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General Committees

Debated on Tuesday 12 December 2023

Delegated Legislation Committee

Draft York and North Yorkshire Combined Authority Order 2023

The Committee consisted of the following Members:

Chair: Stewart Hosie

† Atherton, Sarah (Wrexham) (Con)

† Bell, Aaron (Newcastle-under-Lyme) (Con)

† Clarkson, Chris (Heywood and Middleton) (Con)

† Duguid, David (Banff and Buchan) (Con)

† Elphicke, Mrs Natalie (Dover) (Con)

† Glindon, Mary (North Tyneside) (Lab)

† Hollern, Kate (Blackburn) (Lab)

† Lavery, Ian (Wansbeck) (Lab)

† McMahon, Jim (Oldham West and Royton) (Lab/Co-op)

† Maclean, Rachel (Redditch) (Con)

Mahmood, Mr Khalid (Birmingham, Perry Barr) (Lab)

† Mohindra, Mr Gagan (South West Hertfordshire) (Con)

† Slaughter, Andy (Hammersmith) (Lab)

† Smith, Cat (Lancaster and Fleetwood) (Lab)

Wallis, Dr Jamie (Bridgend) (Con)

† Young, Jacob (Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities)

William Opposs, Committee Clerk

† attended the Committee

The following also attended, pursuant to Standing Order No. 118(2):

Levy, Ian (Blyth Valley) (Con)

Third Delegated Legislation Committee

Tuesday 12 December 2023

[Stewart Hosie in the Chair]

Draft York and North Yorkshire Combined Authority Order 2023

I beg to move,

That the Committee has considered the draft York and North Yorkshire Combined Authority Order 2023.

It is a pleasure to serve under your chairmanship, Mr Hosie.

The draft order was laid before the House on 7 November. If it is approved, it will implement the devolution deal agreed between the Government and the councils of York and North Yorkshire on 1 August 2022. Since then, we have worked closely with the councils on implementation, and on 3 November 2023, those councils consented to the order.

The order will establish a new York and North Yorkshire Combined Authority and the office of Mayor for the area, with the first election taking place on 2 May 2024. The elected Mayor will then take up office on 7 May, with a four-year term ending at the next mayoral election in May 2028. Thereafter, there will be elections every fourth year to be held on the ordinary election day for the year: the first Thursday in May. Following the enactment of the Elections Act 2022, those mayoral elections will be held on a first-past-the-post basis.

The Mayor will be the chair of York and North Yorkshire Combined Authority, which will comprise as constituent councils City of York Council and North Yorkshire Council. The combined authority will be established on the day after the day on which the order is made, subject to parliamentary approval, which is likely to be before the end of the year.

Until the elected Mayor takes office, there will be an interim chair of the combined authority, which will appoint one of its members to that post. The order confers significant functions on the combined authority, as agreed in the devolution deal. They include the functions of a police, fire and crime commissioner, to be exercised by the Mayor.

Other significant functions include, as set out in the devolution deal, concurrent powers with Homes England, powers on regeneration and transport, and powers for establishing mayoral development corporations.

Education and skills functions will be conferred on the combined authority at a later date, along with the devolution of the adult education budget, as agreed with the area.

Can the Minister say whether the residents of York and North Yorkshire have been consulted about these huge changes? That has happened in other areas. Have the residents had any say in this?

The Minister said that the Mayor would be elected every four years on a fixed-term basis. Why does he think that that is a better system than the Mayor being able to decide when he or she wishes to have an election, just as the Prime Minister gets to choose when to hold the UK general election?

Local government generally holds elections every four years. We are considering a local government Mayor and we therefore think that it is right that they are elected every four years.

As I was saying, the adult education budget will be devolved to the combined authority later, as agreed with the area. That is with a view to the area being responsible for skills and adult education from the academic year 2025-26, subject to its meeting the readiness conditions, and to parliamentary approval of the secondary legislation that confers the functions.

The order also provides for the governance arrangements of the combined authority. Each constituent council will have two members on the combined authority, and the Mayor will appoint one of them to be Deputy Mayor. The Mayor will also appoint a Deputy Mayor for policing and crime, who may be any person the Mayor considers appropriate. Those governance arrangements provide that the PFCC functions and certain other functions—for example, the power to designate a mayoral development area, or to draw up local transport plans and strategies—are to be exercised by the Mayor personally. The Mayor may delegate the exercise of those functions to another member or officer of the authority, with particular specified arrangements for the PFCC functions.

The order will be made, if Parliament approves, under the Local Democracy, Economic Development and Construction Act 2009, as amended by the Cities and Local Government Devolution Act 2016. As required by the 2016 Act, along with this order, we have laid a section 105B report, which provides details about the public authority functions that we are devolving to the combined authority, some of which are to be exercised by the Mayor.

The statutory origin of the order is in a governance review and scheme adopted by the constituent councils in accordance with the requirements of the 2009 Act. It reflects the agreed devolution deal.

