Pollution Prevention and Control (Fees) (Miscellaneous Amendments) Regulations 2026

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Pollution Prevention and Control (Fees) (Miscellaneous Amendments) Regulations 2026.

My Lords, the Pollution Prevention and Control (Fees) (Miscellaneous Amendments) Regulations 2026 were laid before the House on 14 May. Before outlining the provisions made by this draft instrument, I will briefly provide some context.

The DESNZ Offshore Petroleum Regulator for Environment and Decommissioning, which I shall refer to as OPRED, minimises the impact of the offshore oil and gas sector on the environment by controlling air emissions and discharges to sea, and reducing disturbances over the lifecycle of operations, from seismic surveys through to post-decommissioning monitoring.

OPRED recoups the eligible costs of its regulatory functions from the offshore oil and gas sector in two ways: first, by using regulations that are covered by these fees regulations; and secondly, by five charging schemes. The charging schemes do not require legislative change and will be amended administratively.

OPRED’s average income from fees is around £7.3 million annually, recovered from around 100 companies. Currently, the fees that it charges are based on rates of £210 per hour for environmental specialists and £114 per hour for non-specialists. Environmental specialists are technical staff who carry out the functions of the Secretary of State, and non-specialists are support staff. OPRED’s fees are determined by multiplying the appropriate hourly rate by the number of hours worked by both environmental specialists and non-specialist staff.

I turn to the detail of this instrument. The current hourly rates have been in force since July 2025. Having reviewed its cost base, OPRED concluded that the existing rates need revising to reflect today’s costs for regulatory services. During this review, OPRED also identified that some regulatory costs were not being fully recovered—in particular, the cost of statutory advice from nature conservation bodies and certain costs associated with the UK energy portal, which is OPRED’s digital system for delivering regulatory services. The revised cost base ensures that all eligible costs are met by those who benefit from these services, rather than by the taxpayer. This is consistent with HM Treasury’s Managing Public Money principles, which require full cost recovery where appropriate.

The revised hourly rates were approved by His Majesty’s Treasury in January 2026. The fees regulations will amend the charging provisions by increasing the existing hourly rate for environmental specialists to £256 and for non-specialists to £130.

OPRED formally consulted the offshore industry on the rate change proposals and cost base revision in February 2026. The consultation, which launched on 17 February and closed on 13 March, sought views on the proposed rates and their implementation. Five responses were received. While the responses were limited, the issues raised were broadly consistent. Respondents commented primarily on the scale of the proposed increases, including the cumulative impact over successive financial years and comparisons with inflation; and raised concerns about the transparency of the underlying cost base and timing of implementation.

OPRED concluded that failure to implement the revised rates would result in costs falling to the taxpayer, rather than being met by those benefitting from OPRED’s services. OPRED determined that the rates should be increased in accordance with the proposals in the consultation. A formal response to the consultation was published on GOV.UK in April 2026. OPRED’s fees regime guidance will be revised to reflect the new hourly rates.

I conclude by emphasising that the revisions to the hourly rates being introduced by the fees regulations will allow OPRED to recover the eligible costs of providing regulatory services from those who benefit from them, rather than those costs being passed to the taxpayer. I beg to move.

My Lords, I am grateful to the noble Lord, Lord Wilson of Sedgefield, for introducing the regulations. I have a couple of questions. He said that there are 100 companies. Is the number going up or down each year? I imagine that the number of companies will probably reduce. It would be helpful to know if, for example, over the coming year, there will still be 100 companies performing this task.

I would like to focus on the calculations that the Government have used to reach the rate. It seems to be quite a large increase when the original rates were in place for only one year from 2 July 2025. Even though my maths is not great, I have done a calculation on my calculator, and in each case, the increases are well over 10%. I would like to understand the basis on which that sizeable increase has been introduced, and I would like an undertaking from the department that this will not be replicated in future years. It seems very harsh on the affected companies that they will have to find this additional resource when clearly they have been paying a lower figure in the past year. I would like to understand why there has been a more than 10% increase in the hourly rate for both specialists and non-specialists and an undertaking that this will not happen in future years.

