Grand Committee
Terrorism Prevention and Investigation Measures Act 2011 (Continuation) Order 2026
(1 day, 23 hours ago)
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Lord Hanson of Flint
That the Grand Committee do consider the Terrorism Prevention and Investigation Measures Act 2011 (Continuation) Order 2026.
Relevant document: 13th Report from the Secondary Legislation Scrutiny Committee
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
My Lords, this Order was laid before the House on 14 September 2026 and provides for the continuation of the Secretary of State’s powers under the Terrorism Prevention and Investigation Measures Act 2011, also known as the TPIM powers. The continuation is for a further five years.
I think all noble Lords accept that it is the first duty of government to protect the public, and central to that mission is to counter the threat we face from terrorism—a threat which, sadly, is enduring and evolving. In response, there is a range of tools, including the powers conferred on the Secretary of State by the Terrorism Prevention and Investigation Measures Act 2011, which I well recall, having dealt with it at the time as shadow Minister for these issues.
The measures ensure that, where prosecution or deportation is not possible, the Secretary of State can impose specified restrictions and requirements on an individual involved in terrorism-related activity, to protect the public from a risk of terrorism. Section 21 of the Act states that the Secretary of State’s TPIM powers will expire at the end of five years from the date the Act was passed. The orders were renewed twice, in 2016 and 2021, and these powers are due to expire at the end of 13 December 2026. As TPIMs remain an important part of the UK’s counter-terrorism toolkit, we seek to renew them today. This position is supported by the Independent Reviewer of Terrorism Legislation, the Investigatory Powers Commissioner and the director-general of the Security Service.
As noble Lords will know, the Secretary of State can impose a TPIM notice on an individual if the conditions set out in Section 3 of the Act are assessed by the Secretary of State to have been met. These conditions include that the Secretary of State reasonably believes that the individual is, or has been, involved in terrorism-related activity, and reasonably considers that it is necessary, for purposes connected with protecting members of the public from a risk of terrorism, to impose such measures on the individual. In addition, the Secretary of State has powers to extend and vary a TPIM notice that is in force, and to revive a TPIM notice that has been revoked.
It may help noble Lords to know that, since the introduction of the Act in 2011, 33 TPIMs have been imposed. As of the last published set of figures, from June to August 2026, there are four TPIMs currently in force.
These are undoubtedly restrictive measures, which is why it is right that they are used sparingly and only in exceptional cases involving individuals assessed to present the highest levels of terrorism-related risk, where prosecution, deportation or other disruptive measures would be insufficient to protect the public.
There are, however, stringent safeguards. The Secretary of State must be satisfied that all conditions are met and apply to the court for permission to impose the TPIM notice, except in cases of urgency. A TPIM notice is subject to a review hearing at which the court reviews the Secretary of State’s decisions and the conditions were and continue to be met. The Act also provides a right of appeal in relation to specified decisions taken after its imposition.
Having consulted as required by the Act, the Home Secretary has decided to make this statutory instrument to provide for the continuation of TPIM powers for a further five years, the maximum period allowable in the legislation. We take this step because, sadly, we still face significant terrorist threats, and it is necessary to continue upholding the first duty of government: securing the nation and keeping our citizens safe.
The House of Commons has considered this order, and I hope that noble Lords will also support it today. I beg to move.
Lord Cameron of Lochiel (Con)
My Lords, the Official Opposition support this order. The Terrorism Prevention and Investigation Measures Act 2011 gives the Home Secretary powers that are needed in the small number of cases where the threat is real, but prosecution is not possible. Without this order, those powers would lapse on 13 December this year. Continuing them until December 2031 is the responsible course of action and we will certainly not stand in the way of this.
However, I have a few questions for the Minister. First, he stated that four TPIM notices are currently in force. How has that figure changed since the last renewal of the powers in 2021? I appreciate he may not have those figures to hand. More broadly, is the Minister satisfied that the powers are being used in proportion to the threat rather than falling into disuse?
Secondly, what is the Government’s assessment of compliance and breaches? For instance, how often are TPIM subjects found to have absconded or breached their conditions? Does he believe that the police and security services are properly resourced to monitor them?
With those questions, I reiterate the support of the Official Opposition for this order.
Lord Hanson of Flint (Lab)
I am grateful to the noble Lord, Lord Cameron of Lochiel, for his broad support for TPIMs. They were introduced when the noble Baroness, Lady May, was Home Secretary; I shadowed her at that time, and we had some concerns, some of which were around the issues the noble Lord has mentioned. Absconds and breaches are important issues.
I can give the noble Lord some figures. Since 2017, 16 TPM subjects have been prosecuted, with breaching measures imposed on them, and 12 pleaded guilty. To date, three have been found guilty by a jury. Judges have imposed custodial sentences on individuals who have breached the terrorism prevention and investigation measures, which I hope demonstrates to the noble Lord and the Committee the seriousness with which courts take these breaches.
On conclusion of any custodial sentence, the Home Secretary has the power to revive the existing TPIM if it provides a necessary and proportionate response to any threat that the individual may still pose. It is important that I put on record that the breach of a terrorism prevention order is a criminal offence. Every suspected breach is treated seriously and investigated, and we will always work with the police and the Crown Prosecution Service to support prosecutions accordingly.
I mentioned in my opening remarks that we currently have four individuals on TPIMs. I hope the noble Lord will be reassured that we provide a quarterly update on the TPIMs figures, and we have had 33 since their instigation. Off the top of my head, I do not have the quarterly figures for before the latest quarter, but there are four existing TPIMs. We will give an update every quarter on the numbers to date.
The Secretary of State takes these powers very seriously. The number one priority is to ensure that a TPIM is proportionate. When the Secretary of State—the Home Secretary in this case—signs off that TPIM, they must have a full submission and a full examination of it, and they will challenge it to ensure it is required and necessary. The appellant can appeal in court against that TPIM, and therefore a robust case is always made. A breach or indeed an abscond is a serious matter, and TPIMs provide significant levels of control over a range of movements and locations. As the noble Lord will know, on a number of occasions we remove people to new locations, so they are broken away from other influences.
I say to the noble Lord that we can rest assured. When I was in his position as a shadow Minister in the House of Commons, I asked about and was concerned about absconds and breaches. Now, as a Minister in government working alongside the Home Secretary, I am confident that we have a regime that is minimising those breaches. As I said to him in relation to the figures, if breaches or absconds occur, we take them extremely seriously, and these cases will potentially result in a custodial sentence. With those remarks, I hope I have assured the Committee that the order is worthy of general support.
Tobacco and Vapes Act 2026 (Display of Tobacco Products) (Consequential Amendments) Regulations 2026
(1 day, 23 hours ago)
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Baroness Merron
That the Grand Committee do consider the Tobacco and Vapes Act 2026 (Display of Tobacco Products) (Consequential Amendments) Regulations 2026.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
My Lords, I shall speak also to the draft Tobacco and Vapes Act 2026 (Age Verification Defence to Underage Sales) (England and Wales) Regulations 2026.
The Tobacco and Vapes Act, which received Royal Assent earlier this year, was landmark legislation that will deliver on the Government’s commitment to create a smoke-free generation and tackle youth vaping. As we know, smoking claims around 75,000 lives a year in the UK. That is why from 1 January 2027 it will be an offence to sell tobacco products, herbal smoking products or cigarette papers to anyone born on or after 1 January 2009, which will help to create the UK’s first smoke-free generation. The Act has also strengthened protections for children by making it an offence to sell vaping products or nicotine products to anyone under the age of 18, closing loopholes in the previous age of sale requirements. This reflects our health advice that, while vapes can be an effective aid for adult smokers to quit smoking, children and non-smokers should never vape or use nicotine products.
The two instruments before the Committee today will support the effective implementation of the new age of sale measures in the Act. I begin with the age-verification regulations. The Act provides powers to set out in regulations steps that retailers may take to verify that a customer has reached the legal age of sale, as a defence to the age of sale offences. This instrument sets out the steps that would satisfy this defence in England and Wales. It aims to give retailers confidence about how they can verify the age of customers attempting to buy these products. It also provides for two alternative methods of age verification which will both satisfy the defence.
First, a person charged with an age of sale offence may rely on the defence where they can prove that they were shown a physical identity document bearing the customer’s photograph, a date of birth and a holographic mark or ultraviolet feature. These criteria capture common forms of ID such as passports, driving licences and PASS cards. Secondly, a retailer may rely on a digital proof of age. This must be verified and delivered through a digital verification service, known as DVS, which has been independently assessed against the UK DVS trust framework and is listed on the statutory DVS register.
The provisions on digital proof of age follow the passage of the Data (Use and Access) Act 2025, which placed the trust framework and the DVS register on a statutory footing. They also follow the coming into force of the Licensing Act 2003 (Mandatory Licensing Conditions) (Amendment) Order 2026, which enables the use of these services as part of alcohol sales. I shall be clear that there is no requirement for individuals to use digital proof of age, nor are businesses required to accept it. It simply provides an additional, voluntary option alongside physical documents.
In developing the criteria for physical and digital proof of age, we have considered three key aims. First, we have sought to mirror the criteria for physical and digital proofs of age that can be used for alcohol sales—something we rightly discussed in Committee. This aims to capture the many retailers who sell alcohol as well as tobacco, vaping and nicotine products, who will need to remember only one set of criteria. Secondly, the criteria ensure that a range of commonly used forms of ID can be accepted. Thirdly, we have sought to future-proof the regulations by ensuring that digital proof of age can be used alongside traditional physical documents. In other words, we are seeking to make this workable.
Neither the Act nor these regulations create a requirement for retailers to ask every customer for proof of age before every sale. The steps set out in this instrument are also not the only means of establishing a defence. The Act provides an alternative defence where a retailer can prove that they took “all reasonable steps” to avoid committing the offence. This is very much a re-enactment of the defence in previous tobacco and vapes legislation of having taken all reasonable precautions and exercised all due diligence. These regulations set out an additional, more prescriptive route to establishing a defence. A retailer who follows the steps in these regulations can have confidence that they would be able to demonstrate a statutory defence if they were ever subsequently challenged over a sale—another matter that arose, correctly, during Committee.
The next statutory instrument I will refer to relates to the display of tobacco products in retail premises. Under the current rules, introduced by the Tobacco Advertising and Promotion Act 2002 and related regulations, retailers in England, Wales and Northern Ireland are prohibited from displaying tobacco products. The 2002 Act includes an exemption that allows retailers to display tobacco products to a customer aged 18 or over, on their request, and a linked defence where a retailer mistakenly displays products to someone whom they reasonably consider to be 18 or over. This statutory instrument updates those provisions so that tobacco products can be displayed, on request, only to people born before 1 January 2009, aligning display restrictions with the new age of sale that comes into force on 1 January.
Without these amendments, under the current display legislation, individuals aged 18 and over could still be shown tobacco products, even if the products could not legally be sold to them. This would undoubtedly create an inconsistent and confusing position for retailers and could increase the risk of accidental underage sales. By aligning the age at which customers can be shown tobacco products with the new age of sale, we are aiming to help businesses comply with the law and to support effective enforcement.
These changes also aim to ensure the continued effectiveness of restrictions on tobacco display. We have decades of evidence to show that reducing the visibility and accessibility of tobacco products helps to reduce their appeal, particularly among young people. Restrictions on display also contribute to a more supportive environment for adults who are trying to quit smoking, by reducing exposure to tobacco products in everyday settings.
These regulations mark what I believe to be an important milestone in the implementation of the Tobacco and Vapes Act. They are a step towards creating a healthier future for today’s children and for generations to come, and I commend them to the Committee.
Lord Young of Cookham (Con)
My Lords, I apologise for missing the first 90 seconds of the Minister’s speech, which was the time it took me to sprint from my room to the committee corridor. I am grateful to the Minister for her lengthy explanation— it has enabled me to get my breath back. As she explained, these instruments follow from the Tobacco and Vapes Act, which is an Act I supported as a long-standing member of the APPG on Smoking and Health, and which actually carried forward a policy started by the previous Conservative Government. As the Minister has said, the first SI is relatively simple. It ensures that tobacco products, which cannot be displayed in shops, are not shown to anyone who is not old enough to be sold them—that is, anyone born after 1 January 2007.
The Government recently closed a consultation on extending point of sale restrictions to nicotine products. This is actually overdue. The display of addictive vapes in plain view of children has helped to increase youth usage, and it has undermined their essential role as a primary smoking cessation aid. I was interested to see the coverage in the BMJ regarding large amounts of industry lobbying around the consultation. Of course, this is nothing new, as those of us who have worked on this issue for a long time know. This was then followed by another story about how AI bots flooded the initial consultation on the then Tobacco and Vapes Bill in 2023. Of the 118,756 responses received, 90,835—that is, 76%— were submitted by bots. The DHSC said the submissions were
“often duplicated many times and sent at high frequency from a small number of IP addresses”.
This bombardment appears to be the first documented instance of large-scale automated interference in a formal public health policy consultation. We know that the tobacco industry will often work with or through other organisations, third parties or proxies to fight regulation. For example, the C-Talk website is dedicated to independent retailers, convenience stores and high street businesses. Campaign materials on this site, relevant to the consultation exercise, appear to have been written by somebody who completed an internship at British American Tobacco. Paul Cheema, the co-founder of the site, has recently received awards and prizes sponsored by Imperial Tobacco and has also appeared in an advertisement for another tobacco company, JTI. That is a concerning relationship.
Consultations are not referendums; they are there to gather evidence, information and views. But where responses come from does matter. When it comes to tobacco, responses should be driven by public health, not commercial interests, in order to drive decision-making to protect our population from the harms done by these lethal products.
The second instrument outlines what defence is accepted for retailers when it comes to verifying age, making it clear that either physical or digital ID must be checked. While the mention of digital ID may set alarm bells ringing for some, given previous plans to mandate digital ID for workers in the UK, I actually think this is fair, ensuring that this is an option for consumers and mirrors what has already been introduced for alcohol. It makes sense that we make the identification process as seamless as possible.
These regulations are about ensuring we are ready ahead of 1 January. There will be many more to come, and we have recently seen many announcements relating to vape shops from other government departments, such as the need for planning and the removal of business rate relief. It is important that we do not encourage the sort of shops and behaviours that we are seeking to resolve, so I welcome those initiatives.
Finally, the Minister will recall the pressure, as the Bill went through, for a road map showing how smoking rates will be reduced, having some milestones and ensuring that vaping policy is a broader part of a tobacco control plan. The Government resisted this, but I would be keen to hear when the Minister winds up what type of evidence is being gathered to judge the success of the Act, alongside other government policies on tobacco and vaping.
Lord Rennard (LD)
My Lords, these two statutory instruments are essential stepping stones towards a historic milestone in public health. They will help to enable the smoke-free generation policy to come into legal effect on 1 January 2027. They are not about reopening the principle of the rising age of sale, which both Houses voted decisively in favour of. We now need to implement the policy as effectively as possible.
I was a strong supporter of previous legislation prohibiting retail stores from displaying tobacco products openly to the public. As the Minister said, tobacco products can be shown only once a customer’s age has been verified as being 18 or over. I agree with her that the instrument before us sensibly updates those rules to reflect the forthcoming changes to the age of sale. They will help to ensure that lethal products are never displayed to anyone who cannot legally be sold them.
The Government are also proposing point of sale restrictions for nicotine products such as vapes and nicotine pouches. For too long, we have seen brightly coloured nicotine products, designed to be attractive to young people, displayed at child height near shop counters. The indiscriminate promotion of these products must stop. I welcome the proposal to store nicotine products separately, so that the customers buying them are not inadvertently exposed to tobacco displays.
As we seek to promote switching from smoking tobacco to vapes instead, we need to recognise the problem of perception. Action on Smoking Health has shown that 54% of UK adults and 52% of smokers mistakenly believe that vaping is as harmful or more harmful than smoking tobacco. Most significantly, that figure rises to 61% among smokers who have never tried vaping. I was a very early supporter of legislation promoting vapes, or e-cigarettes as they were then called, as a means of quitting tobacco. But now, we have to balance very carefully how vapes are promoted. We want to clamp down on their appeal to young people and at the same time ensure that these restrictions on promoting vapes do not inadvertently worsen misconceptions among adult smokers.
We need smokers, most of whom want to quit, to understand that switching to vaping can really help them and that vaping products are less harmful. So, I would be grateful if the Minister could explain how nicotine product point of sale restrictions will be designed so that they do not entrench dangerous misconceptions about their relative harm compared to tobacco products. Can she also say whether there will be scope for improved public health messaging, such as Swap to Stop, on covered retail units?
The second instrument concerns the legal defences available to retailers when verifying a customer’s age. It provides clarity by accepting both physical and digital forms of identification. Responsible retailers, who know their regular customers, can continue to serve them without unnecessary friction.
Data from ASH shows that 41% of 11 to 17 year-old smokers and 47% of children who vape purchase the products directly from retail shops. Furthermore, it shows that 71% of retailers in England and Wales actively support mandatory age verification, with only 20% opposed to it. Tighter verification is urgently needed. Responsible retailers want to do the right thing. What detailed guidance will be published to explain what these defence changes mean in practice for shopkeepers operating Challenge 25 schemes?
As we approach 1 January, leadership and clear communication from central government will be decisive in making the policy work and helping us to move further towards the smoke-free generation that we are seeking. Retailers and local councils are doing their part. Perhaps the Minister can tell us more about the Government’s national public awareness campaign and when it will launch. If we combine clear regulations, evidence-led public health messaging and dedicated support for our front-line retailers, we can ensure that 1 January 2027 marks the true beginning of the end for the tobacco epidemic in this country.
Finally, I want to share the concerns of the noble Lord, Lord Young of Cookham, when it comes to the relationship between tobacco companies and C-Talk and the Protect Your Store campaign. The tobacco industry often uses proxies to circumvent restrictions that are in place to prevent it from influencing health policy. But those restrictions are there for a very good reason. Retailers should stand ready to implement this important, life-saving policy, and evidence shows that when consumers spend their money on things other than tobacco it is good for the UK economy. I look forward to the Minister’s response.
Lord Evans of Rainow (Con)
My Lords, I thank the Minister for introducing this SI and for turning up this morning. She is clearly under the weather; perhaps she should have a hot toddy and take a rest for the rest of the day, given that she will be in her place at the Dispatch Box tomorrow evening for Committee on the Health Bill.
Protecting young people from the harms of smoking and vaping is the principle underpinning both these measures, but it is essential that the regulations implementing these changes are practical and properly scrutinised. The first instrument I will address today concerns the display of tobacco products, aligning existing exemptions with the new generational ban. At first glance, this appears to be a straightforward change, but it raises wider questions about the cumulative burden being placed on retailers.
The Government’s own impact assessment estimates that the changes to vape displays could cost retailers £26 million. The Association of Convenience Stores has suggested that the costs of a full display ban could actually exceed £160 million for convenience stores alone. These figures demonstrate the substantial financial pressures facing businesses as a result of these reforms. Can the Minister therefore clarify what assessment has been made of the specific costs associated with implementing this instrument, particularly for small independent retailers? What assurances can she provide that businesses will receive sufficient time and guidance to adapt?
The second instrument sets out the steps that retailers must take to check a customer’s age when selling tobacco or vaping products so that they can demonstrate that they have followed the law if an underage sale takes place. These provisions follow on from the fact that the generational ban introduces a fundamentally different approach to age verification. Rather than simply establishing whether someone is over 18, retailers will need to determine whether customers were born before a particular date: namely, before 2009.
This creates additional complexity for shopkeepers and their employees, who will be expected to understand and enforce the law. The Government must ensure that those acting responsibly are not inadvertently exposed to prosecution because of unclear requirements. Can the Minister explain how the Government will ensure that retailers can reliably check whether a customer is legally entitled to buy tobacco, particularly as the age limit will change each year? What expectations are there for people to carry identification as they get older?
During the passage of the Tobacco and Vapes Act, concerns were raised about the extensive powers given to the Secretary of State. Concerns have been repeatedly raised about the breadth of the Government’s regulation-making powers and the importance of parliamentary scrutiny. It is therefore vital that these powers are exercised transparently, with clear evidence supporting the measures introduced. Can the Minister tell us how the Government expect trading standards officers to enforce these additional requirements without providing them the resources to do so?
As my noble friend Dr Caroline Johnson highlighted in the other place, these powers could allow the Government to extend smoke-free restrictions to a wide range of places with limited parliamentary oversight. While these SIs deal particularly with tobacco displays and age verification, the wider concern about scrutiny remains. Can the Minister reassure the Committee that future regulations will be subject to proper consultation and parliamentary scrutiny, and that the Government will clearly explain why further restrictions are necessary?
I hope the Minister will address these concerns and reassure the Committee that these regulations will be implemented fairly and scrutinised properly.
