have skills particularly, or an existing workforce? None of these things are apparent.
So what I am asking—I do not think it an unreasonable request—is that, before the Government launch us, and taxpayers’ and airline passengers’ money, into this reckless scheme of being a world leader in something in which we have no apparent comparative advantage, they set out the economic case for doing so. The contrivance here is that the amendment would be inserted as a commencement blocker, so that the Bill could not commence until this has been done, but I am not wedded to that; it is merely a way of inserting it into the debate. But the Government owe it to the public to have a better case and a better argument for why they should do this.
After all, this is not our first attempt to produce SAF. In the last few years, we have had schemes such as the advanced fuel funds, the Green Fuels, Green Skies fund, the Future Fuels for Flight and Freight competition, and others. But despite those, around 90% of the SAF used in this country is still imported. Why has this not taken off domestically already, with that level of support, if we have the sort of advantage that we should be able to bring to bear, and that will make a success of it this time? I, at least, would like to know. I beg to move.
Lord Harper (Con)
My Lords, I strongly support the first of my noble friend Lord Moylan’s amendments—the one about transparency and the impact of the revenue certainty mechanism on ticket prices for consumers. As I think he acknowledged, this is an area where consumers want to see sustainable aviation fuel used, but it is reasonable that they understand the cost of it. Many people who fly are very sensitive to the cost. The industry is very conscious, in all the conversations that I have had with it recently, but also previously, when I led the Department for Transport, about the importance of delivering sustainability at a low cost that does not impact significantly on consumers, and particularly does not price the least well-off, most price-sensitive consumers out of the market and stop them flying. So I think this level of transparency specifically about the cost from the revenue certainty mechanism is very welcome.
As my noble friend said, that is not the only cost from developing sustainable aviation fuel, because there is obviously the cost of SAF that is bought from outside those UK plants that benefit from the revenue certainty mechanism, so I strongly support the thrust of my noble friend’s amendment and I will listen carefully to what the Minister says about whether the Government will bring forward any measures on this; it would also support what they had in their impact assessment.
As a final point on this amendment, I agree with my noble friend that the impact assessment is clearly an assessment, an estimate. No one is going to beat the Government up if it is not quite right, but there is a big difference between a £1.50 charge per ticket per year and a £10 charge per ticket per year, or more, and it is important that we have a rough idea of where we are on that, so that is very welcome.
On the other amendments, I will add just one thing which I alluded to earlier. It is not just an industrial policy question, it is about security of supply, particularly if there are certain circumstances that impact it, as we saw during the pandemic or as we might see if there were another energy price shock. Actually, there is an industrial policy question about producing stuff in the UK; there is also a question about availability or making sure that we have access to those fuel supplies. Both questions are important, as is having the Government be clear and transparent about it.
Both the previous Government and this one have set out some of the thinking in terms of the decision we made to have the advanced fuels fund and the different rounds of that. We have set out some of the thinking in the money that has been going into this through the ATI funding as well. Bringing all that together and having a very clear exposition of the Government’s policy in this space is welcome and will actually do nothing but benefit the Government. So, although I am not sure that the mechanism for delivering it is the right one, I think the thrust of my noble friend’s amendment is right and I strongly support its intention, if not the specific mechanism.
Lord Berkeley (Lab)
My Lords, following up on the question from the noble Lord, Lord Moylan, about the £1.50, I may be missing something, but if that is a cost to UK airlines for passengers leaving or arriving at UK airports, do we add that to a similar cost which might be applied by France, Germany or Timbuktu? They may have different costs in creating SAF, if they ever get round to doing it. The noble Lord mentioned cabbages. Well, if you are flying to Russia, you probably get lots of cheap cabbages there and you can turn those into SAF. I think we need to know what the total cost is going to be for this particular journey, whether it is £1.50 or £10 or whatever.
Sustainability is fine, but we had a Question today about the Drax power station and wood chips. If you look at some of the consultancy reports on how those wood chips are made, you will see that most of the trees seem to have many years of life left in them, but we do not worry about that, apparently. A bit more detail from my noble friend the Minister would certainly give me a bit of comfort.
