Heat Networks (Market Framework) (Great Britain) (Amendment) Regulations 2025
(1 day, 21 hours ago)
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Lord Whitehead
That the Grand Committee do consider the Heat Networks (Market Framework) (Great Britain) (Amendment) Regulations.
The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)
My Lords, these draft regulations were laid before the House on 30 October.
Heat networks have a crucial role to play in our decarbonisation ambitions and energy security mission. As proven internationally, they can provide low-cost, low-carbon energy for all, particularly in high-density areas such as our major cities. They are one of the most versatile forms of renewable energy, as they can access heat from a variety of sources, including waste heat from growth sectors such as AI. This potential has fuelled government ambition. By 2050, we aim to grow heat networks from the current 3% of the UK’s heat demand to around 20%.
However, the growth of this sector depends on consumer trust, underpinned by good regulatory foundations. That means we must deliver a fair deal for the nearly half a million households that already rely on a heat network. The current lack of regulation means that many people are experiencing poor customer service, with unreliable heating and a lack of clarity on what makes up a bill. This cannot continue. That is why, for the first time, we are establishing a regulated market framework to protect heat network consumers that supports the case for sector growth.
Earlier this year, when this House approved the Heat Networks (Market Framework) (Great Britain) Regulations 2025, we paved the way for consumers on a heat network to receive protections comparable to those in gas and electricity markets. The powers for the Secretary of State to introduce these regulations were provided by the Energy Act 2023. They will apply across Great Britain. We have also consulted the Scottish Government, as per Section 220 of the Energy Act. I thank them for their support in this matter. These regulations do not apply to Northern Ireland; the Northern Ireland Executive have their own powers to introduce regulation.
The regulations made in March introduced the authorisation regime. This will work in a similar way to the domestic gas and electricity licensing regime. From regulatory commencement, Ofgem will have the powers to investigate and take action in cases of unfair pricing, establish protections for vulnerable customers and require suppliers to put in place robust complaints-handling processes. It will also be a requirement on heat network suppliers to treat their customers fairly. This instrument is therefore the last piece of the puzzle that will enable this market framework to go live from 27 January.
The instrument simply builds on previous regulations by introducing amendments that will expand the authorisation regime that Ofgem will implement. The changes include the provision of powers to Ofgem to assist with the conduct of pricing investigations, which will be essential to protect customers from unfair, high and opaque prices. It will also introduce deemed contracts to ensure that the rights of households and their supply of heat are protected even when no formal contract is in place.
Noble Lords may also note that this statutory instrument includes provisions to protect consumers if a heat network becomes insolvent. A special administration regime, or SAR, will seek to ensure that customers do not experience interruptions to their supply of heating and hot water in the event of a heat network operator or supplier insolvency. The rules for this will be set out in separate statutory instruments that will be put forward to this House in future.
The instrument also makes it clear that air conditioning systems will be explicitly excluded from the scope of these regulations, as we believe that including them would not be proportionate or in the interests of consumers, and air conditioning systems normally stand aside from the heat network itself.
In addition to the above, these amendments include provisions to partially revoke parts of the Heat Network (Metering and Billing) Regulations 2014. This is designed to avoid duplication in legislation, as there are some existing requirements and obligations on heat supplies in the metering and billing regulations that will now be streamlined rather than entirely removed.
Finally, these amendments make changes to the scope of the Energy Ombudsman scheme. The addition of small businesses aims to align the scope for heat networks with the scheme’s application in gas and electricity markets.
I wish to make noble Lords aware, by the way, that there is a slight error in Regulation 10, which would have the effect of applying a different definition for a micro-business from that in gas and electricity markets. Officials will ensure that this error is rectified as soon as possible through the medium of a negative statutory instrument in the very near future.
We have committed to maintain minimum technical standards, which will be a key part of the market framework, and we aim to consult on proposals shortly. However, to be clear, these are not in scope of this statutory instrument and draft regulations will be brought forward to this House in due course.
I understand that four public consultations dating back to February 2020 have informed these regulations, which have helped the department to develop the final market regulation proposals. The detailed Ofgem authorisation conditions and associated guidance are still being consulted on and will be published before the authorisation regime commences on 27 January 2026.
In conclusion, this instrument and the one made in March will enable the Government to do what has never been done before, as we introduce regulation to the heat network sector. The only way to realise the Government’s growth ambition for heat networks is to ensure that customers can trust heat networks to provide safe, reliable and cost-effective heat. These regulations therefore represent a huge step forward, providing heat network consumers with much-needed protection similar to that in other utility markets that already exist. We must get on with the job and introduce the final elements of the market framework that will not only help to drive up consumer standards in this sector but help to promote market growth. I beg to move.
Baroness Bennett of Manor Castle (GP)
My Lords, I thank the Minister for his clear and comprehensive introduction to this SI and I welcome the fact that we are getting this long-overdue regulatory framework for heat networks. I agree with him that they are an important part of our energy future. Based on renewable and low-carbon emissions, they can give people reliable, secure energy supplies to meet their heating needs.
My questions are based on a report from Citizens Advice in July this year, titled System Critical: No Margin for Error in New Heat Network Rules. That “no margin for error” is why we are here interrogating this. As that reports outlines, and as the Minister said, since the rising price of gas after Russia’s invasion of Ukraine, we have seen serious problems in this sector.
My first question relates to what the Minister said about regulatory commencement on 27 January. The report says that Ofgem
“must outline the standards expected”
from providers, how it will act
“to improve systems and processes”,
and how it will deal with some of the terrible behaviour we have seen from some of the providers. Given that 27 January is not far away at all, my question to the Minister is: how prepared is Ofgem to act on this? We will of course already be in the middle of winter and people will already be accruing bills, which will be a real issue.
My other question relates to my personal experiences, particularly with Camden council estates. We know that many heat networks were installed in the 1960s and 1970s and have lots of problems, including that they are not controllable. People find themselves being heated even when they do not wish to be heated. There are real problems with controls, systems, leakage and all those kinds of issues. I am interested in the Minister’s view of how those issues will be addressed under this framework.
Earl Russell (LD)
My Lords, we support the Government’s fundamental ambition grow UK heat networks from the current 3% to 20% of the UK’s heat network demand by 2050. We share this ambition; we recognise that heat networks will play a pivotal role in helping to achieve our drive towards net zero and driving low-carbon energy growth. I particularly note that this is important in relation to the planned future growth of AI.
But, if this vision is to succeed, customers will have to have the absolute trust that heat networks are safe, reliable and cost effective. For too long, as the Minister acknowledged, this part of our energy system has been in the regulatory twilight zone. The half a million households on heat networks have often been left facing poor customer service, frequent outages and opaque billing. In many cases, people have found themselves trapped in contracts with extortionate charges and little way out. So this statutory instrument definitely goes a long way; it is long overdue and very welcome, because it helps to bring some order to that chaos. In the other place, the Minister himself noted the number of complaints that he personally had had about heat networks. So this is a significant step, and it places customers on a more equal footing with those in regulated gas and electricity markets, so we welcome it.
We also welcome the introduction of the special administration regime—SAR—for protected heat network companies. This is a vital safeguard. It ensures the continuity of heating and hot water supply even if the operator collapses, and it literally stops people being left in the dark and the cold.
We broadly share the plan to share the costs of the administration across the market. This seems a sensible approach and it strengthens market confidence by spreading that risk. When will the detailed regulations be published, and how will the Government ensure that these costs are shared fairly and equitably across the market, particularly in relation to the smaller operators? Will further consultations take place on that specific aspect of that sharing of the cost?
We welcome the new deemed contracts provisions, which are important because many people move to a house that is on one of these heat networks and have no choice but to sign up to them. So these deemed contracts are important and will help to ensure that people get a fair rate for their energy.
We fundamentally welcome the new powers that have been given to Ofgem. These give the regulator real teeth in this marketplace, with explicit authority to determine whether the charges are disproportionate, to investigate poor service, to extend the redress schemes and to support small businesses and micro-businesses. I recognise what the Minister said about how the definition around micro-businesses will be changed to make sure that it fits with the other regulations.
Nearly half a million households are on these networks and, to date, they have had little power or influence, and there have been problems. So what specific guarantees can the Minister offer that Ofgem will have both the additional resources and the new technical capacity to conduct effective investigations and issue binding directions where network operators are found to be guilty of unfair charging practices? Will the Government commit to publishing a transparent industry-wide methodology, showing how this issue of either disproportionate or not disproportionate charges is arrived at?
Generally, my questions further forward are about how, as we have heard, these regulations will come into force at the beginning of January—literally in a few weeks’ time. Considering the short amount of time before they come into effect, I ask the Minister to give an assurance about the customer redress scheme and the correction of technical error, and an assurance that Ofgem has the resources and capability to implement all these systems on time, because that is a concern.
Generally, these regulations are welcome. They bring order and clarity, and they help to bring confidence to this market. If this market is to grow, it needs this regulation, so we welcome this SI.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank the Minister for setting out the purposes of these regulations. We welcome them, so I shall not overburden him with questions beyond those already asked by previous speakers. It is somewhat frustrating that I did not spot the error in the amendments to Regulation 56 in the current Regulation 10; I must do better. These measures represent another step towards the full regulatory framework for heat networks that consumers have waited too long to see. From January 2026, the full authorisation regime and the special administration powers are due to come into effect—a significant milestone that we welcome wholeheartedly.
As the Minister said, we must be clear about the situation facing many people with heat networks. Years of unregulated, decentralised heating have left households paying high and unpredictable costs, receiving confusing bills and unable to switch supplier or seek meaningful redress. Citizens Advice has warned that, for some, bills have doubled or even tripled, which is simply untenable.
Therefore, while we support these regulations, their success will depend entirely on effective implementation. A framework on paper is not enough; consumers need enforceable, practical protections. As the noble Baroness, Lady Bennett of Manor Castle, rightly identified, it is essential that Ofgem is fully prepared and properly resourced to take on its new responsibilities from 27 January. It must be able to intervene when prices are unfair, when service standards fall short and when vulnerable households are at risk of disconnection. Clear complaints processes must be in place, and operators must be held to account. Like the noble Earl, Lord Russell, I would be grateful if the Minister can provide assurances today that Ofgem will be ready from day one, with no gaps or uncertainty for existing heat networks customers.
The introduction of a special administrative regime is similarly welcome. But, again, the test will be in its delivery. Consumers must have confidence that, should a provider fail, essential heating will continue uninterrupted, particularly for households in the winter months. The demand and use of heat networks will continue to play an increasingly important role in our energy system, and it is vital that this regulatory framework is implemented swiftly and effectively. Consumers must be able to rely on heat that is affordable, transparent and properly overseen. Without that assurance, the sector will not expand at the scale required.
These regulations take us closer to a regime that commands consumer confidence; the task now is to ensure that the protections set out in the Energy Act are delivered in practice for the half a million households that depend on these networks.
Lord Whitehead (Lab)
I thank noble Lords for their valuable contributions to this debate. A number of them go to the heart of why we are doing what we are doing today: the question of the state of many of the older heat networks that exist in this country. They are very far from the sorts of standards that we would expect to bring forward in new heat networks, and they have often operated with very sub-optimal arrangements for many years, to the considerable detriment of customers.
Therefore, the regulatory regime that we are introducing should give an enormous amount of succour to those who have suffered under those heat networks over a long period. As mentioned by the noble Baroness, Lady Bennett, there are heat networks from the 1960s and the 1970s which simply have not updated what they do, and they will be held accountable for what they do in these networks by the new regime under Ofgem. Ofgem can introduce fines for the systems if they are found wanting and, as a measure of last resort, can ensure that those networks are transferred to the running of another organisation entirely.
The noble Baroness, Lady Bennett, also mentioned the report encompassing a number of these issues from Citizens Advice, and that is why its work as a consumer champion is so important. I can assure the noble Baroness that Ofgem will be ready for regulatory commitments. It has raised no questions about its capacity to introduce these regulations and to make sure that they work to maximum capacity from day one. Ofgem will, however, take action such as collecting pricing data and various other things to refine how the regulations may work over the early period of their operation.
I can assure the noble Baroness, Lady Bloomfield, and the noble Earl, Lord Russell, and all the noble Lords who raised concerns, that Ofgem will therefore be ready for regulatory commencement. Ofgem will be publishing what methodology will be used to determine reasonable pricing. This has recently been consulted on by Ofgem. However, the exact benchmark of what is considered fair pricing will not be published first, so that heat networks do not move their prices to the top of that benchmark.
Overall, therefore, I assure noble Lords that the scheme will work to the best of its design and ability from the word go and will properly encompass all the many and varied types of heat network we have in operation, with a view to bringing them all up to the same standard, rather than down to the same standard, for the future. Indeed, the instrument simply builds on previous regulations by introducing amendments that will expand the authorisation regime that Ofgem will implement. We have also heard mention of deemed contracts, which will be in place to ensure that the rights of households and their supply of heat are protected, even when there is no formal contract in place.
I am sure noble Lords will want to join me in thanking the District Energy Association heat authority, which tried to put a voluntary system into operation to secure compliance and uprating of systems. That has worked for 10 years. In itself, it has worked very well, but it encompasses only part of the heat network arena. This will cover everybody, so it will be a great step forward in that respect.
On the question of consultation, I understand that the four public consultations that have already taken place, dating back to February 2020, have informed the regulations, but the detailed Ofgem authorisation conditions and associated guidance are still being consulted on and will certainly be published before the authorisation regime commences on 27 January.
In conclusion, I consider that these regulations, which will include the most vulnerable, will now make sure that pretty much everybody enjoys statutory protections. Heat networks are indeed the future, and we must do everything we can to support their growth and instil confidence in that growth as it takes place. Sound and proportionate regulation is therefore central to delivering this and I beg to move.
Baroness Bennett of Manor Castle (GP)
One of the responses provided by the Minister provoked a question in my mind; at this point, I should perhaps declare that I am a vice-president of the Local Government Association.
The Minister said that there would be fines for systems—we were talking in particular about those long pre-existing, 1960s and 1970s-type systems—and that they could potentially be transferred to another authority. Of course, many of these systems will be owned and run by either councils or arm’s-length organisations that used to be owned by councils or housing associations. I will understand if the Minister wants to write to me, but are the Government considering the fact that many of these will not be commercial providers?