As provided for by the 2009 Act, the councils of York and North Yorkshire consulted on the proposals in their scheme. That goes directly to the point that the hon. Member for Wansbeck made. The councils promoted the consultation by several means and activities. Responses could be made online or directly by email or on paper. That public consultation ran from 21 October to 16 December 2022, and a total of around 2,500 people responded to it through a variety of platforms. As statute requires, the constituent councils provided the Secretary of State with a summary of the responses on 9 March 2023. The results of the online survey show that a majority of 54% of respondents support or strongly support the overall proposals for the establishment of and the governance arrangements for a new mayoral combined authority and an elected Mayor.

The Secretary of State is satisfied that the order meets the statutory tests in the 2009 Act, namely that no further consultation is necessary, and that conferring the proposed powers would be likely to: improve the exercise of statutory functions in the combined authority area; reflect the identities and interests of local communities; secure effective and convenient local government, and ensure that, where the functions are local authority functions, they can be appropriately exercised by the combined authority.

Most importantly, the order opens a way to providing the very considerable funding for the area set out in the deal. That includes £18 million of annual investment funding for York and North Yorkshire for the next 30 years. In total, that will mean more than £500 million to be invested in the area to drive growth and take forward local priorities. The deal also includes an additional £1 million to support the development of local transport plans, more than £13 million for building new homes on brownfield land during 2023-24 and 2024-25, and £7 million investment to drive green economic growth, along with investment of up to £2.65 million in projects that support the area’s priority of delivering affordable, low-carbon homes.

The existing local enterprise partnership will be integrated into the new combined authority to facilitate support for the local economy and the business sector. The Government are currently investing £25.4 million from the UK shared prosperity fund and from the Multiply fund in the York and North Yorkshire area. From 2025-26, York and North Yorkshire Combined Authority will plan and deliver this funding, if the UKSPF is continued and delivery geographies remain the same. All that will help the Mayor and local leaders to drive economic growth and development for rural, coastal and urban communities across York and North Yorkshire.

I pay tribute to the local leaders and their councils for all they have done and continue to do to address local priorities and support businesses, industry and communities across York and North Yorkshire.

The order, which is supported locally, is a significant step forward for York and North Yorkshire, its businesses and communities. It is key to the future economic development and regeneration of the area, and it will enable local leaders to invest in and address local priorities effectively. I commend it to the Committee.

It is a pleasure to serve under your chairmanship, Mr Hosie. I am delighted to take up the role of shadow Minister for English Devolution and Local Government, and to discuss devolution in England once again.

If we want to achieve change in our country, we must all be steadfast champions of local and devolved government, where decisions can be taken by communities with a real interest in and insight into place and the people who live there. There is no road to recovering our fragile economy or fractured public services, or delivering on the demands for power to be distributed, which does not travel through our local councils, combined authorities and mayors.

Parliament is privileged to have many former councillors serving in it. I know from serving as a councillor for 13 years, including as a council leader, the difference that local government can make when public services are aligned with public good. However, we also know that those foundation are weakened after 13 years of austerity. Nine councils have issued section 114 notices, and there is a strong chance that more will follow, unless the Govt take urgent action. There is still no plan from the Government to deal with the chronic state of adult social care, rocketing demand for children’s services, and the broken housing market that fuels the homelessness crisis, the like of which we have not seen in modern times.

There can be no hiding from the fact that the mini-Budget just over a year ago, which sent so many households to the brink, is also hitting councils hard. Rocketing inflation means that the cost of servicing borrowing is much higher. The cost of energy and wider inflation mean that budgets set in good faith simply do not hold against that tide.

English devolution is, at best, a fragmented patchwork, which still excludes large parts of the country. Before entering Parliament, I had the honour of serving on the Greater Manchester Combined Authority as we were building the first devolution deal outside London, which created, I believe, the most expansive devolution package in England. It created the conditions for Greater Manchester to take control of its bus network, unleashing fairer fares and delivering for the needs of local communities and the economy. There was also a rapid package to reform health and social care in the area.

However, that was 10 years ago. Progress on rolling out further powers across England has been painfully slow. We have seen great things in the Yorkshire region, with Mayor Tracy Brabin in West Yorkshire and Mayor Oliver Coppard in South Yorkshire. They are showing the difference devolution can make when Westminster learns to let go.

That is happening across the country under Labour metro Mayors and council leaders. Areas such as York and North Yorkshire, which we are discussing today, are rightly being pragmatic in accepting that the order is an important step forward, and we hope that the Hull and East Riding devolution agreement makes further progress too. However, the truth is that the devolution settlement is fragmented, piecemeal and does not go far or fast enough. The powers and resources do not touch the sides of what is needed and do not provide enough resilience in the age of austerity.

Too many devolution deals lack ambition from the Government. In too many places, including large parts of rural England, there is no devolution to speak of. It is important to address that. Consequently, communities cannot assert control over the places where they live and invest. That means that local people, economies and the services they rely on are held back and starved of the investment they need to get on.

As the begging bowl culture and “hunger games” approach continue, we cannot level up from the top down, which is why Labour will set a presumption towards handing power back to our towns, cities and communities. Labour will push power out of Westminster with a “take back control” Act that gives communities a direct say in their future. We will start by giving all our metro Mayors the powers and flexibility to turbocharge growth in their areas, for example, over planning and housing, transport, net zero and adult education.

We will offer all places the right to negotiate with the Government for powers that have been devolved elsewhere. