Draft Merchant Shipping (General Lighthouse Authorities) (Increase of Borrowing Limit) Order 2026
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The Parliamentary Under-Secretary of State for Transport (Keir Mather)
I beg to move,
That the Committee has considered the draft Merchant Shipping (General Lighthouse Authorities) (Increase of Borrowing Limit) Order 2026.
The draft order will assist in the replacement of the ageing and increasingly obsolete vessels belonging to the general lighthouse authorities by increasing the amount of borrowing they can access under the Merchant Shipping Act 1995. It is the second of an anticipated series of 10 similar orders.
As arm’s-length bodies of the Department for Transport, the GLAs perform a vital role in meeting the UK’s obligations under the international convention for the safety of life at sea. The UK has some of the busiest and most dangerous waters in the world, and the potential for calamity is clear. With over 85% by volume of UK imports and exports transported by sea, the importance of the work of the GLAs cannot be overestimated. They have been doing this work for hundreds of years and are world-class experts, but expertise is not enough. It is equally vital that they have modern, efficient equipment to support them.
The GLAs work their vessels extremely hard. Their average economic service life is 25 years. Replacement on these timescales is therefore business as usual. I am delighted to note that the first of a new generation of GLA vessels, the Northern Lighthouse Board’s Pole Star, was delivered on Christmas Day 2025. This represents a sea change from her predecessor, as she is a significantly more capable, greener and more comfortable ship. That is a tangible demonstration of the Government’s continuing investment in the GLAs to ensure they continue to have the right tools to deliver their vital statutory duties.
The cost of new vessels is what brings the draft order to this Committee today. The GLAs are funded by light dues, which are an hypothecated tax paid by commercial and other shipping interests. The GLAs are not paid for by general taxation and make no call on the UK Exchequer to meet their day-to-day operational costs. The Merchant Shipping Act 1995 recognised that GLAs would occasionally need additional borrowing to afford large capital purchases, but it also set a cumulative limit of £100 million on the amount that all three GLAs could borrow. That figure was first included in legislation in 1988. It was not changed until the first of these orders, approved by Parliament in 2024, increased the limit to £133 million. However, it did not recognise inflationary or other pressures, or changes in international financial reporting which resulted in other costs, such as fixed-price elements of contracts, being treated as “borrowing” in accounting terms. That figure also included all borrowing, regardless of source—commercial or Government.
In real terms, £100 million in 1988 is equivalent to £197 million today. The GLAs were able to keep comfortably within the original £100 million limit until the need to purchase new vessels meant that it is now insufficient to meet forecast borrowing requirements. However, the 1995 Act places restrictions on how and when the power to increase the limit can be used. First, increasing the limit requires advance approval from His Majesty’s Treasury. My colleagues accepted our case and have provided that approval. Secondly, the limit can be increased only by order, hence the statutory instrument before us today. Thirdly, the limit can only be increased by a maximum of £33 million at a time—that is, in a single order—as the Select Committee on Statutory Instruments advised.
Given those legal constraints, we need to increase the limit by the maximum £33 million once again. Additional orders will be required for future increases to ensure that the limit aligns with forecast GLA borrowing. We will submit these orders for parliamentary approval in due course.
I must stress that increasing the borrowing limit does not represent a commitment to new funding. Every vessel replacement project will remain subject to the highest levels of scrutiny under Department for Transport, Cabinet Office and HM Treasury spend controls and approvals. However, these orders are essential to enable the GLAs to fund new vessels through borrowing when they need them. I therefore commend the draft order to the Committee.
Greg Smith (Mid Buckinghamshire) (Con)
It is always a pleasure to serve under your chairmanship, Sir Desmond.
I am generally cautious about borrowing beyond our means, but on every organisation significant costs are sometimes imposed that require capital spending. The general lighthouse authorities have been looking after our seafarers for hundreds of years and do critical work to maintain their safety and welfare. Even though they may no longer have the same number of almshouses to maintain, or responsibilities for mariners’ widows and children to fulfil, they still play an enormous role in maintaining the operational network of aids to navigation around the United Kingdom and the Republic of Ireland. It is a tremendous legacy of British maritime history, and given the importance of the maritime sector, it is right that the GLAs have the resources they need to ensure safe passage for vessels.
