Draft Human Rights Act 1998 (Remedial) Order 2026
(1 day, 13 hours ago)
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The Minister for Courts and Legal Services (Sarah Sackman)
It is a pleasure to serve under your chairship, Sir Desmond. The draft remedial order implements the decision of the European Court of Human Rights in the case of SW v. the United Kingdom. The order amends section 9(3) of the Human Rights Act 1998 to make damages available in relation to judicial acts done in good faith where the judicial act breaches the requirements of procedural fairness under article 8 of the European convention on human rights. The Government consider that amending section 9(3) in this way is the appropriate approach that ensures we meet our international obligations while respecting the principle of judicial immunity.
The background to SW v. the United Kingdom is as follows: the particulars in the case are that the applicant was a social worker who acted as a professional witness in childcare proceedings in the family court. The family court judge made adverse findings in his judgment as to the professional conduct of SW without giving the applicant adequate opportunity to respond and directed that the judgment be sent to the local authority to which the applicant was then assigned. The applicant’s assignment within the local authority was subsequently terminated.
In November 2016 the Court of Appeal found that the applicant’s article 8 rights had been infringed and set aside the findings. However, the applicant was unable to obtain damages due to section 9(3) of the Human Rights Act, which prevents the payment of damages for judicial acts done in good faith except in very limited circumstances. In 2021 the European Court of Human Rights subsequently found that there had been a breach of article 13 of the convention, which is the right to an effective remedy when read together with article 8. This is because the applicant did not have access to an effective remedy at the national level capable of addressing the substance of her article 8 complaint and by which she could obtain appropriate relief. The European Court of Human Rights awarded a sum in damages which has now been paid. We are obliged, as a matter of international law, to implement this judgment, which in this case requires legislative change to ensure that similar violations will not arise again in future.
The Human Rights Act contains powers in section 10 and schedule 2 to make amendments to legislation via a remedial order to address findings of the European Court of Human Rights. On 17 July 2025, the Government laid a proposal for a draft remedial order to make the necessary amendment to the Human Rights Act. The Government consider that this represents an appropriate measure to implement the findings of a breach of article 13 on the facts of this case. In November 2025, the Joint Committee on Human Rights reported on the draft remedial order. We are grateful for the Committee’s scrutiny and for accepting that this is a valid use of the power to make a remedial order and address the specific breach of article 13 that the Court identified in SW.
The Joint Committee was of the view that the proposed amendment was too narrowly drafted to prevent future breaches of article 13 where judicial acts infringe on convention rights. It recommended amending the order either by introducing principled exceptions to section 9(3) or considering removing the provision entirely alongside a number of other recommendations to amend the drafting. While we recognise the Joint Committee’s recommendation to go further, having examined these concerns carefully the Government decided to continue with the current approach for the order and implemented small drafting changes in response.
The implementation of this judgment should not be delayed any further as it has already been five years since the judgment became final. We have taken care to ensure that the draft remedial order appropriately addresses the incompatibility identified by the Court in SW while respecting the principle of judicial immunity. While the remedial order has not been amended as recommended by the Joint Committee on Human Rights, we have committed to undertake a review of the operation of section 9(3) separately to the implementation of this judgment in consultation with the judiciary, the Joint Committee on Human Rights and other relevant parties. I want to express my gratitude to the Joint Committee for its scrutiny of the proposal and its careful consideration of the more recent draft order. We welcome the Joint Committee’s recommendation that both Houses approve the order.
Hon. Members will have heard me mention the need to protect the principle of judicial immunity, and I just want to say a few words about that. Judicial immunity is a long-established common-law principle. An independent and impartial judiciary is one of the cornerstones of a democracy, and judicial immunity is an important safeguard of that independence. It protects judges from personal liability arising from acts carried out in the exercise of their judicial functions. Officials have had continued engagement with the judiciary during the drafting of this remedial order to ensure that they were fully sighted on our plans.
Given that the Human Rights Act applies to the whole of the United Kingdom, this order will apply UK-wide. Officials have been in contact with the devolved Governments during the process of drafting the order.
The draft order will ensure that damages may be awarded under the Human Rights Act in respect of a judicial act done in good faith where the judicial act is incompatible with article 8 on the grounds that it was done in such a procedurally defective way as to amount to a breach of the requirement to procedural fairness under that article.