Lord Whitehead (Lab)
The noble Baroness makes a good point in relation to what are, as I have said, a huge number of systems of very different quality and status. Making regulations in respect of those sorts of bodies is very difficult, because they are all mini electricity or gas networks in their own right; indeed, they are mini networks that could fall by the wayside if they are regulated in a way that is not sympathetic to their particular arrangements. Noble Lords can see, I think, that these arrangements do not exactly coincide with what is in the existing gas and electricity sectors, but do try to take account of those particular circumstances.
Within that, there is a serious bottom line: these bodies must provide good value for their customers, provide good levels of redress and ensure that they are operating to the best of their capacity. Those are the sorts of things that Ofgem will ensure are looked at and regulated properly, with an eye on the fact that heat networks are not in the same position as electricity and gas networks. That bottom line is there in these regulations and should not be set aside easily. Otherwise, Ofgem will certainly be doing the business of ensuring that those bodies work properly.
I think there is nothing further for me to say, other than that I commend these regulations to the Committee. I hope, by the way, that what I have said this afternoon satisfies the noble Baroness, Lady Bennett, as far as her question is concerned; if she has any further concerns, I will be happy to write to her.
Oil and Gas Authority (Carbon Storage and Offshore Petroleum) (Specified Periods for Disclosure of Protected Material) Regulations 2026
(1 day, 21 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Lord Whitehead
That the Grand Committee do consider the Oil and Gas Authority (Carbon Storage and Offshore Petroleum) (Specified Periods for Disclosure of Protected Material) Regulations 2026.
The Minister of State, Department for Energy Security and Net Zero (Lord Whitehead) (Lab)
My Lords, these technical regulations were laid before the
As set out in the Energy Act 2023, carbon storage licensees are responsible for complying with various obligations, including the reporting of information and samples obtained through the conduct of licensee authorities to the NSTA. We believe that the wealth of data that carbon storage licensees gather during exploration or storage activities is a national resource and its publication will accelerate the deployment of CCS in the UK. That is why we introduced the Oil and Gas Authority (Carbon Storage) (Retention of Information and Samples) Regulations 2025, which came into force in May 2025. These regulations specify the types of information and samples that carbon storage licensees must retain and the periods for which they must retain them.
The regulations we debate today set out when the NSTA can publicly disclose carbon storage information and samples provided to it by carbon storage licensees, and which types of information and samples may be disclosed. They also amend when the NSTA can publicly disclose information on the drilling or operation of wells under offshore petroleum licences. The timeframe for this was set out in the Oil and Gas Authority (Offshore Petroleum) (Disclosure of Protected Material after Specified Periods) Regulations 2018—try saying that in one breath—and this amendment to the 2018 regulations will bring the NSTA disclosure powers across CCUS and offshore petroleum into alignment.
Information and samples play a very significant role in the UK carbon dioxide storage industry, and access to high-quality data for the NSTA, industry, academia and the public will enable efficient use of the UK’s storage potential. The carbon storage information and samples published will support sharing of knowledge and lessons learned, including best practices and innovation, ultimately leading to cost reductions and advancement of the sector. This includes accelerating the North Sea energy transition. The NSTA helps drive this transition by realising the significant potential of the UK continental shelf as a critical energy and carbon-abatement resource. These regulations will further provide opportunities for the industries based offshore, with the very significant potential that exists for storing carbon dioxide in depleted oil and gas fields and other geological formations in the UK continental shelf.
The NSTA has consulted on both the carbon storage and offshore petroleum aspects of these regulations. The consultation on the amendment of well data confidentiality closed in September 2022 and a response was published in February 2023. The consultation on the proposed regulations for the disclosure of carbon storage information and samples closed in April 2024. That consultation will ensure that the regulations are effectively introduced. A response was published in October 2025. This means that the feedback received from those consultations was positive and has been carefully considered in shaping these regulations to ensure that they reflect industry needs and best practice.
CCS is not optional; it is essential for Britain’s energy security and industrial competitiveness, and for our clean-power future. These regulations may be technical, but their impact is profound. They unlock a wealth of data that will accelerate deployment, drive innovation and maximise the UK’s carbon storage potential. This is about making Britain a clean energy superpower, safeguarding jobs, securing investment and delivering net zero in a way that strengthens our economy. I urge the Committee to approve these regulations without delay.
The regulations reflect extensive consultation and positive engagement with industry and stakeholders. They are practical, robust and future-focused, designed to ensure that the UK remains at the forefront of clean energy technology. This is about more than disclosure; it is about delivering on our net-zero commitments, safeguarding energy security and creating opportunities for growth and jobs in the industries of tomorrow. I beg to move.
Lord Hunt of Kings Heath (Lab)
My Lords, I very much welcome the regulations and totally agree with my noble friend about the importance of CCUS to meeting our net-zero targets. Only a few weeks ago, the Whitehead review made the same point about GGRs: you cannot achieve net zero without this. I look forward to my noble friend responding to the Whitehead review and no doubt accepting all its recommendations.
These regulations seem to fall within what the review said about regulation. Certainly, I very much agree that this is an important element for market investment and certainty. Paragraph 5.4 of the Explanatory Memorandum says that the UK continental shelf holds
“an estimated 78 billion tonnes of theoretical CO2 storage capacity”.
Clearly, there is huge potential for the UK. The Explanatory Memorandum mentions that, potentially, there are many countries that we could reach agreement with for storage in the UK continental shelf. So, can my noble friend tell the Committee the extent to which we are now in discussion with some of our European neighbours about the huge potential of storage in the North Sea?
Earl Russell (LD)
My Lords, we welcome these regulations, which seek to establish a necessary legal framework for the public disclosure of protected carbon storage information and samples. These are crucial steps towards fostering a transparent culture in the UK’s nascent carbon capture, usage and storage—CCUS—industry. As has been said by others, CCUS is essential for the UK to meet its net-zero carbon targets and budgets—particularly as set out by the Climate Change Committee—and the sector is projected to support up to 50,000 jobs and significant future economic growth. As has also been pointed out, the UK’s continental shelf is estimated to hold up to 78 billion tonnes of theoretical CO2 storage capacity, so this is essential in helping us meet these targets and creating the green jobs and growth of the future.
We support the principles of transparency set out in Parts 2 to 4 of the regulations, which govern the storage data obtained by the OGA, operating as the North Sea Transition Authority—the NSTA. We welcome the approach, as set out, of clarifying data based on levels of commercial sensitivity; this is sensible and pragmatic. We also welcome the decision that non-commercially sensitive items will be published straightaway. For more sensitive material, the NSTA has established clear and time-limited protection periods before disclosure. For example, detailed well information, protected carbon storage samples and computerised model information may generally be disclosed, but only after a period of two years. These two years are designed to protect licensees with sufficient exclusivity for the data they have paid to acquire.
On the regulations that relate specifically to the two-year period for the disclosure of computerised model information—relating specifically to the creation of CO2 storage models that stimulate flows of fluids in storage complexes—the NSTA has acknowledged the need for further detailed consultation. Does the Minister know when those further consultations might be completed?
Other data is classified as highly sensitive, particularly in relation to storage resource information, quality of CO2 that could be stored and substrate geology—that kind of thing. I note that the NSTA provides the ability, but not the obligation, to disclose protected material, so licensees will have an opportunity to make representations concerning the delay or withholding of disclosure. That protective mechanism is important, and I recognise the need for it in the regulations, but I simply ask the Minister: what is the minimum timeframe for representations that the NSTA will guarantee to licensees before commercially sensitive protected material is disclosed?