Baroness Merron (Lab)
My Lords, I am most grateful to all noble Lords who have contributed to this debate and grateful for the support for the measures that we are taking. I know that many noble Lords who have spoken today have long been active campaigners, and I am extremely grateful. In particular, the noble Lord, Lord Young, welcomed the various steps across government, which speaks to the fact that this is not just a matter for health; there are other actions that we can take. I am also glad that the noble Lord, Lord Rennard, welcomed the clarity that these regulations will provide. He referred to avoiding unnecessary friction. That was very much part of our discussions during the passage of the Bill, and it is one of the concerns of the noble Lord, Lord Evans, which we share.
In just seven weeks’ time, the smoke-free generation will become a reality in this country, and that is something to celebrate. The first young people born in 2009 will turn 18, the law will change and those young people will enjoy a life that is free from the harms of tobacco that have plagued successive generations before them. These two sets of regulations are important steps in making sure that retailers are ready—I take on board the concerns raised—that the law is consistent and that the new age of sale is implemented successfully from 1 January. That is what these regulations seek to do.
I turn to the points raised. The noble Lords, Lord Young and Lord Rennard, raised questions about the tobacco industry’s influence and input into consultations. I remind the Committee that our consultation on proposals to reduce the appeal of tobacco, vaping and nicotine products closed on 2 October. The consultation spoke to aligning the display of vaping products, nicotine products, cigarette papers and heated tobacco devices with display restrictions—in other words, removing them from display and moving them away from the eyes of children and young people. We are currently considering the responses.
Concerns were raised about interference. We have robust controls in place to prevent the manipulation of public consultations. These controls certainly worked effectively in our past consultation, where we set out the case to create a smoke-free generation. I assure noble Lords that we remain alert to the kind of interference raised by the noble Lord, Lord Young, in particular, and we will not be deterred from doing what is necessary to promote healthier living and to protect children and young people.
The noble Lord, Lord Young, asked about a road map. Of course, we very much share the ambition to further drive down smoking rates; we are far from complacent. I know how pleased the Chief Medical Officer was recently at the historic low in smoking rates, but we do not stop there; we will continue. Our immediate priority is delivering the Tobacco and Vapes Act and the comprehensive programme of secondary legislation that sits behind it. With the investment in stop smoking services and enforcement, these measures will form our programme for delivering a smoke-free UK.
It might be helpful if I remind the Committee that the Act includes a requirement for the Secretary of State to review the operation of the Act within four to seven years of Royal Assent and to lay a report before Parliament concluding the findings of this review. I assure noble Lords that we remain open to evaluating the impact of the Act and to being held to account on that. I remember the conversation about what the right length of time was. This is our feeling on the right length of time, so we can give the Act time to make an impact and be realistic with Parliament about what has been achieved.
Lord Rennard (LD)
Before the Minister sits down, can I ask her a little more about this promotional campaign beginning on Monday? What is the budget for this campaign? I am delighted to hear that it will appear on television, radio, social media and elsewhere, but these things cost, and I would like to know how much will be invested in this programme. Perhaps the Minister could let me know another time.
Baroness Merron (Lab)
I will be very pleased to write to the noble Lord on that point of detail.
Tobacco and Vapes Act 2026 (Age Verification Defence to Underage Sales) (England and Wales) Regulations 2026
(1 day, 23 hours ago)
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Baroness Merron
That the Grand Committee do consider the Tobacco and Vapes Act 2026 (Age Verification Defence to Underage Sales) (England and Wales) Regulations 2026.
Relevant document: 13th Report from the Secondary Legislation Scrutiny Committee
Financial Services and Markets Act 2000 (Cryptoassets) (Miscellaneous Amendments) Regulations 2026
(1 day, 23 hours ago)
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Lord Wilson of Sedgefield
That the Grand Committee do consider the Financial Services and Markets Act 2000 (Cryptoassets) (Miscellaneous Amendments) Regulations 2026.
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
My Lords, I will speak to the two statutory instruments. I think it is fair to say that financial services are a key driver of growth in the United Kingdom. Embracing innovation is essential if we are to maintain our position as a leading global financial centre, particularly in relation to tokenisation, digital assets and the technologies underpinning new forms of payments, trading and market infrastructure.
I turn first to the Financial Services and Markets Act 2000 (Cryptoassets) (Miscellaneous Amendments) Regulations 2026. As noble Lords will know, earlier this year the Government legislated to establish a financial services regulatory regime for crypto assets, including stablecoins. That framework gives firms the certainty they need to invest and innovate in the UK while ensuring appropriate protections for consumers and markets.
The instrument before the Committee today makes a number of targeted amendments to that regime. It does not replace the regime already approved by Parliament but ensures that it operates as intended, remains proportionate and supports a competitive UK market as this sector develops. In particular, it ensures that requirements designed for crypto asset trading do not apply disproportionately to the use of appropriately regulated UK-issued stablecoins for payments.
The Government consider that stablecoins issued in the UK, appropriately regulated to ensure that they are truly stable, could play a significant role in both retail and wholesale payments. The Government are currently consulting on wider reforms to payments regulation to accommodate tokenised payments, including stablecoins. Without these amendments, firms using UK-issued qualifying stablecoins in payment chains could be captured by crypto asset regulatory activities designed primarily for trade. It would therefore be disproportionate to require firms using UK-issued qualifying stablecoins in payment chains to secure permissions under the crypto asset regime now, only to require further permissions under the future payments framework.
This instrument therefore excludes UK-issued qualifying stablecoins from the crypto asset dealing and arranging activities. Lending and borrowing involving those stablecoins will remain regulated, given the different risks that those activities can present. It also excludes the temporary holding of those stablecoins in connection with a payment transaction from the crypto asset safeguarding activity. This is about ensuring the right regulation applies to the right activity, rather than removing stablecoin activity from regulation.
Alongside this principal change, other amendments clarify the regulatory perimeter for stablecoin issuance and backing asset arrangements. They also bring forward the commencement of provisions clarifying that qualifying stablecoin backing assets are not treated as collective investment schemes or alternative investment funds, and that neither qualifying stablecoins nor the assets backing them are electronic money. These changes are aimed at removing barriers to stablecoin adoption for different use cases ahead of the crypto asset regime coming fully into force in October 2027. Acting now provides clarity before firms need to comply with the new regime.
The instrument also introduces targeted exclusions for certain proprietary trading and market-making activities, technical service providers and certain central securities depository arrangements. Finally, it makes corresponding amendments to the financial promotions regime to ensure that the perimeter remains aligned with the crypto asset regime. Following extensive engagement with parliamentarians and industry, these amendments provide greater certainty and remove unintended barriers, while retaining appropriate protections for consumers and market integrity.
I turn to the draft Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2026. The Financial Services and Markets Act 2023 gave the Treasury powers to establish financial market infrastructure—FMI—sandboxes. These sandboxes allow new technologies to be tested in financial markets within a modified legislative framework where existing requirements might otherwise impede innovation. The powers were designed to be flexible. When Parliament legislated in 2023, it was not possible to know every provision of legislation that might need to be modified as technologies developed. Section 17 of the Act therefore allows further legislation to be added to the list of relevant enactments that can be modified using the sandbox powers.
Baroness Kramer (LD)
My Lords, I fully accept that these two instruments contain sensible changes to reflect the introduction in the case of stablecoin in one and, in the other, to promote innovation within the crypto sphere. I will not do a line-by-line analysis—the Minister has laid out much of that—but I have some concerns. I will address each SI in turn to reflect those areas of concern.
Using the same order as the Minister, I start with the Financial Services and Markets Act 2000 (Cryptoassets) (Miscellaneous Amendments) Regulations 2026. This SI exempts qualifying stablecoin from regulation related to most dealing and arranging activity. I recognise that, as the Minister pointed out, this does not apply to general lending or borrowing, but it removes regulation from institutional collateral and repurchase arrangements. I recognise that the word “institutional” is intended to show that consumers would be protected even though there is a relaxation of lending and borrowing rules around repos and collateral. But, to me, the very fact that we are making this distinction again between institutional and consumer in the way we regulate—or in whether there is any regulation at all—raises again the whole issue of the regulatory perimeter.
The mini-bond scandal of just a few years ago is a powerful example of how bad actors manipulate around the edges of the regulatory perimeter established by the FCA to exploit people who think they are protected by FCA regulations when they are not. It is not difficult to confuse people, because the FCA’s approach means that some activities of a firm are regulated, while others—carried out by exactly the same firm but merely with a different customer base, as it were—are not. Many investors can be fooled and exploited.
I would just like to hear the Minister’s comments, because I am concerned. The crypto industry has plenty of honest players but it is also a magnet for the criminal, the corrupt and the inept. I would like a lot more assurance that this SI is not setting up the next mini-bond scandal, particularly around the area of institutional repos and collateral, which could easily be reformed in such a way that consumers could be persuaded that they were indeed qualified and sophisticated enough to purchase them, and then we will be back into another Woodford and that sequence of scandals.
I am also mindful that, when those mini-bond scandals first broke, the FCA basically said, “Nothing to do with me, guv—they’re outside the perimeter”. I would like to have some assurance that the FCA is now recognising that that perimeter cannot be such a hard line; it has to have some flexibility when there is obvious abuse.
The second of the statutory instruments deals essentially with the sandbox. I certainly do not object to it but again I have questions. I recognise that I was somewhat involved in the early days of the sandbox approach, and it has played a very important role in supporting innovation by using practical experience to get regulation right. It was first conceived of and introduced by UK financial regulators after the financial crisis to develop an effective regulatory framework for the fintechs, which is how I got involved in the process. The model, indeed, has been both recognised and copied around the world.
This SI, however, significantly extends the scope of the sandbox. The primary weakness of the sandbox system is that the regulator picks and chooses who gets to go in. When it picks out one of several small rival companies looking at approximately the same kind of innovation, it hugely advantages that entity that is chosen to go into the sandbox. Rivals suddenly find that they may struggle to get investment. Then, when the regulations appear, they are very much structured around that particular sandbox experience and so are often very tailored to the specific company that was in the sandbox and in effect they shut out relatively close rivals.
Companies have not dared to complain about a lot of this publicly because they are afraid that they will be treated as FCA troublemakers. How will the Government and the FCA address this issue now that the scope will be very much wider, drawing in many more pieces of legislation and a much bigger activity base?
Secondly, what kind of oversight does Parliament have as these innovations are introduced? This statutory instrument assumes permanent enactment by negative SIs, but the scope of the legislation essentially makes regulatory innovation subject only to regulatory decision-making. That is a direction which many of us in this House have raised before, and it seems that these changes in particular double down on that concern over both scrutiny and oversight.