Sarah Bool (South Northamptonshire) (Con)
It is a pleasure to serve under your chairmanship, Sir Desmond. As the Minister has set out, the regulations are being laid to implement the European Court of Human Rights’ judgment in SW v. United Kingdom, application number 87/18, to allow for damages in respect of a judicial act done in good faith where the judicial act is incompatible with article 8 of the European convention on human rights on the right to respect for a private and family life.
We are here today because, under section 4 of the Human Rights Act, when a provision of legislation is found to be incompatible with the ECHR a Minister may, under section 10, make an order to make such amendments to the legislation as the Minister considers necessary to remove the incompatibility. Remedial orders are therefore powerful legislative instruments used to amend primary legislation.
I wonder about the decision taken to make this change using a remedial order rather than primary legislation, given the time that has passed. The family court laid down its judgments in 2014 and the Court of Appeal in 2016, and the European Court made its ruling in 2021. The Government have argued the rationale is that they
“consider there is little prospect of finding suitable primary legislation to make an amendment in the near future”—
which is perhaps more revealing of the quality and suitability of much of the Government’s legislation during this Parliament. It is important to remember that the limitation in the Human Rights Act on the availability of damages in proceedings in respect of a judicial act done in good faith is there to preserve the principle of judicial immunity, a principle that is a key aspect of judicial independence—a cornerstone of a democracy. Any amendments to it therefore have to be carried out with the greatest care and consideration.
The debate today demonstrates the challenges that are faced by the two sovereign powers of the EU and the UK. It is becoming increasing clear that the ECHR repeatedly ties Ministers’ hands, blocking the democratic decisions of this place and frustrating the will of our constituents. The prime example: over 83,000 people have crossed the channel under Labour. I am afraid that the Government may have to recognise that as long as we stay shackled to the ECHR, foreign criminals can use the courts to block deportation, meaning that we will never be able to deter illegal channel crossings—[Interruption.] Do not worry, Sir Desmond, I am moving on.
I highly recommend to any member of the Committee the report by Lord Wolfson, the shadow Attorney General, on our position on the ECHR. As he says himself,
“the ECHR places significant legal constraints on the Government’s ability”
to address issues such as immigration. Leaving would allow us to
“legislate freely on any of the issues raised in this paper, without being tied to the expansive interpretation of human rights that has been developed by the European Court of Human Rights”
For as long as the European Court of Human Rights regards the ECHR as
“a ‘living instrument’ such that its decisions, and in consequence those of domestic courts, are not constrained by the actual wording of the ECHR itself”
we will have problems.
As a society, we can either continue to pass statutory instruments and orders piecemeal, as we are today, as the EU’s jurisprudence expands, or we can take decisive actions based on our own laws and the strength of this place.
Sarah Sackman
How regrettable that the Opposition could not waste an opportunity to engage in the point scoring rather than problem solving that is their ordre du jour. How sad, too, that their memories are so short—David Maxwell Fyfe, the distinguished Conservative jurist, was one of the architects of the European convention, which was such an important part of the post-war settlement and is now a vital pillar of documents such as the Good Friday agreement, which is so important to peace within these isles. It is so sad to see the Opposition seek to ally this country with the likes of Belarus, which is not a democracy in which I would care to live.
Sarah Bool
I invite the Minister to acknowledge that the interpretation the ECHR has expanded far beyond what was intended when it was first created in that post-war period.
Sarah Sackman
The ECHR contains some pretty basic principles: the right to privacy and the right to fair proceedings and a fair hearing. The Human Rights Act, one of the achievements of the previous Labour Government, brought rights home so that British people could enforce those universal inalienable rights in our domestic courts. How far the Conservative party has drifted. Here we are, seeking to make a forensic but much-needed remedial order, yet instead we hear bombast about ripping up the ECHR, together with the Good Friday agreement, to end up much like Belarus, one of the few countries outside the ECHR.
Anyway, here we are. Those are the political dividing lines and I commend the order to the Committee.
Question put and agreed to.
The Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026
(1 day, 13 hours ago)
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The Committee divided: - Ayes: 10 / Noes: 4 - Question accordingly agreed to.
The Financial Secretary to the Treasury and Paymaster General (James Murray)
I beg to move,
That the Committee has considered the Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026 (S.I., 2026, No. 809).
Should I speak now, Mr Stringer? I have not done a statutory instrument in a few months, so I am just recalibrating.
James Murray
Thank you for the quick explainer, Mr Stringer. It is a pleasure to serve on this Committee and to see you in the Chair.