We generally welcome these regulations and think that they are crucial for the development of this sector. This instrument is crucial for safety and for ensuring that there is a balance between the sharing of information and protecting what is commercially sensitive. We feel that, in general, the balance is in the right place here. We support these regulations as they will help underpin the successful, transparent and efficient development of the UK’s potential CCUS industry. But we urge the Government to address these essential questions of implementation, technical definition and scope, in order to ensure that the regulations achieve their full potential.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank the Minister for introducing these regulations. As has been explained, these are technical measures designed to update the periods during which information relating to carbon storage licences and offshore petroleum wells remain confidential, and to ensure a more consistent and timely approach to public disclosure. We recognise the intention behind the instrument: improving the flow of information, supporting effective regulation and giving industry greater clarity and certainty.
We on these Benches recognise the importance of transparency, accuracy and timely publication of data in the offshore sector. Carbon capture and storage will continue to play an important role in meeting the UK’s future energy needs, and the North Sea will remain central to that effort for years to come. It is therefore right that the regulatory framework keeps pace with technological and operational developments and that that information is accessible and consistent across the sector.
Lord Whitehead (Lab)
I thank noble Lords for their valuable contributions to this debate. I will briefly try to address some of the important points made. First, perhaps I ought to knock on the head the possible suggestion from my noble friend Lord Hunt that I will be marking my own homework when it comes to the review I undertook a little while ago of greenhouse gas removals. I can assure him that others in the department will be doing that, not me. Although I hope that they will take on board the things that are in the review, it is entirely up to them and not me to do so. But I reflect that that report, among other things, was very positive about the role that CCUS can play, particularly in developing our net-negative approach to net zero over the next period.
As the noble Lord mentioned, we ought to think for a moment about what an enormous asset we have in the North Sea as far as CCUS is concerned. An estimated 78 billion tonnes of theoretical CO2 storage capacity is distributed across the UK continental shelf, and that is one of the largest, if not the largest, potential CO2 storage capacity in Europe. Therefore, the UK has the opportunity to offer cross-border CO2 transport and storage services to neighbouring countries. We very much welcome interest from EU and EEA countries, and we are committed to exploring opportunities to overcome the regulatory barriers to cross-border CO2 transport and storage networks alongside neighbouring countries with common interests. Noble Lords will know what progress the Norwegians have been making in this area, so there is no time to lose with making this work as well as it can.
I thank the noble Earl, Lord Russell, for his questions. I appreciate the detail in his questions. In the interest of accuracy, I think it is best that I write to him, particularly in terms of the NSTA consultation. He will know that NSTA has already consulted very substantially on a number of these aspects, but it is true that some consultations are continuing. I cannot give the exact dates by which they will be concluded, but I am sure he will get a satisfactory answer when I send him a letter to that effect.
The noble Baroness, Lady Bloomfield, asked about investor confidence in CCUS. This is something we are taking seriously. A lot of this should have been underpinned by what has been happening with the track one cluster investments in CCUS. Very large amounts of money have been committed over the next 25 years to making those investments work fully. Therefore, from the UK Government’s point of view and an investor point of view, both sides should be completely clear that the UK is deadly serious about this. We are prepared to make the long-term investments and have the long-term infrastructure underpinning it to make the whole enterprise as successful as it can be in terms of the emergency we have in front of us for carbon capture and storage.
CCUS will complement our transition to home-grown clean energy. It will safeguard our energy security, and it will decarbonise power and industry in a way that drives growth. It is recognised as a core sector within our industrial strategy, which backs clean energy industries as a priority growth sector and is central to delivering our growth mission. I have mentioned that key to that is ensuring investor certainty in the process as it develops.
I will conclude by reaffirming that these regulations are not just a technical adjustment—very technical though they appear. They are essentially a strategic enabler for the UK’s energy transition. By providing both the public information and some investor security and clarity as the regulations come forth, I think we have got the right balance in making this happen as far as these regulations are concerned.
The Oil and Gas Authority (Carbon Storage and Offshore Petroleum) (Specified Periods for Disclosure of Protected Material) Regulations 2026 will unlock critical data, strengthen transparency and accelerate the development and deployment of carbon capture, usage and storage across the UK continental shelf. These regulations, as I have underlined, reflect extensive consultation and positive engagement with industry and stakeholders. They are practical, robust, future focused and designed to ensure that the UK remains at the forefront of clean energy technologies.
Producer Responsibility Obligations (Packaging and Packaging Waste) (Amendment) Regulations 2025
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, these draft regulations were laid before this House on 3 November. They amend extended producer responsibility for packaging, or PEPR, across England, Wales, Northern Ireland and Scotland. They represent a major step towards a circular, resource-resilient economy—one where producers take greater responsibility for packaging, and waste is designed out from the start.
Extending producer responsibility for packaging is the cornerstone of the Government’s once-in-a-generation recycling reforms. These reforms will increase the quality of the recycling that local authorities collect, support sustainable growth in the UK waste management and reprocessing sector, and reduce our reliance on material imported from overseas. As a result of the reforms, the waste management sector has committed to creating 25,000 new jobs and investing more than £10 billion in the economy. UK circular industries—those keeping products and materials in circulation for as long as possible—now deliver £67 billion yearly to the economy, and growth in this sector is more than double the rate of the overall UK economy.
The original PEPR regulations, introduced in 2024, created a framework for managing household packaging waste. They shifted the financial burden of disposal from taxpayers and local authorities to businesses supplying packaging. Producers must now cover the costs of managing their packaging waste and ensure that a proportion is recycled, with evidence provided to the regulator.
I now turn to the new obligations. These amendments aim to improve fairness, clarity and operational efficiency, responding to feedback from producers, local authorities and stakeholders, while aligning with international best practice. I will highlight three key reforms. The first is the appointment of a producer responsibility organisation, or PRO. We are enabling the appointment of a producer responsibility organisation from 2026—a very significant development. The PRO will be an independent not-for-profit body, established with the support of producers, to take on core responsibilities for the operation of the PEPR scheme. This responds to industry requests and mirrors successful models in countries with mature extended producer responsibility systems. The PRO will operate under conditions agreed by the four Governments and work closely with PackUK, the scheme administrator. Sovereign functions, such as data ownership and fee-setting, will remain with PackUK.
Secondly, I speak to the expansion of offsetting provisions. Large producers operating closed-loop recycling systems for food-grade plastics—where they collect and reprocess their own food-grade plastic waste—can now deduct these tonnages from disposal cost obligations. Eligible producers may resubmit 2024 data and receive revised invoices for 2025. We are doing this because we want to increase the recycled content in food-grade plastics. Despite sorting techniques, it is currently difficult for local authorities to keep plastic that is intended for food contact separate from other types of plastic. The result is that food-grade plastics often get downcycled, so we lose this valuable material. Closed-loop systems preserve valuable material and reduce reliance on virgin plastics, supporting the UK’s move towards a circular economy.
Thirdly, there are technical amendments for clarity and enforcement. These include material definitions, with fibre-based composites with plastic layers of 5% or less by mass being treated as paper or card, simplifying reporting and fee calculation; producer class obligations, introducing clearer rules on responsibility transfers during mergers or ownership changes; and enforcement, giving stronger powers to tackle free riders—businesses meeting thresholds but failing to register or report. PackUK can now recover costs for historic non-compliance. Regulator fees are being updated to reflect inflation, increased activity and new services, such as the recyclability assessment methodology and digital infrastructure. Lastly, local authority cost modelling will be improved to ensure that payments deliver environmental outcomes.
Baroness Redfern (Con)
My Lords, I thank the Minister for his introduction to these regulations and also declare that I am a vice-president of the LGA and a past leader of a local authority. I welcome and note this statutory instrument creating an obligation on businesses that supply household packaging and managing the packaging once it has been discarded, to enhance to environmental protection, and for producers to demonstrate how they can work with the general public so that more products can be recycled and, importantly, to make packaging environmentally sustainable and, we hope, more easily recyclable—with, inevitably, lower fees charged.
Importantly, the instrument also mandates producers to make more sustainable decisions at the product design stage. That means more costs for businesses to take in, so, on the counter side, what support will His Majesty’s Government undertake to incentivise employers, helping them to increase their recycling target rates to deliver more carbon savings? Will this amendment refer to small, medium and large businesses on a sliding scale, or for any exemptions? I make a request in particular for extra support for our small businesses, as they are a lifeline in our supply chains to our economy.
Another point to make is: what assessment is being designed of how the household definition could be refined to capture fewer items of packaging disposed of by businesses? How are producers to offset fees for packaging that they produce when they collect and recycle packaging themselves? In particular, the amendments allow producers to offset fees for closed-loop packaging, easier on top of the existing exemptions. How will this be truly monitored? What acceptable range of evidence must producers provide for closed-loop packaging waste, which has been recycled before fees for packaging can be offset? I look forward to the Minister’s reply.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Baroness, Lady Redfern, and to thank the Minister for his introduction. I broadly welcome this statutory instrument, which is at least a baby step towards polluter pays—that those who profit from the production of packaging that causes such damage in our communities should at least deal with the costs of dealing with the waste, which is of course only one small part of the total environmental and public health costs of the packaging overall.
I will start with a couple of specific questions, following on from the noble Baroness, Lady Redfern, and then ask a broader, bigger question. As the noble Baroness said, a lot of the concern around this SI has been about the trade-off between closed-loop recycling systems, turning things back into food-grade recyclate, and how that will be monitored and audited. I note that a joint submission from the Wildlife and Countryside Link, the Environmental Investigation Agency and Everyday Plastic expressed concern about this and said that there was an absence of stringent and auditable evidence requirements, which could be a serious loophole.
We have to look at this in the context of how much sheer corruption and fraud we have in the waste sector. I can see one noble Lord frowning at me in puzzlement, but of course there is the 10,000-tonne waste mountain beside the River Cherwell in Kidlington in Oxfordshire and the 25,000-tonne one in Bickershaw in Wigan, which are believed to be illegally dumped waste. There are widely thought to be huge problems of lack of control and oversight.
In that context, I note the concerns expressed by our Secondary Legislation Scrutiny Committee about the resources available to the Environment Agency in England. It also refers to the other agencies, but I will refer just to England as that is within our purview. I note that the committee suggests that we press the Minister on whether Defra is confident that the regulators will have sufficient information—and, I would add, whether they will have the resources to process and deal with that information. We all know how incredibly stretched the Environment Agency is. Is it actually being given more resources to deal with this SI? That is my very specific question.
I have another specific question. I spoke about the corruption in the UK waste management sector, but significant quantities, particularly of plastics, have been shipped overseas. They are not being recycled at all and are causing huge environmental and public health issues, often in global South countries. So my specific question is: will companies be able to use a closed-loop recycling system that operates overseas, and how do the Government expect the Environment Agency in England in particular to manage that overseas information?
I turn to my second set of questions—it is one big question, really. The Minister said in his introduction that this was a once-in-a-generation action. I really hope that that is not true because, as I said, this deals only with the producers paying for the disposal of the waste. It does not cover all the environmental, social and public health damage done by the creation of that waste in the first place: by the resource extraction, the use of energy and climate emissions.
I am not sure whether the Minister is aware of a WWF UK report from 2021, Packaging Unwrapped, which spells out in great detail the different forms of packaging and what we know—and, importantly, do not know—about the damage they do. Looking at aluminium and steel, it talks about the lack of data on the damage done by mining and the energy use in their production, very often of course in the global South. On paper packaging, it talks about how much paper is imported from Indonesia and the potential, though little-documented or undocumented, links to deforestation there.
Right along the line, there are public health issues with the many thousands of chemicals added to plastics, all of which have public health implications. I hope the Minister will acknowledge that none of that is included if you just make companies pay for the waste disposal. Are the Government looking at further ways to make sure that the genuine full cost of the packaging is indeed paid by those who are profiting from its use?
Baroness Grender (LD)
My Lords, I thank the Minister for setting out these regulations and the noble Baronesses, Lady Redfern and Lady Bennett, for their important and interesting contributions. These regulations mark the next step towards the vital circular economy that many of us have advocated for over many years, rightly shifting the cost burden for packaging waste away from council tax payers and local authorities and towards those who place that packaging on the market in the first place. That direction of travel is welcome, but there are serious concerns about how the transition will work in practice, especially given the speed of the introduction, and especially for small producers and the already stretched hospitality sector.
The aims of extended producer responsibility—to reduce waste, increase recyclability and make the “polluter pays” principle real—are ones that the Liberal Democrats strongly support. The moves to refine the 2024 framework and establish a clearer role for a producer responsibility organisation can, in principle, help to deliver a more coherent and efficient system. However, from the outset, there have been calls from across the industry for a more phased, proportionate transition that recognises the very different capacities of large brands and small producers to absorb new costs and navigate complex reporting requirements. For smaller producers, this is not a marginal administrative adjustment; it is a potentially significant new cost arriving on top of energy bills, wage pressures and squeezed demand. Many smaller producers do not have in-house compliance teams, but my understanding—unless the Minister can correct me—is that they will be expected to collect detailed packaging data, interpret nuanced recyclability rules and manage new fee structures that still remain, in part, uncertain.
The concern is that, if this instrument’s timetable is implemented in its current form, some smaller producers and niche food and drink producers may find themselves priced out, not because they are unwilling to play their part but because they lack the capacity to manage the complexity and volatility of the new regime. For instance, this scheme has been described, in the voice of hospitality, as
“a well-intentioned environmental policy that’s become a margin killer for hospitality businesses”.
Indeed, the hospitality sector illustrates the risk starkly. Pubs, cafés, hotels and restaurants report feelings as if they are paying twice: once through higher prices, as suppliers pass on their producer obligations, then again through existing commercial waste contracts for exactly the same packaging. This flows from the way in which household packaging is defined, which can sweep in materials that never go near a household bin and are handled entirely as commercial waste.
As I think will be clear from all noble Lords’ speeches, we all desperately want these aims to succeed, but we hope that the Government recognise the concerns about implementation. May I ask the Minister some specific and, I hope, helpful questions? First, what changes, whether through the threshold, fee modulation or phased implementation, will the Government consider to ensure that small producers are not driven out, driven to worse packaging decisions, lowest common denominator options, or forced to consolidate solely because of the cost and complexity of compliance under these regulations?
Secondly, what steps will be taken, and on what timescale, to address the issue of paying twice issue—especially for the hospitality sector—so that operators are not charged both through their supply chains and through existing commercial waste arrangements for the same packaging?
Thirdly, will the Minister commit to publishing a clear, segment-by-segment impact assessment covering small producers and hospitality businesses specifically; and to reviewing the scheme after its first full year of operation, with a view to adjusting it where disproportionate burdens become evident?