As regards the breadth of the shift of what had previously been primary legislation now to the regulator, much of the motivation seems to be driven by the introduction of DIGIT, a digitally native short-dated government debt instrument that the Government intend to issue in 2027. Although DIGIT depends on known technology in the form of blockchain, the risks of unexpected technology failure are high, liquidity is an issue, and the system clearly lacks interoperability. How is Parliament supposed to raise these issues and challenges, given the way in which decision-making is essentially transferred to the regulator, which as far as I can tell has not provided satisfactory answers on any one of the issues that I just listed?
The SI also makes it clear that the regulator can go on to make changes which are far more sweeping than the examples it discusses in the Explanatory Memorandum that is attached. I would very much like the Government to address some of these concerns.
Baroness Neville-Rolfe (Con)
My Lords, I thank the Minister for introducing these two instruments. On these Benches, we welcome the steps that the Government are taking to support the development and regulation of digital assets in the United Kingdom. This is an area of considerable opportunity for our financial services sector, and it is so vital to UK growth. It is important that we establish a regulatory framework that supports innovation and competition while maintaining appropriate protections for consumers and the integrity of our markets.
I recognise the work being undertaken by Chris Woolard, the Government’s digital markets champion, to explore the potential role of stablecoins in our financial system. We also note the Government’s proposed digital gilt next year—DIGIT, as we heard it called by the Minister. The noble Baroness, Lady Kramer, was right to ask about how we can follow the path of these important changes, given that future changes would limit parliamentary accountability.
Although these are broadly welcome developments, I return to a concern that we raised repeatedly during the passage of the Financial Services and Markets Bill through your Lordship’s House: the absence of a clear co-ordinated strategy for the development and adoption of digital assets across our financial system. Indeed, it was precisely this concern that motivated our amendment to the Bill—now Clause 50—requiring the Government to develop a comprehensive digital asset strategy.
The development of digital assets is taking place at considerable pace around the world. Stablecoins, tokenised securities, digital currencies and distributed ledger technologies all have the potential to transform different aspects of our financial system. But these are not isolated developments; they are increasingly interconnected components of what could become a fundamentally different financial infrastructure. Therefore, what we need from the Government is not simply a collection of individual regulatory initiatives such as these, however welcome they might be, but rather a clear explanation of how these initiatives fit together, what the Government ultimately want to achieve and, above all, how they will ensure that the UK remains competitive as these technologies develop internationally. The proposed digital gilt is a useful illustration of this concern. Last week, the FT made the pointed observation that it was unclear what the exercise was intended to achieve beyond demonstrating that a digital gilt could be issued.
Turning specifically to the first instrument, we welcome the Government’s intentions to make UK-issued regulated stablecoins more practical to use for everyday payments, transfers and settlement. The instrument rightly introduces a number of exclusions from the regulated activities framework. I look forward to hearing the Minister’s response to the question raised by the noble Baroness, Lady Kramer, about flexibility in the event of abuse.
I have two areas of concern. First, if you are a potential stablecoin operator, you would be desperate to know exactly what the regulatory regime will be before you finally commit. The Treasury still holds the ring on how payment systems regulation will change, and its consultation has closed. When will final decisions on the regime be taken?
Secondly, the relatively narrow scope of today’s SI illustrates the wider point about the need for a whole-system approach. The principal payment-related exclusions are focused on a particular category of stablecoin: those issued by an appropriately authorised UK issuer. They do not extend generally to the wider range of crypto assets, and other activities, including certain exchanges and custody services, remain within the regulatory perimeter. Therefore, I would be grateful if the Minister could explain how these measures fit within the Government’s broader plans for the adoption of stablecoins and digital assets. Do the Government intend to set out a more comprehensive vision for their practical application across the economy?
Turning to the second instrument, we welcome the Government’s intention to provide greater flexibility for innovation through financial market infrastructure sandboxes. As I understand it, this instrument expands the range of legislation that may be modified within an FMI sandbox rather than itself making substantive changes to those enactments. That additional flexibility is welcome. It is right that firms should be able to test emerging technologies in an appropriate and controlled regulatory environment. I know that the Financial Services Regulation Committee is conducting an inquiry into sandboxes, and I look forward to its conclusions.
A fundamental question is what happens beyond the sandbox. It is one thing to demonstrate that a particular technology or process can work within a controlled environment. It is quite another to establish that it can operate successfully, at scale, within the wider financial market. There is a risk that we develop a succession of interesting pilots that demonstrate technical feasibility but never make the transition into commercially viable, widely adopted infrastructure.
Lord Wilson of Sedgefield (Lab)
I thank the noble Baronesses for those remarks and those numerous questions. I hope I can get to all of them and answer them at least adequately. Both noble Baronesses made a general point about digital asset policy. The Government have a substantial programme of work under the Wholesale Financial Markets Digital Strategy, including legislation, regulation and industry co-ordination. Specific initiatives such as the digital securities sandbox, the digital gilt instrument—DIGIT—the crypto asset regulatory framework and payments reform complement work being taken forward by the regulators and the sector. Chris Woolard, who has been the wholesale digital markets champion, is leading industry’s work through nine taskforce action groups and published his first report back in July. It is also fair to say that there has been cross-party consultation on this, and with the industry. I seem to remember that the noble Baroness, Lady Neville-Rolfe, raised taking stablecoins for payments, not just for general assets, when we discussed this back in February. We all just want to get this right, because it is so technical and it is so important for the economy as well.
To answer the point made by the noble Baroness, Lady Kramer, about FCA oversight and the mini-bond scandal, for example, the Government consider this approach to be the right and most appropriate one. UK-issued stablecoins will remain subject to high regulatory standards, and other requirements continue to apply. I will write to the noble Baroness on the issues that she raised on repo and collateral.
The digital securities sandbox allows both incumbents and new entrants to come into it. At the moment, 17 have gone through the first gateway, and three are actually in the sandbox now and in a position to—
Baroness Kramer (LD)
Can I just ask whether the Minister has any numbers for how many people have applied to go into the sandbox and have been turned down? Do we know, or do they get discouraged so early that there is no record?
Lord Wilson of Sedgefield (Lab)
I shall write to the noble Baroness on that. What I do know is that organisations are applying to go into it, so it is obviously being used and the industry sees it as very important. As I have said, we just need to get this right.
Further affirmative SIs may be needed as permanent changes issuing from these debates come forward in future. On the removal of UK-issued stablecoins from these activities creating a gap in consumer protection before the new payments regime is introduced, it is true that certain UK stablecoin transactions that would have fallen from the crypto regime will now remain unregulated until the payment reforms are implemented. However, the Government consider that this is the right approach and is more proportionate than requiring stablecoin payments to obtain crypto permissions now, only to seek different permissions under the future payments framework. This does not mean that stablecoins will be removed from regulation. Stablecoins issued in the UK will remain subject to high regulatory standards, and firms will remain subject to other applicable regulations.
Turning to some of the points made by noble Baroness, Lady Neville-Rolfe, on the issue of DIGIT, the Government are helping to demonstrate the technology through the digital gilt instrument. DIGIT will be a new digitally native UK government debt instrument issued on DLT within the DSS. The pilot is intended to test DLT across sovereign debt issuance and to catalyse development of UK digital market infrastructure, and the first transaction is expected in the first quarter of next year.
The noble Baroness, Lady Neville-Rolfe, also asked about the Government’s plans for stablecoin. It has the potential to have a significant role in retail and wholesale payments. We already see the benefits that stablecoin can provide in cross-border payments, reducing costs and improving efficiency. The Government also recognise that unlocking the full transformative potential for digital assets and blockchain technologies requires payments that interact with them directly, and stablecoin can play an important role in achieving this. It will therefore be important for the UK to harness those opportunities in promotion of the ongoing competitiveness of UK financial services. The crypto asset SI is explicitly intended to support a competitive UK regime by removing barriers while retaining appropriate regulation.
The noble Baroness, Lady Neville-Rolfe, asked about digital assets. The Government are a strong supporter of digital assets and see them as a key strategic priority. The Government are actively taking forward actions set out in the July 2025 wholesale financial markets digital strategy. We have appointed to Chris Woolard, and many other actions are being taken to support this work, such as the Bank of England and Financial Conduct Authority’s input on tokenisation, which closed in July. They intend to publish a further road map soon.
The Government have also made substantial progress on the digital security sandbox and the digital gilt instrument. I think it fair to say that the Government are taking this very seriously. We see the contradictions in this, especially with stablecoin and the efficiencies it can make. Obviously, the parliamentary regime and consultation is very important. The crypto asset SI avoids duplicative requirements for UK stablecoin payment activity ahead of wider payment reform, ensuring that requirements designed for crypto asset trading do not apply disproportionately to stablecoins used for payments, while regulation is retained where the risk is justified.
For the sandbox, these regulations make targeted additions to the legislation within scope of the FMI sandbox powers. This is needed because barriers to innovation cannot always be identified in advance. The changes will ultimately allow the digital securities sandbox to operate more effectively and, in particular, to provide the flexibility necessary to support the issuance of DIGIT through a platform participating in the sandbox.
In conclusion, these are proportionate measures that support innovation in financial services while maintaining appropriate protections. They ensure that regulation is targeted at the risks presented and that our frameworks can adapt as markets and technology develop. I commend both instruments to the Committee.
Baroness Neville-Rolfe (Con)
I was pleased to hear that the Government will publish another digital road map. It would be good to know whether it will be shared with Parliament in some way and will cover some of the broader issues beyond the wholesale side.
Lord Wilson of Sedgefield (Lab)
I am sure we can arrange that when it is published. Because it is such a technical issue, we obviously need to ensure that we have expertise from all over the place to keep us on board with what is happening in this field, so I take on board what the noble Baroness is saying.
Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2026
(1 day, 23 hours ago)
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Lord Wilson of Sedgefield
That the Grand Committee do consider the Financial Services and Markets Act 2023 (Addition of Relevant Enactments) Regulations 2026.
International Claims Commission for Ukraine (Immunities and Privileges) Order 2026
(1 day, 23 hours ago)
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Lord Wood of Anfield
That the Grand Committee do consider the International Claims Commission for Ukraine (Immunities and Privileges) Order 2026.
The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office (Lord Wood of Anfield) (Lab)
My Lords, this order is required before the UK can ratify the convention establishing an International Claims Commission for Ukraine. Noble Lords will remember that the UK signed the convention on 16 December 2025.
The international claims commission builds on the register of damage for Ukraine established two years earlier, in 2023, which collects and records claims from individuals, organisations and public bodies in Ukraine for damage, loss and injury inflicted by Russia. Once the commission has been established, the register and its work will be transferred to the commission. The commission will review, assess and decide on claims recorded in the register, as well as subsequent claims, and determine the amount of compensation due in each case.
