Lords Chamber

Wednesday 10th December 2025

(began 1 month, 2 weeks ago)

Share Debate
Watch Live
Skip to latest contribution
This debate has concluded
15:06
15:06
15:07
15:08
15:08
15:09
15:10
15:10
15:11
15:11
15:12
15:12
15:13
15:13
15:14
15:15
15:15
15:16
15:17
15:18
15:18
15:19
15:20
15:21
15:21
15:22
15:23
15:23
15:23
15:24
15:25
15:26
15:27
15:27
None Portrait Oral questions: Priorities for the 2026 Review Conference of the Parties to the Treaty on the Non-Proliferation of Nuclear Weapons
-

Baroness Miller Domer.
15:28
15:29
15:30
15:30
15:31
15:32
15:33
15:34
15:34
15:35
15:35
15:37
15:37
15:38
15:38
15:39
15:39
15:40
15:40
15:41
15:42
15:42
15:43
15:43
15:44
15:45
15:46
15:46
15:47
15:47
15:50
None Portrait Business of the House
-

My Lords, I beg to move the

**** Possible New Speaker ****

motion standing in my name on the Order Paper. This motion be agreed to, as many of our opinion will say. many of our opinion will say. Content the contrary not content. The contents have it Infrastructure (Wales) Act 2024 Consequential Amendments Order 2025 Baroness Sanderson of Stoke on Trent. Sanderson of Stoke on Trent. motion standing in my name on the Order Paper.

**** Possible New Speaker ****

Order Paper. Motion be agreed to. As many as are of that opinion will say content the contrary not content. The contents have it. Occupational pension schemes. Collective money purchase schemes. (Extension to Unconnected Multiple Employer Schemes and miscellaneous Provisions Regulations 2025

**** Possible New Speaker ****

Baroness Sherlock. I beg to move the motion. Standing in my name on the Order Paper.

**** Possible New Speaker ****

Paper. Question is that this motion be agreed to? As many as of that opinion will say content the opinion will say content the contrary, not content. The contents have it. Education (Scotland) Act

**** Possible New Speaker ****

have it. Education (Scotland) Act 2025 (Consequential Provisions and Modifications) Order 2025 Lord Katz. My Lords, I.

**** Possible New Speaker ****

Beg to move the motion standing in my name on the Order Paper. The question is this motion be agreed to? As many as are their opinion will say content the contrary not content. The contents have it Judicial Appointments

**** Possible New Speaker ****

Commission Amendment Regulations 2025 Baroness Levitt. My Lords, I beg to move the

**** Possible New Speaker ****

My Lords, I beg to move the motion standing my name on the Order Paper. The question is that this motion be agreed to. As many of that be agreed to. As many of that opinion will say. Content the contrary not content. The contents have it in questions and an answer to an urgent question asked in the
15:51
None Portrait Urgent Question Repeat: Latest developments concerning AJAX and other army vehicles
-

to an urgent question asked in the House of Commons on Monday, the 8th of December on Ajax and other Army vehicles.
15:51
15:53
15:54
Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (Liberal Democrat)
-
-
We in these benches also recognise the responsibilities that recognise the responsibilities that we have with troops now helping to train the Ukrainian army and extend our condolences there. We know that we are committed to Ukraine now that we're waiting for further comments on what's really happening with the Ajax vehicle, can I ask three quick, wider questions? First, the Minister and the Commons admitted that the number the Army has a number of vehicles that have been in service for a long period, which is, I think, saying both the fighting fleet and the logistics fleet are pretty outdated.

Does that mean that we should be putting much more investment in this much more dangerous period into the Army fleet than we currently plan? Second question, we we have the SDR saying we're now in a very different situation, but the Treasury and the budget have said that we'll do a little bit of extra investment in the next two years and then maybe a bit more in 3 or 4 years time. Should we not be now talking about a much more serious threat, which requires much more defence investment than we currently plan? And my third question is about strategic partnerships.

The Defence Industrial Strategy says, I quote, it is no longer affordable for NATO allies, especially within Europe, to develop their own exquisite capabilities at low production volumes. That means much closer cooperation and collaboration with others. And given what President Trump is currently saying about NATO alliance, that means hard negotiations with our European partners. Difficult though it is. Does the Minister agree?
15:56
Lord Coaker Portrait Lord Coaker, The Minister of State, Ministry of Defence (Labour)
-
-
Quite a bit in that the. But the series just just to quickly deal with the points that the noble Lord made. First of all, thank him for the comments he made at the beginning about the bravery and sacrifice of our armed forces. He will know that we've paused all use of the Ajax vehicles pending the outcome of the investigations. As the safety of our armed forces comes, comes first. In terms of logistics. He will. I think he will be referring to the fact that large numbers of trucks are having to be repaired and they are being repaired, and we'll expect that to be completed in the, in the, in the new, in the new year.

In terms of the, the SDR and the money, he will see the budgets that have been made available in the increase over, over a period of time. And he refers to the the aspiration to move even further with that, particularly by 2035, on the point he makes about strategic partnerships. Of course, they're crucial. And we spend a large number of time, a large amount of time, negotiating with European friends and partners. He will have seen the recent Norway deal with respect to the frigates.

He will assume the arrangements we've made with France. He will sing with the arrangements we've made with Germany. He will see the arrangements we've made with Poland, and they're just some of the examples, and I hope demonstrates to the noble Lord that we take seriously the need to negotiate and work and cooperate with our European friends, most of whom are members of NATO as well. This scandal reminds me of a scandal I worked on when I was a very young man. The airborne early warning system of the 1980s started under
15:57
15:58
15:59
16:00
16:00
16:01
16:01
16:02
Lord Coaker Portrait Lord Coaker, The Minister of State, Ministry of Defence (Labour)
-
-
Well. >> If I, if I answer that question, let me let me without being flippant about it, I've fed up with flippant about it, I've fed up with lessons learned from various reports over a period of time. I think the bigger question is why is it that so often the lessons learned don't actually translate into something that that makes a fundamental difference? Because, I mean, the noble Baroness works in the mod, and the noble Lord works in in the way he suggested.

I don't actually think that the vast majority of people set out to do a bad job. I think they work with dynamism, principle and determination to do their best. But somewhere along the line, we don't seem to be able to procure the equipment that that we should at the pace we should and for the price that we should. What I hope is that the defence reform, which the Secretary of State has implemented, the establishment of a new armaments director with a new national armaments director at the top, directly accountable for what happens with respect to procurement is a reform that in a year or two years, or whenever, the noble Lord will be able to turn round and say, this is a reform that worked, lessons were learnt, actions were taken and they made a fundamental difference.

And I just finish with this point. The the real point about this is we have to get our defence industry, whether it be across Europe, but fundamentally in our own country, because the defence and security of our nation depends on the sovereign ability of our own industry to to produce and develop the goods and ammunition and munitions and war equipment to support our soldiers that we need. Yeah. Questions on an answer to an urgent question asked in the House of Commons on Monday 8th December of Commons on Monday 8th December on the restriction of jury trials.

on the restriction of jury trials.
16:04
16:05
16:06
16:07
Baroness Levitt Portrait Baroness Levitt, The Parliamentary Under-Secretary of State for Justice (Labour)
-
-
I repeat what I, in a sense, >> I repeat what I, in a sense, what I said to the noble and learned Lord Lord Keen of Elie. It's a pleasure to see the noble It's a pleasure to see the noble Lord Lord Marks Henley on exactly the same topic as we dealt with a very short time ago. I don't understand why it's felt that for the from the victim's perspective, it makes any difference at all whether it's post-charge or pre-charge a victim dropping out as a victim, dropping out and not getting the case that they thought they wanted to see during the court process.

The fact is that there are all sorts of reasons why it is that victims decide they don't want to participate in the process anymore, but there seems to be some suggestion that in the pre-charge period, those victims are sort of living underneath some kind of a rock, and they're not actually hearing about the problems in the criminal justice system, including the amount of time that victims have to wait to hear that have their court, their cases heard. The fact is, in any event, actually even 9% dropping out post-charge is far too high.

What the statistics show is that the average wait in the Crown Court for victims of rape and serious sexual offences is 391 days. That's an awfully long time over a year for them to wait. Turning to the second of the noble Lords questions why the length of sentence? Well, the reason why the length of sentence is because cases that are that are ultimately result in sentences that are shorter tend to be shorter and less complicated cases to hear.

So they're much quicker. That's the reason. And it's never been the case, as noble Lords know that all cases in the criminal justice system are heard by juries. 90% of cases are heard in the magistrates court. What this government is proposing to do is simply move that line a little bit in order to ensure that those most cases that are most serious are going to get the longest sentences in the Crown Court, are dealt with more quickly.
16:10
16:10
16:12
16:12
16:13
16:13
16:14
None Portrait Urgent Question Repeat: Latest publication from Operation Kenova and the Government's response to its findings
-

Questions on an answer to an urgent question asked in the House of Commons yesterday on Operation of Commons yesterday on Operation Kenova. My Lords, a 164.
16:15
16:16
Baroness Anderson of Stoke-on-Trent Portrait Baroness Anderson of Stoke-on-Trent (Labour)
-
-
My Lords, can I first put on record my sincere thanks to both John Boucher and Sir Ian Livingstone for an extraordinary piece of work. They have set the standard for both gaining trust with victims, but also for ensuring that we have an article two compliant investigation which has given us very sobering reading. Noble Lord is aware that yesterday we published a written ministerial statement, and he's also aware of the ongoing litigation about many of the issues that are in the report.

We will be discussing them in more detail once some of that litigation is completed. With regards to his points about our security services, I completely agree with him. Both our security services and all of those that wore uniforms during the troubles, as he knows, because I have said it from this Dispatch Box I agree they ran towards danger to keep us all safe. They continue to do so every single day, both in Northern Ireland and in the rest of GB. With regards to neither confirm nor deny the noble Lord is right.

The first duty of any government is to protect national security and we must therefore ensure sensitive information that is injurious to the public interest, including information which could damage national national security or present a real risk of harm to life, is not released. Ncnd is an important protection, in particular, where disclosure information might otherwise compromise the recruitment and retention of Cheers, but it is also covers a broad range of other sensitive national security activities. There will be no change and with regards to the Irish state, the roles of the Irish State noble Lords are aware that in September we published a joint framework about how we're going to work together on legacy, and we hope to see all of that delivered in full.

We expect to Lord Low.
16:17
16:18
16:18
16:19
16:20
16:21
16:22
16:22
16:23
16:24
16:24
16:25
16:25
16:26
Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage, Parliamentary Under-Secretary (Housing, Communities and Local Government) (Labour)
-
-
facilitate a step change in the delivery of the new homes and critical infrastructure our country critical infrastructure our country so desperately needs. This legislation will create certainty and speed up the process for and speed up the process for consenting, nationally significant infrastructure. It will create a new sustainable model for new sustainable model for development and nature recovery, and establish mechanisms for effective cross-boundary strategic effective cross-boundary strategic planning. We can and must do things differently, and this bill will enable us to do so.

That is why we have been so determined to ensure we can make use of its provisions as soon as possible, and why I am delighted that following today's debate, it will shortly become law. We have already debated at length the intention of the noble Lord Lord Lansley amendment 33, following our previous debate last week. The government tabled an amendment to give effect to this change, which will now see the first set of regulations for the national scheme of delegation, subject to the affirmative procedure.

I am pleased to say that on Monday, the Other place agreed to the government amendment which gives effect to that change, removing the unnecessary provisions in Lords Amendment 33, in respect of future regulations for which there are already powers in the Town and Country Planning Act 1990. I would like to thank Lord Lansley for his continued engagement. This change, alongside existing safeguards built into the legislation, will ensure that an appropriate amount of parliamentary scrutiny is able to take place on these provisions ahead of implementation.

Given this House has already confirmed its agreement with the noble Lord Lord Mance amendment, I trust it will now lend its support to motion. Aye. I move.
16:28
16:29
16:30
16:30
Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering (Conservative)
-
-
Congratulate the noble Lady for for the Minister for. >> Accepting such a sensible amendment. The noble Lady was kind enough to write to me about non-hazardous reservoirs. And she non-hazardous reservoirs. And she did say in that that the regulations and the guidance will be kept under review. Could I urge her to use her good offices to ensure that that both houses will be able to review that? I just once again record my huge disappointment that this non-hazardous reservoirs legislation will not come into effect before 2028, which I think is far too late given the impact reservoirs operating below capacity already, the deficit we will face over next year, especially in

**** Possible New Speaker ****

Yorkshire, is deeply regrettable. My Lords, I'd like to thank all

**** Possible New Speaker ****

My Lords, I'd like to thank all noble Lords who have contributed to this short debate in response to the noble Lady, Baroness McIntosh. the noble Lady, Baroness McIntosh. I would just say that I think possibly a question is out of scope possibly a question is out of scope of the motion that's before us today, but I'm always happy to meet with her and discuss this further. And she does have a detailed letter from me today explaining the government's position. I'm just very briefly address the points made by the noble Baroness Pinnock.

It's vital that exercising Democratic oversight planning committees operate as effectively as possible. As I know, she knows only too well not revisiting the
16:31
Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage, Parliamentary Under-Secretary (Housing, Communities and Local Government) (Labour)
-
-
same decisions and focusing on applications which require member input. So the government wants to make sure that skilled planning make sure that skilled planning officers in local authorities have the right level of trust and empowerment, making sure they can resolve more applications more quickly in the service of residents and businesses, and to ensure that our planning professionals are our planning professionals are fully supported in their role and their skills and experience put to best use. But I know that she'll be best use.

But I know that she'll be more than familiar with all of those issues that I've spoken about. My Lords, this will be my final time at the despatch box. Speaking on this bill, I'm not going to say thank goodness, but we've had we've had some very long discussions and some very long sessions on the bill, and I would like to once again place on record my thanks to all noble Lords who have engaged with the Bill and the Department through its passage. The open and robust nature of our debates have undoubtedly strengthened this bill.

In particular, I want to extend my heartfelt thanks to Baroness Boycott, Lord Jamieson, Lord Roborough, Baroness Pinnock and Earl Russell for the time they have given to engage in so thoughtfully on this critical legislation to all of the civil servants and the staff in the House who've had to work very late sometimes on this bill. And I very much look forward to working with noble Lords as we take forward the implementation of this bill, which will be a major step in the government's reform programme.

The House should be under no doubt. We intend to move quickly over the coming months so we can realise the full benefits of this legislation. My Lords, I move.

**** Possible New Speaker ****

The question is that motion A be agreed to, as many of that opinion agreed to, as many of that opinion will say, content, not content. The contents have it. Consideration of Commons amendments on the Commons amendments on the Employment Rights Bill Baroness
16:33
Baroness Lloyd of Effra Portrait Baroness Lloyd of Effra, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
-
-
Lloyd of Effra. >> My Lords, I beg to move motion A that this House do not insist on its insistence on Lords Amendment one. B in respect of which the Commons have insisted on their disagreement and do agree with the Commons in their amendments, one E and one F in lieu of Lords Amendment one B, I will also speak to motions B, b1, C, D, d1, E, and e1. Given the developments that have taken place since the bill was last debated by the House, I would also like to take some time to set

**** Possible New Speaker ****

out the. Apologies. The question is that the Commons amendments be now considered, as amendments be now considered, as many of that opinion will say. Content the contrary, not content. The contents have it motion a The contents have it motion a Baroness Lloyd of EFRA.

**** Possible New Speaker ****

So again. Apologies, my Lords, I beg to move motion A that this House do move motion A that this House do not insist on its insistence on Lords Amendment one b in respect of which the comments have insisted on their disagreement and do agree with the comments in their amendments, one E and one F in lieu of Lords Amendment one B, I will also speak to motions B, b1, C, D, d1, E, and e1. Given the developments that have taken place since the bill was last debated by the House, I would like to take some time to set out the context of those changes.

I therefore must ask for the indulgence of the House as regards the length of my speech, before turning to the specifics of the amendments. In the name of my noble Lord Lord Fox, I want to first provide a general update throughout the passage of this important bill, which delivers on multiple manifesto commitments. We have gone through careful deliberation, scrutiny and debate. Noble Lords will have seen my statement to your Lordships' House last week, where I outlined how the government had convened tripartite discussions with trade unions and business representative organisations.

These discussions were focussed on finding a way forward on unfair dismissal. This is an issue which business and many in your Lordships' House, including His Majesty's Loyal Opposition, told us was their number one priority. Solving it was the only means of breaking the current impasse between this House and the other place. I am glad to report that we have secured an agreement between trade unions and business representative organisations on that issue, which is now unlocked, a path to get the much needed bill on the statute book without further play.

This is acknowledged in the joint statement by business representative organisations involved in the negotiations, which accepts that any remaining concerns with the bill can be dealt with in the regulations to come, which will be informed by open and transparent consultations. This negotiated outcome has now been debated and agreed by the elected House. We will, of course, debate it in detail this afternoon, but I begin by asking your Lordships' House to endorse the agreement reached by worker and employer representatives. The success of these discussions sets a clear example of the benefits in working together in a tripartite manner.

This was a commitment that was front and centre of the Labour Party's plan to make work pay, and I am pleased to see it in action as part of these discussions. We must not delay. We must not stand in the way of further delaying these long promised improvements to workers rights. As the recent agreement centres on unfair dismissal, our speak first to Motion B and amendments 120 G, 120 H, 120 J to 120 M, tabled by the government in the other place, and motion B in the amendments to the Commons amendment tabled by the noble Lord Lord Sharpe of Epsom, relating to unfair dismissal, the government's amendments in you will reduce the qualifying period for unfair dismissal protections from 24 months to six months, all while maintaining existing day one protections against discrimination and automatically unfair grounds for dismissal.

To further strengthen these protections, the government has also tabled amendments which will ensure that the qualifying period for unfair dismissal protections can only be varied by primary legislation, and that the compensation cap for claims be removed. That will remove both the 52 week and the £118,223 cap. In practice, few awards get anywhere close to these caps, with the median average award for unfair dismissal being £6,746 in 20 2324, and removing the cap will not impact the methodology for how an employment tribunal would calculate these awards.

The noble Lord Lordships amendments would change the government's amendments and would go against the negotiated outcome between the trade unions and business representatives. From discussions in November, my ministerial colleague, Minister Dearden, confirmed the outcomes of these negotiations in the Commons when debating this element of the bill on Monday. She said I was in the room as part of the negotiations with business representatives and trade unions. I can confirm that the compensation cap was discussed and agreed in the room. The government believes that the current compensatory award caps, caps, cap caps, incentivises claimants to construct complex cases which allege discrimination in order to access uncapped compensation.

These types of claims are more complex and take longer for the tribunal to handle. Therefore, by removing the compensation cap for ordinary unfair dismissal claims, this incentive will be lessened, making it easier for tribunals to reach a judgement more quickly and decreasing burdens on the system. Following a helpful meeting with the noble Lord Lord Vaux of Harrowden, I can confirm that we will publish an enactment Impact assessment for the bill as soon as possible once the Bill secures Royal Assent and prior to commencement regulations for the entire unfair dismissal package being presented to Parliament.

The new public. The new impact assessment will be publicly available and include an assessment of the impact of the removal of the compensation cap. We are aware of representations made by organisations including the British Retail Consortium and UK hospitality. The government stands ready to engage with those and similar organisations to hear their concerns and answer their questions. Our impact assessments will set out how we will review the bill and any secondary legislation that follows. Implementing this bill will take several years, and its full effects will not be realised until long, until long after Royal Assent.

That's why our monitoring and evaluation framework will ensure the real world impacts attract, and used to inform future policy decisions. We will also publish Post-implementation reviews to assess the impact of the implemented policies. These will typically occur five years after the legislation comes into force. Additionally, the Dispute Resolution Stakeholder Taskforce, which includes business representative organisations and trade unions, is looking at the likely impact of the full suite of measures in the Employment Rights Bill on employment Tribunals, including the removal of the compensation cap, and I can assure noble Lords that findings from the impact assessment on the removal of the compensation cap will be taken into consideration by the taskforce.

This taskforce will help the government to develop reform measures to ensure the current system, including Acas, is more efficient and resilient, so it is better equipped to respond to future changes. My Lords, turning now to motion A and the government amendments one E and one F, and to motion A1, and the amendments one G and one H, which were tabled by the noble Lord Lord Fox relating to zero hour contracts. I would like to take this opportunity to thank the noble Lord Lord Fox for his contributions throughout the passage of the Bill.

Our conversations have been constructive and productive, while others have sought to oppose measures in this bill outright. We have appreciated his efforts to understand and accommodate our chosen policy approach, while ensuring the bill is workable and deliverable in a manner that works for employers and employees alike. We agree that the security of work is of the utmost importance, and it is clear that we align on the issue of needing to protect workers from precarious, precarious employment. We also agree that future arrangements must not place excessive burdens on employers.

We will do this by working with businesses and other stakeholders on the detail of the zero hours measures, which will be set out in future regulations. We have tabled an amendment in lieu in the other place, which will place a statutory duty on the Secretary of State to consult before exercising powers to set the length of the initial and subsequent reference periods. This consultation will conform to best practice and ensure that all stakeholders can contribute and shape our reference periods are set in regulations.

The noble Lord Lord Vaux amendment seeks to set the subsequent reference period at no less than 26 weeks. I can reassure the noble Lord that our amendment places a statutory duty to consult on this detail. As part of the consultation, there will be adequate opportunity for himself and others to feed in their representations on the length of subsequent reference periods before the detail is set in regulations. We recognise there is a strong business interest in this issue, given the new responsibilities they will have under this part of the bill, and were committed to working with them.