The regulations form an important part of the legislative framework for the UK’s carbon border adjustment mechanism. The core framework for CBAM has already been set out in the Finance Act 2026, but the regulations provide further detail on two important aspects of its operation. Mainly, they establish how and under what circumstances liable persons can claim relief for charges paid under overseas carbon pricing schemes; they also provide additional clarity on how the CBAM rate should be calculated in practice.
CBAM is a new environmental tax that will apply from 1 January 2027. It will apply to specified goods in five highly traded carbon-intensive sectors: aluminium, cement, fertiliser, hydrogen, and iron and steel. The reason for introducing CBAM is clear: to support the UK to decarbonise, domestic producers face carbon costs that encourage investment in cleaner and more efficient production. Without CBAM, there is a risk that production and associated emissions will simply move overseas to jurisdictions with lower carbon costs, leading to what is known as carbon leakage rather than to a true reduction in global carbon emissions.
CBAM is designed to address the risk of carbon leakage by ensuring that imported goods face a carbon price comparable to what manufacturers would pay were they producing the same goods in the UK. In doing so, it supports our decarbonisation objectives and gives UK producers the legislative support that they have called for to bolster their confidence in investing in the transition to net zero.
The regulations put this idea into practice by creating a mechanism that ties the CBAM rate to domestic carbon prices. They set out that the CBAM rate is to be calculated by taking the quarterly mean average of the UK emissions trading scheme auction price, and how the free allocation adjustment is to be applied to reflect the upcoming phase-out of free allowances to domestic industry.
Luke Myer (Middlesbrough South and East Cleveland) (Lab)
Can the Minister explain why the Government are proceeding with the removal of free allowances when there is no contingency plan if the UK’s CBAM fails to prevent carbon leakage?
James Murray
The mechanism of removing free allowances is part of the transition to the new system. Under the new system, the CBAM price will ensure that those industries within the UK that are investing in decarbonisation are not disadvantaged by industries moving overseas. If the industries move overseas to areas that have a higher carbon intensity, they could be at an advantage relative to the industries here in the UK. It is about levelling the playing field for businesses operating in the UK.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
The Minister mentioned that fertiliser will be affected by the CBAM. Farmers are rightly concerned about how this will impact them. Some farming organisations have indicated that this might increase the price of fertiliser by up to £70 a tonne, which will obviously have a big impact on the price of food. When will the rate for fertiliser be set, and when will it be announced?
James Murray
Although fertiliser production is emissions-intensive, the effective carbon price paid by UK-based fertiliser manufacturers has been extremely low because of the allocation of free allowances to that sector. As a result, we expect initial liabilities to be very modest for imported fertilisers. To support transparency and to help businesses to prepare, the Government will publish illustrative CBAM rates very shortly, which will provide a clear indication of the likely scale of the charge that may apply to fertiliser imports when the CBAM comes into force.
I should emphasise that CBAM is not a protectionist measure, nor is it designed to raise revenue. Its purpose is to ensure that imported goods face carbon costs comparable to those that our domestic industry faces, as I set out in response to my hon. Friend the Member for Middlesbrough South and East Cleveland. It is therefore only right that, where the emissions embodied in an imported good have already been subject to qualifying a carbon price overseas, those costs are recognised and relief is made available. Importers of goods produced under schemes that align with the criteria, such as the EU emissions trading scheme or the Canadian federal output-based pricing system, should not pay twice for the same emissions. Those are just two examples; a list of all the national schemes that the Treasury recognises as qualifying carbon pricing schemes has been published on gov.uk.
The regulations establish the framework for claiming this relief. They define the characteristics of a qualifying carbon pricing scheme, set out how an effective carbon price should be determined and specify the evidence and independent verification required to support a claim for carbon price relief.
The Government remain committed to a full consultation throughout the development of CBAM, and that has included a technical consultation of the regulations before the Committee today. A small number of technical and clarificatory changes were made following that consultation, as is set out in paragraph 7.3 of the explanatory memorandum. Those changes improved the operation and clarity of the regulations without altering the policy intent. Engagement has not been limited to formal consultation. The Treasury and HM Revenue and Customs continue to work with domestic businesses, trade bodies, verifiers, international partners and other interested stakeholders and remain committed to ongoing engagement as CBAM comes into force on 1 January 2027 and beyond.
In summary, the regulations implement important aspects of the CBAM framework already approved by Parliament in the Finance Act 2026. They provide clarity on carbon price relief, including when it is available and how importers can calculate it, and they give transparency on how the CBAM rate will be calculated. In doing so, the regulations support the effective introduction of CBAM from 1 January. They help to protect against carbon leakage and they give businesses greater certainty about how the new tax will operate. I commend them to the Committee.
John Cooper (Dumfries and Galloway) (Con)
It is a pleasure to serve under your chairmanship, Mr Stringer. His Majesty’s loyal Opposition will oppose this legislation, but not because of the detail we have heard today, complex though it is, and which has been a long time coming, emerging inch by painful inch. Rather, we oppose this legislation in the round. The Conservatives’ intention is to scrap the carbon border adjustment mechanism as well as the emissions trading scheme. Committing to fully scrapping the carbon tax regime, the Leader of the Opposition said that it was “madness” to pursue the goal of preserving the environment by
“killing British industry and fatally weakening our national resilience.”
We are not alone. Many industry voices agree. Steel is one of the sectors most affected by CBAM. Frank Aaskov, the director of climate change policy at UK Steel, has said:
“The UK Government is knowingly driving towards deindustrialisation with its carbon border policy, while ignoring repeated, evidence-based warnings from industry.
As currently structured, the policy will favour overseas competitors over domestic steel producers, undermining investment decisions being taken now on decarbonisation.”
The Government’s ruinously expensive steel strategy—apparently keeping blast furnaces alight with bundles of taxpayers’ £20 notes—is in meltdown. CBAM is another hammer blow for this foundational industry, as with cement, chemicals and aluminium. Reindustrialisation is simply not possible while this Government inflict punitive energy costs on business and pursue a net zero agenda that is more concerned with green dogma than real-world practicality.
There is much talk from Government about food security being national security, but our pivotal agricultural industry is alarmed by CBAM and, as we have heard, by its impact on fertiliser. The umbrella body, the Agricultural Industries Confederation, warns that the fertiliser market operates across highly integrated European supply chains. The current lack of clarity risks creating unnecessary administrative burdens, pricing uncertainty and potential distortions between UK, EU and third-country suppliers. Industry estimates show that CBAM could add between £70 and £100 a tonne to the cost of fertiliser. That is a huge additional burden on an industry in which margins are already tight.
John Lamont
The shadow Minister’s excellent speech is making it very clear why farmers and other part of industry are concerned about the regulations. In response to my earlier intervention, the Minister said that he would be telling farmers the rates “very shortly”. Frankly, that is not good enough. Does the shadow Minister agree that farmers need that certainty now? They might not be able to get a definitive figure, but they need to know the date by which the rate will be announced.
John Cooper
My hon. Friend makes an excellent point. All businesses need certainty, and farmers are no different. They need to buy things in advance, so they need to know how much things will cost. It is about going back to the foundations. The additional cost of fertiliser is likely to link directly to higher food prices, which will affect all our constituents in a cost of living crisis.
What will be the impact of the measure on businesses? The explanatory memorandum to the regulations says that CBAM
“will have a significant impact on...10,000 businesses importing CBAM goods into the UK.”
As with every regulation, small businesses will face higher administrative costs relative to their turnover. However, the Government have not published a new impact assessment alongside the instrument. Could the Minister tell us why not? How can the Government claim that the tax information and impact note from November 2025 remains accurate, when we all know how much more precarious the situation for business is now than it was a year ago? Across industry and businesses big and small, warning lights are flashing on dashboards.
CBAM is a wrong-headed attempt at a solution to the failures of the carbon tax. The solution cannot be to add yet more burdens on Britain’s businesses to try to balance out the damage already done. The solution is to tackle the problem at source: to axe the carbon tax entirely, and the emissions trading scheme and CBAM with it, and to end the deindustrialisation of our country. This is the time to drive industry forward, not to hamstring it with additional costs that are deleterious and damaging to its very survival. The Government should think again.
Sadik Al-Hassan (North Somerset) (Lab)
The regulations set out how the carbon border adjustment mechanism will work in practice from 1 January 2027. In North Somerset, where residents care deeply about the environment, the principle matters. Imports should not escape a carbon price that UK producers already pay. As the Member for a farming constituency, I know that my farmers will appreciate the answers that my right hon. Friend the Minister gave earlier. Importers who have paid a genuine carbon price abroad can claim relief, but only under qualifying schemes, with independently verified data and six years of record-keeping. That guards against greenwashing and double-charging and is a sensible adjustment mechanism.
Pippa Heylings (South Cambridgeshire) (LD)
We Liberal Democrats support the carbon border adjustment mechanism. We have long supported action to support businesses, create incentives to prevent carbon leakage and ensure that the transition to net zero is both environmentally effective and economically fair. That is particularly important for farmers and agriculture, especially after the summer of extreme heat that we have just seen. Over the past five years, farmers have seen the worst three harvests on record, so tackling climate change is at the top of their mind. They are acutely aware; they are long-term planners and they know that we have to do what we can.