Baroness Pidgeon (LD)
My Lords, I shall talk about Amendment 19 and the impact on airline tickets, which I think is really important. At Second Reading, a number of noble Lords raised the impact on passengers, and it goes to the whole theme of our discussion this evening, which has been about transparency at every level of the Bill.
We should talk, maybe outside the Chamber, about what sort of comprehensive report we could produce on the impact of this legislation, whether that is the direct impact on the passenger, through the price of their ticket, or in all these other areas we have been discussing today. There is a cost as we transition to the greater use of SAF through the revenue certainty mechanism, and it is really important that passengers and the whole industry understand the true cost of the Bill, so I will be interested in the Minister’s response to the points that have been raised.
Lord Hendy of Richmond Hill (Lab)
My Lords, the Government want to ensure that flying will remain affordable for UK holidaymakers and travellers while supporting a United Kingdom sustainable aviation fuel industry. A report on the impact of the Act on ticket prices within a year of its enactment would be premature. Costs need to be negotiated and signed, plants built and SAF produced and sold before any real impact on ticket prices can be measured, but the Government can control costs by controlling how many contracts are issued.
I cannot tell the noble Lord, Lord Berkeley, what the effect on ticket prices from other countries producing this will be, but the Government’s cost-benefit analysis of the revenue certainty mechanism, which noble Lords have referred to, published in May this year, will remain the best estimate of the Act’s impact on passenger air fares over the next period, pending the mechanism working and SAF being produced in some volumes here. The Government take reporting to Parliament seriously. Where appropriate to undertake it, we can present an assessment of costs and benefits reflecting the latest available evidence, but that evidence is not there yet.
Amendments 23 and 25 would require the Government to publish an assessment on the UK’s comparative advantage in the production of SAF. The Government believe that this would be counterproductive and would delay the good progress that we have made for decarbonising the aviation industry through the SAF mandate and the advanced fuels fund. The Government and other noble Lords, including someone on the same side as the noble Lord, Lord Moylan, are certainly more confident about the ability of UK industry to produce SAF than the noble Lord. The points from the noble Lord, Lord Harper, about security of supply are germane here.
The SAF industry has been calling for support to overcome the investment barriers. This Bill will help to drive our missions to kick-start economic growth and make Britain a clean energy superpower, delivering the Government’s manifesto commitment to secure the UK aviation industry’s long-term future. The Bill is a crucial step to establish a SAF industry in the United Kingdom and to drive investment, growth and jobs. I hope that the noble Lord is persuaded to withdraw his amendment.
Lord Moylan (Con)
My Lords, before I go any further, I just return to paragraph 4.23 of the cost-benefit analysis, where I read out something earlier thinking that I understood it, but now I do not think that I understand it at all. Perhaps it is a bit late procedurally for the noble Lord to explain it to me now; he might write to noble Lords. It says that
“the likely impact on ticket prices is between -£1.5 and £1.5, on average, per year”.
What is “per year” doing there? Surely, it is on average per ticket. Why does this say per year? That would assume that maybe you fly once a year. However, if you fly more than once a year, it would not be per year at all; it would still be per ticket, but it would not be per year. Explaining to me what that means would be extremely helpful.
What we wanted to hear—what the public wanted to hear—from the Minister on this particular question was that he put himself and the Government squarely behind £1.50 as the upper estimate of the cost of the measures in this Bill. He did not do that, and we have noticed it. It will get around. On this occasion when he had the chance, he could have said £1.50, as my noble friend Lord Harper said. Of course, it could be a bit more, it could be a bit less, but it is of the order of £1.50. He could have said, “That is what we the Government believe. I, Lord Hendy, on behalf of the Government, am putting myself behind that estimate: £1.50, not £10, not £15, but something of the order of £1.50 is what we are backing”. He did not, and we have noted that. We are not going to let that matter drop.
Concerning comparative advantage, the Minister made what I thought was an uncharacteristically sneering remark, implying that I did not think that Britain was capable of producing SAF. He was trying, I think, to draw a wholly false distinction between my views and the views of my noble friend Lord Harper. Britain can do anything—of course Britain can do anything. Britain can particularly do anything if we throw millions of pounds of subsidy at something. I think back to the day when Britain could produce vans at British Leyland because it was being given very large amounts of subsidy. That was until we found a way of producing cars in this country that did not require those subsidies and we became a leader in car production here under the flag of the Japanese, who invested in order to make a profit, not simply to farm subsidies. It is not a question of whether we can do something.