Unions and stakeholders. Ahead of the necessary secondary legislation. It is important we get the detail right and we can't do that without consultation. It would not be appropriate for us to pre-empt that exercise, and therefore I cannot support the noble Lords Amendment. However, I look forward to hearing what the noble Lord says on the matter, and I hope he will agree that our proposed approach is fair, workable and balanced. Ensuring that government can implement its manifesto commitment with input of key stakeholders.

Now, my Lords, I speak on motions C and amendments 48 E and 48 F tabled by the government and the other place relating to seasonal work. The government is fully aware that for some employers, work fluctuates throughout the year. The consideration of seasonal work is built into the right to guaranteed hours, provisions and embedded into the bill. There are several ways in which the employer can approach seasonal demand. In the Other place, we tabled a further amendment in you placing a statutory duty on the government to consult before making these relevant regulations, including with representatives of seasonal workers and representative bodies of employers with seasonal workers.

Therefore, before any such regulations are introduced, employers, trade unions and other parts of civil society with interest in seasonal work will be consulted. This will ensure they have their say and can directly influence the policy set out in the regulations, enabling both the flexibility and security needed for seasonal work sector. I would like to take this opportunity to thank the noble Lords on the front bench opposite and the noble Lord Lord Fox for their engagement on this issue. In our engagement, we provided indicative examples of how the relevant provisions would apply to different types of seasonal worker, and I've made sure to share these in an all peers letter to noble Lords, which we hope will further contextualise these points.

My Lords, I will now speak to motion D, an amendment 72 J and 72 K tabled by the government. In the other place a motion d1 an amendment 72 L to 72 N and £0.72 to 72 R tabled by the noble Lord Lord Burns, which relate to political funds. I want to begin by thanking the noble Lord Lord Burns for engaging with my noble friend Lord Collins of Highbury and me on this important issue, which I know is of great importance to him.

The government remains absolutely committed to repealing the Trade Union Act 2016, a commitment set out in the plan to make work pay, which we have a clear and substantial mandate to deliver. Part of this repeal includes reinstating the long standing practice that existed for 70 years before the Trade Unions Act 2016, whereby new union members are automatically included as contributors to a political fund unless they choose to opt out. This is on the basis that they already, they are already making an active choice to join a voluntary organisation which has a democratically decided, which has already democratically decided to maintain a political fund.

Of course, if an individual does not agree with the use of their union's political fund or for any other reason, does not want to contribute, then they can take the decision to opt out. Every new union member will be clearly informed on the application form. They have the right to opt out of contributing to a political fund. The government has listened with care to the noble Lords perspective and has tabled amendments responding to these concerns, while not undermining the manifesto commitment to return to a default opt in system.

Under the pre 2016 legislation, an opt out notice could only take effect on the 1st of January of the year after it was given. Under the government's amendment, opt out notices will now have effect on either the 1st of January the following year, after it has been provided, or on a date specified in the union's rules. Whichever of these comes first. The amendment affirms flexibility under the legislation allowing unions to move, allowing unions more quickly to process a member's request to opt out.

The government's additional amendment in this area places a statutory duty on the Secretary of State to issue guidance within three months of this clause coming into force. That will set out, that will set out the kinds of provisions that unions should include in their roles, in their rules about the timing of giving effect, to opt out notices. This will help to enable unions, as a matter of best practice, to action opt out notices promptly. However, if this is not the case or if there are developments in this field, the amendment provides that guidance can be updated.

Furthermore, to help with transparency, existing government guidance on political funds will be updated to reflect the changes being made by the bill. The decision to contribute to a trade union political fund is entirely one for each individual member, and for those who choose not to do so. The government guidance will be clear that exercising that choice must be properly available and practically possible. Given his long standing interest in this topic, we would of course be happy to meet again with the noble Lord Lord Burns, following Royal Assent and prior to the government guidance being published.

We believe these amendments will enable the government to deliver its manifesto commitment of repealing the 2016 act and returning to the default opt out model. I will speak now on motion E and amendment 62 E, tabled by the government and the Other place and motion E1 and amendment 62, which was tabled by the noble Lord Lord Sharpe of Epsom, relating to the 50% turnout threshold for industrial action ballots. My Lords, repealing the 50% ballot threshold is a manifesto commitment linked to the repeal of the Trade Union Act 2016, legislation which imposed unnecessary bureaucratic barriers on the ability of trade unions to organise and negotiate on behalf of their members.

Repealing the threshold aligns union democracy with other established democratic practices, such as parliamentary and local elections, which are considered legitimate without the need for turnout thresholds. However, recognising the strength of feeling on the issue in your Lordships' House, the government has reflected on its approach. The government previously tabled an amendment in lieu, which will require the Secretary of State to have regard to any effects of balloting on the proportion of those entitled to vote in industrial action ballots who actually do so.

The government has since further built on this amendment by placing a statutory duty on the Secretary of State to lay a statement before Parliament when making regulations to repeal the 50% threshold to demonstrate how the government has met the duty to have regard to the impact of balloting. We hope the amendment will assure parliamentarians that when the 50% threshold is repealed, we will have looked at those issues in the round and align the repeal with the establishment of balloting. My Lords.

In conclusion, the government has listened to the concerns of your Lordships' House. It has gone away and worked collaboratively with employers and trade unions to find a compromise, and it has now delivered on that compromise as part of a packaged deal to get this bill to Royal Assent. I now respectfully ask your Lordships' House to acknowledge the movement made by the government and allow this Bill a manifesto commitment to progress onto the statute book so that working people can start to benefit from these important and popular reforms to workers rights without any further delay.

I beg to move.
16:50
Lord Fox Portrait Lord Fox (Liberal Democrat)
-
-
The question is that motion AB Lords. Lords. >> I beg to move a motion A1 as an amendment to motion A leave out amendment to motion A leave out from disagreement to end and insert. D'you disagree with Commons in their amendments one e and one F in lieu of Lords Amendment one B and do propose amendments one G and one H in lieu of Commons amendments one E and one F. Similarly to similar similarly to the Minister, I will indulge I.

I beg the House's indulgence because if this speech is longer than a speech would normally be for round three of ping pong, it's because, as the Minister pointed out, there have been developments since the last we last debated the bill. I'll begin with my motion A1, which addresses a major issue that's caused us concern. As I've said repeatedly, we support the principle that workers should have a right to guaranteed hours after completing a period of zero hours work. Our concern has always lied in the cumbersome administration of that, right.

After several attempts to make what I would think were meaningful improvements without undermining that principle, I must admit I have felt quite frustrated on this issue. However, as we heard just now from the Minister, it is reassuring that the government has taken on board these concerns. As the Minister partially explained, the reference period is crucial in setting how often the employer must make an offer a new offer of guaranteed hours to an employee. And I would point out that the employee does not necessarily have to want that offer.

There's merely an obligation on the employer to make that offer. Clearly, if this offer has to be made every month, it's a much more burdensome than if it has to be made once or twice a year. That is the nature of the amendment that I have tabled. I understand that this is subject to consultation, and I'm reassured by the description of the consultation that the Minister has just made. My choice of 26 weeks was, first of all, in a sense, to emphasise that point between a month, 26 weeks or or 12 months, and also to spark the sort of response that I've just got from the Minister.

And in that respect, I'm, I'm, I'm satisfied. A joint press release issued by after the negotiations by the business organisations noted, and I quote, we remain committed to working with government and unions to dealing with this in the necessary secondary legislation to implement the bill. We must ensure that it supports the opportunity for workers while avoiding damage to economic growth. And we subscribe to that view. And I think the Minister also gave her support to the nature of the consultation that will follow.

I'm now going to move on to the the unfair dismissal issue, as we heard, the government amendment in lieu creates a six month qualifying period for workers rights. It also removes the section, crucially removes the section that would have enabled secondary legislation to alter that qualifying period. That was good news. It will come as no surprise, therefore, that we welcome this compromise. It represents success for the tripartite discussions that led to its breakthrough, and all three parties should be commended on the good faith that they brought to that meeting.

The Bill's previous position on day one rights would have significantly held back the employment prospects of anyone who would have represented the slightest risk to an employer. This now avoids that risk, as the British Chambers of Commerce, the Chartered Institute of Personnel and Development, the Confederation of British Industry, the Federation of Small Businesses, the Recruitment and Employment Confederation and Small Business Britain put it in their press release that heralded this deal, this agreement, and I quote, this agreement keeps the qualifying period that is simple, meaningful and understood within existing legislation.

It is crucial for business confidence to hire and to support employment, at the same time as protecting workers. Unquote. I think that is a very strong endorsement from the employment side of of this part of the deal. My Lords, I feel sure that one of the factors that helped concentrate minds during these negotiations was the need to meet a deadline. If this act does not gain Royal Assent by the end of the year, then key benefits that we've all discussed and many of us support that were created by this bill, would have to wait a further year before they were enacted for the workers across the country.

My Lords, I feel proud of those people on our benches who helped create the the pressure and help to hold firm. While that decision was in in the in the making. I thank my Liberal Democrat colleagues for helping to make sure that they turned up every time to, to, to, to to help the government come alongside the other two parties, come to the compromise that we now have. And I think it's credit to both this side of the House and and across across the rest of the house.

Moving to B1 in the name of the noble Lord Sharpe, my Lords, as well as containing good news on day one rights, the government amendment in lieu contained a surprise or a surprise to us. It's clear that removing the compensation cap for unfair dismissal has generated unease since the amendment was tabled. And this is not something your lordships have discussed. And as we heard, it was discussed during the tripartite negotiations. But there has been some confusion, and I suggest the ambiguity of the word lift has contributed to this.

In no small measure, lift can mean both remove and make increase, and I suspect there may have been some confusion. So some employers, whilst welcoming the shift to day one rights to six month qualifying period, have and are expressing concern about the possible implications of potentially unlimited financial exposure. However, your lordships should note that, as the Minister said, the average unfair dismissal award for the year 2324 was under £7,000, with a ceiling of more than £118,000.

Clearly, the cap did not influence the awards being made and I ask the Minister to to to confirm and she has that the criteria that he used to set the award are not changed by the contents of this bill. This being the case, my Lords, it seems that the main beneficiaries of this change will be those who earn considerably more than, than than the average wage in this country. It will be those those who, who, who, who pay more and more.

But the very highest paid in my anecdotal experience, really use employment tribunals. Their their deals are set in deals with boardrooms and and usually NDAs my Lords so so I, I genuinely do not believe that SMEs will be disadvantaged by this. However my Lords, the process was very poor and I think we can all agree on that. And in my discussions with the government, as we've heard, I pressed for meaningful impact assessment and we've just heard the Minister confirm that there will be meaningful impact assessment, consultation and impact assessment and open up printing of that.

Furthermore, this will be completed and published before the clause that that actually lifts the cap will be enacted. So I think there will be time to address if something really bad comes out of that, then there will be time to act on it. After that, as the Minister noted, ongoing monitoring of the effects of these changes will be essential, and corrective action should be taken and must be taken if negative trends emerge. In any case, my Lords, I remain unconvinced that B1 would provide the analytic value that we would get from a proper impact assessment.

So even in the event that I was supporting the noble Lords, I do not think the route that he has taken is one that is actually going to benefit. It seems more symbolic than than meaningful. My Lords, moving on to other issues that have occupied previous bouts of ping pong. My Lords, the issue of seasonal work has been discussed by the Minister and has not returned in in in moderated form. And I do thank the Minister for the, the the letter that was circulated a few days ago, and I was happy to see the examples that I requested outlining how seasonal work could be treated using this proposed legislation in a number of different settings.

I think this has helped alleviate the concerns, but clearly the consultations and the framing of the regulations that will follow are going to be absolutely crucial. So this leaves the Union political funds in amendment D1 in the name of the noble Lord Burns and strike ballots covered in amendment E1 in the name of the noble Lord Sharpe both of these issues, Lord, your lordships have discussed at length the noble Lord Burns has very clearly, and in my view, persuasively presented, that a that a number of various combinations of opting in or out of, of of political funds.

And I regret that the compromise on this issue has not been reached. There has been some some movement. I understand that the government has offered to continue to discuss, and we just heard discuss the issue with the noble Lord Burns. And I hope as this this occurs before the regulations are laid and gives the noble Lord Burns a chance to feed in to those regulations. Overall, my Lords, I think that further discussion is the best way to take this forward from now.

Turning to the last Amendment E1, the noble Lord Sharpe has argued strongly on the issue of strike thresholds, and it is, of course, a concern. And his amendment today insists on something that we have previously debated. But I would contest that both the political fund and the ballots issues are important, but they are second order issues compared to the day one rights and guaranteed hours issues. I think that is reflected in the words used by most of the business organisations and some of the conversations that I've had, and I think it's something your lordships should reflect on.

Clearly. There remain many other loose ends in this Bill, with much consultation remaining and many Statutory Instruments to come. But of course your lordships will have a role in incentivising consultation and helping to focus that secondary legislation. And of course, it can only happen. There can only be jeopardy in secondary legislation if if there is a genuine chance of a Statutory Instrument being killed, my Lords, otherwise the the process of secondary legislation in your Lordships' House is a routine exercise punctuated by occasionally meaningless regret motions, unless the unless His Majesty's loyal opposition embrace the possibility of voting for fatal motions on the Statutory Instruments, the pressure on the government to consult, and the pressure and the pressure on Statutory Instruments is minimal.

All of the words that were spoken during primary legislation have to be backed up in secondary legislation. My Lords, my Lords, at the outset we said that this bill offered important benefits. We supported these benefits and indeed, my noble friends Lord Palmer of Childs Hill and Baroness Kramer added further benefits and protections during the process of the bill. But we also made it clear that we had fundamental concerns. The largest of these have now been addressed. My Lords, the extension of the unfair dismissal window is a substantial achievement and deserves clear recognition.

Together with the other important reforms in the bill. These outweigh other concerns. It seems to us that this should be the last round of ping pong. For these reasons, we will support the government to ensure delivery of the change to unfair dismissal, as well as the broader set of new rights in this bill, which these benches support. I beg to move A1.

**** Possible New Speaker ****

The original question was that motion A be agreed to? Since when motion A be agreed to? Since when motion A1 has been moved as an amendment to a motion a leave out from disagreement to end and insert? from disagreement to end and insert? Do disagree with the Commons in their amendments one E and one F in their amendments one E and one F in lieu of Lords amendments one B and do propose amendments one G and one do propose amendments one G and one H in lieu of Commons amendments one E and one F.

The question, therefore, is that motion A1 be agreed to.
17:05
Lord Sharpe of Epsom Portrait Lord Sharpe of Epsom (Conservative)
-
-
My Lords. >> My Lords. >> I rise to speak principally. >> To motion B1 in my name, and the government's introduction of a six month qualifying period, one that month qualifying period, one that can be amended only through private primary legislation, was, I'm happy to acknowledge a very welcome concession, and we thank the Government Benches opposite for it. While Angela Rayner spoke of disruption, the truth is that this House was simply doing what it's supposed to do and what it does best, scrutinising legislation diligently and ensuring that our small businesses and our young people retain at least some chance of building a bright future.

And those, my Lords, are our vested interests. But, my Lords, what followed was the very opposite of proper scrutiny. Without consultation, without assessment, and as far as we can tell, without any precedent, the government, and also without even the courtesy of signalling the change to either House, the government brought forward at the 11th hour a wholly new measure to abolish entirely the compensation caps for unfair dismissal. These issues had not been discussed at any earlier stage in the bill's passage.

Now, the constitutional implications of introducing major new policy at ping pong are profound. This is not responsible government, my Lords. It is unnecessary, it's inappropriate, and it's constitutionally troubling. So motion B1 in my name accepts almost all of the government's amendment. It seeks only a modest and responsible safeguard that the government conduct a review of the compensation limits before abolishing them. My Lords, I acknowledge that there is an impact assessment that has been promised

**** Possible New Speaker ****

after the this becomes law, but what use would that be after it's become law? It would already, by definition be somewhat redundant. Yes.

**** Possible New Speaker ****

Yes. My Lords, this is not obstruction. It is the bare minimum that a competent administration that a competent administration should undertake. And when Tony Blair increased the cap in 1999, there was consultation. My Lords, when the coalition government introduced the 52 week cap in 2015, introduced the 52 week cap in 2015, there was consultation. So why should this government be exempt from the same cross-party, accepted standards of good practice? The government claims that this change reflects an agreement between business groups and trades unions.

But I wonder if this is true, my Lords, Neil Carberry, chief executive of the Recruitment and Employment Confederation, was explicit. He said and I quote for the employer side of the table last week, lifted did not mean abolished. Right now, we agree that the 52 week cap should go. It protects ordinary workers better as part of the deal that retained the qualifying period, we anticipated a further discussion about the future of the cash cap two, but the decision to go for abolition now, abolition now is political, end quote, my Lords, the Federation of Small Business said on Times Radio this week.

In the agreement between us as business groups and the unions, we agreed that there would be a lifting of the cap. We didn't suggest it would be both caps abolished. So that's broader than the agreement, and it helps a very small number of very, very rich people working for corporates. End quote. My Lords, when those alleged to have agreed to this package say plainly that they did not agree to abolish both caps, the government rationale collapses. Now it is rumoured that there are minutes of these various meetings, and in order to perhaps clear all this up, could I ask the noble Lord, the Minister or the noble Baroness, the Minister, if that is the case? And if it is, would they place a copy of the minutes of these meetings in the library? Yeah.

My Lords, let's also have a look at the possible practical consequences of this. The government appears not to have considered even the most basic scenarios. For example, what happens when a board is faced with an underperforming CEO on £1 million or more? Today, many boards reach a clean exit. Notice is given a payment to cover the maximum unfair dismissal award is made and a swift settlement is agreed. It allows the organisation to move on, but under an uncapped regime the entire risk changes.

Will a board now be expected to conduct a full six month performance improvement plan offered formal warnings objectives. Documented support, staged reviews simply to reduce the risk of defending a seven figure tribunal sum. And my Lords, in answer to the noble Lord Lord Fox question, the incentives have now changed so we would expect behaviour to change. They will now be incentivised to use the tribunal system even if they weren't in the past. My Lords, let us consider a particular bete noire of your house, the water company executives, those who've overseen sewage being pumped into our rivers and seas.

Are these individuals really now to be entitled to multi-million pound payouts for so-called unfair dismissal? Is that the policy intention, our noble Lords opposite, truly comfortable becoming the party defending corrupt water bosses while ordinary claimants are pushed further back in the queue? My Lords, this policy is a recipe for the rich and wrecking of justice for working people. My Lords, turning to amendment C, we are glad that it has taken the persistence of the official opposition to ensure that the government now concedes the need to consult our farmers and our other seasonal businesses after the jobs tax, the tax on family farms, business rates increase and that are crushing the hospitality and retail sectors.

And with the construction construction sector shrinking at the fastest rate since the pandemic, it is rather vital that these industry concerns are taken seriously. My Lords, moving to motion D1, I'd like to start by by saying that I agree with the noble Lord, Lord Burns. He's been entirely reasonable and constructive throughout these discussions. Lord Burns has engaged with the government in good faith, seeking sensible middle ground rather than conflict. But, my Lords, it's precisely because his approach is so measured that the position taken by the noble Lord opposite Lord Collins is so remarkable, because it was the Collins Review of 2014 that argued that the old model of automatic political fund enrolment was no longer acceptable.

It was the Collins Review that insisted workers must give explicit individual opt in consent before contributing to political activity. Lordship was the Collins review that championed transparency, choice and the principle that democratic democratic legitimacy cannot rest on inertia. My Lords, we agree with the noble Lord, Lord Collins. Dare I say he's u-turning and possibly not the first one on those benches to do so. My Lords, in our previous debate, the Minister suggested that the recent wave of industrial action somehow demonstrates that the existing legislative framework is inadequate.

The rise in strikes in 2022 and 2023 occurred against the backdrop of the sharpest inflation shock in 40 years, global economic turbulence during and after the pandemic, and the profound wage erosion that followed the peak of the Russia-Ukraine conflict. These are extraordinary economic circumstances, not failures, of the Trade Union Act of 2016. In 20 1718 and 2019, the first full years after the act was implemented, working days lost to strike action fell to historic lows. In 2018, the 273,000 working days lost represented the sixth lowest annual total since records began in 1891, according to the ONS, industrial action in the public sector was at its lowest sustained level for decades.

My Lords, turning to recent events, just over a week ago, the BMA announced yet another round of industrial action. These strikes will undoubtedly put patients at risk and place even greater strain on our already overstretched National Health Service. Let's also recall that it was the government's own health secretary, who accused the BMA of behaving like a cartel. And my Lords, you can't negotiate with a cartel. We've all heard purely through the most reputable Westminster whispers, of course, that there may be a measure of tension within the government on this, a hint of disagreement between the health Secretary and other Ministers, perhaps even the Prime Minister himself.

I would never suggest that Ministers are briefing against one another, or that competing ambitions are shaping policy. But the murmurings do grow louder by the day. But, my Lords, the government have a splendid opportunity this afternoon to dispel all such unhelpful chatter. They can prove to the House, and perhaps even to themselves, that they are ignited operation. They can put all doubts to rest with one simple gesture by accepting what we are calling the Wes Streeting amendment before your Lordships' House today, my Lords, His Majesty's Official Opposition remains firmly and unapologetically on the side of Britain's business,

**** Possible New Speaker ****

large and small. I beg to move. My Lords.

**** Possible New Speaker ****

My Lords. I will speak to. Motion D1. In recent. Years, there's been an

**** Possible New Speaker ****

Years, there's been an interest. In what's become. Known as choice architecture.
17:14
Lord Burns Portrait Lord Burns (Crossbench)
-
-
>> This was popularised by the book nudge and by one of the authors, Richard Thaler, who received the Richard Thaler, who received the Nobel Prize for economics in 2017, partly for the work on this. And one key point, which is so relevant to the issues I've been raising, is that he highlighted that when individuals are presented with a choice, any default option has a very important influence on their decision and should be taken into account in designing process of choice.