The convention requires participating states to confer specified privileges and immunities on the commission and on persons connected with its work, to enable them to perform their functions independently and effectively. That is what this order is about: it gives effect to those requirements in UK law. By ratifying the convention, the UK will support the principle that Russia must pay for the damage it has caused and help establish a credible international process for assessing claims and delivering justice for Ukraine.
This is about more than compensation. It is part of the UK’s wider commitment to stand with Ukraine for the long term—a commitment shared by both this Government and the previous Conservative Government —and to ensure that Russia is held accountable for the consequences of its aggression. There can be no just and lasting peace without justice and accountability, and the claims commission is an important step towards ensuring that those who have suffered loss, injury and damage have a credible route to redress.
This order was laid in draft before Parliament on 14 September 2026 under Section 10 of the International Organisations Act 1968. It is subject to the affirmative procedure, and, if approved by both Houses, it will be made by His Majesty in Council under Section 1 of that Act.
Lord Bruce of Bennachie (LD)
My Lords, I thank the Minister for this introduction. We debated this in June. This is the next step in its implementation, and I think it is welcome on all sides. As the Minister said, this is an instrument of the Council of Europe, and I have just a few questions for him.
This obviously takes us further down the road. Has the commission started work or when is it likely to start work? It is understood and accepted that there are no plans to visit the UK and that whatever plans might happen in the future are limited, but presumably there is the possibility that members of the commission may wish to interview Ukrainian exiles in the UK in order to get evidence for assessing damages. It would be interesting if the Minister could clarify whether that would be the case. Certainly, one would not want to obstruct such a process.
We are debating this against the backdrop of current meetings between Russia and the United States, which, to be honest, are quite concerning. What it seems is being discussed comes pretty close to something like persuading the Ukrainians to surrender, which I know is not the UK’s policy. Apart from a few fringe people in the political arena, all the official parties are strongly supportive of Ukraine.
Can I test the Minister a little? I know it is hypothetical, so I have no doubt that he will use that as a defence. President Zelensky has said that he is worried that we may be facing a new Yalta: a situation where the great powers carved up Europe without much reference to the people who were directly affected by it. That is obviously President Zelensky’s concern. People can recognise that the brave people of Ukraine are war-weary and exhausted and would welcome peace, but not peace at any price.
Are we involved in these negotiations, and to what extent does Britain have the opportunity to influence the outcome and ensure that the interests of Ukraine and, indeed, the wider interests of Europe, are fully appreciated? One of the concerns that many of us have is that there is a degree of ignorance and carelessness within the American Administration and, indeed, America’s wider political society, in regarding Europe as some faraway place that does not affect them very much. It affects us very much, and it is not acceptable that it should be carved up by outsiders who are not party to this. I hope that the Minister will understand the concerns we have.
On the specifics of the commission, I remember from the last debate that the seized Russian assets added up to about half the assessed damages or liabilities at that time. Is that still the case? Can we be sure that this is the best case for ensuring that those assets are not returned to Russia but are instead used for these purposes, and that the other half is still an obligation on Russian when it comes to the time of reconstruction?
On a very minor but important detail, on the fact that the commission does not allow road traffic offences to be given immunity, we realise from past experience that this is important. We have had concerning misuses of immunity in the past, so I want to acknowledge that we are grateful that this has happened and to accord the fact that the devolved Administrations have said that those aspects of the commission’s activities that are devolved will be subject to separate legislation, which I understand is at hand.
To conclude, I welcome this development. Timetabling would be of interest and, obviously, assurances that it will happen and that we will not be left with a situation where outsiders, in effect, negate its efficiency.
As a passing interest, many years ago I was for several years a member of the Parliamentary Assembly of the Council of Europe, an organisation for which I have huge admiration and was very grateful to be part of. It continues to produce valuable initiatives and support democracy and human rights, more vigorously than perhaps any other institution in Europe. I hope that the United Kingdom will continue to be a full and active participating member of the Council of Europe. As an aside to the Conservative Front Bench, I am concerned that the Conservatives are going down a path that could lead to Britain’s withdrawal from the Council of Europe if we were to withdraw from the European Convention on Human Rights. Support for the convention is a precondition of membership. I hope that that will not be the case, but I cannot leave this without saying that it is a concern.
The Earl of Courtown (Con)
My Lords, I thank the Minister for going through this debate on the International Claims Commission for Ukraine. As he said, the order gives effect to the privileges and immunities required by the convention in establishing the International Claims Commission for Ukraine (Immunities and Privileges) Order. As the noble Lord, Lord Bruce, said, we debated the convention in detail in June, and I will not detain the Committee with a rerun of that detailed debate. However, some points raised by my noble friend Lord Callanan in that debate remain relevant. I hope the Minister will be able to provide an update on them.
On the question of Russia’s liability for the costs of the commission, can the Minister say what assessment the Government have made of the likely total cost to the UK of the commission, should Russia never join it? In addition—and the noble Lord, Lord Bruce, touched on this—can the Minister say what the Government’s latest position is on the use of frozen Russian assets to support Ukraine? The Minister’s predecessor did not answer the point in our previous debate about including compensation for Russian actions between 2014 and 2022. Perhaps I can press the Minister for an answer on that today.
The noble Lord, Lord Bruce, mentioned the position of my party on the ECHR. The Conservative Party would leave the ECHR. This policy has been considered in detail, and it has been set out in full. We would, of course, continue full-throated support for Ukraine outside the ECHR, and I see no reason why leaving the ECHR should prevent us backing efforts to ensure that Ukrainians who have suffered such loss as a result of Putin’s illegal war get the compensation they deserve.
Lord Bruce of Bennachie (LD)
I am grateful to the noble Lord, but I wonder if I might get clarification, because leaving the ECHR means leaving the Council of Europe. There are only two countries in Europe that are not members of the Council of Europe. They are Russia and Ukraine. So, is the Conservative Party’s position that the UK is going to be the third one?
The Earl of Courtown (Con)
I think I will leave it as I have already said. We are steadfast in our support for Ukraine, and we will support the Government when they are doing the right thing by our Ukrainian partners, who have suffered so terribly at the hands of Vladimir Putin.
Lord Wood of Anfield (Lab)
I am grateful to the noble Lord, Lord Bruce, and the noble Earl, Lord Courtown, for their contributions. I will try to quickly answer their questions. The noble Lord, Lord Bruce, asked whether the commission has started work. No, it has not started work yet. The register of damages has been compiled. The process is that countries such as the UK have to confirm the convention, and this SI enables us to do that. We anticipate—I am looking at my officials—that that will be ratified early next year, and other countries have to do the same. Then the process of beginning an administrative body to do the work begins. The register of damages, which is the essential prerequisite for this, is well in train, but not the claims commission itself.
The noble Lord, Lord Bruce, also asked whether the claims commission will want to do interviews in the UK. It is quite possible. I cannot see into the future, but these privileges and immunities are the standard way in which members, officials and functionaries of the commission would work, consistent with commitments we have and the behaviour we expect. The noble Lord, Lord Bruce, also asked me to become a CNN pundit on the Abu Dhabi talks—I feel like a CNN pundit on this one. Jonathan Powell, the National Security Adviser, my friend and colleague, is in Abu Dhabi today and tomorrow. He will be in the vicinity of the conversations. We are fortunate in having him as a National Security Adviser with extremely close connections to the E3 national security adviser network and to the American representatives. We are pleased that we have some engagement in this process.
The noble Lord is also right to say that there are a number of different initiatives. The Finnish and Norwegian leaders recently had a call with Vladimir Putin, and there is uncertainty about what will happen next. I live in hope that there will be a breakthrough in Abu Dhabi. My expectations are governed by a series of false dawns when the Russian position, sadly, did not change. To go back to the point made by the noble Lord, Lord Bruce, I completely agree that there are lots of questions about the future of European security that need to be answered, but a ceasefire has to be in place first before any of these other issues are addressed collectively. That ceasefire should be achieved as soon as possible.
Both the noble Lord and the noble Earl raised the issue of Russian sovereign assets. Our position is that Russia should compensate Ukraine for its internationally wrongful acts: it must fund the cost of the reparations mechanisms. Until Russia agrees to do so, the operational costs of the claims commission—just those costs—will be covered by its member states from the point at which the organisation is established. As a member, the UK will contribute to these operational costs. The precise amount will depend on the agreed funding arrangements between members, which is yet to be decided.
Arrangement of Business
The Deputy Chairman of Committees (Lord Vaux of Harrowden) (CB)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
National Policy Statement for Fusion Energy Generation
(1 day, 23 hours ago)
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Baroness Curran
That the Grand Committee takes note of the initial proposed National Policy Statement for Fusion Energy Generation.
The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Baroness Curran) (Lab)
My Lords, it is a pleasure to be with you this afternoon. At its heart, EN-8 is about preparing for a transformative new energy source. Fusion offers the prospect of abundant, low-carbon, safe energy. It has the potential to strengthen our long-term energy security, support economic growth and position the United Kingdom at the forefront of the emerging global industry. Fusion is already supporting UK jobs, supply chains and innovation. Efforts to commercialise it will enable us to capture a significant proportion of the emerging global market.
This debate is not about what specific projects should look like or where they should be located. Rather, it is about ensuring that our planning system is ready for the significant opportunities that future fusion energy projects may bring to local areas and to the UK as a whole. It is about signalling to the rapidly growing global fusion industry that the UK is open for business and that we are ready to support real-world fusion energy deployment.
EN-8 marks an important milestone in that journey. As noble Lords will know, national policy statements are statutory documents prepared under the Planning Act. They provide the principal framework for the assessment of development consent applications for nationally significant infrastructure. Once designated, EN-8 will be world’s first national planning policy dedicated to fusion energy infrastructure. It will sit alongside the Overarching National Policy Statement for Energy (EN-1) and provide the primary planning framework for nationally significant fusion energy projects in England and Wales.
It is important to be clear about what EN-8 does and does not do. EN-8, alongside EN-1, provides developers and decision-makers with clear policy for assessing nationally significant fusion energy projects. It establishes a proportionate approach that reflects fusion’s distinct characteristics, while ensuring rigorous assessment of relevant environmental and safety planning considerations. As fusion remains a rapidly developing field and future facilities may differ in design and operation, EN-8 provides for a deliberately technology-neutral framework that supports innovation and will remain relevant as fusion technologies develop.
What EN-8 does not do is approve any specific fusion energy development. Nor does EN-8 allocate sites for future fusion projects. Nor does it replace existing regulatory regimes that protect the environment, workers and communities. Rather, EN-8 provides much-needed clarity and transparency for decision-makers, as well as developers who want to build in the UK, reducing uncertainty and making the UK a more desirable place to invest.