That point brings me to our two concerns about the Government’s decision to introduce the regulations in this way and at this moment. First, we are concerned by the inclusion of fertilisers without confirmation of the rate. That risks imposing substantial additional costs on a sector that is already under immense cumulative financial pressure. In the context of prolonged conflict in the middle east and the closure of the strait of Hormuz, as well as the climate change pressures that I have mentioned, farmers are facing rising costs, volatile incomes and significant uncertainty.
John Lamont
The hon. Lady is right to identify the big challenges that farmers are facing. The last thing they need is up to £70 or £80 a tonne being added to the cost of fertiliser. Surely the Liberal Democrats should oppose the regulations until we get some clarity from the Government as to what the financial impact will be.
Pippa Heylings
That is exactly the point that I am raising, which is about uncertainty. The National Farmers’ Union has estimated exactly that cost, which will ultimately be borne by British farmers. At a time when they face such volatility and uncertainty, we should be strengthening our food security, not undermining it. We would like the Government first to tell farmers what that rate would be.
Pippa Heylings
I will continue. We would also like the Government, potentially, to introduce a temporary derogation for imported fertilisers.
Unlike Conservative colleagues, we have a second concern about the slow progress in linking the UK and EU emissions trading schemes. Without that linkage, the UK CBAM will be more complex, more administratively burdensome and more costly than it needs to be. Businesses trading with our largest trading partner should not be forced to navigate unnecessary layers of bureaucracy because the Government have failed to make progress in this area. A linked UK-EU carbon market would make the system simpler, more efficient and more effective, so we call on the Minister to make securing ETS linkage with the European Union an urgent priority at the upcoming UK-EU reset meeting.
These are not objections to the principle of the carbon border adjustment mechanism. They are practical questions and improvements that would make the policy fairer for British farmers, less burdensome for British businesses and more effective in achieving its environmental objectives. If the Government want the mechanism to succeed, will they please ensure that it supports our climate ambitions and the long-term competitiveness of British agriculture and industry?
Robbie Moore
We are about to vote on a statutory instrument that will impose an additional tax on our farmers, going over and above the many other overheads that they are experiencing as a result of this Government. Fertiliser is already one of the most volatile and expensive inputs for many of our farmers and growers. Industry analysts project that the CBAM will add an additional £50 to £75 return on imported nitrous fertiliser, inflating farmers’ procurement costs by up to 20% to 25%. I would like to understand from the Minister what financial assessment the Government have made of the increase in costs associated with producing much of the food that this country likes to eat, and indeed much of the food that is exported too.
There is also a structural flaw. Analysis has rightly identified that CBAM applies a tax on fertiliser inputs but does not directly provide a tax on imported goods. It is putting a tax only on the fertiliser that our UK farmers are utilising to produce food in this country, not on the imported food that we are bringing into this country. It is therefore not creating a level playing field.
Lewis Atkinson (Sunderland Central) (Lab)
I was not in the House in 2021—I think the hon. Gentleman was—when the Conservative Government introduced the emissions trading scheme, which introduced the carbon levy on UK producers of fertilisers and other such produce. Is the hon. Gentleman against the ETS now, and if so did he speak against it at the time, or is he just against levelling the playing field for UK producers? What has changed?
Robbie Moore
The Conservatives are clear that we will vote against the implementation of the CBAM. We are against the increase in costs associated with this tax on our fertiliser. A level playing field must be generated, but that is not what this legislation will implement.
Robbie Moore
It is frightening that the Liberal Democrats will, I suspect, be voting today to impose an additional tax on our farmers on the cost of producing food.
Foreign growers outside the UK and EU can continue to use cheap, high-carbon fertilisers without penalty, while that food has direct access to UK markets and supermarkets, undercutting our British farmers. The UK has virtually no domestic mass scale fertiliser production left, so there is no option but to import that fertiliser into this country, which will carry increased costs through this tax being implemented by the Government. The tax cannot protect the domestic sector; its functions are therefore a direct penalty on UK growers.
I would also like to understand what assessment the Government have made of environmental implications. The mechanism is expected to apply a flat-rate tax based on weight or broad carbon categories. Industry specialists have noted that in this format it is likely to incentivise—accidentally, or maybe this is the Government’s intention—the use of nutrient-dense raw urea rather than cheaper, clean liquid options. That is completely contrary to DEFRA’s existing air quality policies, which actively discourage raw urea, due to high ammonia and nitrous oxide emissions. What assessment have the Government made of the roll-out of CBAM in relation to DEFRA’s own air quality policies, because they seem to be in contradiction?
Will the Minister outline again when the rate will be announced, with its implication for many of our UK farmers? What timeframe will apply for implementation? What assessment have the Government made of the cumulative impact of all the other increases to the cost of food production under this Government? What interplay is there with DEFRA’s own assessments, undertaken with Minette Batters’s profitability review, and with the air quality targets that have already been set by DEFRA?
I reiterate that I do not support this carbon tax. The Opposition will vote firmly against it when the Committee divides on the motion.
James Murray
I thank all Members for their contributions. As I set out in my opening remarks, the regulations before the Committee give effect to important elements of the CBAM framework, which has already been established by Parliament under the Finance Act 2026. Ultimately, CBAM is about ensuring that the UK’s decarbonisation efforts lead to a real reduction in global emissions. The regulations help to achieve that objective by ensuring that imported goods face a carbon price comparable to that of goods produced in the UK. The regulations support a fair, proportionate and effective CBAM to protect against carbon leakage, and to give industry the confidence to invest in the transition to net zero.
I am grateful to hon. Members for their contributions and will try to address some of their points. As I say, without CBAM the risk is that production and associated emissions will simply move overseas to jurisdictions with lower carbon costs. That carbon leakage, as it is referred to, would be the impact of not having a CBAM, rather than a true reduction in global carbon emissions.
A number of points have been made about the impact on businesses, about the timing of the introduction of the measures and about when the various values will be put in the public domain. I assure the Committee that we have considered carefully how best to support businesses’ preparations for CBAM. We have had to balance the benefits of publishing information at the earliest possible opportunity against the importance of ensuring that the figures published are sufficiently representative to be genuinely useful. For that reason, we have chosen to wait for the latest available data through the UK ETS baseline data reporting exercise, which will provide a robust illustration of future CBAM liabilities. As I say, we will publish that information very shortly.
John Lamont
The Minister will be aware of the comments of Paul Tompkins, the NFU deputy president, who has highlighted that adding a CBAM to fertiliser will add significantly to the costs and growing pressures that farm businesses already face. What discussions has the Minister had with the National Farmers’ Union about the issue and specifically about a date when farmers will find out the rate that is to be applied?
James Murray
As I said earlier, that happens not only through the formal consultation, but through regular engagement with all sorts of industries affected by the introduction of the CBAM. We want to ensure that we develop the detail of the policy in the best possible way, particularly in relation to fertiliser. I understand that the hon. Gentleman raised that issue, as did a number of others.
A few hon. Members mentioned a figure of £70 per tonne of emissions in fertiliser. I do not recognise that figure at all. I confirm to the Committee that, as I have said, although fertiliser production is emissions-intensive, the effect of the carbon price paid by UK-based fertiliser manufacturers has been extremely low because of the allocation of free allowances to the sector. As a result, we expect initial liabilities to be very modest for imported fertilisers. I will publish illustrative rates very shortly.
Other hon. Members questioned the impact on businesses of the administrative burden of implementing the CBAM. I reassure the Committee that only those that import £50,000-worth or more of CBAM goods in a 12-month period will need to register for the UK CBAM. HMRC estimates that more than 80% of otherwise affected importers will be excluded from the CBAM altogether and that more than 99% of imported emissions will be covered. We believe that that gets the balance right between covering the relevant imports and minimising the administrative burden to those who could be affected.
Edward Argar (Melton and Syston) (Con)
I draw the attention of the Financial Secretary to paragraph 9.3 of the explanatory memorandum:
“There will be one-off costs to businesses to familiarise themselves with the requirements, train staff and set up new systems. There will also be a one-off cost associated with the time taken to register for CBAM where required. In addition, there will be ongoing costs to businesses to collate and report to HMRC information about the CBAM goods they have imported”.
What sort of quantum will those costs come out at? What assessment has the Financial Secretary made of what those costs will be for a business?
James Murray
I am happy to write to the right hon. Gentleman with any further information that might be available, in addition to what he referred to. However, the wider point, as I said in my opening remarks, is that this is about ensuring we address the risk of production with associated emissions simply moving overseas to jurisdictions with lower costs. The CBAM ensures that we prevent such carbon leakage, so the impact of the policy is to have a genuine reduction in carbon emissions rather than simply moving production overseas. That is the driving principle behind the regulations, the framework in its totality, and the details that we are debating. I thank all right hon. and hon. Members for their contributions and commend the regulations to the Committee.