My previous amendment aimed to eliminate the impact of the default option in one direction or another. When members wish to take advantage of the right not to pay the political contribution, it proposed that new members should be required to make an active choice between two options displayed on the application form to pay or not to pay, and this would eliminate the need for a default option and potentially reflect more closely the true preferences of members. This proposal has not found favour in the House of Commons.

Clearly, the government and the trade unions with political funds want to influence the decision of members in favour of paying the political contribution. They want as many members as possible to pay the contribution, and I understand the motivation of that. Of course, there are two reasons why I have persisted with this issue. The first, in such situations, an active choice between two options has become the standard approach between two options standard approach for people making a decision. And this is 2025.

It is not 1945 when the previous arrangements were established. We strongly believe that people should have the freedom to make personal choices free from bias, and this is much easier to offer in the digital age. There are not huge bureaucratic obstacles to this, and my case is that this principle should extend to political funds as well. Secondly, I have repeatedly said that if we fail to find a lasting solution, I fear that this whole area is going to be subject to frequent changes with different governments, and that is not going to be in the long term interests of anyone.

My amendment today is a further attempt at meeting the government by acknowledging that the government is committed at this stage, to returning to the opt out model, which will favour more members paying the political contribution. However, I am seeking to minimise the barriers to members opting out by requiring that members should be able to opt out if they so choose, by ticking a box on the application form when they complete, which they can complete when they join a union. I stumbled across this proposal following an examination of the application forms of some unions under the existing post 2016 arrangement, trade unions with political funds have been very happy to allow new members to opt in to contributing to the political fund on the application form.

They clearly feel that this helps to reduce the impact of the default option. However, the government insists that they want to make it as easy as possible for members to exercise the right to opt out under their new proposal, but they will not go this far. The bill outlines several ways that this could be achieved, and the Minister has explained to me on many occasions that he is committed to trying to make it easier for people to opt out, if that is their wish.

However, none of these proposals includes requiring new members to have the right to opt out at the point of application. Basically, they are still introducing a significant hurdle by forcing members to go through an entirely separate and burdensome process to opt out. So this sounds to me very much, you know, please make us chase, but not too much. And my amendment also requires that members should be reminded of their option to opt out every year rather than every ten years, which is the proposal in the present bill.

When I read that employees might be reminded every year of their right to join a union, I find it ironic that there should only be reminded every ten years of their right to opt out of the political fund. Can the Minister confirm that under the proposals in this bill, a new member who wishes to opt out using any of the methods which are listed in clause 59, they will pay the political contribution for the first year of membership and that they have no entitlement to a rebate.

Or can the Minister point me to the the position in the bill where this is covered? The House the Minister has has observed how the amendments from the House of Commons do detail some further ways of making the process of opting out easier, but I have to say, these relate much more to issues of timing, rather than the whole question of how difficult it is to exercise their right to opt out. So I continue to hope that Ministers can be persuaded to reconsider their position to encourage to remove the obstacles, preferable to go down the route that I have.

I have suggested. But to make this process of opting out as easy as possible, otherwise, I fear once again in the future we will have to go round this this route many times. Again, I'd like to move.
17:19
Lord Vaux of Harrowden Portrait Lord Vaux of Harrowden (Crossbench)
-
-
Lords before I start. I just >> Lords before I start. I just want to thank the noble Lady, the Minister and noble Lord, Lord Collins, for meeting with me earlier today, which allowed us to earlier today, which allowed us to sort out some misunderstandings, for which I'm very grateful, and I'm going to speak only to be I'm going to speak only to be motions B and B1, and I somewhat regret that this is not the speech that I had originally intended to make.

In fact, I'd actually written. I had intended to make a very short speech thanking the noble Lord, the Minister and the government for listening to the House, to almost every business group, to the Resolution Foundation, and to the Tony Blair Institute, and indeed their own impact assessment and reaching a sensible compromise based on what this House had proposed. And I was very pleased that the government had held talks between the business groups and the unions, and that all had agreed that compromise. That compromise was workable, contrary to some of the more irresponsible comments that we've seen in the press, some coming from the other place.

Sadly, this was not a case of out of touch piers blocking a government bill. This was a good example of this House doing its job of scrutinising legislation and asking the Other place to think again. We do not block legislation, my Lords. We seek to improve it. And I don't underestimate how difficult it was for the government to make the concession, the important concession on day one, unfair dismissal rates that they have made. Sadly, though, my Lords, I can't end my speech there.

The government set out the compromise it had reached in an announcement on the 27th of November, which said that agreement had been reached on a six month qualifying period, which would only be changeable by primary legislation. So far, so good. It did also very briefly mention the lifting of the compensation cap, something that has never been discussed during the process of this bill. Then, my Lords, I saw the actual amendment, which goes somewhere somewhat beyond lifting the compensation cap. The amendment actually abolishes it altogether, so that compensation for unfair dismissal will be unlimited, which I would suggest is different from lifting.

My Lords, as we've heard from the noble Lord Lord Fox, it is at best ambiguous. And I do note the noble Lady is now referring to removing the cap, which I think is more accurate. And as we've heard, this does not appear to have been equally understood by every party to the agreement between the employer organisations and trade unions. A number of employer organisations are still expressing concerns about it. Does this late change matter? What the amendment does is to remove the current cap on what can be claimed in an unfair dismissal claim.

Currently, it is the lower of 52 weeks pay, or £118,223. Now, whilst it might be true that few claims actually go over that, that may well be because higher paid people will generally reach agreement knowing that the cap exists rather than taking the matter to the tribunal. So this change may incentivise more, higher paid people to turn to the already overburdened tribunal system. There's no downside to them to doing so with the hope of a higher payout, or at least to strengthen their negotiating position.

Now, as we've heard, the irony of this is that the main beneficiaries are likely to be senior employees on high salaries who are moving towards the end of their careers, not the workers. The government claims to be helping. The noble Lord Lord Sharpe gave the example of the water industry. I was trying to think of an example as well, and one rather closer to this house occurred to me when the noble Lord, Lord Mandelson, was fired from his position as ambassador to the United States.

There was a lot of speculation in the press that he might be able to claim for unfair dismissal, due to the summary nature of his dismissal. Now, obviously I don't know the details of his contract. What has been agreed or anything else would be interesting to know what was agreed. But is this really the sort of situation the government wants to give the possibility of unlimited compensation to? It would certainly strengthen the negotiating hand of the employer employee in any such situation. But, my Lords, the truth is we don't know what the effect will be, whether in fact this matters.

It's been introduced without warning at the last possible moment in the bill, with no consultation, no impact assessment and no scrutiny. Whatever one thinks about the merit of removing the cap on compensation, this is not the right way to do it. I would go as far as suggesting it is testing our constitutional processes to the limit. Legislation should not be decided in. I don't think I'm allowed to use smoke filled anymore, but in darkened rooms as a deal between a limited number of interested parties.

It is not the way we do things, my Lords. This is a material change and it deserves to be properly consulted on impact, assessed and debated. It should have been introduced much earlier. The amendment proposed by the noble Lord Lord Sharpe is admirably constructive. I thought they would go rather further. Rather than remove this clause altogether, it proposes a review of unfair dismissal compensation to take place within three months, and sets out that the review must involve the consultation with employers organisations, employment law practitioners, trade unions and other the Secretary of State considers appropriate.

I think that is a fair and constructive approach. But, my Lords, I do think we have perhaps to be pragmatic. This is the third ping pong. This is unlikely to move whatever we do at this stage in the other place. And I am very conscious that I don't want to see the key concession of six month qualifying period being unpicked as a result of our actions. And as I say, I do accept that was a big step for the government to make.

I thank the noble Lady, the Minister, for her confirmation that there will now be an impact assessment published as soon as possible. I would ask if she could perhaps explain what she meant. I didn't get clearly that there was going to be a full consultation with other parties. At the moment this has been consulted between six organisations and I don't know how many unions. That's not a wide consultation on such a big change. Will there be a proper consultation process on this before it comes into into power? But my Lords, reluctantly assuming the answer to that question is, is to the positive whilst protesting in the strongest possible terms that introducing such a significant change at such a late stage runs a coach and horses through the proper process of scrutiny of legislation.

I am minded to bring this to an end and accept the government amendment. But as I say, I will listen to what she says before I make that final decision. One final request, though this late material, late insertion of a material change to legislation in the third stage of ping pong must not become a precedent. And I ask the noble Lady, the Minister, to confirm that the government sees this as a one off extraordinary repeated.
17:27
17:28
Lord Cromwell Portrait Lord Cromwell (Crossbench)
-
-
My Lords, I would like to speak fairly briefly to support Lord fairly briefly to support Lord Burns amendment D1, what has become known as the Hokey Cokey amendment. known as the Hokey Cokey amendment. Opt in, opt out, opt in, opt out. Through this chain of amendments that have been put down, I support that have been put down, I support the vital role of trade unions, but I do find it hard to understand why legislation should be used to steer. Or, if you prefer, nudge employees towards funding political causes.

The noble Lord Burns has today shifted a very long way from his original amendment. All the amendment now requires is a checkbox at the start to allow employees to opt out if they so wish. My Lords, this is surely the absolute minimum that should be available to them. I would have preferred asking trade union members, if they wish to opt in as a positive statement, rather than opt out, perhaps a negative attracting black marks in the membership lists of their union.

It does the government no credit to seek to deny employees this opt in choice. However, I am like the noble Lord Fox and the noble Lord Vaux, reluctant to extend ping pong, and I'll be guided by the noble

**** Possible New Speaker ****

Lord, whose amendment this is. Yes. My Lords, the subjects covered

**** Possible New Speaker ****

My Lords, the subjects covered by the amendment before the House today have been more than extensively debated already, so I extensively debated already, so I don't need to rehearse all the arguments around each issue, nor do arguments around each issue, nor do I need. I hope to remind the House that this whole Bill represents the
17:29
Lord Barber of Ainsdale Portrait Lord Barber of Ainsdale (Labour)
-
-
that this whole Bill represents the fulfilment of a hugely important manifesto commitment and by long established convention, must ultimately be recognised and accepted by this House. But what I do want to briefly focus on as a former chair of Acas is what is new. Since our last debate on the bill, and that is the unprecedented agreement between the TUC and unions with the major employers organisations in this country. I say unprecedented because although there have been agreements on some issues over the years between the TUC and the CBI, I think of the joint work that was excellently done developing the furlough scheme during the Covid crisis.

I cannot recall ever such a grouping of the representative organisations of employers coming together to seek and to reach an understanding with the TUC. Employer side. In this process. The noble Lord Fox has done that for me already. So this is a historic development and to my mind a very positive one, and I want to warmly congratulate those on all sides who gave leadership for the government, for the unions and the employers to make this possible.

All the parties needed to move from their original positions to make this possible. Now, as is clear, the centrepiece of this agreement is moving from a right to protection against unfair dismissal from day one of employment to after six months in the job. And this is a proposal that has been championed by many noble Lords in our earlier debates, speaking up as they have for what they have seen as the most important concern of employers on the different provisions within the bill.

But of course, this agreement is more ambitious than that. In also clearing the decks for the bill to move swiftly now to Royal Assent, as the joint statement by all the employers organisations makes clear, and I quote, this change addresses the key problem that must be sorted in primary legislation. That statement acknowledges that other issues covered by the bill on which they may have concerns, will be consulted on in due course. After Royal Assent. And I think this reflects a widely shared view that rather than leaving continued uncertainty and dragging this debate out further, it is now better for all parties to get the bill passed so that we can all move on to the next stage of bringing some key provisions into force, in line with the published timetable, and moving to the planned consultations on other issues covered by the bill.

Now, my Acas, and indeed my tech experience, has taught me how difficult it can be to find intelligent compromise on issues that may have been hard fought. And it's also taught me the vital importance of agreements being honoured when a deal is done, and if the passing of this bill is further delayed, that would frustrate one of the key objectives of this agreement. As the employers organisation said in their statement, it shows that dialogue works, and I truly hope that the positive spirit that underpins the agreement does continue to the next phase.

And I mean, in the changes to be made across the workplaces of this country, not just the consultations on detailed aspects of the bill, because my ambition has always been for unions and employers to find constructive ways of working together in order to build successful organisations. So, in that spirit, I hope that all noble Lords will now get on board and will show. Dare I say it, solidarity with the employers of our country in the compromise that they have reached and support not just the changes in unfair dismissal arrangements, but by now passing the Bill through to Royal

**** Possible New Speaker ****

Assent without any further delay. Hear. Hear. My Lords, I.

**** Possible New Speaker ****

Hear. My Lords, I. Rise to speak on motions B and B1, and register that I'm on behalf B1, and register that I'm on behalf of SMEs, and as a small employer of 130 people, I can. I thank the 130 people, I can. I thank the government for listening to the businesses and this chamber with regards to the change to unfair dismissal, and six months is certainly enough time for business to assess employees. Can I thank the opposition and the Liberal Democrat frontbenchers and my noble friend, Lord Haldon, for persisting
17:35
Lord de Clifford Portrait Lord de Clifford (Crossbench)
-
-
in trying to change clause 23? This change could have had the effect of change could have had the effect of allowing employers, especially SMEs and Micro-businesses, to take the chance on a prospective employee who shows the skills and talents who shows the skills and talents for a particular role. But the employer, for whatever reason, may have doubts. And this could be this have doubts. And this could be this is due to a lack of experience or different ways in which some individuals need to work nowadays, individuals need to work nowadays, or an employment gap, and this change certainly will help that.

But the government introducing the change to the change of lifting of the compensation compensation cap will have the potential of significantly dampening down the enthusiasm of employees to make this change. This is. This is especially for microbusinesses regulation burden and the risk of starting. Starting to take on employees is significant, and the removal of Cap will add to the real fear to to start employing people. And fear is what they hear. All they hear is an unlimited cap. And that's what we'll focus we in their mind.

And they will not know about the average limit being just 7 or £8000. The thought of an unlimited liability if you get the dismissal process wrong, will either stop taking on employees, or that some employee issues are not or not tackled for fear of possible possibility of the amounts. So this will have a negative impact on on productivity and possibly the culture that people work in. I have listened to the noble Baroness, the Minister, and and welcome an impact and impact assessment and consideration.

But I would ask to reconsider this change and put some limit on the compensation so that small business can assess the liability and not have the fear, even if unfounded, of paying a large fine that could put that business or that business owners at risk. Thank you.
17:37
Lord Hendy Portrait Lord Hendy (Labour)
-
-
Lord, I wish to make two points. The first is in relation to motion The first is in relation to motion B and the removal of the arbitrary statutory limit on compensation. My noble friend, the Minister has already mentioned the tribunal statistics for 2023 to 2024 published by the government, and the fact that the median award for unfair dismissal was £6,746. That's the median award. And not as the noble Lord. Lord Fox mentioned, the average award. It means that 50% of all awards for unfair dismissal are less than £6,746, but those statistics reveal something that I found even more startling.

And that is that last in that year, 23 to 24, the tribunals disposed of 31,000 single claim cases and 2000 multiple claim cases, and of those, only 646 awards were made in respect of compensation for unfair dismissal. Now, of course, one accepts that many cases were settled through art Acas or between the parties and then approved by the tribunal, and that would count as a disposal. But 646 cases out of 33,000 means that this jurisdiction of unfair dismissal is little used.

Of those awarded compensation. The latest government survey, which dates from 2013, never been updated, found that only 49% of claimants had been paid in full and a further had been paid in full and a further 16% had been paid in part, 35% of successful claimants receiving a tribunal award had never received a penny of their awards. Now, in 2016, the then government sought to address this lamentable state of affairs by establishing the Employment Tribunal, Penalty Enforcement and Naming Scheme to penalise companies which do not pay within 28 days of the tribunal order, and since 2018, by publicly naming them.

However, the BBC and the Bureau of Investigative Journalism published research two months ago showing that of 7000 unpaid claimants using the scheme, no less than 5000 had failed to obtain any recovery. 4800 penalty notices had been issued with a combined value of £9 million of unpaid awards, but government records show that only 109 of those notices were actually paid, and none of the employers in question were named. Despite nearly 4000 requests for naming as well as compensation.

Because I suggest that the these are the issues that the government needs to confront going forwards, and not the issue of whether highly paid executives and others who are found to have been unfairly dismissed are, or are not entitled to the full measure of compensation for their losses. Lords, the second and final point I wanted to raise was in relation to motion D, the the amendment from the noble Lord, Lord Burns. And the discussion that there has been on this occasion, and on the last occasion which my noble friend Lord Barber was involved in, about the compromise that was reached in 2016.

Lords, I'd like to go back a little further in history in relation to trade union political funds. In 1871, the Trade Union Act gave unions, for the first time in British history, legitimacy. Under the law, a trade union was materially defined as, quote, such combination with a permanent or temporary for regulating the relations between workmen and masters, unquote. The act protected such organisations from illegality, in particular for restraint of trade. What's now called anti-competitive activities, of which collective bargaining as the means of regulating relations was the paradigm.

Example with various tweaks. The essential element of regulating relations between workers and employers remains the essential element in the current legislation for the definition of trade unions. But the Lords, the point I want to make is that before the 1871 act and for 40 years afterwards, trade unions continued to spend money as they had to spend money in promoting parliamentary bills for the benefit of working people, such as on health and safety, national insurance, restoration of the right to strike.

After the Taff Vale judgement of 1901, and so on at the end of the century, they came to the conclusion that they needed representation in Parliament. The Labour Representation Committee was founded by the TUC in 1900 and became the Labour Party in 1906. All this was largely financed by the unions from their general funds, just as employers financed the

**** Possible New Speaker ****

Tories and the liberals. But in December 1909. Yes.

**** Possible New Speaker ****

Thanks for bearing with me all this changed. The Judicial Committee of this House, held in Committee of this House, held in the Amalgamated Society of Railway Servants in Osborne, that the statutory definition was exhaustive, statutory definition was exhaustive, and it was therefore unlawful for a union to spend money on any object union to spend money on any object other than the regulation of industrial relations laws. That decision was not a foregone conclusion three years earlier in the High Court, in a case called Steel and South Wales Miners Federation, Mr.

Justice Darling had held this. The statutory definition was not. I'm getting to a point here. You bear with me. The statutory definition was not intended to be exhaustive or to prevent an association from lawfully doing other doing acts. Beyond those mentioned, it's significant that the legislation is silent about providing benefits for members, which is one of the recognised branches of trade union business, so that even if the purposes mentioned in the union rules don't come within those specified in the statute, there's nothing to render them illegal.

But further, I'm of the opinion that they do fall within those specified in the statute. It seems to me that one of the ways of regulating relations between workmen and masters is to get laws passed by Parliament for their regulation, and that one of the first steps towards getting those laws passed would be to send a representative to Parliament to promote a bill for that purpose. Now, my Lords, the Osborne judgement was met with widespread outrage. The Liberal government procrastinated in addressing the evident injustice of the case.

Eventually, a political compromise was offered, which the then 29 Labour MPs and the unions were obliged to accept it. It contained three elements. It changed the definition of a trade

**** Possible New Speaker ****

union. I'm coming to the end. Order, order.

**** Possible New Speaker ****

Order, order. Sorry. Beg. Can my noble friend just be more

**** Possible New Speaker ****

Can my noble friend just be more specific to the point? Perhaps he could wind up his contribution? Yes.

**** Possible New Speaker ****

Yes. I'm coming to the conclusion. What? The Trade Union Act of 1913 did was to change the definition of did was to change the definition of a trade union, to allow it legitimately, to spend funds on other objects beyond industrial relations, and if approved by a ballot of the members, the union could have a political fund to be used for specified political purposes, and each member had to be given the opportunity to opt out of payment of that part of the subscription earmarked for the political fund.

That was the compromise. And the Lords, in seeking to maintain in this bill the outdated compromise of 1913, the government, in my view, have gone further than they needed, what they should have done and what they could do if the objection is still maintained, is to repeal the modern form of the 1913 act and allow unions, like all other clubs,

**** Possible New Speaker ****

corporations, partnerships and. Order, order, order, order! May

**** Possible New Speaker ****

Order, order, order, order! May I ask my noble friend to wind up

**** Possible New Speaker ****

now, please? Sorry.

**** Possible New Speaker ****

My Lords. Can I just. Come in? In mercifully.

**** Possible New Speaker ****

In mercifully. Brief terms, I'm going to speak very quickly about SMEs, but I'm going to spare you the history of SMEs in the UK 1910 to 2026. My point is this very quickly, in relation to motions B and B1, lifting the cap on unfair dismissal
17:48
17:49
17:50
Baroness Lloyd of Effra Portrait Baroness Lloyd of Effra, Parliamentary Under Secretary of State (Department for Business and Trade) (Labour)
-
-
I thank all the noble Lords for their contributions today. I think this continues the robust discussion that we've had throughout the passage of this bill. And just first coming to some of the sort of constitutional or types points which go to the way we do business. As I outlined in my opening speech, the tripartite talks and the amendments resulting from them were context and bill specific, and they were a really a demonstration of the way in which we were listening very clearly to the views that were expressed in this House through many exchanges, and led to a very productive discussion in a tripartite manner.

However, they are very context and bill specific, and I think the noble Lords and Cromwell will be very familiar with discussions with the Leader of the House on how she and other members of the House would like to conduct business more regularly. So I will just seek to address some of the points that have been made during the course of of of the discussions. I think, again, just just coming back to the sort of the nature of, of it all.

These were part of discussions between business representative organisations and, and trade unions and the government, and specifically on the question of of the minutes, there are civil service, contemporaneous notes of the meetings, but they haven't been shared with participants nor more widely. And we think it would be impolite, inappropriate to share the meeting notes without the agreement of those who attended the meetings. The government's statement, an update on the Employment Rights Bill released on the 27th of November, and the subsequent written ministerial statement laid in both houses, clarity to the House on on the developments that were happening, which were, as I said before, in response to concerns raised here and on the the question of lifting, removing that is indeed something I have to, you know, given some thought to, I mean, the word lift, lifting Embargos lifting, lifting bans is used very commonly in that manner to mean remove.

And when asked this question in the other place, my ministerial colleague Minister did and did confirm the outcomes of the negotiations and said I was in the room as part of the negotiations and I can confirm the compensation cap was discussed and agreed in the room. I was not in the room and I therefore pay weight to to the comments you made on that. And I think to a couple of comments and interventions made by Lord Verjee and my noble friend Lord Barber.

This is in total a pragmatic way forward. And just on the point of the the opposition amendment. It it is it it would it would not enable us to move forward because it would remove the cap and replace it with the report. So it is not it is not something that can be encompassed. And and we can continue with the package as negotiated. It would actually cause us it would, you know, it is not consistent with the agreement that was reached and which we have brought to you and encapsulated in the bill.

So I just wanted to underline that it is it is it is it is not something that we can accept. On the question other there have been points made about the actual substance of the cap. And as the noble Lord just, just before me, made the extremely pertinent point that there are already. Areas of the law which have uncapped areas, and we but we do not think that removing the cap will mean that compensatory awards will necessarily increase in the way that others have set out.

Tribunals have well established ways to calculate the compensation that might be awarded for particular types of losses resulting from unfair dismissal. And as the figures that have been quoted here today show, that those methodologies lead to awards that are on average under £7,000, and employment tribunals will continue to focus on claimants actual losses when determining awards, so that I think some of those those fears are un un unwarranted. But in any case we are we are going to publish the impact assessment and we will engage with business organisations continuously.

And I think the last month has shown how productive it can be to to engage both with business organisations and trade unions together to advance all the measures here. I. Just think that is all of the points made on the cap, in particular from many of the members coming on to the political funds. On this question of whether it is an active choice or whether we are trying to restrict people from making an active choice as to whether to contribute to a political fund or not.

When joining a trade union, new members are taking an active choice to voluntarily join a collective organisation which has, via democratic ballot of members, decided to establish a political fund. So we we don't see these as two distinct decisions a decision to join a democratic organisation which has a political fund and a decision to opt in to a political fund. But one active decision, and I would remind noble Lords, we are all we are proposing to do is restore the position, as it was for 70 years, perhaps not quite in its quite as much detail, but 70 years before the Trade Unions Act 2016 came into force.

And this simplifies the political funds process to ensure a balance is struck between protecting trade unions from administrative burdens, while ensuring members continue to have a choice on whether they wish to contribute to a political fund. And crucially, we do agree with the noble Lord Lord Burns that members who, for whatever reasons, should choose not to contribute, should and will be able to do so easily and without detriment, and exercise that right to opt out of contributing. So we will continue to require trade unions to make new members aware of their right to opt out of the political fund.

The unions will have to explain to members on the application form that opting out will not affect other aspects of their membership, and they will not face any disadvantage, and members will be easily able to. Members will be able to easily inform unions of their decision to opt in or out, including by post email, completion of an electronic form and by any other electronic means. And I was asked about the sort of guidance or regulations in this area. So it's it's the guidance that the Secretary of State will be under a duty to issue within three months of the relevant clause coming into force, and this guidance will set out expectations as to how quickly unions should action opt out notifications, and will state that unions should, as a matter of best practice, give effect opt out notices at the earliest feasible opportunity, and this will help ensure that unions action the opt out notices promptly.

And as I stated earlier, and I can commit again here today. The guidance will also be clear that members exercising that right to opt out must. That must be properly available and practically possible. So we do want to make sure that members are able to opt out in that way. And that guidance will be guidance will be clear on on how that is affected. On the question of the rebate that will be affected from the earliest time possible.

Once the opt out notice has been Once the opt out notice has been given. On the question of ballot thresholds. I noticed the the sort of attempt to sort of recontextualize the recent years industrial action. But I think the fact is that the threshold at 50% has not, has not, has not led to less industrial action. In fact, all strike action recently has taken place at over 50% of the turnout threshold. So we do not think that this will have any impact on, on, on sorry that that this threshold is will.

Let me start again. So we don't think that this will inhibit good industrial relations. In fact we think that this is an unnecessary. The 50% is an unnecessary level. It's it's it's inhibiting of the democratic right of union members and unions to, to take to to demonstrate their will. It doesn't take place in other areas, for example, local government or parliamentary elections. And therefore we think it should continue. How do I answer that question?

**** Possible New Speaker ****

Yes. We're not going to introduce it until we have assessed.

**** Possible New Speaker ****

introduce it until we have assessed. And just to reiterate again, we won't introduce the 50% threshold won't introduce the 50% threshold unless we have until we have assessed the impact of balloting, assessed the impact of balloting, the Secretary of State will have to have regard to the impact of that. And he will lay a statement And he will lay a statement explaining what the effect of balloting is before the 50% threshold is rescinded. So to conclude, my Lords, we now want to move forward with purpose guided.

What do I say?

**** Possible New Speaker ****

No. To conclude, my Lords, we now want to move forward with purpose, want to move forward with purpose, guided by our manifesto commitment to work constructively with

**** Possible New Speaker ****

stakeholders. Finish. So my neighbour Lord

**** Possible New Speaker ****

Finish. So my neighbour Lord Dear, my noble friend is just coming to the end. I remarks. Then we go to the votes. Thank you. Mr.

**** Possible New Speaker ****

we go to the votes. Thank you. Mr. I want to emphasise again that the government is convening of recent discussions and our willingness to compromise on the issue of unfair dismissal should signal to parliamentarians and stakeholders that we want to get this right. I want to emphasise again that the government's work on this agenda is far from over. There will be opportunities for further debate and scrutiny and I look forward to these discussions. I therefore hope the noble Lords will join business representatives and trade unions in supporting the position reached in recent discussions and by backing the government's motions today.
18:02
Lord Fox Portrait Lord Fox (Liberal Democrat)
-
-
My Lords. There was a moment when I was engulfed in shame that I had misunderstood the difference between median and average. between median and average. Fortunately, the noble Lord Hendy distracted, distracted your lordships quite quickly. So I've lordships quite quickly. So I've I've recovered, my Lord, my Lord. Nobody in this in this house is Nobody in this in this house is pretending that this is perfect. We are at a point of pragmatism, and we're also, I remind you, Lordships, at a point of the third ping pong, the noble Lord Vaux has made some important points.

All of us go into this. If it was perfect, my Lords, I would press amendment A1 and I would want to keep on iterating. I know that now is the time for this

**** Possible New Speaker ****

bill to to pass. Therefore I beg leave to withdraw amendment A1. Yeah. Lordships pleasure that the.

**** Possible New Speaker ****

Lordships pleasure that the. Amendment be withdrawn. It is by leave withdrawn. The question is that motion A be agreed to? As many that motion A be agreed to? As many as of that opinion will say content contrary not content. The contents contrary not content. The contents have it. We then move to motion B Baroness Lloyd of Effra.

**** Possible New Speaker ****

Baroness Lloyd of Effra. My Lords, I've already spoken to motion B that this House do not insist on Lords amendments 23 and 106 to 120, in respect of which the Commons have insisted on their disagreement and do agree with the Commons in their amendments. 123 128, 120 J to 120 M in lieu of Lords Amendments 23 and 106 to 120.

**** Possible New Speaker ****

I beg to move. The question is that motion B be

**** Possible New Speaker ****

The question is that motion B be agreed to motion B one Lord Sharpe of Epsom. My Lords, in view of the manifest constitutional impropriety manifest constitutional impropriety on display, I don't think we have a choice. I beg to move motion B one.

**** Possible New Speaker ****

choice. I beg to move motion B one. Is it your pleasure that the

**** Possible New Speaker ****

Is it your pleasure that the amendment be withdrawn? It. My my apologies, my Lord. It was the opposite, was it not right? The question is that the amendment agreed to as many as that opinion content.
18:04
None Portrait Division
-

Not content. >> Not content. >> I think the not content to have it content. The question will be decided by a division. I will advise the House when voting is open. Voting is now open.

**** Possible New Speaker ****

Order. The The question The question is The question is that The question is that the The question is that the amendment be agreed to. As many as that opinion will say content. Contrary, not content. not content. The contents will go to the right by the throne. Will not content to the the throne. Will not content to the

**** Possible New Speaker ****

The The question The question is The question is that The question is that the

**** Possible New Speaker ****

By.

**** Possible New Speaker ****

There There have There have voted There have voted contents There have voted contents 244

**** Possible New Speaker ****

There have voted contents 244 not content 220. So the contents not content 220. So the contents The question is that motion be as amended be agreed to as amended to that opinion will say content contrary not content. The

**** Possible New Speaker ****

contents have it. We move to motion C Baroness Lloyd of EFRA formally. My Lords, I've already spoken to

**** Possible New Speaker ****

My Lords, I've already spoken to motion C that this House do not insist on its insistence on Lords insist on its insistence on Lords Amendment 48 be in respect of which the Commons have insisted on their disagreement and do agree with the Commons in their amendments. 48 and Commons in their amendments. 48 and 48 F in lieu of Lords Amendment 40 eight B, I beg to move.

**** Possible New Speaker ****

eight B, I beg to move. The question is that motion C be agreed to? As many as that opinion will say content. Contrary, not content. The contents have it. We EFRA.

**** Possible New Speaker ****

My Lords, I've already spoken to motion d that this House do not insist on Lords amendment 72 d to insist on Lords amendment 72 d to 72 h to which the Commons have disagreed, and do agree with the Commons on their amendments 72 and Commons on their amendments 72 and 72 K in lieu of Lords amendments 72

**** Possible New Speaker ****

to 72 H. I beg to move. The question is that motion D be agreed to before I call motion D1? agreed to before I call motion D1? I should alert the House to a typographical error in amendment £0.72. The reference to page 37 should be to page 87. The amendment is agreed to. It will be corrected by printing point motion D1 Lord

**** Possible New Speaker ****

Burns. Our Lords, I've listened closely

**** Possible New Speaker ****

Our Lords, I've listened closely to the Minister and I've had several conversations with the frontbench team. I'm still I remain frontbench team. I'm still I remain very disappointed with the determination to go back really towards the the 1945 arrangements. towards the the 1945 arrangements. And I do fear that unless we can make further progress and improve how this bill actually works in how this bill actually works in practice, then it will end badly in time. I can't believe that it's got a great shelf life.

I was involved in 2016 discussions. They were very fraught. There was a lot of ill will and we compromised on that occasion with the greatest of difficulty, chances of reaching compromise in the same circumstances. On another occasion, it will be very difficult, and I hope that whatever further discussions take place about how this works in practice, we are going to get something that is much nearer to what I describe as a real and effective and active choice for the people who wish to opt out.

However, I recognise that I've reached the end of the road. I think on this. I've never got involved in this issue other by accident back in 2016 and I will

**** Possible New Speaker ****

not press my amendments, so I beg leave to withdraw my. I'm sorry it cannot be withdrawn because the noble Lord has made a speech. I must put the question. The original question was that motion be agreed to? Since when motion D1 has been moved as an amendment to motion D to leave out amendment to motion D to leave out from disagreed to end and insert? Do disagree with the Commons in Do disagree with the Commons in their amendments 72 and 72 k in lieu of Lords amendment 72 to 7214.

Or is it 44? And do propose amendment 72 L to 72 N and £0.72 to 72 to R in U of Commons amendments 72 and 72 K. The question, therefore, is that motion be be agreed to. As many as that opinion will say. Content. Contrary, not content. not not not I think the not contents have it.

**** Possible New Speaker ****

No, no. The question is that motion D be

**** Possible New Speaker ****

The question is that motion D be agreed to as many as that opinion will say content and contrary not will say content and contrary not content. The contents have it.

**** Possible New Speaker ****

content. The contents have it. My Lords, I think it's a little bit of uncertainty in the chamber. bit of uncertainty in the chamber. I think that I think I was correct, I think I'm correct. If Lord Burns wishes to withdraw his motion, he

**** Possible New Speaker ****

can do. I think he wants to withdraw his amendment, not to vote. No, that is not the position. If

**** Possible New Speaker ****

No, that is not the position. If a noble Lord makes a speech rather than then he. Then I must put the than then he. Then I must put the question. I have put the question. Nobody has voted in favour of it. So I think we are back where we So I think we are back where we wish to be, or where the majority

**** Possible New Speaker ****

wish to be. So I'm getting really strong advice. If the clerks that he is able to draw his motion, I don't know what we do here now. Yeah, well we'd better.

**** Possible New Speaker ****

I hate to intervene, but it's been actually voted not content. So

**** Possible New Speaker ****

I think we're we're back to the beginning, if that makes sense. Yes. I'm assuming now that we may

**** Possible New Speaker ****

I'm assuming now that we may move on to a motion e Baroness Lloyd of f.

**** Possible New Speaker ****

Lloyd of f. My Lords, I've already spoken to motion E that this House do not insist on its insistence on Lords insist on its insistence on Lords Amendment 62, in respect of which the Commons have insisted on their disagreement and do agree with the Commons in their amendment 62 e in lieu of Lords Amendment 62. I beg to move.

**** Possible New Speaker ****

The question is that motion be agreed to motion E one Lord Sharpe agreed to motion E one Lord Sharpe of Epsom. The original question was that motion be agreed to? Since when motion E one has been moved as an amendment to motion E leave out from house to end and insert do from house to end and insert do insist on its amendment 62 and do disagree with the Commons in their disagree with the Commons in their amendment 62 e in lieu of Lords Amendment 62.

The question, therefore, is that motion E one be agreed to. As many as that opinion

**** Possible New Speaker ****

content. Not content. The question will be decided by

**** Possible New Speaker ****

The question will be decided by the vision. I will inform the House when voting is open.

**** Possible New Speaker ****

The Lord.

**** Possible New Speaker ****

The Lord. Order, order voting is now open.

**** Possible New Speaker ****

My My Lords.

**** Possible New Speaker ****

My Lords.

**** Possible New Speaker ****

My Lords. The question is that the amendment be agreed to. As many as amendment be agreed to. As many as that opinion will say. Content. Contrary, not content. content. The contents will go to the right by the throne and not content to the Lords. Lords. The question is that the amendment be agreed to. To To be To be absorbed To be absorbed. Yes. I think it's a time Lord Yes.

I think it's a time Lord Flight. I think.

**** Possible New Speaker ****

The contents have voted 219, the not contents 223. So the not not contents 223. So the not The question is that motion be agreed to? As many as that opinion will say content contrary not content. The contents have it. My Lords, this may be an appropriate moment to have a short break before we

**** Possible New Speaker ****

Thank Thank you. My Lords House, to be in

**** Possible New Speaker ****

My Lords House, to be in Committee on Sustainable Aviation. Fuel Bill Lord Hendy of Richmond Hill.

**** Possible New Speaker ****

Hill. My Lords, I beg to move that the House now do resolve it. Do now
18:35
18:35
Lord Ravensdale Portrait Lord Ravensdale (Crossbench)
-
-
My Lords, I shall speak to my amendments one, five, and six, and amendments one, five, and six, and I'm also going to speak to amendment three in the name of the noble Baroness, Lady Bloomfield, noble Baroness, Lady Bloomfield, and again declare my interest as a chief engineer working for Atkins Wireless, co-chair of legislators for nuclear. Turning to amendment five. First, my Lords, I listened carefully to what the Minister had to say at Second Reading on this matter and was pleased to hear some clarification around competitive allocation.

And of course, to get the market moving. Most contracts will likely be bilateral initially between the counterparty and the provider, but the legislation must be future proofed. And we had a lot of discussion in the other place on the effect on airfares of this legislation. And at Second Reading here, and the way of bringing costs down and delivering value for money is, of course, competition. Longer term, we do need a mechanism similar to offshore wind, where a strike price and an auction is put in place, and that would apply the rights.

Competitive pressure to the markets put downward pressure on costs. All of the similar government legislation, for example, the Energy Act 2023 for hydrogen carbon capture and storage and the Energy Act 2004 for for offshore wind does include such provisions. But the bill before us today does not. And clarity on how this competitive process will be set out is important. So I've proposed this amendment. Now. Amendment five is based upon section 76 of the Energy Act 2023. But it has been tweaked so that rather than spelling out all the things regulation might cover, I instead give the Secretary of State the power to make rules.

And what this does is reduce the complexity of what is in the other acts by avoiding the need to table a complex piece of secondary legislation, and instead cover this through a rule making power. The amendment, also through the framework, allows the Secretary of State to make decisions on aspects such as the the process for producing the SAF, the outputs and, critically, the location of production, which feeds into some of the amendments in the next group. So overall, amendment five is an opportunity for the government to clarify the strategy, the overall overarching strategy of the bill in moving from bilateral negotiations to competitive allocation by embedding competition within the bill, and this would provide clarity to the Bill and ensure that the benefits of competition in lowering costs are taken forwards.

Turning to amendment six models, there is another opportunity here for the government in aligning the bill with the SAF mandate order. Now, the strategic nature of power to liquid fuel or third generation SAF e-SAF has been recognised by the government and in the SAF mandate order, there is a table that specifies the percentage of SAF that must be in power-to-liquid form by calendar year. Now, it's crucial that the revenue certainty mechanism secures enough e-SAF production capacity to meet the SAF mandates in the UK.

Otherwise, there is a real risk that the mandate won't won't be able to be met due to global scarcity. So analysis from the transport and environment NGOs shows that the UK can't rely on e-SAF imports from the EU, for example, to meet the SAF mandates as planned. EU production capacity is just enough to meet EU regulations, so that strikes the importance of aligning the revenue certainty mechanism with the SAF mandate order. So what what I'm proposing in amendment six is simply to take the fuel of aviation fuel demand in the UK, which is around 10 million tonnes per year.

That's the lower end of aviation fuel demand over the past couple of decades using. And that's taken from ONS data. So it's simply multiplies that figure by the percentages in the SAF mandates order. So this amendment would really help the government to ensure that the revenue certainty mechanism and domestic SAF production delivers the quantities of power to liquid fuel that are required to meet the SAF mandate. And it would critically ensure that we have join up between these two parallel pieces of legislation that the the Revenue certainty mechanism is joined up with the SAF mandates order.

I would also like to speak to amendment three in the name of the noble Baroness Bloomfield. So this amendment is very straightforward. It proposes a modification to the SAF revenue certainty contracts having a default length of ten years proposes extending it to 20 years, and this is particularly of interest for nuclear derived SAF. So if a SAF offtake is to support the investments in a nuclear power station like electricity offtake agreement does today, then revenue certainty beyond ten years is highly likely to be required, because ten years offtake of SAF is too short to be bankable and is likely to block a SAF developer from supporting investments in nuclear new build projects, as they would need to do in order to comply with the SAF mandate.

So this amendment is really to probe whether a change to the ten year period is required for certain classes of projects, or whether the option of longer term contracts is open in the existing legislation. I

**** Possible New Speaker ****

beg to move. Amendment proposed clause one, page one, line five. At the end, page one, line five. At the end, insert the words as printed on the

**** Possible New Speaker ****

marshalled list. My Lords, I. Want to rise to speak briefly to

**** Possible New Speaker ****

Want to rise to speak briefly to this group of amendments. I strongly agree on the importance of
18:41
Lord Harper Portrait Lord Harper (Conservative)
-
-
strongly agree on the importance of having a a proper framework for these contracts, and also to have a competitive process. I think the lesson from the energy market is that that competitive process is important to make sure that we achieve the policy objective, which is the production of the fuel, but at the lowest possible cost, which is in the end going to be passed on to consumers. So I think that that having some sort of competitive process is very important. I also think that the and there's, there's two, two amendments in this group that are potentially conflicting here.

So I'm, I understand the argument in favour of the allowing a longer contract period, particularly for nuclear derived power to liquid fuel as, as the noble Lords said. But equally, I wouldn't want that to be the the automatic default for all of these contracts. And I was very struck by my the amendment on the paper from my noble friend Lord Moylan, about making sure that it is possible for the government to exit from these contracts. And I think from my point of view, the attraction here is just to make sure we don't.

We learn one of the lessons from the energy market. And what we don't do is have contracts as a balance to strike here. We want long term contracts to give certainty to the investors and those going into first to market plants in the UK to produce this. But what we don't want to do is lock in contracts longer than necessary, potentially at a point where the market price is lower. And we've effectively we're holding the price higher than it needs be.

And I think we have learned some lessons from how that works in the energy market. Now, the amendments on the paper may not be the right way of doing that, but what I'd be interested to hear from the Minister, the noble Lord, the Minister when he winds up this group, is what what has the government learnt from the way these sorts of contracts, because he referred in his speech at Second Reading to the contracts for difference models from the energy market, what has the government learned? What detailed work has been done about getting these contracts right, both at the outset, but also enabling them to be flexed as the circumstances change? So again, we get the right level of price protection.

That's which is necessary to get the initial investment and produce investor certainty. But we don't keep it going past the point at which investors are making returns above what what was necessary to get them to invest. So and you obviously can't change those rules retrospectively. So it's about getting the right level of certainty. So I'd be interested to to hear what the minister's got to say there. I'm supportive of the thrust of his amendment at five on on the power to liquid fuels.

I think it was amendment five. Sorry, amendment six. The only thing I would quibble with is that had a must in it. And the the and I don't know the likelihood of this, but what I wouldn't want to do is force the government to enter into revenue certainty contracts that were not necessary to produce. If we had producers actually producing enough of that third generation sustainable aviation fuel, I wouldn't want to force the government into having to enter into revenue certainty contracts that were unnecessary.