Why is a stand-alone NPS needed for fusion, and why now? The simple matter is that it would not be appropriate to apply requirements designed for nuclear fission power stations to fusion facilities, given the differences in the technology. The two technologies are fundamentally different and have very different hazard profiles. Fusion involves joining light nuclei, such as hydrogen isotopes, to produce heavier ones, such as helium. Fusion does not use the fuels used in nuclear fission, cannot create a runaway chain reaction and does not create very long-lived radioactive waste. A fusion-specific national policy statement therefore provides the most proportionate and effective approach to planning for future fusion energy developments that supports innovation and investment.
With over 70 years of research and development and a world-leading regulatory framework separate to nuclear fission, the UK has already established itself as a leading destination for fusion research and development. In our March 2026 fusion strategy, we set the guiding objective to accelerate growth of our UK fusion industry. Major programmes such as the spherical tokamak for energy production—I think I got that right—which is our prototype fusion power plant programme, demonstrate our ambition to remain at the forefront of global efforts to commercialise fusion energy and provide the demand to grow a UK supply chain. We are also seeing private development such as the UK Infinity Fusion Consortium moving at pace and developing plans to deploy in the UK. Implementing a clear and predictable planning framework now is therefore an important part of creating the conditions necessary for investment and deployment.
EN-8 is therefore not simply a planning document. It is part of a broader effort to ensure that we are ready for the opportunities that fusion can offer. It provides certainty where certainty is needed, flexibility where flexibility is required and a proportionate framework that reflects the distinctive characteristics of fusion technology. EN-8 has been designed with these principles in mind.
EN-8 follows the structure of other technology-specific energy national policy statements and sits alongside the Overarching National Policy Statement for Energy (EN-1). EN-8 explains how EN-1’s generic assessment principles apply to fusion energy infrastructure and sets out the fusion-specific considerations that earlier consultation has suggested. It explains what, if any, additional factors need to be considered by developers of fusion energy infrastructure.
In addition, while the Nuclear Regulatory Review deliberately excluded fusion, given the differences in technology and regulatory approach to nuclear fission, we have nevertheless considered the review’s recommendations carefully and reflected those relevant to fusion in EN-8. The draft NPS does not exclude semi-urban locations and acts only where necessary, it supports socioeconomic benefits from fusion and it avoids unnecessary or duplicative requirements through proportionate, outcome-based assessment. EN-8 gives developers, regulators, communities and decision-makers clarity and confidence, while retaining flexibility for the future.
Between June and August this year, the Government consulted publicly on the draft EN-8. Respondents from industry, academia, regulators, councils and the public broadly supported a technology-neutral framework dedicated to fusion which is aligned with the wider national policy statement suite. Of course, respondents also highlighted areas where further clarification could be helpful, including on the interaction with regulatory regimes, the approach to phased or evolving fusion projects, the treatment of cumulative impacts, climate resilience and the wider socioeconomic benefits that fusion may bring. These are all important points, and the Government are carefully considering all consultation responses as part of the next stage of the process. I would like to place on record my thanks to everyone who contributed to the consultation and to the Energy Security and Net Zero Committee for its scrutiny of the draft document.
Fusion remains a potentially transformative energy source, and commercial deployment is growing ever nearer. But if the United Kingdom is to maintain its position as a global leader in fusion, we cannot wait until projects are ready to be built before putting the necessary frameworks in place. I look forward to hearing the views of noble Lords in today’s debate. I beg to move.
Lord Khan of Burnley (Lab)
My Lords, I welcome the publication of the Draft National Policy Statement for Fusion Energy EN-8. We stand at a critical juncture in our transition to a clean energy future. Fusion energy offers the extraordinary promise of near-limitless low-carbon power without the long-lived high-level radioactive waste associated with traditional nuclear fission. By establishing a dedicated, streamlined planning framework today, we ensure that the United Kingdom remains a global leader in commercialising this revolutionary technology.
We can see the tangible reality of this ambition right now in Nottinghamshire with the pioneering spherical tokamak for energy production, or STEP, project at West Burton. This world-first prototype is not just a scientific experiment; it is an economic engine for the East Midlands, proving that the green transition can drive regional growth, create high-skilled jobs and revitalise our industrial heartlands. By providing a clear planning pathway through EN-8, we give the STEP project and the commercial ventures that will inevitably follow it the long-term certainty that they need to succeed.
I particularly welcome the Government’s decision to grant fusion projects critical national priority status, aligning them with our broader decarbonisation goals under EN-1. Furthermore, distinguishing fusion from fission by removing rigid population density restrictions is a sensible, science-led approach that recognises the inherent safety advantages of fusion technology, where a meltdown or runaway chain reaction is physically impossible.
However, while we must pave the way for innovation, we cannot afford to outpace our regulatory safeguards. A robust policy framework must answer the difficult questions before the concrete is poured. First, we must address the capacity and readiness of our regulators. The Energy Security and Net Zero Committee recently raised valid concerns regarding the relative inexperience of environmental regulators with first-of-a-kind commercial fusion. How are the Government planning to resource the Environment Agency and the Health and Safety Executive so that they can rigorously assess complex systems such as STEP without administrative bottlenecks?
Secondly, while fusion does not produce high-level waste, it generates significant amounts of low and intermediate-level radioactive materials through tritium use and materials activation. What specific criteria would EN-8 enforce regarding lifecycle assessments and the long-term decommissioning of these facilities? Where and how will this waste be safely managed?
Finally, as prototypes scale up into commercial plants, we must look at the broader geopolitical and security landscape. How will this planning framework interact with non-proliferation considerations, particularly concerning the international supply chains for deuterium and tritium?
EN-8 is a bold, necessary and deeply exciting step forward. If we can resolve these pressing questions around regulatory resourcing, waste management and supply chain security, we will not only secure our own energy independence but pioneer a clean energy blueprint for the rest of the world. I thank the Minister for introducing the national policy statement and for her introductory remarks, and I look forward to her response.
Earl Russell (LD)
My Lords, it is a pleasure to speak in this debate, and I thank the Minister, the noble Baroness, Lady Curran, for securing it. I welcome the chance to speak on what is a really extraordinary scientific journey—one that, as others have said, is vital to our long-term net-zero future. The running joke has always been that fusion is the energy of the future and is always 30 years away.
Earl Russell (LD)
Whether 15 or 30 years away, however, we are making progress, and that joke does not really apply anymore. We are trying to do something really extraordinary: to build a star here on earth, to heat hydrogen to around 10 times the temperature of the core of the sun, and to hold plasma in a chamber with magnets cooled to near absolute zero.
Britain is not sitting on the sidelines on this but is actually leading the world. The Joint European Torus at Culham has set records for fusion energy output. The MAST upgrade is the world’s largest operational spherical tokamak. Public and private investors, from the UK Atomic Energy Authority to Tokamak Energy, are pushing ahead and pushing each other forward. We have rightly earned our place at the heart of this.
The prize, as others have said, is incredibly large. The International Atomic Energy Agency counts fusion among the most environmentally friendly sources of energy: no carbon dioxide; no harmful atmospheric emissions; and it produces fuel from hydrogen and lithium, which are both widely available. We know that electricity demand here is expected to double, or more than double, by 2050, as we seek to electrify our heating, transport and industry. The UK Atomic Energy Authority believes that fusion could provide steady baseload power that would complement our renewables. If it works at scale, we could move from an energy politics of scarcity and competition towards abundance, and the global market has been estimated to be worth £12 trillion.
But we need to be honest about the climate argument, which is a point that the Commons Energy Security and Net Zero Committee also made. The earliest we will see this energy in production and viable is the 2040s, so we need to continue on our renewables journey and we need to cut our emissions. This energy will come late in the day in terms of meeting our climate targets.
That being said, we on these Benches back fusion. We support it, and we support the £2.5 billion invested so far and the £1.3 billion to be put into STEP. The Government are backing a winner, and I believe that it is justified, but the risk is also large, and the horizon is long. Ministers and the Government have a duty to be open about the costs and processes involved and to make sure that we are getting value for public money.
That brings me to EN-8. As the Minister said—I did not know this until she said so—it is the world’s first policy for energy fusion. Obviously, planning policy is our primary consideration here today. There is a lot here that we welcome and support, and my sense is that that is also the case for others around the Room today. We welcome the designation of low-carbon fusion energy as a critical national priority; the priority for brownfield and former energy sites; and the recognition that fusion’s low radiological risk means no population density limits. We also welcome the encouragement of collocation with energy-intensive users, such as data centres, and the 19 fusion-specific considerations on top of EN-1.
We also welcome the broadening of what can count as a nationally significant project. The Government are bringing in fusion infrastructure with thermal, or combined thermal and electricity, capacity over 50 megawatts, which recognises that fusion plants may supply heat as well as power. We also welcome the application of good design principles, which are key, and how the new plants will meet the very important climate-resilient targets—as we know, our climate is changing in the future.
As the Minister said, industry has broadly welcomed the draft. I thank the Minister for noting that the Government will look at the responses and points that have been made on that draft.
I have a few areas that I would like to explore while I have the chance to do so. In 2022, the Government decided that fusion would continue to be principally regulated by the Health and Safety Executive and the relevant environmental agency. As the noble Lord, Lord Khan, has already mentioned, of course we recognise that fusion is not fission, but the Commons Energy Security and Net Zero Committee was entirely unconvinced that removing the Office for Nuclear Regulation would reduce bureaucracy and warned that “the relative inexperience”—or, really, the complete inexperience—
“of the Environment Agency may lead to the excessive caution”
in this field. My question for the Minister, therefore, is: how will regulators be adequately resourced? What specialised staff are the Government seeking to recruit and what are the timeframes for ensuring that all this is done in good time?
I understand that fusion sits outside the nuclear siting and licensing regime of 1965; that makes sense, but questions remain about how third-party liability, insurance and—as has already been mentioned—long-term waste costs can be handled. As the industry seeks to invest, it will need further clarity on these points.
Can the Minister also say a little more on where we are at with the STEP programme? I understand that the aim is to submit a development consent application in 2029 and to start building in 2030. Even conventional schemes can take well over a year, so are we still on track for this timetable? It feels like quite a tight timetable for a one-of-a-kind plant.
Fusion plants will be strategic national assets and the supply chains behind them will depend on global supply chains. What considerations have the Government given to securing those supply chains, particularly when we will face a world of competition, particularly with the USA and China, which are particularly investing in this technology? What are we doing to make sure that those supply chains work?
The Energy Security and Net Zero Committee also called for non-proliferation guidance to be issued now, not at the five-year review. Will the Government accept that recommendation?