Finally, on the evidence given to the Secondary Legislation Scrutiny Committee by the Wildlife and Countryside Link, the Environmental Investigation Agency and Everyday Plastic, as described by the noble Baroness, Lady Bennett, what consideration have the Government given to piloting—in the first instance, with some of the larger producers—to ensure confidence that the information streams and the system are robust, that the reporting is robust and that the loopholes are closed, before rolling this scheme out to the smaller producers I described earlier? I look forward to hearing the Minister’s responses to these questions.
Lord Roborough (Con)
My Lords, I too thank the Minister for introducing these amended regulations. I begin by acknowledging that they make a number of sensible technical adjustments to the extended producer responsibility scheme. They show some movements in response to concerns raised by industry, and they are broadly welcomed on that basis. However, the underlying concerns repeatedly voiced by stakeholders have not yet been fully addressed. This is particularly acute in two areas: the treatment of glass within the cost recovery model; and, as also highlighted by the noble Baroness, Lady Grender, the emerging problem of double-charging in food, drink and hospitality businesses.
Lord Katz (Lab)
I thank all noble Lords for their valuable contributions. I am glad to have the opportunity to close this important debate and to have heard a range of views. It is clear that we are all passionate about this topic and I acknowledge that the principles behind PEPR, which began in 2024 before this Government but which we are carrying on, are taken as a good thing across the Committee. We are trying to meet its aims with sincerity, working with industry, local authorities and waste collectors.
I turn to the comments and questions raised. The noble Baroness, Lady Redfern, asked about the impact on small businesses. It is worth noting that many PEPR schemes around the world offer no exemptions from their obligations for small businesses, whereas in the UK we have some of the most generous measures for small businesses across any packaging scheme globally. The exemptions that we are applying in this scheme will apply to approximately 70% of businesses supplying packaging in the UK, which recognises that we want to support small businesses rather than price them out of the market, as the noble Baronesses, Lady Redfern and Lady Grender, referred to.
A number of contributions focused on the concerns raised by the Secondary Legislation Scrutiny Committee, particularly around whether regulators would have sufficient resources to carry out their functions effectively. The charges in this scheme were calculated based on the expected activities required effectively to undertake regulatory duties, using assumptions on the time these would take based on the experience of regulating similar sectors and the fixed cost of delivery. As the system embeds, regulators will continue to review operational delivery costs to ensure that there is effective recovery. Environment Agency enforcement resource is covered by grant-in-aid funding from Defra.
As well as provision to increase charges by inflation with the consumer price index, there was additional regulatory provision to allow regulators to seek approval to supersede the charges by introducing a charging scheme made under the Environment Act 1995, the Waste and Contaminated Land (Northern Ireland) Order 1997 or the Waste Management Licensing Regulations (Northern Ireland) 2003. Defra will continue to work closely with regulators on this topic.
The noble Baroness, Lady Bennett, in particular raised the question of having sufficiently robust information on producers’ recycling to make a fair assessment. Draft guidance on reporting requirements will be published on GOV.UK before Christmas, ahead of the regulations coming into force. The regulator does not usually stipulate the specific documents required but will provide examples and principles, as every producer is different and may therefore have access to different evidence. Guidance will develop over time to reflect real-life examples presented by producers during compliance checks. For example, a producer could obtain written confirmation from their reprocessor outlining what percentage of the material collected and sent for recycling was actually recycled. This would need to outline the reprocessor’s method of determining this value and the regulators would expect the producer to have a documented process in place for validating this data. While these requirements apply only to the reprocessor and not the producer, these regulations put the burden of proof on producers as they are benefiting from the off-set.
In short, producers must maintain evidence that their closed-loop packaging waste has been recycled into food-grade plastic material under the closed loop system. There is no requirement for this evidence to be third party verified. Regulators will carry out their statutory duty to monitor compliance, as you might expect. I think the noble Baroness, Lady Redfern, raised that issue.
I turn to some of the wider comments of the noble Baroness, Lady Bennett, which she raised when we last discussed orders on plastic waste packaging and recycling in Grand Committee. She is right to hold the Government’s feet—indeed, everyone’s feet—to the fire on creating a true reuse circular economy. To be clear, when I spoke about once-in-a-generation reform, I was not talking specifically about this SI; this is a good SI, but this is not the be-all and end-all. I was talking about the system.
I want to be clear that the Government are committed to transitioning to a circular economy, and reuse will be an important part of that journey. To help make that happen, we will be launching a call for evidence early next year on reusable packaging. This will help us to understand what support and policies are needed to increase reuse. For instance, we are encouraging the glass industry to seek to reduce the cost impacts of PEPR through a transition to reuse and refill, something that used to be commonplace in the UK and continues to be in many other countries.
That brings me on neatly to some of the issues around glass and reuse. The noble Baroness, Lady Grender, and the noble Lord, Lord Roborough, both raised issues on dual-use packaging not being addressed in the SI. I want to reassure the Committee that the Government are taking this seriously. Minister Creagh met with leaders from industry groups affected by the dual-use issue earlier this year, and we recognise the strength of feeling. But we also acknowledge the need for a system that can be effectively monitored and enforced, given that the impact on the PEPR fees for packaging remains in scope of fees.
Workshops have been held over recent weeks to urgently and carefully identify options which address the issues, while maintaining the objectives of the scheme. Sector-specific working groups will test these proposals further. It is important to note that any amendment that exempts more packaging will increase fees for the material that remains obligated to the system. This is because the total cost producers need to cover collectively will not be affected by any such amendment. If there is less obligated packaging, the fee per tonne will increase.
Specifically on glass, there is a question about the problem of the cost in the scheme being calculated by weight, not unit. It is important to recognise that waste management costs are largely driven by weight. We have also taken account of other factors that influence collection costs, including the estimated volume of each material in bins and collection vehicles. It remains the case that glass is a heavy material with a low resale value. A unit of glass packaging costs more for local authorities to manage as waste than an item made of more lightweight and high-value materials.
On switching, major food and drinks producers have told us their view that there is little risk of short-term materials switching, owing to long lead times in changing packaging. Major supermarkets have categorically said that PEPR is not their main driver for changing packaging. Decisions on changes are likely to align with the policy objectives of moving to easier-to-recycle packaging, which, from year two of PEPR, will see a reduction in fees through eco-modulation.
There was a question from the noble Baroness, Lady Grender, on the impact of fees on differential sectors and an impact assessment. In October 2024 the Government published a full assessment of the impact of the PEPR scheme for packaging, including cumulative costs. This considered a wide range of different costs to businesses and included estimates of expected net annual cost to business for those obligated producers. This cost to business had not been split by the sector in which the producers and businesses engage in market activity, given the data’s availability, the commercial nature of data limits and the ability to provide a sectoral level assessment of impacts.
I assure noble Lords that the Government continue to work closely with industry to understand the impact of the upcoming fees on business as the scheme is implemented and rolls out. We are committed to the continuous improvement of the scheme and, where appropriate, will seek to adjust regulatory settings to address feedback from stakeholders.