So I think I support his his the thrust of his argument, which is to make sure enough of the third generation SAF is produced to meet the requirements in the mandate, but I wouldn't want the government to be forced to do that. So I think the wording of the amendment just needs something which which says only has to do that if not doing so would not allow that level of fuel to be produced for the market.

**** Possible New Speaker ****

For his for his comments on the amendments and I yeah, I would, I would certainly be open to to what would certainly be open to to what he's saying there about the wording in that amendment. I and I would just say that, you know, the way, just say that, you know, the way, the way we've structured this amendment is to provide a million tons of fuel of, of oil equivalent tons of fuel of, of oil equivalent figure. And that has been it's been taken using a we try to do it using a floor mechanism.

So we've looked at the total aviation fuel demand in the UK over the past around 20 years. And we've taken the lowest figure, and we've simply multiply that by the percentage of percentages in the SAF mandates order. So I hope by providing that floor mechanism, there is there is that flexibility there. But I wording.

**** Possible New Speaker ****

I'm grateful to the noble Lord for that clarification. I certainly agree with the thrust of his amendments. I just wouldn't want amendments. I just wouldn't want there to be a legislative mandate for the government to do something that proved to be unnecessary. So that proved to be unnecessary. So and again, I think understanding from the Minister what's the appropriate amount of flexibility for the government to have in practice, because we want the government to use the lessons from those contracts and to have the appropriate level of negotiating space to strike the best deal for aviation consumers.

But we we also want to make sure that the government doesn't give away unnecessary amounts of, of consumers money that is not necessary to produce the the result. So I think overall, the amendments in this group, I think are helpful in enabling us to have that debate and to just test what lessons we've learned from the way these sorts of contracts work in the energy market, but also the the amount of negotiating space that Ministers will need when they're directing the counterparty to strike the best possible commercial deal.
18:47
Baroness Pidgeon Portrait Baroness Pidgeon (Liberal Democrat)
-
-
My Lords, this group of amendments is. >> Trying to tease out really the details around revenue certainty, mechanism contracts. Amendment two mechanism contracts. Amendment two from Lord Moylan is saying that the contracts must not exceed ten years and must have a no cost break clause at five years. And amendment three from Baroness Bloomfield, on the other hand, wants the contracts to be increased from 10 to 20 years, as we've already heard the reasons around that. So a difference in thinking from two members.

But I think what is key here and from the debate so far, is that flexibility is needed depending on the type of industry involved. Here. The Minister briefed members about the thinking behind the ten year contracts at a recent meeting, so I hope the noble Lord, the Minister, can explain from the despatch box to reassure members that the government has in mind the right length of contracts for this emerging area and Lord Ravensdale amendment five, as he's outlined, is trying to put kind of flesh on the bones.

I think of the revenue certainty contracts by developing an allocation framework similar to contracts for difference for energy. And whilst commitment six is looking at the role and amount of revenue certainty, certainty contracts are power to liquid fuels. I think both of these are really important points, which I hope the Minister can address, and whether this is the right stage for such detail, or whether some of that should be coming through at secondary legislation stage. great.
18:48
Lord Moylan Portrait Lord Moylan (Conservative)
-
-
Interest to this short debate, and I have to say, and it is almost and I have to say, and it is almost certainly my fault, and I will probably need to be mildly probably need to be mildly humiliated as I'm corrected on the topic. But we've discussed the length of contracts by reference to clause one, subsection seven. But it seems to me that clause one, subsection seven, says nothing at all about the length of contracts and the noble Lord.

The Minister now has the opportunity to put one or both sides of this question to correct one or both sides of this question. The subsection in question says no direction may be given under subsection one. After the end of the period of ten years, beginning with the day on which the act is passed, and. That subsection seven and subsection eight, which follows immediately on, gives the power to the Secretary of State by regulation to amend subsection seven, so as to extend the period for a further five years.

So this is saying when the counterparty can enter into contracts, not when the contracts start. It's not saying when the contracts end the contract, as long as it's awarded in the first ten years, possibly 15 years depending, could be for 100 years and nothing that has been tabled by noble Lords seems to me in relation to this clause affects that. I, however, speaking now to my amendment number two, I believe that I have bitten firmly on the question, and I have said no contract, whenever it's awarded, may last for more than ten years and must contain a break clause after five years.

So I think I am talking in my amendment about the length of the contract, but the other noble Lords who've tried to talk about longer contracts aren't talking about longer contracts at all. So I'm I may have got that completely wrong, but the noble Lord.

**** Possible New Speaker ****

Noble friend give way. But for two reasons. I'm grateful to him. The first reason is, if you'll indulge me, is, despite having asked the clerk for advice, I then asked the clerk for advice, I then carefully omitted to just declare an interest at the beginning of my speech, which I will now correct speech, which I will now correct and draw attention of the House to my entry in the Register as the non-executive chair of Rvl Aviation, non-executive chair of Rvl Aviation, which I did during the Second Reading debate.

But on my noble friend specific question I did in my speech, I think refer to his amendment. He obviously hadn't. I always had the misfortune of having supported his amendment before he had so ably moved it. But I absolutely agree with him that it's the contract length that's important, and not just the period

**** Possible New Speaker ****

from when the bill becomes law. I think we're all agreed that we should be talking about contract should be talking about contract length. I'm just saying that my amendment is the only one that actually refers to it. That's that's the point I'm trying to to that's the point I'm trying to to make. So we're all agreed on it, that it should be that. And I also that it should be that. And I also want to come to a point raised by the noble Lord Lord Ravensdale, in the noble Lord Lord Ravensdale, in respect of competition.

He says there must be an opening, at least in the future, for these revenue certainty mechanism contracts to be awarded competitively. And he seeks to put this in place in the bill now. And he appeared to say that if this was not done now through some sort of device such as he is proposing, then there would not be in future an opportunity for competitive procurement. If I misrepresented him. Of course, I will entirely give way and be corrected, but if I make the point, I see he might be about to rise.

I might as well complete the point before he corrects me, because my understanding is there's nothing to prevent competitive procurement taking place from day one under these arrangements, and therefore it is not necessary to put in place an arrangement to secure it. But I'm again, I'm open to being corrected on all hands about this because I'm groping my way in the

**** Possible New Speaker ****

dark through this thicket. The noble Lord I agree with with what he said, and I think the Minister provided that clarification at Second Reading, that there's nothing in the nothing in the bill that prevents in the bill that prevents competition. But I do think for consistency with the other legislation that I outlined that has that direction on similar competitive processes in the in the competitive processes in the in the energy acts and for clarity on the on the strategy, I think it would be it would be beneficial to have

**** Possible New Speaker ****

that process set out in the in the bill. I'm very grateful. To the noble Lord for explaining

**** Possible New Speaker ****

To the noble Lord for explaining that, and I'm glad we're broadly at Eden, but he helps me to my third Eden, but he helps me to my third point, which is that the assumption point, which is that the assumption by the noble Lord Lord Ravensdale appears to be that the procurement appears to be that the procurement of all future SAF, including non HEFA, SAF, and potentially at some stage power-to-liquid, is going to have to depend upon or be supported by a revenue certainty mechanism, or at least.

Some form of subsidy or support from the state. That appears to be the assumption. I wholly deprecate that assumption. I think it is appalling that we should embark upon this project with a view to a regime of perpetual subsidies. If SAF is not rapidly producible on a commercial basis in this country, then really, as I shall come to in other amendments, the whole project should be reconsidered at this stage. But I'm comforted in thinking that the government does not envisage perpetual subsidy by my reading of clause one, subsection seven and subsection eight.

Because why would the government put in what is effect these the subsections I referred to before? So I won't read them out again? Why would the government put into place what is, in effect, a sunset clause, if it envisaged that there would be a need for perpetual subsidy, because, in effect, the noble Lord may want to confirm this. Subsection seven and eight, taken together, are a sunset clause at the end of ten or possibly 15 years. No more contracts can be awarded without further primary legislation.

So I just think that there's a degree of confusion which I may have participated in in what we're actually discussing. And I we are giving to the noble Lord, the Minister, the opportunity to bring a blast of fresh air to clear the fog and explain it all to us so that we know what we're talking about. Because up until now, I'm not entirely sure that we, all of us are now coming to my amendment number two, which has been explained very well by the noble Baroness, Lady Pigeon.

I don't need to elaborate on what it says, but I haven't yet given any rationale for why it should commend itself to the committee. Coming to my amendment number two, before I sit down, amendment number two seeks to limit the length of contracts. Now, the reason for this is very simple. This bill is a large slice of corporate welfare. It gives having given through the SAF mandate, which we approved last year, having given to the industry a guarantee of uptake of SAF, so that you know that your product is going to have to be bought, that isn't enough for them.

We're now going to give them, in addition, a guaranteed price. That's what they're demanding. Now, I don't blame them for demanding that. Let's have guaranteed demand and a guaranteed price. That's a very pretty place to be in. Let's transfer all the risk somewhere else. And who is going to pay that guaranteed price? Not the government, not the government, because it's not a subsidy, but rather they've discovered from the electricity market the contract for the difference which the noble Lord Lord Ravensdale has referred to to some extent, at least from for his thinking as a model, but a structure which has given us the highest electricity prices in the civilised world.

And so the cost. What this points to is the fact that the cost of SAF is going to fall on the airlines and potentially and ultimately on the passenger. And indeed we will come to this later. But the the government has made an assessment of what that might mean in terms of pounds per ticket, so to speak. And that's the subject of a later amendment, which I won't trouble you with now. And therefore, given recognising the large element of corporate welfare in this bill and the need to get away from corporate welfare and incentivise competition, I suggest there should be some basis.

And I'm grateful to my noble friend Lord Harper for supporting this some basis for limiting the contract and therefore the benefits that accrue to the producers of SAF. I have suggested ten years. Ten years is, of course, an arbitrary number. It might be six years, it might be seven, it might be eight. And I suggest that also including with it a break clause, which I put at five years, so that the government, if they saw that this was all going very well and and the thing was becoming commercial, the government could walk away.

And that must be the government's ambition. And I put that break clause in it. Five years. That is an equally arbitrary number. If the Minister agreed on the principle, he and I, I'm sure, could sit down and very rapidly agree a maximum length of contract and an appropriate term for the break clause. But I think it is in that direction that we should be looking. If we are not to burden young people. There are not so many young people in the House.

In the committee this evening. We many of us are getting to the point where our best flying days are behind us. But when you when you look to young people who perhaps work in other parts of of the house and you say you are going to be paying for this for the next 20 years, you and your wives and your children and even potentially your grandchildren are going to be paying for this slice of corporate welfare. So if we don't get it right, the burden falls on you.

When one thinks about that, then of course, one is moved very strongly and surely moved in the direction of supporting my amendment number two.
19:00
19:01
19:01
Lord Hendy of Richmond Hill Portrait Lord Hendy of Richmond Hill, Minister of State (Department for Transport) (Labour)
-
-
land use change. However, adopting these amendments would limit the government's allocation flexibility by setting criteria in advance, by setting criteria in advance, which could ultimately reduce value for money in the contracts agreed. It is important that the allocation It is important that the allocation strategy is able to reflect different technologies. As they develop, the government will develop, the government will establish a fair and transparent process to assess each project's key costs, benefits and risks. This process will be developed over the coming months and will involve consultation with stakeholders.

The decisions on contract allocation will be determined during the contract allocation process. Noble Lord Moylan is right that we don't want perpetual subsidy, but we do have to establish over time the the the opportunity for different technologies to develop. The noble Lord Moylan is right about in in his remarks about contract lengths. There's no humiliation there at all. The length of the length of contracts is not set out in the draft, in the draft bill.

And the amendments other than his amendment two would extend the time in which the contracts could be entered into, not the length of the contracts themselves. But and we are engaging a range of stakeholders on contract length because it makes sense, obviously, to talk to the talk to the market about about about that. And no final decisions have yet been made. Contracts issued under similar schemes are generally for a period of 10 to 15 years, which reflects a standard debt repayment period, limiting the contract to ten years may not be sufficient to attract the investment necessary to construct these these plants, and I would contend that it's premature to decide the contract length until the market has advised what it would need in order to construct the plants that would make that would make the fuel.

The bill allows the Secretary of State crucial flexibility to adjust any standard contract length in between allocation rounds. In the light of emerging market evidence. It also preserves optionality for the potential for potential needs of emerging pathways. For example, nuclear derived SAF, the addition of a no fault break clause will, of course, undermine the certainty provided by the contract and seriously risks losing the investor confidence which this bill aims to increase. In respect to the noble Lord Harper point, the learning from the energy market is that the contracts need to be long enough to secure the investment that we're talking about, noble Baroness Pidgeon asked what the right contract length is, and I think we have to establish that by talking to the market.

So it's premature to to to determine it. Now, on the contrary, amendment three sought to extend seeks to extend the time in which revenue certainty contracts can be allocated from 10 to 20 years. And the purpose of the bill is to kick start the industry in this country. The revenue certainty mechanism is intended to be time limited measure and to stimulate the early market. And once investors have the confidence in the market price in the first of a kind, technology has proved itself at commercial scale to the noble Lord Rowlands point.

The mechanism should no longer be needed. So I, I think we, the government contends that amendment three is is is not the right way to go. However, if the government finds in due course, it's necessary to extend the provision. Subsection eight of the act will allow the Secretary of State to extend the period by which contracts can be allocated in five year increments, by making regulations by affirmative resolution. So, so, so Parliament can take a view about the applicability of that extension at the time that it's proposed.

Amendment five by the noble Lord Lord Ravensdale seeks to include a contract allocation framework in the bill. The government will need to carefully consider and work with industry on specifics of contract allocation. This will ensure that there will be a fair and transparent, transparent allocation process that evaluates the key cost, benefit and risks of each project, and this will be developed over the coming months and will be subject, rightly as it should be, with to consultation with stakeholders. The amendment, as it stands, will reduce the government leverage in negotiations by setting criteria in advance and limit the ability to secure the best value for money in the contract signed.

The noble Lord Ravensdale referred to the Energy Act 2023 and the Allocation Framework Framework, which was included in the Energy Act 2013 and the LNG act 2023, as it was ensured that the Secretary of State could effectively regulate the activities of an allocation body where one is appointed under that legislation. In this bill, the Secretary of State will carry out the allocation process, so it's not necessary to set out an allocation framework to govern the activities of an allocation body.

I hope my explanations answer the concerns,

**** Possible New Speaker ****

and noble Lords feel able to withdraw their amendments. Before the Lords.

**** Possible New Speaker ****

Sits down. Actually, I'll excuse me, I'll wrap up now, but could I could I just ask him around? His response on amendment six is response on amendment six is appreciated, but I, I there is then the risk that if it's not set out, the risk that if it's not set out, the amount of third generation SAF or Power-to-liquid that needs to be produced, then effectively this this bill does not then align with the SAF, the SAF mandates, which does have those clear percentages in terms of power-to-liquid fuel requirements.

So does he accept that there is there is a bit of a gap in between this legislation and the the SAF mandates in that one perhaps doesn't support the other in, in delivering what's in the SAF mandate.
19:07
Lord Ravensdale Portrait Lord Ravensdale (Crossbench)
-
-
I think the noble Lord for his intervention. If I'm if he's willing, I will take that point away and contemplate it further.

**** Possible New Speaker ****

away and contemplate it further. I found the noble Lord, the Minister, and it's it's been an excellent short debate, and excellent short debate, and certainly Lord Moylan did provide that clarity on on contract length. I think. I think we were missing supported by the Minister. I was pleased to hear that the allocation process will be fleshed out through a consultation, and for now, I beg

**** Possible New Speaker ****

leave to withdraw my amendment. Is it your Lordship's pleasure that the amendment be withdrawn? It that the amendment be withdrawn? It is by leave withdrawn. Amendment two Lord Moylan not moved and three two Lord Moylan not moved and three Baroness Bloomfield not moved. And

**** Possible New Speaker ****

number four Lord Grayling. My Lords, it may be for the convenience of the committee, if I rise to move amendment number four, in the name of my noble friend Lord Grayling, who has taken the deepest and most knowledgeable interest in this bill, but who has had to excuse himself from the committee today because of pressing family matters. However, it's not my intention to speak to his amendments. I simply wish to create an opportunity for other noble Lords who may wish to speak to them.

To do so, I will only say in regard to them speaking, if you like, from the front bench, that they raise very interesting questions about the potential beneficiaries of the
19:09
19:10
19:10
Lord Harper Portrait Lord Harper (Conservative)
-
-
this group? Amendment 18 they both have the same, I think, intention, have the same, I think, intention, which is to make sure, as is set out in the explanatory notes to the out in the explanatory notes to the Bill, that the point of the revenue certainty mechanism is to support UK SAF production, not SAF UK SAF production, not SAF production, that takes place elsewhere. And I think the purpose of of tabling the amendment certainly that that my noble friend Lord Grayling did I think was two things.

Firstly, to make that point explicitly clear, but also I think to test and this is set out in the amendment just to test with the Minister what definition of UK production the government is going to adopt in its contracts. What does that mean in terms of the the components of the fuel, where the different stages of production have to take place and what what the lines will be about? What qualifies as UK production? There's clearly clearly I think what we're intending to do, and certainly with the the plants that have received capital support from the government, is to have the end to end process here in the UK and the plants here in the UK, and effectively all of the value created in the UK.

But clearly there may well be businesses which only do part of that in the UK. And I think it's important, just to be clear, and the government to be clear about where the lines are going to be, what it's going to insist on in the contracts so that the the money that's coming from UK consumers is going to support UK jobs as part of that industrial policy. That is, after all, the point of this. There is no point having a revenue certainty mechanism if all it's going to do is deliver SAF production elsewhere in the world, we could just let that get on with it, frankly, and not be too worried about it.

The point of this is to make sure that we produce that fuel here for two reasons. As I understand it. One, there's a an industrial policy argument for doing that to make sure we develop the technology here. But I think also there's the learning from what happens during the Covid pandemic, when countries then resort to holding on to some of these essential fuel supplies for their own industries. And during that period, you know, some of the international trade in some of these internationally traded commodities actually gummed up.

And we found that some of those strategic supplies were not available. So I think for both of those reasons, UK production is important. And I think it would be of benefit to the House to hear from the Minister exactly how the that.

**** Possible New Speaker ****

Hi. My name is attached. In support of this amendment, but I didn't actually ask it to be. but I didn't actually ask it to be. I asked for it to be attached to a different amendment under the name of the noble Lord Russell, but I

**** Possible New Speaker ****

think this is a great amendment support. Thank you. I welcome your
19:13
19:13
Earl Russell Portrait Earl Russell (Liberal Democrat)
-
-
noble friend Baroness Pidgeon Lord Ravensdale and Baroness Jones, even if it was the wrong amendment for if it was the wrong amendment for adding her support in in to it. This. This amendment seeks to ensure that the government's ensure that the government's support for sustainable aviation fuel translates into genuine home grown industrial capacity. As we've grown industrial capacity. As we've heard, we support this bill, we support the aims of the bill and we support the aims of the bill and we we want to see it move forward.

Other countries are moving forward. The United States, through its Inflation Reduction Act across Europe, the progress is being made and we welcome the bill here. But we need to act decisively to make sure that we're not don't become a passive importer. And we welcome this bill seeks to do that. We believe that this this mechanism reporting would, would really help to strengthen this bill, to make sure that these issues are defined and reported on. There's an important distinction between manufacturing and and simple operations such as blending, trading or storage.

Too often, limited progress is repackaged as domestic production when it is not so we in this amendment, we we've sought to define what UK production means. The main chemical or biological conversion processes takes place here. Clarity, we believe, is essential. And this having this is is in the government's interests as well as ours. The amendment doesn't seek to tie the Secretary of State's hands. It provides a clear framework for defining what counts. Is this UK production? It also allows flexibility to set out more detailed rules by regulation on the extent of processing ownership and the evidence required for compliance, while maintaining robust accountability.

It seeks to ensure that the public funds that have been putting into this bill into SAF production, produce good public value. It also seeks to ensure that this any fuel supported under the revenue mechanism should not be exported abroad. That would be effectively US, the UK taxpayer paying to support foreign aviation emissions reductions. The amendment allows for limited exceptional exemptions. These can happen and problems with the supply chain, but these should not be be subsidised through the revenue Certainty Mechanism.

It requires the Secretary of State to publish an annual report on the total volume supported, the proportion the truly consistent with UK production, and to report on any fuel that is actually exported. We believe this reporting mechanism would be helpful. It helps to assess which airlines are leading and which are lagging in using SAF to cut their emissions. It also will help us to understand the type of sustainable fuels being used, and having that broken down into SAF and e-SAF.

This duty is is fairly modest, but we believe that it it would it would help domestic production here. It helps ensure that this revenue certainty mechanism is indeed building the UK production and helping to do what the bill sets out to do, which is to get this initial investment in place, this big investment. So do these these big factories can be be set up and support jobs and growth in this country. So the amendment is fairly straightforward. Just turning to Lord Grayling's amendment.

The amendment is is in a very similar vein. We share his intentions and what he sets out to do. However, I would argue that the amendment here goes a little bit further. It's clearer in defining what production is. And whereas his amendment really sets out a useful boundary, I think ours really fills in the framework inside that boundary. Without a statutory definition of UK production, without the reporting duty amendment provides it. It is difficult with the other amendment to guarantee that levy revenues are genuinely strengthening domestic capacity.



**** Possible New Speaker ****

Does that make me? My Lords, very briefly, writer, support amendment 18, to which I've support amendment 18, to which I've added my name, support the other amendment in this group. And I think, as has been said, really think, as has been said, really setting out those definitions in the amendments of what what manufacture means and how it's manufacture means and how it's going to be supported is important for the government to consider in for the government to consider in making sure that all of this is UK based.