I am slightly baffled by paragraph 5.4 of the Explanatory Memorandum, which states that:

My Lords, I thank the noble Lord, Lord Wilson, for stepping in for the Minister and for introducing the SI. The instrument revises the hourly rate used to determine fees paid by the offshore oil and gas industry for environmental regulatory services provided by OPRED. Specifically, the instrument increases the hourly rate for specialist officers from £210 to £256 an hour and for non-specialist officers from £114 to £130 an hour. We understand that these amendments are designed to ensure full cost recovery for OPRED’s activities, shifting the burden of regulation from the taxpayer under the polluter pays principle.

From these Benches, we fully support the polluter pays principle as a pillar of responsible environmental and economic policy. It is right that it is in place and is being updated. On that basis, we do not oppose the instrument. Having said that, like the noble Baroness, I have a couple of questions for the Minister about the details of the SI.

On the scale of the increases, there will be a rise from £210 to £256 per hour for specialists, which I calculated as nearly 22%, as well as an increase from £114 to £130 an hour for non-specialist officers. These are quite substantial increases. We note that there have been previous increases in recent years under the same mechanism. The department tells us that they reflect the application of the Treasury’s Managing Public Money to account for a share of corporate services, senior management, human resources, office services and the like.

We recognise that overheads are increasing for OPRED, as they are for many businesses across the country. We are aware that inflationary pressures exist, but I am concerned that in the arrangement before us these inflationary pressures are being passed on to the industry. Can the Minister reassure the industry that OPRED is not only aware of that cost pass-through but is doing everything it can, within its power, to make sure that cost pressures are controlled and managed so that that pass-through does not happen any more than is needed? As the Minister said, there were only five responses, but transparency was raised. It is quite a big extra cost. Under the changes proposed here, we are asking the sector to absorb an extra £1.6 million a year, taking the total from £7.3 million to £8.9 million for these services.

My Lords, I declare my interest as chairman of Amey, Acteon and Buckthorn Partners, which show an interest in energy transition. However, on this occasion, it is a rather tenuous link to this specific debate, since only Acteon provides global subsea services to both offshore wind and oil and gas in stations around the world.

I warmly welcome the Minister to this debate. Sadly, I did not have the opportunity to spend time with him in the House of Commons, as I preceded him. He looks exceptionally young, healthy and fit, so it comes as a surprise that we did not have that opportunity. He is now approaching the 10th anniversary of the support to his constituency of three significant donors, who were very welcome to his constituency and his ability as a Member of Parliament at the time: namely, Tony Blair, GMB and Unite. Those three happen to be completely united in their opposition to the Government’s policy on issuing new licences for oil and gas in the North Sea. This is therefore an opportunity for me to question whether the Minister shares the views of those to whom he was so close in another place, all of whom were sound on the policy of oil and gas.

I remind him of what they stand for and have said. On protecting jobs and energy security, Sharon Graham said:

“North Sea workers are losing their jobs, at a time when the need for domestic oil and gas has never been greater”.

Unite said:

“There can be no blocks on North Sea oil and gas until real, comparable jobs are created. Protect jobs, protect energy security and deliver a just transition”.

On the just transition and Labour’s policies, Sharon Graham said:

“North Sea workers cannot be sacrificed on the altar of net zero… We should not be letting go of one rope until we have hold of another”.

Gary Smith stated recently:

It is interesting that we are now talking about OPRED; I echo the comments made by the noble Earl, Lord Russell, about the importance of its work and the views it forms on environmental aspects of work offshore. When it comes to the North Sea, it knows that we need oil and gas for decades to come. Even the Climate Change Committee acknowledges that. Yet, thanks to government policies, we are now paying Norway billions of pounds for gas from the exact same reservoirs that they are banning British industry from drilling. Those are reservoirs across the median line, but they are the same geological structures across the North Sea.