That brings me to the end of most of the questions that were raised by noble Lords. The noble Baroness, Lady Bennett of Manor Castle, raised—I do not know what to call it—the atrocious illegal waste site on the A34. I want to reassure noble Lords, as it is obviously a topic of concern to many, that the Environment Agency is now working to ensure that the public and the environment are protected from potential impacts and to pursue the criminals responsible. Following new information on the risk of fire, planning work has begun to clear the site as soon as possible on a wholly exceptional basis. The Environment Agency and local partners are now working through the most effective way to manage this work. I confirm that a 39 year-old male was arrested on 25 November in relation to this and investigations are ongoing, so I cannot comment any further.
The noble Baroness, Lady Bennett, mentioned the situation in Wigan; I do not have anything about that in my notes, but I am happy to write to her with an update. This is of concern to those in Wigan and of as much concern to us as the situation in Kidlington, which was the case that, perhaps unfairly, attracted the most attention and news coverage. One awful and illegal fly-tip is as bad as another in my book, so I am happy both to write to the noble Baroness to update her on the situation and to ensure that we are able to keep noble Lords abreast of it. I hope that I have covered most of the issues—
Lord Roborough (Con)
I understand that this may be beyond the Minister’s notes today, but I asked whether there will be an opportunity to use technology more effectively in compliance and in enforcing these regulations. I am happy for the Minister to write to me on that, if he is willing, as well as on any broader opportunities for reducing the cost of both enforcement and compliance with technology.
Lord Katz (Lab)
I thank the noble Lord and apologise for missing out that question. Of course, as a principle, we are keen to use technology to make monitoring and compliance easier for everybody involved in the system. We are also keen to drive down the costs of compliance so that people can concentrate resources in the whole system on driving down waste and improving the reuse and recycling of materials. I do not have specific details, so I will undertake to talk to officials and perhaps write to the noble Lord with more detail about what we have in store there.
This amendment to the legislation is necessary to maintain the circular economy for packaging in the UK; to ensure that the key industry request for producers to be involved in running the scheme is taken forward; and, ultimately, to ensure that materials and products are kept in use for longer. I trust that noble Lords understand and accept the need for this instrument. Once again, I thank everyone for their contributions.
Building Safety Regulator (Establishment of New Body and Transfer of Functions etc.) Regulations 2026
(1 day, 21 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Taylor of Stevenage
That the Grand Committee do consider the Building Safety Regulator (Establishment of New Body and Transfer of Functions etc.) Regulations 2026.
Relevant document: 44th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, I want to take this opportunity to congratulate Andy Roe, who has been leading the work to improve the performance of the building safety regulator and whose peerage was announced on 11 December.
The establishment of the building safety regulator was the most significant reform of the building safety regime in decades. The building safety regulator has removed significant risk from the system and placed residents at the heart of housebuilding. The regulator is an important and non-negotiable part of our built environment, particularly as we deliver 1.5 million homes and accelerate the remediation of unsafe buildings.
The BSR was first established within the Health and Safety Executive. The HSE provided invaluable leadership and experience during the establishment and early operations of the BSR. It is now time for a new phase for the BSR. In June, my department announced reforms to the regulator, including investing in strengthened and dedicated leadership for the BSR; operational improvements, including the creation of a new innovation unit to improve the processing of gateway applications; and bolstered, long-term investment in the capability of the BSR and its capacity to work with industry. Alongside this, we announced the intention to move the BSR out of the Health and Safety Executive, establishing it as an arm’s-length body of the Ministry of Housing, Communities and Local Government. That is the specific purpose of these draft regulations.
These regulations set up a new arm’s-length body sponsored by MHCLG that will exercise the functions of the building safety regulator, as established under the Building Safety Act. The regulations transfer the functions of the building safety regulator from the Health and Safety Executive to this new body. The provisions of these regulations will come into force on 27 January 2026.
The regulations enable the smooth transfer of powers so that the BSR has the legal basis to continue to perform its functions without interruption. They include transitional provisions to cover the period where staff and services will move over in stages from the HSE to the BSR. The regulations provide that the BSR will maintain its operational independence, with its own powers, strategic plan and programme of work, as outlined in the Building Safety Act. This move does not change the functions of the regulator or the ministerial powers and responsibilities set out in the Building Safety Act.
This change will support the building safety regulator for the coming years, strengthening accountability and providing a singular focus and dedicated leadership for building safety regulation. Importantly, this is also the first step towards establishing a single construction regulator, a key recommendation of phase 2 of the Grenfell Tower Inquiry. The new body for the building safety regulator will form the basis of the single construction regulator. The regulations will make sure that the building safety regulator continues to deliver its statutory functions under the Building Safety Act, while leading it into a new era. This will provide the foundation for a stronger, more accountable system that prioritises safety while supporting innovation across the built environment.
I hope that noble Lords will join me in supporting the draft regulations, which I commend to the Committee.
Lord Young of Cookham (Con)
My Lords, I join the Minister in congratulating Andrew Roe on his peerage. The experience that he will bring to your Lordships’ House from London Fire Brigade and the building safety regulator will be enormously welcome.
This instrument was debated in another place last week, on 10 December, and it completed its consideration in 12 minutes. On 11 December, the Industry and Regulators Committee produced its report, headed Building a Better Regulator. Within that report is a chapter on exactly the subject that we are debating this afternoon—namely, the single construction regulator—and it gives the background to the decision to which the Minister referred: the need to have a single construction regulator. It goes on to say that witnesses were broadly supportive of the proposal for the single regulator, with several suggesting that the current system was “fragmented”.
However—and this is the point that I want to make in this very short intervention—there were notes of caution. The Chartered Institute of Architectural Technologists argued that
“it is more important that these functions be delivered effectively, than that they be delivered by a single body”.
The institute suggested that the priority should be addressing current regulatory challenges rather than merging functions. Philip White questioned whether this was the right time to establish it and, as with the BSR’s move from HSE to a body within MHCLG, he argued that the organisational change would lead to “disruption”, while suggesting that the regulator would do its best to
“keep business going as usual”.
The Select Committee listened to that argument and to the argument for going straight ahead, and concluded, in paragraph 106:
“We support the Government’s broad proposal to establish a single construction regulator. However, we heard concerns that organisational changes could distract from the immediate imperative of improving operational performance. The implementation of this further organisational change should wait until the BSR is delivering its building control decisions within statutory timeframes”.
As we know, that is not what it is doing, so the question that I want the Minister to answer is: why is she going ahead, it seems, in defiance of a very clear recommendation from a Select Committee? I appreciate that it reported last week, after the instrument had been laid, but none the less it is a clear recommendation that we should not go ahead in January. I wonder how the Minister would respond to that clear recommendation from a unanimous report by one of your Lordships’ Select Committees.
Lord Elliott of Ballinamallard (UUP)
My Lords, I will make a very short intervention. I was quite interested to hear from the noble Lord, Lord Young, about what the Select Committee said about this. Some noble Lords will be aware that I have taken an interest in this matter because of some communications I have received over the last few months in relation to delays in getting the building safety regulator’s approval, which have caused huge difficulties for the construction industry, the housing industry and individuals who want to move into a new property or premises.
In principle, I have no issue with a single construction regulator—on the basis that it will be an improvement. I am not yet convinced that it will be an improvement, because we have not seen that with our current system. I would like to see much better progress with the system we have before we move it to an arm’s-length body, because you sometimes lose a level of control with an arm’s-length body. I listened to the Minister indicate that there will still be a control mechanism. I am keen to hear what that control process will be because, if it is to be a more accountable system, it must be more accountable to both this House and the other place. Otherwise, we will not get the improvements that we are looking for and desire.