For me, another important point is that these are really big infrastructure projects and we want to support community benefits. What more are the Government doing to make sure that local economies, the wider economy and the people who live next to these big industrial sites will benefit from them? Is it still expected that STEP will support around 10,000 jobs? What work is being done to support the skills and apprenticeships that will go with that?
Issues have also been raised around how we talk to local communities about these projects. Obviously, this is a new, evolving and unknown technology, so there is a real need for the Government to put effort and consideration into how they communicate these projects to make sure that the public are reassured of their inherent safety.
Cooling water is an issue. Tomorrow, we will debate the Environment and Climate Change Committee’s report on drought. Obviously, we know that this is subject to forward plans, but it looks like we could be short by 5 billion litres of water per year by 2030. These plants have big cooling needs, and they may be collocated with data centres and other high intensity water and energy requirements. Given that collocation is mentioned in this document, will the Government give more consideration to desalinisation or other methods so that we can look at water usage? Water usage is quite a critical element of these projects.
There is still some debate about the relationship between EN-1 and EN-8; I understand what the Minister says, and that EN-1 is the overarching document. I welcome the fact we have developed a separate policy with EN-8, but there are some issues about the relationship between those two documents, which could do with further clarification.
I also want to ask about the energy spatial plan, which the Government are in the process of developing and should be published later this year. But this plan needs to work with the energy spatial plan. These plants, particularly at start-up, will require to draw huge amounts of energy from the grid—although, when they are up and running, they will supply energy back to it—so grid planning and siting are key issues.
I like the fact that we are at the forefront of this technology, but the technology is evolving and changing, and other countries are investing heavily in it. Just yesterday I was reading about the helicon current drive at the DIII-D national energy facility, which is a new development of an old technology that hopes to maintain a steady state for longer so that we can get closer to getting long-term energy out of these plants. That highlights that the technology is moving really quickly, so I guess there is a question about how EN-8 will develop with new technologies.
In the European Union, policy on fusion energy is still country based, and we are ahead of the EU now. But these are big, large-scale projects, and as part of our reset with Europe we should be looking for greater co-operation with our European partners. I think we are actually ahead of the game here, and on this document we could be leaning into Europe to develop better policies based on this. I would encourage the UK Government to include fusion as a key element of our European reset.
We are supportive of this national policy statement. We think this is a real opportunity for the UK to press home its technological advantages in this area. The development of and investment in this technology is really important towards providing our future long-term energy security and helping deal with the problems of energy use and climate change.
Lord Moynihan (Con)
My Lords, I declare my interest as chair of Amey, Acteon and Buckthorn Partners. I welcome this national policy statement and congratulate the noble Lord, Lord Khan, on his contribution. I will return to the specific points he raised as I think they are very important in the context of getting this policy right. We are in a period of consultation. The strategy aims, as we know, to accelerate growth in the UK fusion industry, building on the £2.5 billion in R&D provided by the previous Conservative Government. Today, this will be primarily achieved by investing £1.3 billion into the spherical tokamak for energy production—STEP—prototype fusion power plant. STEP, as has been mentioned, aims to design, develop and build a prototype fusion plant by the 2040s. The Conservative Government committed £240 million in funding towards the first phase of concept design in the previous Parliament.
Before I go into detail on a specific number of issues, which I would be grateful to the Minister to take into account, this is part of the Overarching National Policy Statement for Energy, or EN-1. It was drawn to our attention in the statement that we should also read EN-1 and other relevant national policy statements. In reading it, I came across a section that I know will have the enthusiastic support of the Minister, because it talks about the need for new nationally significant infrastructure projects and new nuclear energy infrastructure. Also within the section is the acknowledgement of the
“need for new nationally significant gas infrastructure”.
Gas is noted
“as a reliable source of flexible generating capacity”.
We need to:
“Meet ‘peak’ demand for gas”,
and
“Allow for a sustained delivery of large volumes of gas, for example, demand over a particularly cold winter”
and also
“Provide access to the most competitive gas supplies”.
In the spirit of harmony across this Committee, I congratulate the Chancellor on announcing Jackdaw. On the subject of hydrocarbons, we on this side of the Committee welcome the approving and defending of the Sea Lion Field by the Foreign Secretary—now known as the MP for Port Stanley and the Government’s special oil envoy for the South Atlantic. I say that today because this is the first day of consideration by the International Tribunal for the Law of the Sea, under the UN convention, in its hearing on the UK/Argentina dispute, of oil exploration in the Sea Lion Field. We wish the Foreign Secretary well in his strong defence of oil production in the South Atlantic.
Turning to the specific points in the Motion before us, particularly in terms of the House of Commons consideration of planning for fusion and the draft national policy guidance, I thought it would be helpful to outline some of the concerns and comments made by the private fusion companies and industries bodies. They welcome the draft National Policy Statement for Fusion Energy Generation but submitted several key requests for stronger political clarity. I very much hope that these will be taken into account by the Government.
They noted that individual private fusion companies did not submit stand-alone written evidence to the House of Commons Energy Security and Net Zero Committee’s inquiry. Instead, private sector views were channelled through representative bodies, primarily through the Fusion Industry Taskforce, or FIT, which represents more than 20 private engineering, supply-chain and fusion organisations, and the Fusion Industry Association, or FIA, which is the global trade body for around 50 private fusion developers. I would like to address some key points raised by the private sector representatives during the parliamentary scrutiny of draft EN-8 and ask the Minister to ensure that, if she does not fully respond today—which I would totally understand—all these points will be taken into account when the Government come to respond.
First is the question of unclear regulatory sequencing and timing. The FIA and FIT warned that draft EN-8 lacks sharp clarity on how the development consent order process interacts with regulatory justification decisions and permitting by the Health and Safety Executive and the Environment Agency. Industry representatives stressed that unclear decision points prevent developers and their supply chains committing capital and signing contracts with confidence.
The second point, admirably raised by the noble Lord, Lord Khan, as well as by FIT, is the concern is that the HSE and Environment Agency currently lack enough suitably qualified and experienced personnel to evaluate what are diverse, first-of-a-kind private fusion plant designs. FIT warns that capability bottlenecks inside these regulators could severely delay plant approvals as the sector scales. This challenge is recognised across the Committee and I hope the Government will take it into account and respond fully when it comes to their public response.
The third point is ambiguity over long-term radioactive waste liabilities. FIT commented that the draft EN-8 note failed to define who holds long-term financial and operational responsibility for fusion waste disposal across a facility’s life cycle, specifically how liability is split among the developer, the operator and the Government. It noted that this uncertainty directly harms private investment cases and project profitability.
The next point is the absence of decommissioning funding mechanisms. Industry witnesses highlighted that separating fusion from nuclear fission under the Energy Act 2023 removed established fission decommissioning frameworks without replacing them. Private sector developers require a clear, proportionate mechanism for meeting future decommissioning costs rather than waiting until the Government’s target date of autumn 2027.
Then there is the very important issue of silence on third-party radiological liability and insurance. Supporting industry concerns, Lloyd’s Syndicate 1176 and sector witnesses pointed out that neither EN-1 nor draft EN-8 establishes substantive policy on third-party radiological liability, insurance or financial protection. Fusion is excluded from the Nuclear Installations Act 1965, so private developers cannot rely on existing fission insurance pools and therefore face uncertainty over early-stage risk coverage. That is another point that I hope the Government will be able to address.
There is also the very important point about the risk of planning consenting becoming the critical path. Industry leaders warned that if planning and consenting timelines are not streamlined alongside EN-8, bureaucracy rather than engineering would become the main bottleneck to building commercial plants in the 2030s. They stressed that planning frameworks must match the rapid commercial pace of private developers already selecting sites for pilot power stations. This is absolutely critical. I suggest to the Minister that more regulation and red tape can suffocate private sector development, and I hope she will be able to respond positively to the points that have been made on planning. One is on delaying commercial deployment: private developers, some targeting pilot plants by the early 2030s, have argued in planning consultations that overly prescriptive, multi-stage, statutory engagement rules risk slowing down first-of-a-kind infrastructure delivery.
Then there is the question of consent-based siting advantage. Take the example of West Burton; it was selected through a competitive volunteer-led siting process in an area—Megawatt Valley—with a 60-year heritage of coal power generation and strong local appetite for industrial renewal. Planning specialists point out that private developers acquiring commercial or greenfield sites without a prior local bidding contest face very different community dynamics that cannot be replicated simply by covering STEP’s outreach template.
There is then the question of reversing the Planning and Infrastructure Act. The Government recently removed rigid statutory pre-application consultation requirements from the Planning Act 2008, specifically to cut red tape and prevent developers running defensive box-ticking consultation rounds to avoid judicial reviews. Reintroducing a bespoke statutory consultation standard solely for fusion runs counter to the Government’s wider push for streamlined, flexible pre-application guidance. These two aspects of planning law need to be considered and, I hope, responded to by the Government.
There is a risk of gold-plating and regulatory caution from adding extra consent layers. In written evidence to the committee, planning stakeholders warned against creating additional consent letters or rigid procedural hurdles for nascent technologies. Critics argue that turning voluntary practice into strict statutory law invites legal challenge over whether a developer met subjective standards of “good” engagement, potentially recreating the exact planning bottlenecks that EN-8 is designed to prevent. At the heart of the questions that I put to the Government this afternoon are these critical planning issues that need to be addressed if we are to be successful in taking this technology forward.
Finally, I add one or two additional points that were made by those making representations on the note before us. One is a lack of a commercial market and off-take framework. In oral evidence, the FIA emphasised that planning rules alone would not deliver private fusion plants without a supporting commercial market mechanism. Private developers targeting competitive power prices need clear revenue and off-take structures alongside EN-8 to unlock private project finance.
Then there is the question of the need to support export and engineering ambitions beyond UK builds. As the noble Earl, Lord Russell, alluded to—I was going to call him my noble friend, but he is my noble friend on this issue as we are agreement on this—the FIT argued that the draft EN-8 focuses too narrowly on domestic site construction, rather than positioning the UK as the premier global hub to develop, engineer and export fusion technology. It urged the Government to ensure that planning and regulatory frameworks reinforce sovereign supply chains and international exportability. If we develop the IP that is involved in this, that is a critically important point for the Government to look at.
Reference has also been made to the importance of securing long-term skills and supply chain certainty. Both the FIT and the FIA noted that private fusion firms are predominantly people-driven enterprises that require a predictable multi-project pipeline to attract talent and justify supply chain investment. They warned that, without clear policy signals linking EN-8 to a trained workforce and to skills programmes, UK firms risk losing engineers and manufacturing capability to competing markets such as the US and China.