In this case, I am aware that the draft order relates to a programme of vessel replacement needed due to many of them reaching the end of their service life. Having working vessels is of course an expense it is necessary to meet if the GLAs are to operate effectively, but can the Minister assure us that the types of vessel procured will be cost effective and that there will be no onerous procurement criteria that could increase costs?
I understand that there is no direct provision for UK Government funding, but that the Department for Transport covers the financial risk of the GLAs defaulting on their repayments. As the former maritime Minister said in the debate on the 2024 Order,
“This…does not expose the Treasury or the Department, because these are effectively loans to be paid back.”—[Official Report, Fifth Delegated Legislation Committee, 30 October 2024; c. 6.]
Although I am sure that the Minister is confident in the GLAs’ ability to manage their finances, in increasing the borrowing limits through 10 statutory instruments, has any assessment been made of the financial security of the organisations? For example, I understand that the minimum general lighthouse fund cash reserves are set at £20 million to cover costs. While the current level is greater than that sum, will the Treasury need to make any changes? Has the Department for Transport engaged with the lighthouse authorities to ascertain their confidence in paying back the borrowing? Has the potential long-term impact on light dues been assessed? Avoiding increases business costs is critical, and I am sure we want to avoid imposing a greater financial burden on shipping businesses.
The general lighthouse authorities have centuries of history, illustrating—some might say illuminating—their effectiveness in upholding the safety of mariners. It is essential that the Government act as the steward of this history and ensure that they remain operationally and financial viable.
Steff Aquarone (North Norfolk) (LD)
I shall speak briefly, first, to signify that the Liberal Democrats support the instrument. Secondly, I note that the increase widens the availability of funding options for Cromer lighthouse in my constituency, which has been keeping seafarers off the North Norfolk coast safe for nearly 200 years. Although it is no longer staffed and is instead operated remotely from a control centre in Essex, it still plays its part in the network of dozens of lighthouses and lightships that keep the seas safe and that we are supporting today. Many of those working dangerous maritime jobs live in the coastal communities they launch from, so the safety these lighthouses provide also reassures loved ones back on land in North Norfolk and in coastal communities across the country.
I also have in my constituency the only lighthouse in Great Britain that will not benefit from the draft order: Happisburgh lighthouse, which is Britain’s only independent lighthouse. After Trinity House sought to close it in the 1980s, the local community banded together and saved Happisburgh as a working light. Parliament passed the Happisburgh Lighthouse Act 1990 to allow that, and it continues to guide ships off our coast, funded by voluntary contributions. Painted in striking red and white stripes, the lighthouse welcomes locals and tourists travelling toward our beautiful coast. Perhaps the Minister will join me in congratulating the excellent team who keep Happisburgh lighthouse running, and share my hope that the light, which has shone since 1791, will shine for many decades to come.
Keir Mather
I will start where the Liberal Democrat spokesman left off and send everyone involved in the maintenance and continued use of Happisburgh lighthouse my sincere congratulations on keeping it going strong. I hope it continues to do so long into the future.
Responding to the points the shadow Minister made, I have met all the GLAs and remain confident in their capacity to manage this financial programme. I believe that they will make sure that when borrowing is undertaken, it is in a financially responsible way, and that they have the capacity to pay back borrowing in good time, owing to the close and thorough work Department for Transport officials have done with them on this programme. One vessel has already been brought to fruition in a cost-effective way, through a procurement process that I believe the authorities think worked well and served their interests, providing the vessel in a good timeframe. I have no concerns about the financial security of the GLAs, but if any arise, I will be sure to inform the shadow Minister, whom I thank for his general support.
We are an island nation, but I think we do not appreciate shipping’s importance to our economy and thus the importance of keeping seafarers safe. I hope you will indulge me, Sir Desmond, and allow me, on behalf of the Committee, to thank all seafarers and the staff of the GLAs, who go above and beyond to ensure that our vital marine aids to navigation remain operational. With the Maritime and Coastguard Agency and the marine accident investigation branch, our GLAs are recognised around the world for their world-class standards and expertise. The draft order and the others to come will support the purchase of vital new, modern vessels and other equipment they need to perform their statutory duties, and enable them to continue the work they have successfully done for hundreds of years of ensuring the safety of all mariners in UK waters.
Question put and agreed to.