I am broadly supportive of having a single construction regulator, but we are not getting the process properly implemented as it is, so I am keen to know how it will be improved under the new process.
Lord Jamieson (Con)
I am sorry, but I am going to take slightly longer on this SI, because this is a really important issue. We have a housing crisis and a safety crisis in the UK, and we need to get both of them right.
The purpose of this SI is clear enough. Basically, it follows on from work that we did in the previous Government on establishing the BSR, which was established under the Building Safety Act 2022. That was brought forward by the Conservatives and it was the right thing to do. None of us wants to see again the horror of Grenfell, where 72 people lost their lives. The inquiry rightly set out that systematic changes were needed after the decades-long failure that allowed such a tragedy to occur. It is vital that any regulatory system created in the wake of Grenfell is rigorous, trusted and functional.
In principle, strengthening the clarity of responsibility is welcome and in line with the legislation brought forward by the previous Conservative Government. However, in practice, the regime that the SI seeks to underpin is already under severe strain. It is not working as intended. Developers, local authorities and construction professionals are encountering severe and sustained delays. According to the Construction Plant-hire Association, more than 150 high-rise residential schemes are stalled at the gateway 2 approval stage, with delays stretching not to two weeks but up to 40 weeks. London alone accounts for more than 60% of the affected schemes and these delays cascade down through the supply chain, leaving cranes, machinery and personnel—hired at enormous cost—idle while developers wait for decisions that should have been completed months earlier. Just as importantly, the risk of taking on new projects means that people are not doing them. This is about not only the idle projects out there but the projects that have not started.
The Government have promised 1.5 million homes in this Parliament, yet the evidence is overwhelming that they will fall dramatically short, with barely a third of the homes that should be completed actually to be completed and delivered. Experts across the board, from the OBR to Savills, the Home Builders Federation and Professor Paul Cheshire, agree that there is little to no chance of the Government hitting their target.
We now have the lowest number of additional homes in nearly a decade. The HBF states that housebuilding is flatlining at around 200,000 homes a year—far below the 300,000 required to get even close to the Government’s requirement. In London, the picture is dire: housing starts under the current mayor have collapsed, and the number of private homes under construction is projected to fall to just 15,000 by 2027.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank all noble Lords who have participated in this short but interesting debate. Of course, a number of judgments always have to be made about the right time to take action. The noble Lord, Lord Jamieson, is quite right to say that this builds on the work of the last Government. We all want the same thing here: we want the homes that people live in to be safe and for people to feel confident that the buildings they live in are safe.
I will pick up some of the points made. All three noble Lords who spoke raised similar points. I will start with the question of whether the transition to the new BSR governance arrangements will disrupt operations, because it is important. The noble Lord, Lord Jamieson, mentioned that undue disruption should be avoided, and I completely agree with that. The new team at the BSR is fully committed to this change and preparing for it. Maintaining a strong focus on operational delivery is its real priority. The plans to move the BSR into a new body within MHCLG are designed to have the minimal impact on current operations. Improvements in the BSR’s performance have been under way since August. Significant numbers of applications have been cleared, and new operating models are delivering dramatically reduced processing times. I think we are all very pleased to see that. It is right for the residents who are on the end of this, but it is also right for the industry, which has been waiting for this progress.
The noble Lords, Lord Elliott and Lord Young, both asked why we are going ahead with this now. It is very important that we make this commitment now to move at pace on implementing the recommendations of the Grenfell inquiry. We are taking early steps to prepare for regulatory reform by supporting the BSR to move into this new phase of its operations. The move to a new body accountable to MHCLG will deliver a dedicated focus for building safety and strengthen accountability to Ministers and Parliament, which is important. It also marks an important milestone towards our commitment to a single construction regulator. I do not think there is any disagreement in the industry that that is where we need to get to.
We are grateful for the very thorough report from the Industry and Regulators Committee on the building safety regulator. We are carefully reviewing it. As the noble Lord, Lord Young, said, it came out only on 11 December, so we need a bit more time to consider it. We will carefully review it and provide a full response to the committee early next year in line with the required timelines. I know there are notes of caution in the report about effectiveness, rather than a single body, but I know that the whole team is dedicated to achieving this without an interruption in performance, and with the performance improvements we have already seen. That will start the process towards a single regulator, which is important, but it is also important that it does not distract from operational performance.
I will give a brief outline of some of the performance improvements that have happened. Between 1 September and 24 November this year, a record 40 new-build applications were processed from the previous model case load, with the majority approved, allowing construction to begin on 10,000 homes. Cases received in recent months are being handled by the new innovation unit, which has dramatically reduced decision times by 20 or more weeks, compared with the previous peak of 38 weeks for approved new-build decisions. That is a dramatic improvement. Across all application types, overall performance also continues to improve, with a record 578 cases closed since August. Of course, we will continue to monitor this very closely.
Cases received in recent months are being handled by the new innovation unit, and that removes the reliance that the BSR had had on dispersed expertise. The innovation unit has dramatically reduced those processing times: as I said, by 20 weeks or more. Quality applications are essential to ensure that projects can progress. This is another area where there is a lot of dialogue between the BSR and the industry, and it has run webinars and sessions with developers to help them to understand what is needed by the BSR. That is a mutual dialogue. The BSR is continuing to support industry leaders; it is publishing guidance for applicants. But, of course, as we would all want it to say, it does not want to compromise on safety but wants there to be an understanding of what the expectations are.
We hope that moving the BSR to its own body will improve operations: the noble Lord, Lord Jamieson, referred to this. It will create clearer lines of accountability and allow the operational flexibility that comes from the BSR being its own specific organisation. I hope that will build on the record progress we have already seen since the changes made in June.
The noble Lord, Lord Jamieson, referred to the shortage of specialist fire and building inspectors, and some of the other specialisms that are required. We recognise the overall pressures on the building control system and on fire engineering capacity, which is why we have established the independent building control panel and the fire engineering advisory panel to look at the underlying issues and report back in the new year, so that we can fix the system as a whole.
We will work with the independent panel, the BSR and the wider building control sector to establish a shared, long-term, financially sustainable vision for building control services, so that they are able to provide assurance, inspection and enforcement activities that support housebuilding, cladding remediation, decent homes, net zero and social infrastructure ambitions. We have provided £16.5 million to support the recruitment of registered building inspectors to backfill those supporting the BSR and continue to look at options to grow the overall sector.
The BSR has also enabled certain class 2-registered building inspectors to take on some of the less complex, higher-risk building work, freeing up class 3-registered building inspectors to focus on new builds and remediation. A total of 125 cladding workers will be upskilled through the launch of the Construction Industry Training Board’s rainscreen facade installer training. I thank the Construction Industry Training Board for playing a strong hand in supporting work on this. Each year by the end of this Parliament, 100,000 construction workers will be recruited and will be overseen by the Construction Skills Mission Board. Across the board, maintaining the performance is key to this. Starting to move towards a single regulator is the right move to make now. We need to keep an eye on the performance and make sure that it is maintained.
In conclusion, the Government are committed to ensuring the safety of all residents. The building safety regulator has overseen a fundamental change in the built environment, and ensures safety is at the heart of housing. These regulations will enable the smooth transfer of the regulator from the Health and Safety Executive to its own body. I hope the Committee will welcome these regulations.