Finally, in oral evidence, private sector representatives highlighted the challenge of transitioning public laboratory breakthroughs, such as those at Culham, into private commercial enterprises. They called for clearer pathways to ensure public/private partnerships and national test facilities actively accelerate private sector deployment, rather than keeping intellectual property and capability locked inside state programmes.
These are all reasonable points that have been made about the Draft National Policy Statement for Fusion Energy Generation EN-8, and which the committee in another place wisely looked at in its report Planning for Fusion. Given that we have not yet heard the Government’s response, I very much hope that this exchange in Committee is taken as part of the consultation exercise. I also hope that the points raised by the noble Earl, Lord Russell, and the noble Lord, Lord Khan, are considered as representations and fully responded to by the Government. I would not necessarily expect the Minister to respond today, as that would be unreasonable because many of these points are very detailed, but the Government should take them into account when they come to respond fully to the whole consultation exercise and, indeed, to the committee’s consideration of these issues in another place.
Baroness Curran (Lab)
I thank noble Lords for a very substantial debate, and I very much appreciate the comments they have made. If I may begin with the very last comment made by the noble Lord, I can assure him that my view as a Minister, which I would be certain about, is that comments made in Parliament have very significant status. Particularly given the detailed consideration that has been given here today, I can guarantee that that will be fed into the concentration process; it will be given special status, because it is from Parliament, and it will feed into forming the view that the Government take to respond to that. I also thank the noble Lord for recognising that some comments here today are very detailed indeed, and I may not respond to all of them, but I guarantee that I will come back in detail to them and feed them in.
I also appreciate the noble Lord’s ingenuity because, in every engagement I have with him on the broadest range of energy topics, he squeezes in Jackdaw and the court case that is going on today. I recognise that, but he does that in great spirit because of his commitment to the issue, rather than for any other reason.
I will just make two broad points before I go onto the detail in front of me. The first is on the broad issue of planning. I recognise the substance of what the noble Lord said about planning issues and their relevance to the whole energy field. I think I have said in Parliament before that, in a previous life when I was a Member of the Scottish Parliament and when it was of a different persuasion, I was a Planning Minister. I took the importance of planning very seriously, as a mechanism to protect and support, but also as an opportunity. We need good, balanced planning systems. When regimes do not have that, often business does not thrive either, so planning needs that balance. It is there to facilitate and encourage, not for red tape. For this Government, it is not there to smother business in any way whatever. We want a lively planning system that is the servant of economic growth and development to make sure that we have coherence in the system and a level playing field, and that people have stability. That is part of what today is about: it is to give that coherence and stability, so that investors can have confidence that they know what the framework is, rather than haphazard, piecemeal support. I will engage with the noble Lord’s substantial points and look at them again, and make them a theme of how we look at the consultation.
The noble Earl, Lord Russell, as he always does, made very substantial points about the link to clean energy, and the need to support the renewables industries and recognise the myriad challenges that we face at the moment. I assure him that we will continue on that journey and have many discussions about this. This is one part of that journey, but it does not take us off that path, because we know that this is a longer-term issue, not an immediate solution, and we will not argue that it is or put it forward as such.
I will now try to address some of the other points that were made that I have not addressed yet. Some of your Lordships made similar points, so forgive me if I reference one noble Lord and not another. I will make sure that I respond in writing to anything that I have not picked up.
My noble friend Lord Khan made a very useful, interesting and important contribution to this debate, and raised some very significant and substantial points. The regulatory framework around waste is vital, and I will address the point about public opinion and how we engage the public on this. The UK already has a robust regulatory framework in place, governing the treatment, storage and disposal of intermediate and low-level reactive and other harmful waste. We are recognised as having that as well. EN-8 requires developers to demonstrate how waste from their fusion facilities will be managed safely and in accordance with all existing legal and regulatory requirements, the right construction, operation and decommissioning.
The Government will continue to consider how waste from fusion facilities will be managed as the sector develops, which links to the very important point that the noble Earl, Lord Russell, raised about engagement with local communities and the public more broadly. The broader public are, understandably, perhaps not terribly well versed in the details of fusion energy, so we have a responsibility as the Government to be clear about what fusion is and that it is different from fission, and that, even with both energies, we have robust safe regulatory regimes in place. It is important that Parliament questions that thoroughly—that is why this process is so important—but we need to find mechanisms to ensure that local communities get the benefit of that but understand that planning gives them that protection and confidence. I take that point seriously.
I also welcome the support from the noble Earl, Lord Russell, for enabling thermo-generating fusion plants to be considered as nationally significant infrastructure projects. I think that was also said by my noble friend Lord Khan.
The theme of regulator capacity came out quite significantly. Of course, we have looked at the committee report and will respond properly and in full. The Environment Agency and the Health and Safety Executive are heavily experienced in this sector. They have successfully regulated fusion facilities for decades, having, for example, regulated the JET facility at the UK Atomic Energy Authority in Oxfordshire. The Government will continue to fund these regulators to further build their fusion capability and provide access to subject experts at the UK Atomic Energy Authority. We will continue to support early engagement with developers and knowledge building across the planning and regulatory system and engage with investors to ensure they can have confidence that the skills and understanding capacity are there.
On fusion timelines and energy production, the noble Earl, Lord Russell, also mentioned that the timing of fusion energy will not impact short-term climate goals, which I recognise. It is unlikely to make material impact until the 2040s. However, the benefit of fusion energy development remains, with jobs, inward investment and the development of technologies, such as high temperature superconducting magnets, all adding to the UK’s economy well before the fusion energy does—notwithstanding the general points the noble Earl made about clean energy. In the longer term, as energy demand increases, as the noble Earl recognised, fusion will become a more invaluable source of baseload energy.
As my noble friend Lord Khan highlighted, non-proliferation and liabilities are vital issues that we are required to address. Although they are important, these are not strictly planning matters, which is why EN-8 does not directly address them. Outside of planning, the Government have committed in the fusion strategy to clarify third-party liabilities for fusion and believe that the conventional insurance market, rather than the nuclear market, is the most proportionate approach. The Government are engaging with the insurance market to understand the risks of fusion and develop bespoke insurance products. As part of this, the Government have also committed to identifying, by autumn 2027, a proportionate mechanism to ensure that decommissioning facilities can be met by fusion operators, rather than falling to the public.
The noble Earl, Lord Russell, raised questions about STEP. I am happy to confirm that STEP is progressing well, and we still expect government investment in fusion to support over 10,000 jobs by 2030. Alongside that, we have invested £50 million into skills development through the FOSTER programme. STEP, as well as demonstrating that fusion is commercially viable, acts as a demand signal to the wider fusion supply chain. Earlier this year, a number of contracts were placed with the STEP programme, including the construction partners and magnet engineering partners. We know that there is much to do. It is a very large project, but we are ambitious. As we have recognised, we have got a lot of status in this, and we have to remain ambitious.
I also take this opportunity to note, as the noble Earl, Lord Russell, set out, that the new strategic spatial energy plan is at the heart of the Government’s vision for our power system and will set out the blueprint for our future energy system. The UK’s fusion strategy commits to including fusion within that when fusion technology is sufficiently mature.
Moving on to water, I can confirm, and assure noble Lords, that water use is obviously an important planning consideration. Fusion energy infrastructure may use water for cooling, but this water is returned—just at a slightly higher temperature—and this is tightly controlled by environmental regulation. EN-8 will require applicants to set out their proposed cooling systems and apply the mitigation hierarchy to any significant environmental impacts. As I have said, obviously they are required to look at local impact considerations, including the social and economic impacts on local areas. As was said, it is vital that local communities understand that it is not just a government imposition and that they see the benefit.
I can also assure noble Lords that we have always been open to collaboration with the EU and other international partners, and that remains the case. We will continue to work on that.
I will address the points made by the noble Lord, Lord Moynihan, as best I can. I think we all recognise that fusion is a fundamentally different technology to nuclear fission, with a different hazard profile. A dedicated national policy statement is therefore the most appropriate way forward, because this is so significantly different and has to be understood by the public to be so. We need an appropriate regime to provide a clear and proportionate planning framework for fusion that supports commercialisation while maintaining robust protections for workers, the environment and communities—and gets that balance right. EN-8 offers a better balance for investors and communities.
The fusion sector itself called for this national policy statement, and the responses to the public consultation are supportive. Of course, we will look at those along with the comments raised today. We will address that point. The Planning Act was updated last year to streamline the consenting process, in July new guidance covering all key stages of the process was published, and the Planning Inspectorate is redesigning its services to support the implementation of these reforms. This will include providing bespoke and technical advice to applicants, including fusion developers, at the early stages of the consenting process. I hope that addresses some of the issues that were flagged.
The national policy statements will now be reviewed and either updated or withdrawn at least every five years to ensure that they remain appropriate and reflect the Government’s priorities and ambitions. As I said, the Government will reflect on the committee’s report on the wider planning framework and respond. I very much appreciate the range of comments that were made today and the recognition of the opportunities that this energy can provide. We hope to address your Lordships’ very significant points.
Fusion has the potential to contribute to our long-term energy security, support both near-term and long-term economic growth, create highly skilled jobs and—as has been said—strengthen the United Kingdom’s position in a technology of the future. We are already a world leader in this. Through our fusion strategy, we are taking the steps needed to translate that scientific and regulatory leadership into long-term economic, commercial and strategic advantage. We see EN-8 as an important part of that approach, building on our global leadership by ensuring that the planning framework in England and Wales is ready to support the safe and sustainable deployment of fusion energy in a way that supports innovation and investment. As part of that process, we also listen to communities, business and industry.
I thank noble Lords for their comments. If I have missed any specific issues, I will reply later. I am sure that we will continue to discuss some of those broader themes.
Earl Russell (LD)
I apologise for intervening. I really appreciate those responses, but my point about water and collocation was not just about the fusion plants themselves. Since the Government have collocation at the heart of their documents and plans, and that includes AI data centres and other industries with very water-intensive use, it would be good to have further consideration of other processes of desalinisation, if circumstances allow. This is not something that the Minister needs to respond to me on now, but I recognise that for fusion it would be abstraction of water and there are regulations around returning that, but with this abundant energy there comes possibilities for doing things that we have not done before. I leave that there.
Baroness Curran (Lab)
I thank the noble Earl for that point. I will not respond specifically on desalinisation now to make sure that I get a proper briefing on it first. It may cover a broader issue. I take the general point, however: we live in technologically changing times; there is a lot of excitement about that and huge opportunities, but it raises significant questions. We raised this on the Floor of the House and have seen some very significant debate around it internationally. It is a legitimate question, and one we must keep on the agenda. I will respond to the specific question that he raised.