As the noble Lord. Lord Harper said. That is the the point of this bill.
19:18
19:18
19:20
Lord Moylan Portrait Lord Moylan (Conservative)
-
-
My Lords, I beg leave to withdraw amendment four in the name of my noble friend Lord Grayling. of my noble friend Lord Grayling. >> Is it your lordships pleasure that the amendment be withdrawn? Amendment by leave withdrawn. Amendment by leave withdrawn. Amendment five Lord Ravensdale not moved. Not moved. Amendment six. I'm my Lords, I do apologise. Amendment six not moved. The question is that clauses 2 to 5 stem part of the bill. En bloc as many as that opinion will say content.

To the contrary, not content. The contents have it in

**** Possible New Speaker ****

clause six, amendment seven Lord Moylan on behalf of Lord Grayling. My Lords, again, it might be

**** Possible New Speaker ****

My Lords, again, it might be convenient for the committee if I rise to move amendment number seven rise to move amendment number seven in the name of my noble friend Lord Grayling. And while I'm on my feet to congratulate the noble Lord, Lord Earl Russell, on his sort of Lord Earl Russell, on his sort of demotion to a mere, a mere barony. But but let me assure him it will pass, and his family will be able to resume their their earl like status for many generations.

I hope to come. I do wish, if I may, my Lords, to speak. However, since I'm on my feet to my amendment number

**** Possible New Speaker ****

11, which is in this group. If the noble Lord will allow, I will first open the debate by proposing the amendment amendment proposed clause six, page four, proposed clause six, page four, line 19 after contract's insert in respect of sustainable aviation fuel manufactured in the United

**** Possible New Speaker ****

Kingdom. If I may speak to my amendment

**** Possible New Speaker ****

If I may speak to my amendment number 11, and I'm going to try to put this again in language that I understand. So that's fairly simple language. The levy has to be allocated. So if a levy is required, if that is the contracting party has to make payments to the producers of SAF, then they will fund this by a levy. And the levy is going to be applied high up the supply chain. It's going to be applied to the producers of fuel, that is, the people who produce aviation fuel, kerosene, who will be adding a certain amount of SAF an increasing amount each year to their kerosene, before then selling it to airlines.

That, as I understand, is is the mechanism. So the question is amongst the competing producers of aviation fuel, how is the levy to be allocated in one period to the next? And I'm going to make the assumption, for the sake of simplicity, that the allocation period is a year. There's no necessity that it should be a year. It could be done six monthly or monthly. But the noble Lord can say, if the government has a clear intention about that.

My understanding is that the the Bill envisages that allocation will be based on market share and market share, of course, can only be measured in retrospect. You can you can know what what a company's market share was last year or in the last six months. You won't necessarily know what their market share is going to be for the year to come, but of course, they're selling the aviation fuel in the year in which they're acquiring market share, so they will not know what their levy is until the end of the year or the period, the end of the year in which the levy is allocated to them according to their market share.

So they the it will be impossible for them to have a clear notion of what they should be adding to the price of the fuel to compensate themselves for the levy. And it is. It is, of course, envisaged that they should compensate themselves for the levy through adding to the price of the fuel and selling it on, which is how the airlines and ultimately the passengers pick up the cost. This is presented to me at least, and maybe to other noble Lords by the industry as a very serious, practical difficulty that their tendency as a result of doing this will be to overcompensate and add more to the price of fuel than is strictly necessary to cover a levy, which they can only vaguely guess at.

Now, I accept that their market share is unlikely to jump wildly from one year to another. That doesn't happen in mature businesses. I do appreciate that, but the levy was quite sensitive even to modest adjustments in market share from one year to another, and to get an accurate price for passing on to the to the customer, relying on retrospective market share is simply not going to cut it. And the result may well be that customers end up being overcharged.

It would be better if the counterparty were able to calculate the levy on the basis of a transparent pence per litre basis, which could then, and this is another point of capital importance, be added to invoices so that anyone who was buying aviation fuel that would be normally airlines. Of course, anyone buying aviation fuel would see clearly on their invoice how much have been added in respect to the levy. There is a suspicion in the industry, which I'm sure the Minister wants to dispel, that the government would rather obscure what the additional cost of the levy is, and that a system whereby it was written plainly on the face of an invoice would be unwelcome to them.

But I'm leaving aside. That would be useful if the Minister dispelled that view. I'm leaving aside that issue, even if that were not a consideration. There is very importantly, the practical consideration of how this is going to be calculated by companies who will not know what their levy is going to be. And I do think, my Lords, that this is an extremely serious issue about the implementability of the of the Bill and is bound to come back on report because the bill will not work unless this is sorted out.

It will not work, at least in the way in which the government intends. So with that, I recommend my amendment number 11, and I'd be interested to hear what noble what the noble Lord the Minister, has to say about it.

**** Possible New Speaker ****

Beyond that. Lordship I.

**** Possible New Speaker ****

Lordship I. Rise to speak mainly to amendment of my noble friend, the Minister number 20, which is maybe Minister number 20, which is maybe rather an odd order of order of speaking to these things, but it speaking to these things, but it does enable him to respond to me after I've spoken rather than before I've spoken. I'm sure he would. He would welcome that. My Lords, I want to talk about the relationship between sustainable aviation fuel and the production of renewable liquid fuels that could be used in the home heating.

I raised this in Second Reading and highlighted a key point I thought was a key point the production of sustainable aviation fuel, particularly those through the HEFA process, generates hydrotreated vegetable oil or HVO as a by-product. In fact, HVO accounts for around 30% of the output. That's a significant quantity, I believe. But in the consultation on Alternative Heating Solutions published a couple of weeks ago, the government rightly acknowledged the role that HVO could play and could decarbonising off grid homes, of which I declare my home is also off grid and relies on oil and indeed highlights.

It would be the most cost effective option for consumers out of all the other options considered. But the consultation still questioned the feedstock availability for the fuel. And what really pleased me was, in the last few days, a written answer was given to a member of Parliament in the other place. Which states and I quote as of the 1st of January 2025, a market for low carbon fuels for use in aviation and road transport has been supported under two separate schemes, the SAF and the RT Efo and targets under both these mandate and the Rtfo are set considering global availability of feedstocks and competing demands between the transport modes and across the sectors of the economy.

And it basically says that there's enough material for both aviation and home heating, which I think is a major step forward. And the then the
19:30
19:31
Lord Harper Portrait Lord Harper (Conservative)
-
-
just emphasise two of the points. The first one is the point about transparency. I think it is very important actually, that that we're very transparent about what we're doing here. I think having sustainable aviation fuel and making aviation more sustainable is an important policy goal. It's one that that we supported in government and the present government support and the principle of it was also supported by the Liberal Democrats. And I think we should just be open about the cost of it.

There is a cost involved in doing it. There's two reasons to be transparent about it. One, that's how you generate confidence from the public. They can see that aviation is becoming more sustainable. There's a cost involved in doing it, but that cost is a sensible one and one that they're prepared to pay. Secondly, the transparency, I think, enables there to be competition or a downward pressure on the cost, which is easily missing if the costs are obscured. So I think having the costs be transparent, I think is very helpful.

And it also means that different suppliers, you know, aren't able to to hide these costs in their invoicing. The second point is, I'm still unclear about how a mechanism based on market share would work. And I think as well as the lack of clarity and the risk of that leading to overcharging, I also think there's a risk about being backward looking and looking at historic market share. And I'm also not clear whether the intention is that different suppliers would effectively have different costs being added to what they have to charge their suppliers, which would seem to me to have a adverse competitive effect.

We want people to be bearing the cost of the levy, but I don't want different suppliers to be picking up a different proportion of that based on their historic market share, and then having to charge a different price per litre to competitors. That seems to me to lock in a previous competitive structure and outcome. And actually part of what we're trying to do here is to encourage new producers and new people to come into the marketplace with new fuels and to enable that competitive process to take place.

And it's that competitive process that will make sure we get SAF produced at the lowest possible cost, which is important for consumers. So I think I would welcome some clarity from the Minister, and I think I would urge having that clear price per litre of fuel cost that can be placed on people's invoices and having transparency. I also wanted to speak briefly to amendment number 26, which is also in this group, which is in my noble friend Lord Grayling's name as well, which is a I don't know what the correct description is, a sunrise clause or a commencement time period on section six, which says it doesn't come into force until the first SAF producer is six months away from producing that sustainable aviation fuel in the UK.

And I think what my noble friend is driving at in this amendment is to make sure that the costs of producing SAF do not start being paid until there is a domestic plant almost ready to go, and that the payments to that producer would be ready to go, and that effectively, we're not starting to charge people in advance and effectively saving up the money on the basis that at some point, many years down the road, a producer is going to start producing.

So I think there's merit in this. Six months may not be the right time period, but I think it'd be helpful to understand if the Minister's broadly supportive of the principle and for him to set out what the government's view is on that, and then that may be an issue that either the government could return to at report, as the Minister's indicated, he will on on the earlier group of amendments, or whether he has a different way of dealing with this particular issue raised by my noble friend.
19:35
Earl Russell Portrait Earl Russell (Liberal Democrat)
-
-
My Lords, I speak to my amendment and consequential amendment and consequential amendment 12 in this group. This amendment to clause six would replace subsection three with a replace subsection three with a requirement for a standardised levy on aviation fuel uniform across suppliers, suppliers publicly suppliers, suppliers publicly displayed on invoices and expressed in pence per litre. At the outset, I just want to make two quick points. First, on these benches. We support this bill and we support the principle of the revenue certainty mechanism.

Our concerns is not in relation to the levy, but the the method of its deployment and use as drafted. Our worry and the worry of industry is that it's not clear. And in some cases for industry it is it creates burdens and frictions in this process, which if we can find a way to avoid, I think it would be useful. Second, the the amendment. The amendment that I advance comes from conversations that I have had with Valero Energy, one of the UK majors aviation fuel suppliers.

I have no connection with the company. They came to me after Lord Moylan amendment was was tabled, and they believed that the proposed text that I've tabled here offers the most effective remedies to the bill's flaws. That having been said, we I support the noble Lords Amendment and my amendment is is very, very similar. So I don't want to repeat the arguments that have already been made here, but I will just reinforce a couple of them. Industry are concerned about this.

They feel it creates friction. They feel it's an inefficient way of doing these things, and it could slow down investments in the market. It will discourage new entrants. It generates uncertainties. Suppliers will have difficulty for planning. They won't have certainty. They will need to settle up bills at later dates. It's the department says this is administratively simple and it might be for government, but for industry they feel the opposite is the case and it is.

That disincentive is enough that some of them are thinking about the levels of investment that they want to make. And that, I know, is an outcome that we don't want and the government doesn't want either. I also want to make the point that I'm I'm extremely grateful to the Minister and his officials for having a quick meeting with us. I am fully aware that consultations on this matter are ongoing, and I was greatly reassured from the conversations that we had with Ministers.

I know that his officials are working extremely hard to find a way forward. I'm hopeful that between now and report either this amendment or a government amendment or some fresh thinking that that these issues can be looked at again. And this is this is genuinely to help make sure that the bill works not just for government but also for industry. And it does so in a way that doesn't create unnecessary friction. Just turning to the other amendments in this group, amendment seven, eight and nine are tabled by the noble Lord.

Lord Grayling were generally supportive of these amendments, and we would be interested in the Minister's response to them. However, on amendments 24 and 26 that have been spoken to by the noble Lord, Lord Harper, as he said, it's a sunrise clause to this bill, and I have to say that we we have concerns with these amendments. We these these are very, very large investments that we are seeking for these companies to make in very large and substantial plant in this country. And I don't think I would make that level of investment with with these conditions attached.

And I would worry that that actually delaying these payments will create uncertainty, will create fear for those who want to invest in the jobs and growth that we need in this country, and that that could create a downward damaging spiral for the investment that we need. So I think, however, there is a need for the government, maybe to have a little bit of a further think about how the early days of the levy operate and how the government might, in terms of reporting that we have discussed already, talk about how that those processes of early investment can be reported back, showing that investment is happening, that it's on track, that it's being monitored, and that that investment is going towards the end process.

We all want of these plants being set up and running and producing the fuel. Finally, before I sit down, we support the government's own amendments that have been tabled. If the Minister could just if there is an update just on in relation to Scotland, we would welcome that. But with that I. I beg to move. It.
19:40
Lord Hendy of Richmond Hill Portrait Lord Hendy of Richmond Hill, Minister of State (Department for Transport) (Labour)
-
-
I thank all noble Lords for that, for this brief debate on this group for this brief debate on this group of amendments. Amendment seven, eight, nine, 24 and 26 seek to address how funds from the levy are used. I'd first like to reassure that the noble Lords that the money is raised through the levy will only be used to support eligible SAF plants in the United Kingdom. The purpose of clause six is to provide power to place a levy on aviation fuel suppliers, to meet the cost of payments made by the counterparty to SAF producers, and to cover the county counterparties administrative costs.

Clause six restricts the cost incurred by the counterparty in carrying out its functions under the bill, and under this clause, the levy funds will only be used to meet the costs of the of the RCM scheme. The majority of the costs will only be incurred once SAF is being produced and sold by producers who have entered into RCM contracts. It's important that the counterparty is able to recover its costs, which include the cost of administering the contracts, the levy and the payment of surpluses.

I hope that noble Lords will agree that the counterparty should be self-sustainable. Amendment nine intends to ensure that there's a specific, mandatory point at which the supplier becomes liable to pay the levy. However, the government's view is that that's unnecessary because the bill already provides that a person becomes liable to pay the levy at the same point as they become liable to an obligation under the SAF mandate. This aligns the levy to the point at which aviation fuel is eligible for certification under the SAF mandate, and the government thinks that this simplifies the process for fuel suppliers.

I would remind noble Lords that the regulations made under clause six brackets, one that set out how the levy will work subject to scrutiny under the affirmative procedure, which will give Parliament the opportunity to continue to consider the approach amendment. Turning to amendments ten, 11 and 12. We are, as has been noted this evening, already consulted, currently consulting on the detailed design of the levy, including the length, the length of time. It certainly won't be years, which will help inform the drafting of levy regulations.

The current levy design consultation will conclude on the 8th of January 2026, which is of course before any levy regulations are laid in Parliament. Final decisions on the levy design will be informed by this consultation and to be clear, the Bill as drafted, does not specify a particular mechanism and allows the Secretary of State to consider. Consider a range of options for calculating the levy paid by individual companies. To reassure noble Lords, the government is live to the potential impacts of different levy designs.

We are working closely with stakeholders to develop a levy, levy design and engage with them regularly to understand their concerns. We recognise industry's desire for certainty and transparency, and are looking to design the levy in a way that ensures this, whilst also ensuring fairness and affordability for the consumer. We recognise that the levy must be dynamic and responsible to the changing market, whilst also ensuring that the counterparty has funds to make payments under the scheme. But the government is clear that the levy will not be used to generate unnecessary funds, and will only raise sufficient monies to cover the counterparty.

The counterparties costs under the Revenue Certainty Scheme, whilst final decisions will be informed by the open consultation. We're exploring options that deliver this and many of the proposals and options set out in that consultation could help provide greater certainty and transparency. As I've said, the secondary legislation will be laid by affirmative procedure, allowing the houses to scrutinise its contents. And in addition, as a consequence of the short debate that we've just had, I will commit to noble Lords to brief them before then.

On currently how we what the levy is and how we believe it will work. That's in advance of the consultation closing and the noble noble Earl Russell is right, which is that by the Report stage the consultation will have closed, and I think we'll be clearer how, how how it will work. I hope I've provided sufficient reassurance on these points for noble Lords to withdraw their amendments. I'd I'll speak, if I may, for the government's amendments 13, 14 and 20.

But before I do, I'll just remark to the noble Lord Berkeley that he referred to amendment 20. But that's about devolved administrations. But since he did refer to HBO for heating and road transport, I would say to him that we are working. We, as he remarked, we are continuing to work across government to ensure that policies for HVO for heating and road transport are compatible with these policies for sustainable aviation fuel. I'm sure there'll be more on this in due course.

The government's amendments set out the requirement to consult with the devolved governments before making regulations under regulation, making powers set out in clauses one, three, ten and 11 of this bill. These clauses are clause one, bracket six, which allow the Secretary of State to make regulations extending the period of time under which they can direct the county party to enter into contracts by up to five years at a time. Clause one brackets three which give the Secretary of State powers to make regulations requiring the counterparty to maintain a register of information on revenue certainty contracts, and published details about them.

Clause ten brackets one which gives the Secretary of State powers to make regulations which require the counterparty to pay a surplus to levy payers, and require levy payers to pass on the benefits of that surplus to their customers. And clause 11 brackets four, which gives the Secretary of State powers to make regulations which amend financial penalties in line with inflation and make provision on how a company's turnover is determined for the purpose of financial penalties. I would just conclude by saying this doesn't affect the delivery of the bill or the policy.

Intent and final decisions are still taken by the Secretary of State for transport.
19:47
Lord Moylan Portrait Lord Moylan (Conservative)
-
-
Lord Watts I beg leave to withdraw amendment seven. In the Grayling. Grayling. >> Is it your Lordship's pleasure that the amendment be withdrawn? Amendment by leave withdrawn. Amendment by leave withdrawn. Amendments eight and nine not moved on. Block Lord Grayling not moved on. Block four Lord Grayling. Amendment ten Earl Russell not moved. Amendment 11 Lord Moylan not moved. Amendment 12 Lord Russell Earl Russell not moved. Amendment 13 moved. Formally. The question is that amendment 13 be agreed to. As many as that opinion will say content the contrary not content.

The contents have it. The question is that clause six, as amended, stand part of the bill. Lord Moylan.

**** Possible New Speaker ****

My Lords, may I take this opportunity to surprise him a little bit? But since we were congratulating the noble Lord, noble Earl, Lord Russell earlier, noble Earl, Lord Russell earlier, may I now also congratulate the noble Lord, Lord Addington on his on his new peerage and continued membership of your Lordships' House, membership of your Lordships' House, my Lords, in rising to resist for the moment that clause six stand part of the Bill. I'm moved simply by the letter and comments of the Constitution Committee.

The Constitution Committee wrote on the 5th of November to the noble Lord, the Minister, to say that while they understood, a degree of flexibility was required, they regard the lack of specificity in the bill about the levy, which is set out in clause six as a potential inhibitor of detailed legislative scrutiny. Now, the noble Lord has addressed in the last group has made certain remarks that relate to this, and he's very bland and and reassuring and explaining that he does.

You know, we mustn't know anything about the levy at this stage while we have a chance to scrutinise it, because it's all being consulted on and it will all look absolutely wonderful by the time it comes out. But that wasn't enough for the Constitution Committee, and I think it's worth making a marker at this point that it's not necessarily enough for noble Lords. At the very least, I would have thought the Constitution Committee deserved a reply to their letter, which I understand they have not received, and the noble Lord, the Minister, might want to give an assurance that he is going to reply to their letter and explain why this lack of specificity is justified, and how what compensates, if you like, for the fact that legislative scrutiny is not being permitted in relation to the in relation to the levy.
19:50
19:51
Lord Hendy of Richmond Hill Portrait Lord Hendy of Richmond Hill, Minister of State (Department for Transport) (Labour)
-
-
My Lords, I would start by also congratulating the noble Lord Addington on his on his forthcoming Addington on his on his forthcoming appointment as a life peer. Secondly, the noble Lord Moylan raises the correspondence from the Constitution Committee and I did in fact reply to the Constitution Committee. The copy of the. My reply doesn't have the date on it. Which and which I did reply because it's it's been reprinted, but there was a full reply sent to the Constitution Committee.

And, and of course, it did refer to what we were just talking about, which is the consultation, the current levy design consultation concluding on the 8th of January 2026. And of course, as the noble Baroness Pidgeon says, without a levy we wouldn't be able to deliver the revenue certainty mechanism. We are continuing to work closely with industry on the details of how the levy will operate. The current levy design consultation will conclude on the 8th of January 2026, which is before any levy regulations will be will be laid in Parliament and final decisions on levy design will be informed by this consultation.

It is appropriate that the levy provisions are set out in regulations made by the Secretary of State, so that there is the flexibility to respond to changes in the sector. Flexibility is required so that the levy is set at the appropriate level to ensure the the RCM can be delivered effectively and the counterparties costs are recovered. The government has set out the potential costs and benefits that might may arise from the RCM scheme, including the levy and the cost benefit analysis published in May 2025, and the government will actively monitor and control scheme costs, including through the setting of strike prices and by controlling the scale of the number of contracts awarded.

I can reassure noble Lords that the regulation under this clause will be subject to the affirmative procedure, so will be further opportunities for scrutiny as to how this power is used. And we have engaged with the Constitution Committee. I now do have the date. My letter to them was sent on the 17th of November, and I will ensure, following this debate, that a copy of both their letter to me and my reply to the Constitution Committee is sent to all noble Lords who participate in this debate.



**** Possible New Speaker ****

The question is that clause six, as amended, stand part of the bill, as many as of that content, the contrary, not content. The contents have it. The question is that clauses 7 to 9 stand part of the clauses 7 to 9 stand part of the bill. En bloc as many as of that opinion say content the contrary not content, and the contents have not content, and the contents have it. Amendment 14 moved formally. Moved formally. The question is that amendment 14 be agreed to.

As that amendment 14 be agreed to. As many as of that opinion will say content. Contrary, not content. The contents have it. The question is that clause ten, as amended, stand part of the bill, as many as the letter content. The contrary not content. The contents have it. The question is that clauses 11 to 14 stand part of the bill. En bloc as many as that opinion will say content the contrary not content. The contents have it. We now come to the group beginning with amendment 15.
19:54
Earl Russell Portrait Earl Russell (Liberal Democrat)
-
-
Earl Russell my Lord, I stand. I stand to open this this group of stand to open this this group of amendments all on reporting and impact. And I move my amendment 15 impact. And I move my amendment 15 in this group. My Lords, this might seem like just a straightforward seem like just a straightforward reporting amendment and duty on the Secretary of State, but I believe it goes to the heart of what we're trying to do here, and it will help support the government's own commitment to help us to decarbonise our aviation sector and to build a credible and sustainable fuel sector here in the United Kingdom.