Question put.
The Modification of the Law (British Steel Limited Property Transfer) Regulations 2026
(1 day, 13 hours ago)
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The Parliamentary Under-Secretary of State for Business, Innovation, Science and Trade (Blair McDougall)
I beg to move,
That the Committee has considered the Modification of the Law (British Steel Limited Property Transfer) Regulations 2026.
The regulations were laid before the House on 16 July 2026 under the affirmative procedure. Steel is foundational to our economy and national resilience, and to the critical infrastructure on which communities and businesses across the country rely. The House will be well aware that British Steel is one of the UK’s largest steel producers. The steel that it forges is used by our clean energy sector, in construction, in our bridges and on our railways. In other words, Britain needs British Steel.
The decision to bring British Steel into public ownership was not taken lightly. The Secretary of State at the time of the transfer, my right hon. Friend the Member for Hove and Portslade (Peter Kyle), considered the public interest test carefully prior to making a decision, before deeming it necessary to nationalise British Steel based on the relevant factors and the likely costs. Given the financial challenges that the company is facing and has faced for some time, the Government’s assessment was that without taking British Steel into public ownership, there was a significant risk that it would fail and that this essential steelmaking capability would be lost.
We could not sit by and do nothing—the company’s collapse would have led to serious and difficult-to-reverse consequences for steelmaking capacity, supply chain resilience, workers and the communities that have supported the business for generations—so the British Steel Limited Property Transfer Regulations 2026 transferred certain property, rights and liabilities of British Steel to a new publicly owned company, wholly owned by the Secretary of State immediately on 16 July.
The regulations before the Committee are a necessary, targeted and technical part of the transfer. They were made to ensure the effectiveness of the transfer and the operations of the new public company. This statutory instrument is needed to protect the continuity of operations and give legal certainty to employees, customers, suppliers and other parties affected by the transfer.
The statutory instrument addresses five technical areas of the law that require modification to ensure the effectiveness of the transfer of British Steel, reflecting the fairly unique nature of that transfer—a legislative nationalisation at pace—which was not envisaged when the relevant laws were first drafted. First, the instrument puts beyond doubt that the Transfer of Undertakings (Protection of Employment) Regulations 2006—known as TUPE—apply with regard to employees moving from the old company to the new company. This provides British Steel employees with certainty about the continuity of their jobs and terms and conditions after the transfer.
Secondly, due to the unusual situation and pace of the legislative transfer of British Steel’s business, the instrument disapplied the TUPE requirement for the current employer to inform and, where appropriate, consult elected or trade union employee representatives, in the context of this specific transfer only.
Thirdly, the instrument provides that British Steel does not count as a “public authority” subject to the Freedom of Information Act 2000 and the Procurement Act 2023, reflecting the fact that it operates and competes in the private sector rather than as a traditional public body.
Fourthly, the instrument rules out the possibility that Ministers and civil servants count as “shadow directors” of the company, and fifthly, it disapplied rules around the reuse of a company name by a new company when the original company goes into insolvent liquidation.
Taken together, the modifications have enabled, and will continue to enable, the new publicly owned company to function properly while the Government stabilise the business and consider its long-term future. Due to the need for the transfer to come into effect immediately, it was necessary to make this instrument simultaneously with the transfer regulations, and it came into force immediately on 16 July as a made affirmative instrument. The House will rightly expect scrutiny of the decision to make the law modifications in the regulations, and I welcome that today. We have brought the instrument before the Committee so that Members can consider and approve the legal modifications needed to give full and effective operation to the transfer.
In summary, the instrument is limited in its scope of modifications, restricted as they are to British Steel’s specific case, and necessary to make the nationalisation effective. It provides legal certainty, supports employee protections and helps to secure the continuity of British Steel following its transfer into public ownership. I therefore commend the regulations to the Committee.
Peter Fortune (Bromley and Biggin Hill) (Con)
It is a pleasure to serve under your chairmanship, Mr Dowd.
British Steel’s vitality and sustainability is very important to those of us on the Opposition Benches as well. When Scunthorpe faced crisis, it was a Conservative Government who stepped in. We provided financial support and kept the plant running and the workers in employment. We began the work with Tata Steel on a package to secure a future for steelmaking in Wales, and delivered an emergency loan to Celsa Steel to help it to continue trading during the covid pandemic. The Conservative party will never be indifferent to the steel industry.