The whole point of comparative advantage is that you are comparing things. The question is whether this is the best thing we can be doing with the very limited money we have available, or are there other things that would be more productive and would bring greater prosperity to the country? What is the particular advantage we have in relation to this, which means that it is the thing that the Government should be backing?
Doing that does not need to hold up the Bill. It would if it were constructed as a commencement blocker, as it is at the moment, but we could of course all reach agreement around a table on a commitment for the Government to do this within six months of the commencement of the Act. It would not have to hold things up. It is a contrived objection. It is the complete lack of interest in the question on the part of the Government that is so depressing.
Despite those comments, I am grateful to the noble Lords who have contributed, and I beg leave to withdraw Amendment 19.
“Duty to consult about regulations(1) Before making regulations under this Act the Secretary of State must consult any persons the Secretary of State considers appropriate.(2) In the case of regulations under section 1, 3, 10 or 11, that must include—(a) the Welsh Ministers,(b) the Scottish Ministers, and(c) the Department for the Economy in Northern Ireland.”Member’s explanatory statement
This requires the Secretary of State, before making regulations under the Bill, to consult any persons the Secretary of State considers appropriate. In the case of regulations under section 1, 3, 10 or 11 (which may contain devolved provision) the devolved authorities must be consulted in addition to anyone else.
Lord Ravensdale
““relevant crops” means starch-rich crops, sugars, oil crops and main crops, where “starch-rich crops” include—(a) cereals (regardless of whether only the grains are used or the whole plant),(b) tubers and root crops, including potatoes, Jerusalem artichokes, sweet potatoes, cassava and yams, and(c) corm crops, including taro and cocoyam;“renewable transport fuel” means anything that is (or could be treated as) renewable transport fuel for the purposes of Chapter 5 of Part 2 of the Energy Act 2004 (see sections 131D(2) and 132(1) of that Act), other than such fuel where it is derived from relevant crops;”Member’s explanatory statement
This amendment will include nuclear-derived power-to-liquid fuels in the scope of sustainable aviation fuels for which Revenue Certainty Contracts can be offered, and remove food crops, using the same definition of “relevant crops” as the Renewable Transport Fuel Obligations Order for surface transport (SI 2007/3072).
Lord Ravensdale (CB)
My Lords, as the noble Lord, Lord Moylan, referred to earlier, I think this wraps up a number of points in previous groups. It is a good point at which to have this debate about what actually qualifies for support under the revenue certainty mechanism. First, I take the opportunity to congratulate the noble Earl, Lord Russell, and the noble Lord, Lord Addington, on their peerages. It is absolutely brilliant news, and I am really pleased for them.
There are two parts to this amendment, and I would like to deal with them in reverse order. At Second Reading, I asked a question on the eligibility of nuclear energy or nuclear-derived SAF. The Minister said:
“SAF produced using nuclear energy is and will be eligible for the SAF mandate”.—[Official Report, 20/11/25; col. 990.]
I noted that he said the SAF mandate and not the revenue certainty mechanism. What I am really after from the Minister is explicit clarity that nuclear-derived fuels are within the scope of the revenue certainty mechanism, and perhaps some commentary on how this flows through the legislation.
The reason for needing this clarity is that the legislative route is a little convoluted. Clause 16 defines sustainable aviation fuel as
“aviation fuel that is renewable transport fuel”.
Renewable transport fuel is defined in the same clause as
“anything that is (or is treated as) renewable transport fuel for the purposes of Chapter 5 of Part 2 of the Energy Act 2004”.
As I said at Second Reading, I proposed the amendment to the Energy Act 2023 that led to the insertion of Section 131D into the Energy Act 2004, which treats recycled carbon fuels and nuclear-derived fuels as renewable transport fuels. But it was stated there that it required secondary legislation to take effect and to treat these fuels as renewable transport fuels. I noted that this has been done for recycled carbon fuels, but the secondary legislation has not been done for nuclear-derived fuels.