My my Lords, knowledge is power, and it's important that we know the impacts of the legislation that we pass. And it's important with the revenue certainty mechanism that this that we know how it's working in practice and that we have these reports and they're available to to Parliament and to the public. And this will help also to ensure that sufficient volumes are SAF are being produced to meet the mandate and to ensure the transparency of the monitoring mechanisms. The government's own Jet Zero strategy recognises that staff could deliver 32% of emissions reductions needed by 2050, yet we have no consistent public data.

Much SAF is how much staff has already been produced, what types will be developed, where the bottlenecks might lie in the future system. So so this amendment really I don't want to go too long because it it kind of does what it says on the tin. But but this amendment seeks to help answer some of these questions and to help the monitoring process going forward. It would give Parliament and the public the evidence that they need to hold this policy to account, and it would help the sector to have confidence that the transition is coming, and that, in turn, would provide greater confidence for those that wish to invest in this sector.

And reporting is a common requirement. We see it in renewables energy sector, we see it in the transport sector. The electric electric vehicle update. And yet it's kind of it's kind of missing here in the bill. So I believe that it's important to put it in. I don't believe that this would impose undue bureaucracy on the government or their officials. Indeed, I hope I think it would help to deliver the clarity that would be useful to everybody. I think that's all I really want to say on it.

The amendment really speaks for itself. Turning to the other amendments in this group, I support the amendment 16 and 17, which will be moved by my noble friend Baroness Pidgeon. But I will let Baroness Pidgeon speak to her amendments. So that leaves me to speak to amendment 19. A moved by the noble Baroness Jones. This amendment calls for a report no later than three years after the day on which the act is passed, and that report will assess the impact of the Revenue support mechanism for sustainable aviation fuel on deforestation outside the United Kingdom and land use change outside the United Kingdom arising from the cultivation, harvesting or production of feedstocks for sustainable aviation fuel.

My Lords, I'm pleased to support this amendment. This amendment is sensible and I think it's essential to the bill. Without proper monitoring, there is a risk that the UK incentive incentives for SAF could inadvertently drive deforestation or damage land use changes overseas, undermining our climate and biodiversity goals. By requiring the government to report on international land use impacts. This provision introduces transparency and accountability again into the policy framework. It helps to ensure that the public subsidies truly create sustainable fuels, and that we will help to drive us away from using feedstock.

So I think this is useful amendment I, we we cannot have our own decarbonisation at the expense of

**** Possible New Speaker ****

others. And I think it's important that these matters are monitored. I beg to move. Amendment proposed after clause

**** Possible New Speaker ****

Amendment proposed after clause 14. Insert the new clause as printed on the marshalled list.

**** Possible New Speaker ****

printed on the marshalled list. As we have been debating, this is an emerging field in terms of technology and production in the UK, technology and production in the UK, and that is why this bill is here to introduce the revenue certainty mechanism for sector to help mechanism for sector to help support its development and growth. But alongside this, it is important that we have transparency throughout the bill's implementation and the reality in the sector. And as we've just heard this also from my noble friend Earl Russell and from other noble Lords this evening in this debate, amendment 16 would give the Secretary of State the power to increase SAF production obligations where necessary, and to ensure that reports on progress are laid before Parliament and relevant select committees.

Amendment 17 would introduce requirements for air travel providers to report on their use of sustainable aviation fuel, and to provide annual reports to the public via their website. Both amendments will provide that greater rigour and scrutiny of progress towards sustainable aviation fuel targets. These are simple measures that we believe would help with the understanding of this bill. Reporting on progress and, as I said, they will ensure transparency and accountability and also allow for greater ambition. Amendment 16 would enable the Secretary of State to raise sustainable fuel targets in any given year and introduce a duty to consider annually whether the target should be increased.

The Secretary of State would need to set out what the government will do to make any increase possible, and assure that the government revisits, reviews and even raises their plans in this area. And by requiring a copy of this annual report before Parliament and relevant select committees, this would ensure real oversight and accountability. The public needs to see what progress is being made in this area, and amendment 17 builds on this further and would require air travel providers to report annually on their sustainable aviation fuel use in a format that passengers and the public can understand.

Data about emissions and fuel use can often be published in rather complex technical reports that are often hidden and not consumer friendly, so this amendment would ensure airlines publish the amount of SAF used and the proportionate represents of their overall fuel consumption, and this would be easily understood and will allow real understanding of this transition to cleaner fuels. Together, these amendments will allow an assessment of the impact of this legislation and I hope the noble Lord, the Minister, will look favourably on these amendments which support greater transparency in this emerging area.



**** Possible New Speaker ****

My Lord, I rise to support amendment 15, which I think is absolutely vital. Every time I look absolutely vital. Every time I look at the title of this bill, I get irritated because there is no such thing as sustainable aviation fuel, and we really ought to accept that. Too often we have these grand Too often we have these grand promises that are never backed up. And I would argue that carbon capture and storage is another one. But if the government are to press ahead with so-called sustainable aviation fuel, the very least we should expect is full transparency about what is being produced, where it's coming from and what the real
20:01
Baroness Jones of Moulsecoomb Portrait Baroness Jones of Moulsecoomb (Green Party)
-
-
impacts are. Reporting on UK sustainable fuel production gives Parliament the ability to see Parliament the ability to see whether this industry is genuinely delivering any climate benefits, or whether we're simply shifting whether we're simply shifting emissions, land pressures and environmental harms elsewhere. As environmental harms elsewhere. As one expert put it, we're not about to start eating more chips, so we will have to import more waste oil. will have to import more waste oil. And what if rising European demand for so-called waste oil is being met with virgin palm oil fraudulently passed off as waste? If that's happening and studies do suggest it is, then any emissions savings vanish, replaced by deforestation for palm oil plantations.

Plus, most of our waste cooking oil is currently used in road transport fuels, so diverting it into aviation simply shifts emissions elsewhere and nothing actually shrinks. Parliament should not be expected to take the government's optimism on trust. We need to see what's really happening, and this amendment 15 provides at least a little transparency, accountability and a dose of realism. Three things that are too often missing from aviation policy. And if the government believes that sustainable aviation fuel will play a meaningful role in decarbonising aviation, then they should have no hesitation in reporting openly and regularly on its progress.

Now, on 19 a my own amendment, this amendment asks the Secretary of State to do something that should already be at the heart of a bill like this, to acknowledge that what we do here, what we incentivise, what we subsidise, what we label as sustainable, has real consequences for land, forests and communities here and far beyond our shores. Sustainability doesn't stop at the white cliffs of Dover protecting land over here while outsourcing environmental destruction over there is not sustainability, it's hypocrisy.

Supporting crop based aviation fuels risks taking land away from food and from nature. It risks fuelling deforestation, especially in the global South, where communities are already living with the impacts of land grabs and ecological collapse. Yet this bill encourages exactly that. We're using land or talking about land as if it were an infinite resource, and it most definitely isn't. Land is already under enormous pressure from farming, housing, biodiversity loss and climate breakdown, turning that precious land over to growing crops for climate destroying fuel makes absolutely no sense.

My amendment requires the government to publish an assessment of how the revenue support mechanism for so-called sustainable aviation fuel is affecting land use internationally, including whether it's driving deforestation or other damaging land use change. Parliament deserves to know if we're simply shifting environmental harm onto other countries while congratulating ourselves on green progress. And even if we overlook the land use impacts and we shouldn't, this bill will not do anything to actually reduce air travel emissions. Sustainable aviation fuel, as described here, is at best a drop in the ocean, a drop in a rapidly rising ocean.

A clever accounting trick won't call the planet, nor a marginal fuel switch deliver any sort of emissions reductions. We need. One. Analysis of sustainable fuels shows carbon emission savings are almost entirely wiped out by the rising demand for air travel. As professor Bill Rutherford of Imperial College said it, the only way you can make aviation any more sustainable is to do less of it. Every hectare of land used to grow fuel crops risks locking us further into a system that protects the freedom of frequent flyers, rather than the future of planet.

And my apologies, I did not thank the noble Earl Baron Russell, for his support for

**** Possible New Speaker ****

my moment. My Lords, first of all, can I

**** Possible New Speaker ****

My Lords, first of all, can I add my congratulations since they're both still in the chamber to both Lord Addington and Earl to both Lord Addington and Earl Russell on their life peerages today so that they will remain with today so that they will remain with us? I won't get into the whole ranking thing that we got into earlier, but it's very good that earlier, but it's very good that they'll both still be with us. On the substance of this group of amendments.

I think broadly, the transparency is a good thing. As I said in response to an earlier amendment, I think actually being transparent about this is very helpful. I think given that the in
20:06
Lord Harper Portrait Lord Harper (Conservative)
-
-
amendment 15 Earl Russell amendment talks about reporting on on progress, this might be a suitable opportunity just to ask the Minister when he winds up this group, if he could respond to the group, if he could respond to the question I asked him at Second Reading, which was to provide the House and the committee with an House and the committee with an update on the the plants that we're hoping to see in the UK and where hoping to see in the UK and where they have got to.

He very kindly the noble Lord. The Minister responded to some of the questions that members had raised at Second Reading. In his recent letter of the 2nd of December, including 1 or 2 that I'd raised. And I'm very grateful to him for for being courteous and doing that as he said he would. But he didn't touch on where we were at with those plants. And given the significant amount of money in the various rounds of support that we've given, both through the Aerospace Technology Institute but also directly from government, it would be helpful just, I think, for the committee to have an update on some of the timeframes.

We've been contacted directly by some of the the providers with updates on when they think their plants are going to be ready, but it'd be helpful to have that wider picture. Although the noble Baroness Jones of Moulsecoomb knows that I don't agree with her overall view about aviation, and we had that exchange at Second Reading. I am going to take the opportunity because it doesn't happen very often to support the thrust and the amendment that she's got on the amendment paper.

I think the transparency is very helpful, and she will know from my comments at Second Reading that I don't support generally the use of food crops being grown specifically for this purpose, and specifically being turned away from food crops. You'll know that I had one potential exception in that space, which is if by doing so, we could keep the present United States government focussed in this space, that would be a win. And I'm grateful on two points that the noble Lord, the Minister, made in his reply.

Firstly, he confirmed that the government was working closely with the US administration and wanted to keep it on board. I think that's helpful. But he also confirmed which which I hope was welcome to the noble Baroness Jay that the government set very high sustainability standards for SAF in the UK, and was looking to make sure that the revenue certainty mechanism was in line with that approach and didn't trespass on it. So I think because her amendment is about having transparency about it, and she's absolutely right.

There's no point us doing great things in the United Kingdom if the result of that is we just drive poor behaviours elsewhere. So I think having some transparency about that, I think is very helpful. And it may be that the specific amendment may or may not be able to be improved, but I'd welcome the Minister's comments on both the all of the amendments in this group about whether the government is intending at Report stage to have any extra added to the bill in terms of transparency or whether we'll need to return to that ourselves and and take the collective set of amendments here and whether we can actually do some sensible reporting.

I got to make sure it's balanced and we don't put undue burdens on people. But I think, again, transparency in this space is helpful both for the industry and explaining what's going on, but actually is also helpful for consumers. And given that there is a cost to this, I think showing consumers what what is happening, the cost of that is actually a helpful thing in demonstrating the trade offs that we're having to make in this space. So I, I'm broadly supportive of this group of amendments.



**** Possible New Speaker ****

My Lords, generally speaking,

**** Possible New Speaker ****

My Lords, generally speaking, monitoring is good and reporting is monitoring is good and reporting is better. And if the noble air Lord Russell and noble Baroness Lady Russell and noble Baroness Lady Pigeon want to engage over the next few weeks on the drafting of amendments that could achieve that amendments that could achieve that in a way that was not overly burdensome on those charged with doing that reporting or overly
20:10
20:11
Lord Hendy of Richmond Hill Portrait Lord Hendy of Richmond Hill, Minister of State (Department for Transport) (Labour)
-
-
My Lords, amendments 15 and 16, >> My Lords, amendments 15 and 16, the government would contend that there are necessary, as they duplicate measures that already duplicate measures that already exist in the SAF mandate. There are existing statutory powers in existing statutory powers in sections one, two, 4 to 1, three two of the Energy Act 2004, which enable the Secretary of State to amend obligations under the SAF mandate, subject to consultation with those affected and scrutiny by Parliament. Maintaining certainty throughout each obligation period is vital so that suppliers can properly prepare to meet their requirements.

It's essential that those impacted by any changes to the mandate are given the chance to be involved and have adequate time to adapt, especially considering the early stage of the sector. This would need to be taken into account whilst considering any amendments. The obligations under the mandate. The government already publishes annual SAF figures with a comprehensive report for each year, typically released in the winter. Following the reporting year. A formal review of the SAF mandate legislation is required, with the initial review scheduled to occur by 2030.

Government also considers amendment 17 to be unnecessary. Many airlines already publicly disclose information of their decarbonisation initiatives and will continue to encourage them to do so, but the government will publish data on the supply of SAF under the mandate, including information on the proportion of SAF relative to the total aviation fuel supply. In. In answer to noble Lord Harper's point about an update on plants in the UK, I will certainly write to noble Lords who have taken part in this debate saying where we've currently got to, I apologise to the noble Lord for not having included that in the.

In the last letter on amendment 19. A I certainly recognise the noble Baroness. Lady Jones's concern on on land use and deforestation. However, the amendment duplicates existing measures in the SAF mandate. SAFs applied under the SAF mandate cannot be derived from derived from crops and must adhere to strict sustainability criteria. Sustainability criteria in the RCM will align with the criteria in the SAF mandate. The SAF mandate already makes provision for the publication of detailed statistics on the supply of SAF, including feedstock, country or country of origin and carbon and sustainability data.

We will continue to review the evidence and update eligibility and sustainability criteria on a regular basis and in line with this commitment, this government recently published a consultation on the development of a common Biomass Sustainability Framework, which includes proposals for strengthening existing biomass sustainability criteria, including those for woody biomass. In line with the latest evidence, the SAF mandate will be subject to regular reviews to help ensure that it's delivering on sustainability outcomes, with the initial review scheduled to occur by 2030, I hope my explanations are sufficient for noble Lords to withdraw their amendments.



**** Possible New Speaker ****

My Lords, I think this has been an interesting and important debate, and I think it is important and and I think it is important and informative that the whole of this side of the House believes, and I think the Minister does as well in think the Minister does as well in the importance of transparency, reporting and data. I've listened carefully to the Minister's response. I recognise that the work the government is doing in various
20:15
20:16
Lord Moylan Portrait Lord Moylan (Conservative)
-
-
We'll all wish to withdraw his >> We'll all wish to withdraw his amendment. Amendment is your lordships pleasure this amendment be withdrawn. Amendment is by leave withdrawn. Amendment 16 and 17 Baroness Pidgeon not moved. Baroness Pidgeon not moved. Amendment 18 Earl Russell not moved.

**** Possible New Speaker ****

We come now to amendment 19. Lord Moylan. My Lords, I rise to move amendment 19 in my name and to amendment 19 in my name and to speak. Excuse me to the other amendments in my name. In this group they cover two topics. I group they cover two topics. I shall try to deal with them fairly briefly, but they are very important. Even if the speech is short. The resonance and consequence of the amendments is consequence of the amendments is long.

There is going to be a cost to the revenue certainty mechanism, and the cost is going to be distributed to airline passengers through their airfares. How much is it going to be? Well, we are not in the dark on that subject because the the cost benefit analysis produced by the department makes a stab at this. It says overall, the revenue certainty mechanism. I'm referring to paragraph 4.23. Overall, the revenue certainty mechanism when covering a limited but reasonable amount of non HEFA SAF volume SAF volumes is likely to result in a small impact on ticket prices depending on non HEFA SAF prices and whether the levy costs are offset by fuel cost savings.

The likely impact on ticket prices is between one -£1.50 and plus £1.50 on average per year. Now the only things of absolute fixity in that sentence are the numbers and the per year. Almost everything else in it consists of a caveat, and I do accept a statement. A forecast of this type will have to be caveated to some extent. I want to explore some of the caveats in in fact in the next group as well, not merely here.

So what are we talking about when we when we are talking about non HEFA? SAF and I have an amendment to explore that in the last in the last group. But at this stage, I want to know how far the government is willing to go to commit itself on the £1.50. Let's take it on the it's on the negative. It's on the upside. So a cost of £1.50 per ticket. Bear in mind that £1.50 per ticket is not the cost of SAF.

That £1.50 is the cost of of non HEFA SAF produced using the revenue certainty mechanism in this bill, SAF is already in use and it is being paid for by airlines and it is painfully expensive, much more expensive than it was expected to be. It's already having an impact on on on on on airlines fuel bills. That is quite significant. That is not included in the £1.50. The £1.50 is purely for the mechanism that sits in this bill.

But how firm is the government willing to be on this? Because I think this is of crucial significance to the public at large. The public at large would like to see more sustainable aviation fuel. I accept that the label Baroness, Lady Jones of Moulsham, who's no longer in her place, regards that as a chimaera, but the public are happy to see it. But they want to know what it's going to cost them. And if we're going to hold out a prospect, as the government is of a maximum cost of £1.50 per ticket for this, and that's significant sum for a family of four going on holiday, then they would like to know know that it's that the government is stands behind it.

Airlines that I have spoken to suggest the cost is going to be much closer to £10 a ticket, and so the government needs to give some justification as to the £1.50. That's one of the two topics that these amendments cover. If I move on to the second, I have to apologise in a sense to noble Lords, because it's of a more general character. In some ways, it would have been nice if it could have been contrived to come at the beginning of our debate this evening, but the rigidities of our numerical system, our system for numbering amendments and and marshalling them means that it is going to appear at this late stage.

And I appreciate not everybody is interested it in it, but I can assure noble Lords that outside this committee there is a large audience that is very interested in this question, an audience of people who believe still to some extent in capitalism and indeed in the principles of Adam Smith and the notion of comparative advantage, because what this is asking for is the government makes some stab at assessing our comparative advantage in wishing to be a leader in this field.

This is, after all, a measure which is designed to make us a domestic producer rather than an importer, and a leading a globally leading producer of non HEFA SAF compared to the rest of the world. It is, as I said at Second Reading, an industrial policy bill rather than a net zero bill. The SAF mandate was a net zero measure. This is an industrial policy measure. It's a decision by government that this stuff has to be produced here and not imported.

A decision by government that it should be we should be a leader in this field. And the question is, what on earth do we have, by way of comparative advantage, that the government should have alighted upon this particular economic activity, as one in which we are to be, can be, and it is suitable that we should be a leader in the field. Do we have access to particularly rich streams of, of of feedstock? For example, if non HEFA e-SAF is to be produced, some of it at least from from old cabbages collected from people's kitchens, are our cabbages better than somebody else's? Cabbages are wood cuttings and so forth.

Do they have a particular advantage, a greater richness of of oil bearing quality that puts us ahead of the field? I suspect the answer to that is not is our refining capacity, cutting edge and world leading for turning these things into a usable fuel? One. My Lords, I don't know a great deal about that. I see there are noble Lords in the committee who do, I suspect, know a great deal more about it. But what I see as an ordinary reader of the newspapers is that we're closing down our refining capacity as fast as we can fast.

Far from being a leader, we are falling behind. And of course, this is a process which is going to be very heavy on electricity usage. I think nobody denies that. And and yet we have no doubt in the interests of saving the planet. I won't go in to that further at the moment, but we have contrived, in the interests of saving the planet, to have the most expensive electricity in the civilised world. Do we have skills, particularly an existing workforce, which which? None of these things, it seems to me, are is apparent.

So what I'm asking, and I don't think it's an unreasonable request, is that before the government launches us and taxpayers money and, and and airline passengers money onto this reckless scheme of being a world leader in something for which we have no apparent comparative advantage, that they set out the economic case for doing so. And it's been inserted here. The contrivance, of course, is it's inserted as a as a commencement blocker. The the bill can't commence until you until this has been done.

But I'm not wedded to that. That is merely a way of inserting it into the debate. But I do think the government owes it to the public to have a better case and a better argument as to why they should be doing this. We are not. After all, this is not our first attempt to produce SAF we have had in the last few years. We have had schemes such as the Advanced Fuel Funds, the green Fuels Green Skies Fund, the Future Fuels for Flight and Freight Competition, and others.

But it's still the case, despite those that around 90% of the SAF used in this country is still imported. Why has this not taken off domestically already with that level of support? If we have the sort of advantage that we should be able to to bring to bear and will make a success of it this time, I at least would like to know. I beg to move.

**** Possible New Speaker ****

Amendment proposed. After clause 14, insert the following new clause as printed on the marshalled list.

**** Possible New Speaker ****

as printed on the marshalled list. My Lords, I want to strongly support the first of these amendments that my noble friend amendments that my noble friend Lord Moylan has spoken to, which is the one about transparency and the one about transparency and about the impact of the revenue certainty mechanism on ticket
20:26
Lord Harper Portrait Lord Harper (Conservative)
-
-
prices for consumers. As I think he acknowledged, this is an area where consumers want to see sustainable aviation fuel use, but it is reasonable that they understand the cost of it. For many people who fly, they are very sensitive to the cost of it. The industry is very conscious in all the conversations that I've had with it recently, but also previously when I led the Department for transport about the importance of delivering sustainability at a low cost, that doesn't significantly impact on consumers and particularly doesn't price the least well off most price sensitive consumers out of the market and to stop them flying.