We agree with the Government that retaining primary steelmaking capacity in the United Kingdom matters, but they have offered no credible plan for making British Steel viable. I have a few questions. What is the Government’s strategy for profitability? What is their plan for the energy costs that make UK steelmaking uncompetitive? What is the timeline to commercial viability?
We have heard no real detail that amounts to a serious industrial strategy for steel. The Government have spent their first period in office piling cost after cost on to British business—the national insurance increase and the Employment Rights Act 2025, and a regulatory burden that keeps growing. I would welcome clarity on how the Government’s approach for British Steel will succeed where the private sector could not. The Labour party cannot adhere to an ideological obsession with nationalisation that has nothing to do with what is best for steelworkers. We need to look forward, not back. We know that history did not end well for 1970s industrial policy, and the Government would do well to remember that.
Let me turn to the specific provisions in the SI and a number of questions it raises in respect of accountability. I want to press the Minister specifically on regulation 7, which disapplies the Procurement Act 2023 to BCo and its group undertakings. The 2023 Act is meant to ensure transparency, competition and value for money in public contracting, to protect the taxpayer from poor procurement decisions, but here we have a publicly owned company operating entirely outside those rules. Will the Minister outline why the exemption is necessary, whether it will last indefinitely, and what alternative procurement standards will apply in its place?
I have another question for the Minister about the broader nationalised steel sector. The Government will now own not only British Steel but Sheffield Forgemasters and Speciality Steel UK Ltd. These are complementary assets with different capabilities and different products, but they are all part of the same strategic picture for UK steel. The Minister touched on this, but some clarity would be appreciated. Will he outline whether there are any plans to allow Sheffield Forgemasters or Speciality Steel UK to make use of British Steel’s intellectual property or trademarks, or the British Steel brand itself? I would welcome the Minister’s thinking on that.
British Steel can and should have a future, but taxpayers are now the owners of the company, and they deserve transparency, accountability and a credible plan for commercial viability. I look forward to the Minister’s response and, in particular, his answer on the procurement question.
Blair McDougall
I appreciate the constructive tone of the Opposition spokesperson’s comments. Let me get into the specifics he raised. The steel strategy that we set out takes specific action with regard to the profitability challenge that he rightly mentioned. It includes targeted measures on global overcapacity, energy prices, issues around procurement and the availability of scrap.
On energy prices, I direct the hon. Gentleman to the changes we have made with the supercharger scheme. For the steel industry more widely, applications have opened in the last few days for the British industrial competitiveness scheme, which will have a significant impact for many manufacturers.
The changes in the regulations in respect of the Procurement Act 2023 and the Freedom of Information Act 2000 are a recognition that yes, British Steel is ultimately owned by the taxpayer, but it has to operate as a commercial company. We do not want it to have disadvantages or advantages compared with other operators in the field.
The hon. Gentleman is right to say that we have a responsibility to make sure that the company is run as efficiently and effectively as possible. That is exactly the work we are currently doing, including through the appointment of the new chair, Alan Lovell, who will work with UK Government Investments and the DBIST representative on the company board.
On SSUK and, indeed, the whole ecosystem, the hon. Gentleman is exactly right to point out that we need to take an entire-steel-sector view of the future of British Steel. One of the unique things about our steel ecosystem is that there is not a great deal of like-for-like competition, and we do need companies to work together. That will be a key part of the work to produce the plan for the company’s future.
We fully recognise the significance of the decision to bring British Steel into public ownership. It was a serious step taken in exceptional circumstances, and only after careful consideration of the public interest. The regulations do not revisit the whole question of nationalisation, and they certainly do not intend to take us back to the 1970s—although I would argue that pop music was better in that decade. Their purpose is narrower, but it is important to ensure that British Steel’s specified property, rights and liabilities operate effectively in law, and that the necessary legal clarity and certainty is in place following the transfer. That certainty matters. It matters for employees, whose rights and protections must be clear; for customers and suppliers, who need confidence that the business can continue to operate; and for the wider economy, which relies so much on steel.
I reassure the Committee that the Government understand the need for proper scrutiny. The regulations were made using powers passed by Parliament in the Steel Industry (Nationalisation) Act 2026 and are subject to approval by both Houses. This debate has been an important part of the process. The statutory instrument is technical, targeted and proportionate. It supports the effective operation of the transfer, protects continuity and gives confidence to those affected by the transition into public ownership. For those reasons, I commend the regulations to the Committee.
Question put and agreed to.