We have this quite convoluted route through the 2004 Act, the 2023 Act, the secondary legislation and the SAF mandate, so I would appreciate that clarity from the Minister on nuclear-derived fuels. That is the second part of my amendment to ensure that they would be within the scope of the Bill.
My second point is around the eligibility for this Bill of certain types of sustainable aviation fuel. I am seeking to exclude first-generation SAFs from the revenue certainty mechanism. I do not see the need for crop-based biofuels to be given support, because the production pathways for these fuels are already there—they are already commercialised at scale. On previous groups we have talked a lot about some of the issues with crop-based biofuels: they are CO2 saving; they compete with food, potentially raising food prices; they drive land use change and reduce biodiversity. Those fuels have all those other effects, and they are already commercially viable and commercialised, so I cannot see why we need them to be within the scope of the revenue certainty mechanism.
That is brought out in a lot of the government guidance as well. The driver behind the Bill is to provide a mechanism for second and third-generation sustainable aviation fuels. That has been stated repeatedly by the Government. I cannot see a good reason for including these fuels within the revenue certainty mechanism. I look forward to the Minister’s thoughts around that. I beg to move.
Lord Moylan (Con)
If noble Lords do not object, I will speak now rather than later in this group because, having read his amendment, I agreed with the noble Lord, Lord Ravensdale, before Committee that it would be sensible if we grouped these two amendments together. We are both trying to get at the same thing and, in a sense, I am not going to say anything very different from what he said, but I am going to take a different approach. It is fair to say that both of us want to limit the deploying of these contracts, or at least to know what limits the Government are going to apply themselves.
As the noble Lord, Lord Ravensdale, said, Clause 16, states that
“sustainable aviation fuel’ means aviation fuel that is renewable transport fuel”,
and earlier it states that
“renewable transport fuel’ means anything that is (or is treated as) renewable transport fuel for the purposes of Chapter 5 of Part 2 of the Energy Act 2004”,
in which the noble Lord played a certain part in amending in 2023.
Earl Russell (LD)
My Lords, I thank both noble Lords for their amendments; this is one of the really interesting groups. In response to what the noble Lord, Lord Moylan, said about knocking out fuels, I can probably sum up my speech by saying that I am not certain that knocking out fuels is the best thing to do in the transition; we might need to limit the time the revenue certainty mechanism applies to certain fuels. That might be where I am coming from.
Amendment 21 in the name of the noble Lord, Lord Ravensdale, seeks to
“include nuclear-derived power-to-liquid fuels in the scope of sustainable aviation fuels for which Revenue Certainty Contracts can be offered, and remove food crops, using the same definition of ‘relevant crops’ as the Renewable Transport Fuel Obligations Order for surface transport”.
While we recognise and support the ambition behind this amendment—promoting nuclear-derived and more sustainably-derived stuff, thus reducing carbon emissions —we would welcome the Government’s response to the idea of including nuclear-derived power-to-liquid fuels. Our questions relate more to the complete removal of biomass from the revenue certainty mechanism.
I suspect the Minister might say that this technology in relation to the nuclear side is not ready, and we would not disagree. But my question back to the Minister would be: how do the Government plan—if they do indeed plan—to bring these into the revenue certainty mechanism? How will that be done, what is the timescale for doing that, and is it something that can be done by secondary legislation?
We recognise that biomass has some use as a SAF, particularly in the early stages of SAF use. At the same time, we recognise the limitations of biomass as a sustainable fuel and its impact on any use at scale. This amendment raises some fundamental questions about the plans for the revenue certainty mechanism, its role in relation to different technologies for SAF production and how it is best used to advance the aim of zero-carbon flight.
I will be honest: we have some difficult challenges and questions to answer, and this group has certainly raised those. It can certainly be argued, as the noble Lord has done, that crop-based biofuels should not be given long-term support under the revenue certainty mechanism, as production pathways for these fuels are already commercialised at scale, as has been said. It can also be argued that crop-based biofuels offer relatively small CO2 carbon savings compared with fossil fuels, that they compete with food and can create biodiversity loss in other countries. However, crop-based fuels offer some CO2 savings when there are very few other options available today at scale.