So I think actually this level of transparency about the the cost, specifically from the revenue certainty mechanism is very welcome. And as the noble Lord said, that isn't the only cost from developing sustainable aviation fuel, because there is obviously the cost of SAF that's bought outside of those UK plants that benefit from the revenue certainty. So I strongly support the thrust of his amendment, and I'll listen carefully to what the Minister says about whether the government wants to bring forward any measures on this, and it would also just support what they had in their impact assessment.

I agree as a final point on this amendment. I agree with the noble Lord Lord Moylan. Clearly the impact assessment is an assessment. It's an estimate. No one's going to beat up the government if it's not quite right. But there's a big difference between a £1.50 charge per ticket per year and a £10 charge per ticket per year or more. And I think it's important that we have a rough idea of of where we are on that. So I think that is very welcome on the the Second Amendment, the second couple of amendments the noble Lord spoke to, I would just add one thing which I alluded to earlier.

It's not just an industrial policy question, it is that it is that point about security of supply, particularly if there are certain circumstances that impact it, as we saw during the pandemic, or we might see if there were another energy price shock. Actually, there's an industrial policy question about producing stuff in the UK. There's also an availability or making sure we have access to those fuel supplies. Both of those questions are important, but I think, again, having the government be clear and transparent about it, we've set out some of the thinking, I think both the previous government and this one, in terms of the when we made the decisions to have the Advanced Fuels Fund, when we and the different rounds of that, we set out some of the thinking in the money that's been going into this through through the ATI funding as well.

I think bringing all that together and having a very clear exposition of the government's policy in this space, I think is a welcome thing to do and actually would do nothing but benefit the government. So although I'm not sure the mechanism for delivering it is the right one, I think the thrust of my noble friend's amendment is the right one, and I strongly support the intention of it, if not the specific mechanism.

**** Possible New Speaker ****

Lord Sewell in following up the noble Lord Lord Moylan question noble Lord Lord Moylan question about the £1.50, I may be missing about the £1.50, I may be missing something, but if that's a cost to something, but if that's a cost to UK airlines for passengers leaving or arriving at UK airports is do we add that to a similar cost which might be applicable to France or Germany or Timbuktu? And they may have different costs in creating Sav if they ever get around to doing it.

And the noble Lord
20:30
20:31
20:32
Lord Hendy of Richmond Hill Portrait Lord Hendy of Richmond Hill, Minister of State (Department for Transport) (Labour)
-
-
My Lords, the government wants to ensure flying will remain affordable for UK holidaymakers and travellers whilst supporting a United Kingdom sustainable aviation United Kingdom sustainable aviation fuel industry. A report on the impact of the act on ticket prices within a year of its enactment is within a year of its enactment is is pre-emptive contracts need to be negotiated and signed, plants built and SAF produced and sold before any real impact on ticket prices can be measured. But the government can control costs by controlling how many contracts are issued.

I have to say to the noble Lord Berkeley, I can't say what what the effect on ticket prices from other countries producing this will be. But the government's cost benefit analysis of the Revenue certainty mechanism, which noble Lords have referred to, published in May of this year, will remain the best estimate of the Act's impact on passenger airfares over the next period, pending the mechanism working and SAF being produced in some volumes. Here, the government does take reporting to Parliament seriously, where appropriate, to undertake it.

We can present an assessment of costs and benefits reflecting the latest available evidence, but that evidence isn't there yet. Amendments 23 and 25 would require the government to publish an assessment of the UK's comparative advantage in the production of SAF. Government believes this is counterproductive and will delay the good progress we have made for decarbonising the aviation industry. Through the SAF mandate and the advanced fuel funds, the government and other noble Lords, including someone on his own side, are certainly more confident about the ability of UK industry to produce SAF than the noble Lord Moylan and the noble Lord Harper points about security of supply are very are germane here.

SAF industry has been calling for support to overcome the investment barriers, and this bill will help drive our missions to kick start economic growth and make Britain a clean energy superpower. Delivering the government's manifesto commitment to secure the UK aviation industries long term future, the bill is a crucial step to establishing a SAF industry in the United Kingdom and to drive investment, growth and jobs. I hope the noble Lord is persuaded to withdraw his amendments.
20:34
Lord Moylan Portrait Lord Moylan (Conservative)
-
-
My Lords, before I go any further, could I return to paragraph 4.23 of the of the cost paragraph 4.23 of the of the cost benefit analysis, where I read out something earlier, thinking I understood it, but now I don't think I understand it at all. And perhaps it's a bit late for the noble Lord procedurally to explain it to me. Now he might write to noble Lords, but it says that the likely impact on ticket prices is between -£1.50 and plus £1.50 on average per year.

What is per year doing there? Surely it's on average per ticket. Why is it per year that would that would assume that maybe you fly once a year, but if you fly more than once a year, then it wouldn't be per year at all. It would still be per ticket, but it wouldn't be per year. So explaining to me what that means would be extremely helpful. What the what we wanted to hear, what the public wanted to hear from the Minister on this particular question was that he put himself squarely and the government behind £1.50 as the upper estimate of the cost of the measures in this bill.

He didn't do that. And we we've noticed it and it will get around on this occasion. When he had the chance, he could have said £1.50 as the noble Lord. Lord, my noble friend, Lord Harper said, of course it could be a bit more, it could be a bit less, but it's of the order of £1.50. That's what we, the government, believe. I am putting myself, I Lord Hendy I on behalf of the government and putting myself behind that estimate £1.50, not £10, not £15, but somethi of the order of £1.50 is what we are backing.

He didn't, and we have noted that and we are not going to let that matter drop. Concerning comparative advantage, the noble Lord made what I thought was an uncharacteristically sneering remark, implying that I didn't think that Britain was capable of producing SAF trying, I think, to destroy, to draw a wholly false distinction between the views, my views, and the views of my noble friend Lord Harper. Britain can do anything, of course. Britain can do anything, and Britain can particularly do anything.

If we throw millions and millions of pounds at subsidy, of subsidy at something. I think back to the day when Britain could produce vans at British Leyland, because they were being given very large amounts of subsidy until we found a way of producing cars in this country that didn't require those subsidies and became a leader in in car production here under the flag of the Japanese, who invested and who invested in order to make a profit, not simply to farm subsidies.

It isn't a question of whether we can do something. The whole point of comparative advantage is that you are comparing things. And the question is, is this the best thing we can be doing with the very limited money we have available, or are there other things that would be more productive, that would bring greater prosperity to the country? What is the particular advantage we have in relation to this? Which means it is the thing the government should be backing, and it doesn't hold up the bill in order to do that.

It would if it was constructed as a commencement blocker as it is at the moment. But of course, we could all reach agreement round the table that it would be a commitment that the government could do this within six months of the commencement of the act. It wouldn't have to hold things up. That is that is a contrived objection. It is the complete lack of interest in the question on the part of the government that is so depressing. But despite those comments, I'm grateful to noble Lords who contributed and I beg leave to withdraw.

Amendment 19. Is it your. Lordships pleasure that this amendment be withdrawn? Amendment is by leave withdrawn. Amendment 19 A Baroness Jones not moved before clause 15. Government amendment 20 already debated, moved formally. The question is that this amendment be agreed to, as many of that opinion will say. Content contrary not content to the contents have it. The question is at clause 15 stand part of the bill, as many of that opinion will say. Content. Contrary, not content. The contents have it.

We come now to amendment 21. Lord Ravensdale. 21. Lord Ravensdale.
20:39
Lord Ravensdale Portrait Lord Ravensdale (Crossbench)
-
-
My Lords, amendment 21 and as noble Lord Lord Moylan referred to earlier, I think this wraps up a number of points in previous groups. number of points in previous groups. So it's a good, good point to be having this debate about what actually qualifies for support under the revenue certainty mechanism. But actually, first, I just want to take the opportunity to congratulate noble Lord Russell noble Lord Lord Addington on their their peerages. Absolutely brilliant news. I'm really, really pleased for them. So I think two, two parts to this amendment and I'd actually like to deal with them in reverse order.

So at Second Reading, I did ask the question on eligibility of nuclear energy or nuclear derived stuff and what the noble Lords Minister said was. He stated that SAF produced using nuclear energy is and will be eligible for the SAF mandates. So I noted he said the SAF mandates are not the revenue certainty mechanism. So what I'm really after from the Minister is some explicit clarity that nuclear derived fuels are within the scope of the revenue certainty mechanism and actually some commentary on how, perhaps how this flows through the legislation.

Because the reason for needing this clarity is that the legislative route here is a little, a little bit convoluted. We've got clause 16 in the bill, which defines sustainable aviation fuel as aviation fuel that is renewable transport fuel and renewable transport fuel is defined in the same clause as anything that is or is treated as renewable transport fuel. For the purposes of chapter five, part two of the energy 2004. So, as I said at Second Reading, I propose the amendments to the Energy Act 2023 that led to the the clause one three 1d, which treats recycled carbon fuels and nuclear derived fuels as renewable transport fuels.

But it was stated there that this did require secondary legislation to take effect and treats these fuels as renewable transport fuels, and I noted that this has been done for recycled carbon fuels. But the secondary legislation hasn't been done for nuclear derived fuels. So, you know, we've got this quite convoluted route through the 2004 at the 2023 act. The secondary legislation, the SAF mandate. So I would just appreciate, I suppose, that that clarity from the noble Lords, the Minister on nuclear derived fuels.

And that's really the second part of my amendment that really ensures that that they would be within the scope of this bill. My my second point is around the the eligibility of certain types of sustainable aviation fuel for, for this bill. So really I'm seeking to exclude first generation SAFs from the revenue certainty mechanism. I don't I don't believe that crop based biofuels, I don't see the need for them to be given support because the production pathways for these fuels are already there.

They're already commercialised at scale. We've talked in previous groups. We've talked a lot about some of the issues with crop based biofuels, their CO2 saving. They compete with food raising food prices, potentially drive land use change, reduce biodiversity. So all of those other effects of those fuels, they're already commercially viable, they're already commercialised. So I can't see why we would need those fuels to be within the scope of the revenue certainty mechanism. And I think that's brought out actually in a lot of the government guidance as well.

The driver behind this bill is really to provide a mechanism for second and third generation sustainable aviation fuels that has been stated repeatedly by the government. So I can't see a good reason for including these fuels within the revenue certainty mechanism. And I look forward to the Minister's thoughts around that. I beg to move.

**** Possible New Speaker ****

Amendment proposed clause 16, page eight. Leave out lines 34 to 36 and insert the words as printed

**** Possible New Speaker ****

36 and insert the words as printed Lords. Don't object, I'd like to speak

**** Possible New Speaker ****

Don't object, I'd like to speak now in this group rather than later, because I did agree with the noble Lord Lord Ravensdale before committee, having read his amendment, that it would be sensible if we grouped these two sensible if we grouped these two amendments together, because we're both trying to get at the same thing. And in a sense, my what I'm
20:44
Lord Moylan Portrait Lord Moylan (Conservative)
-
-
going to say is not I'm not going to say something very different to to say something very different to what he said, but I am going to take a different approach to it because both of us want to limit, I because both of us want to limit, I think it's fair to say, or at least to know what limits the government to know what limits the government is going to put on itself when it comes to deploying these subsidies, comes to deploying these subsidies, these contracts.

So, as the noble Lord Lord Ravensdale said, if you turn to clause 16, sustainable aviation fuel means aviation fuel that is renewable transport fuel. And a little bit earlier up the page, renewable transport fuel means anything that is or is treated as renewable transport fuel. For the purposes of chapter five of part two of the Energy Act 2004, which the noble Lord played a certain part in amending in 2023. So if one turns to that act in its current amended version, what one sees is that renewable transport fuel could include biofuel.

And here I rather regret that the noble Baroness Jones of Moulsecoomb isn't here, because I think her comments about deforestation would have fitted in very well at this point. Blended biofuel any solid, liquid or gaseous fuel other than fossil fuel or nuclear fuel produced wholly by energy from a renewable source or wholly by a process powered wholly by such energy and any fuel designated by an ETF order as renewable transport fuel. So this is an astonishingly wide list, and as I read it could include HEFA.

So the approach I've taken in my amendment is to try to to work out what the government intends to do from this very wide list by, so to speak, knocking out the options. I'm saying knock out HEFA what happens if you knock out HEFA? What does the government say to that? And the noble Lord Lord Ravensdale is saying, knock out biofuels and see what the government says to that. But the purpose that both of us have is to try and find out.

Well, to ask the question, why are we giving the government this astonishing range when the government says they don't need it, they don't want it. And when, my Lords, we don't want it either. That is the first question. Why are we giving the government this great range? And secondly, assuming we do give the government this great range, what is it they actually intend to do with it? Because we'd be very disturbed if we heard certain things, but we'd be more placated if we heard others.

And how do we hold government to account on that? And that's really what these these two amendments are about. And I think it's a very important subject because we've already complained, if you like, the government is being given a great latitude on the design of the levy without very much or indeed any parliamentary scrutiny beyond beyond the affirmative procedure that will arise later. And here we're giving them, and maybe not wittingly, but we are giving them a huge range in what they might choose to to subsidise.

This could be and should be narrowed. But in the meantime, let us hear what the noble Lord, the Minister, has to say to Lord Raven, the noble Lord Lord Ravensdale and myself about these two amendments. Thank you for giving me.

**** Possible New Speaker ****

My Lords. I rise briefly to respond to this group of amendments. I want to thank both noble Lords for their amendments. I think for their amendments. I think actually this is one of the really interesting groups of amendments in interesting groups of amendments in this bill. And just responding to what Lord Moylan just said about knocking out fuels, I, I think I could probably sum up my speech by saying I'm I'm not certain knocking saying I'm I'm not certain knocking out fuels is the best thing in the transition.

And what we might need to do is limit the time that the revenue certainty mechanism applies to certain fuels. So that that might be where I'm coming from. But turning to amendment 21, in the name of the noble Lord Ravensdale seeks to include nuclear derived power to liquid fuels in the scope of sustainable aviation fuels, for which the revenue certainty contracts can be offered, and also to remove food crops using the same definition of relevant crops as renewable transport. Fuel Obligation order for surface transport.

So while we recognise and support the ambition behind this amendment that promoting nuclear derived and more sustainable derived SAF and thus reducing carbon emissions, we would welcome the government's response to the idea of including nuclear derived fuels. Nuclear, sorry, nuclear derived power to liquid fuels. Our questions relate more to the complete removal of biomass entirely from the revenue certainty mechanism. I suspect the Minister might say that this technology in relation to nucleoside is not ready, and we would not disagree.

But my question back to Minister would really be how does the government plan, if it does indeed plan to bring these into the revenue certainty mechanism, how will that be done? What is the timescale for doing that? And is can I ask, is that something that can be done by secondary legislation? We recognise that biomass has some use as a SAF, particularly in the early stages of of SAF use. At the same time, we also recognise the limitations of
20:50
Earl Russell Portrait Earl Russell (Liberal Democrat)
-
-
biomass as a sustainable fuel and its impact on the use or any use at its impact on the use or any use at scale. This amendment raises some fundamental questions about the plans for the Revenue Certainty plans for the Revenue Certainty mechanism, its role in relation to different technologies for SAF production, and how it is best used production, and how it is best used to advance the aim of zero carbon flight. I'll be honest, we have flight. I'll be honest, we have some difficult challenges and some questions to answer, and this group has really certainly raised those.

It can certainly be argued that crop based biofuels, as the noble Lord has argued, should not be given long term support under the revenue certainty mechanisms, as production pathways for these fuels has been said, is already commercialised at scale. It can also be argued that crop based biofuels are relatively small, offer relatively small CO2 carbon savings compared to fossil fuels, and they compete with food and can create biodiversity loss in other countries. But crop based fuels do offer some CO2 savings when there are very little relative.

Other options available today at scale. On the other hand, with very few alternatives to reduce carbon emissions from the nation today, the revenue certainty could also be an important intermediate step in this continuous journey of decarbonisation. So while we support nuclear derived power-to-liquid, we share a desire to limit the use of the RCM to support bio crops. This amendment does open some complex policy decisions that actually kind of need a lot of careful thought, because actually what we're doing here is we're planning a journey, and on that road we're going to have different fuels that are going to jump in and then jump out, and we're going to move along that.

So I think that a lot of the questions that are actually being asked in this group of amendments is how the government plans to have those fuels come in and drop out and to recognise how will that be done, how will that be scrutinised? How will the mechanisms change? And I think really the same is true in relation to amendment 22, in relation to HEFA and I, the arguments I would make would be be the same really around that. So so with that, I think this has actually been a really important group of amendments, and I think there's quite a lot actually to think about in this space.
20:52
Lord Hendy of Richmond Hill Portrait Lord Hendy of Richmond Hill, Minister of State (Department for Transport) (Labour)
-
-
My Lords, the noble Lord Moylan, if I might just say in relation to if I might just say in relation to amendment 19, the noble Lord Moylan asked some questions in his closing asked some questions in his closing remarks. I will write to him and copy to all noble Lords about standing by, standing by the cost standing by, standing by the cost benefit analysis on ticket prices, and how we can control the cost to passengers by controlling costs through the allocation process.

And I will also clarify, for good measure, the phrase per year. Turning to amendment 21, I understand the noble Lord Lord Ravensdale desire to exclude crops from the revenue certainty mechanism. Several other noble Lords also spoke about their concerns on growing crops for purposes other than food during the Second Reading debate, but the noble, the noble Earl Russell just now was realistic on some of the practicalities of doing so. The sustainability criteria in the revenue control mechanism will align with the criteria in the SAF mandate.

As I mentioned before, there will be a call for evidence shortly focusing on the potential benefits, risks and trade offs of using crops in SAF production. The scope of the call for evidence will include different types of crops, including feed crops, dedicated energy crops and cover crops. Whilst this call for evidence will not currently propose any changes to the SAF mandate, nor does it signal the future direction of the mandate, we would not want to expressly exclude SAF derived from relevant crops from the scope of the RCM, if they might be included in in the in the SAF mandate in future.

And we will, of course, continue to engage with industry on these issues. And I echo the noble Earl Russell's words, which is this is developing and and and the, the, the, the basic things will change over time. And we need to we need to understand it. And that that call for evidence is part of that process. The noble Lord Ravensdale and the noble Earl Russell referred to nuclear eligibility will match that in the SAF mandate. And of course, we're already supporting nuclear through the Advanced Fuels Fund which, which which we believe to be to be right.

Turning to amendment 22, I agree with the noble Lord Lord Moylan that HEFA SAF I hate these acronyms, has already overcome many of the barriers to investment. For that reason, in our response to the first consultation on RCM, we announced that HEFA SAF projects will be excluded from the first round of contract allocation. I hope what I've said is sufficient

**** Possible New Speaker ****

to persuade noble Lords to withdraw their amendment. Just to.

**** Possible New Speaker ****

Just to. Clarify what you said. So nuclear fuels are eligible under the SAF mandate, but they're also eligible under the Revenue Certainty Mechanism. Could you just

**** Possible New Speaker ****

confirm that, please? Yes, I believe I thought that's what I meant to say in answer the noble Lord. But he I do clarify that.

**** Possible New Speaker ****

Lord Wood sits down, I hope. May I just ask? I was hoping that he would say that the government does not intend to state simply and explicitly. The government does not explicitly. The government does not intend to see the mechanism used to support all of the fuels that appear in the Energy Act 2004 that are currently in scope, that he would look to an amendment to eliminate some of those, to give assurance that this mechanism is going to be directed at the fuels that we have been discussing at not and not at that broader list.

Would he like to take advantage of this last moment of committee to to give that assurance that he will he'll be happy with such an amendment and,

**** Possible New Speaker ****

and contribute to drafting it? In answer to noble Lord, I won't

**** Possible New Speaker ****

In answer to noble Lord, I won't do that at this stage, but I will consider what he just said.

**** Possible New Speaker ****

consider what he just said. I thank noble Lords for this short debate, and I think in terms short debate, and I think in terms of eligibility of crop based biofuels as as the noble Lord biofuels as as the noble Lord Russell said, this is a this is a journey we're going on. Absolutely. Crop based biofuels are part of that journey. But I think what the noble Lord Lord Moylan said and
20:57
Lord Ravensdale Portrait Lord Ravensdale (Crossbench)
-
-
made the case quite strongly, I don't think we've heard any any rationale really for why for why those fuels should specifically get support under the revenue certainty support under the revenue certainty mechanism. But I, I look forward to those those further conversations. those those further conversations. Nuclear. We've we've had the clarification on nuclear fuels. And on that basis I beg leave to

**** Possible New Speaker ****

on that basis I beg leave to withdraw the amendment. Residual further that this amendment be withdrawn. Amendment is by leave withdrawn. Amendment 22 Lord Moylan not moved. The question is that clause 16 stand part of the bill, as amended. Opinion will say content to the contrary, not content. The contents have it. The question is that clause 17 stand part of the Bill, as in that opinion will say content the contrary not content. The contents. Habit clause 18, amendment 23 Lord Moylan not moved.

Amendment 24 Lord Grayling not moved. Amendment 25 Lord Moylan not moved. Amendment 26 Lord Grayling not moved. The question is that clause 18 stand part of the bill, as many of that opinion will say, content to the contrary, not content. The contents have it the question is that clause 19 stand part of the bill, as amended. Opinion will say content. Contrary, not content. The contents have it. The question is that the schedule B the schedule to the bill, as many of that opinion will say content.

Contrary, not content. the contents have it. The question is that this be the title of the bill. As many as that opinion will say content to the contrary, not content. The contents have it. That concludes the committee's proceedings on the bill. The House will now resume. My notes. The Committee of the whole House to which the Sustainable Aviation Fuel Bill was committed, has gone through the same and has directed me to report it to your lordships with amendment.

**** Possible New Speaker ****

My Lords, I beg to move. That the House to now adjourn.
This debate has concluded
Return to start of debate - Return to top of page