I ask the Minister, in closing, whether he can answer the specific questions related to the SI but also clarify whether he is in complete agreement with those three outstanding donors of his constituency some nine years ago with whom he will, no doubt, be celebrating next year, as I said earlier. He was a fine and highly respected Member of Parliament for Sedgefield. I am sure he shares the views of those two unions that were so supportive of him when he was a Member of Parliament and are so supportive of a sensible transition in the North Sea that protects the oil and gas industry, its jobs, its opportunities, the new licences, the new development and the new security of supply, which can be guaranteed by a sensible policy towards offshore oil and gas reserves, new licences and an end to the net-zero zealotry of the current Secretary of State.

When it comes to imports of foreign gas, imported LNG has four times the emissions of homegrown—to use the Government’s phrase—British gas. Those emissions have soared because of what the Government are doing to the North Sea: they were up nearly 40% year on year at the beginning of this year.

There are real concerns about the Government’s approach to the North Sea and their policies towards its oil and gas reserves. These are not just about yet again increasing the cost burden on the industry but about jobs, the income that could be derived to the Treasury, security of supply of our own reserves in the North Sea and, in Aberdeen, the future of that great city and the loss of jobs, which amounts to nearly 1,000 a month.

I ask the Minister, in closing, whether he can answer the specific questions related to the SI but also clarify whether he is in complete agreement with those three outstanding donors of his constituency some nine years ago with whom he will, no doubt, be celebrating next year, as I said earlier. He was a fine and highly respected Member of Parliament for Sedgefield. I am sure he shares the views of those two unions that were so supportive of him when he was a Member of Parliament and are so supportive of a sensible transition in the North Sea that protects the oil and gas industry, its jobs, its opportunities, the new licences, the new development and the new security of supply, which can be guaranteed by a sensible policy towards offshore oil and gas reserves, new licences and an end to the net-zero zealotry of the current Secretary of State.

My Lords, I thank noble Lords and the noble Baroness for their questions on this. I will confront head-on the issue that is tangential to this whole debate, which the noble Lord managed to make a substantive point of in his speech. Obviously, I have known Tony Blair for a long time, longer than most people in Parliament, and the one thing he taught me was that the one thing you should be is always loyal to your Government. That is what I intend to be today.

I start off by saying, as I said during the debate, that fees regulations will enable OPRED to recover eligible costs for the provision of regulatory services under the offshore oil and gas environmental legislative regime, as opposed to such costs being passed on to the taxpayer. The change to the hourly rate will increase OPRED’s annual fees from something like £7.3 million to £8.9 million per annum, reflecting the current cost of providing environmental regulatory activities to the offshore sector. On chargeable activities, OPRED considers the environmental implications of all offshore oil and gas operations before issuing permits and consents covering areas as diverse as seismic surveys, marine oil discharges, and permits and consents to local permissions for offshore installations, for example.

I will try as best I can to answer the general points made on the use of the offshore North Sea fossil fuels. It is the position of this Government that we want to wean ourselves off it. We will be using North Sea oil and gas for decades to come, but we need to become self-sufficient in what we do.

Workers in the North Sea are obviously an important issue. This is a massive change in employment, as there was in the north-east of England, where I am from, with the coal industry in the 1980s. The then Government did very little to ameliorate that; this Government are doing a lot more to secure jobs in the North Sea.

Does the Minister agree that the issue is not a reduction in the oil and gas available? After all, in 1990, we were at just over 2 million barrels a day and so was Norway. By 2000, we were each producing just over 4 million barrels a day. Norway has continued to produce, because its fiscal and regulatory regime has encouraged production in the North Sea from the private sector. It still produces more than 4 million barrels a day, yet we have dived to well under 1 million. That is not to say that the oil and gas are not there but that there is no licensing, fiscal and regulatory regime in place to encourage the development of those fields—their exploration, appraisal and production. It is not as if there is suddenly no more oil and gas west of the median line. The basis of Norway’s successful investment in the North Sea is that its fiscal and allowance regime has encouraged that. That is the issue; it is not the molecules.