However, with very few alternatives to reduce carbon emissions from aviation today, the revenue certainty mechanism could also be an important intermediate step in this continuous journey of decarbonisation. So, while we support nuclear derived power-to-liquid, and we share a desire to limit the use of the RCM to support bio crops, this amendment opens some complex policy decisions which need a lot of careful thought. What we are doing here is planning a journey. On that road, we will have different fuels that will jump in and out as we move along it. A lot of the questions that are being asked in this group are around how the Government plan to have those fuels come in and drop out, how that that be done and scrutinised and how the mechanisms will change. The same is true in relation to Amendment 22, on HEFA. The arguments I would make around that are the same.
This is a really important group of amendments, and there is a lot to think about in this space.
Lord Hendy of Richmond Hill (Lab)
My Lords, the noble Lord, Lord Moylan, asked some questions in relation to Amendment 19 in his closing remarks. I will write to him and provide a copy to all noble Lords about standing by the cost-benefit analysis on ticket prices and how we can control the cost to passengers by controlling costs through the allocation process. For good measure, I will also clarify the phrase “per year”.
On Amendment 21, I understand the desire of the noble Lord, Lord Ravensdale, to exclude crops from the revenue certainty mechanism. Several other noble Lords also spoke about their concerns on growing crops for purposes other than food at Second Reading. The noble Earl, Lord Russell, just now, was realistic about some of the practicalities of doing so. The sustainability criteria in the revenue certainty mechanism will align with the criteria in the SAF mandate.
As I mentioned before, there will be a call for evidence shortly, focusing on the potential benefits, risks and trade-offs of using crops in SAF production. The scope of the call for evidence will include different types of crops, including feed crops, dedicated energy crops and cover crops. While this call for evidence will neither propose any changes to the SAF mandate nor signal the future direction of the mandate, we would not want to expressly exclude SAF derived from relevant crops from the scope of the RCM if they might be included in the SAF mandate in the future.
We will, of course, continue to engage with industry on these issues. I echo the words of the noble Earl, Lord Russell, that this is developing and things will change over time. We need to understand it, and that call for evidence is part of that process.
The noble Lord, Lord Ravensdale, and the noble Earl, Lord Russell, referred to nuclear eligibility. We will match that in the SAF mandate. We are already supporting nuclear through the advanced fuels fund, which we believe to be right.
Turning to Amendment 22, I agree with the noble Lord, Lord Moylan, that HEFA SAF—I hate these acronyms—has already overcome many of the barriers to investment. For that reason, in our response to the first consultation on RCM, we announced that HEFA SAF projects will be excluded from the first round of contract allocation. I hope what I have said is sufficient to persuade the noble Lord to withdraw his amendment.
Lord Ravensdale (CB)
Just to clarify what he said, could the Minister just confirm that nuclear-derived fuels are eligible under the SAF mandate and that they are also eligible under the revenue certainty mechanism, please?
Lord Hendy of Richmond Hill (Lab)
Yes, that is what I meant to say in answer to the noble Lord. I do clarify that.
Lord Moylan (Con)
I was hoping that the Minister would simply and explicitly state that the Government do not intend to see the mechanism used to support all the fuels that appear in the Energy Act 2004 that are currently in scope and that he would look to an amendment to eliminate some of those to give assurance that this mechanism is going to be directed at the fuels we have been discussing and not at that broader list. Would he take advantage of this last moment of Committee to give that assurance that he will be happy with such an amendment and contribute to drafting it?
Lord Hendy of Richmond Hill (Lab)
In answer to the noble Lord, I will not do that at this stage, but I will consider what he has just said.
Lord Ravensdale (CB)
I thank noble Lords for this short debate. In terms of eligibility of crop-based biofuels, as the noble Earl, Lord Russell, said, this is a journey we are going on and, absolutely, crop-based biofuels are part of that journey. The noble Lord, Lord Moylan said, and made the case quite strongly, that we have not heard any rationale for why those fuels should specifically get support under the revenue certainty mechanism, but I look forward to those further conversations. We have had the clarification on nuclear-derived fuels. On that basis, I beg leave to withdraw the amendment.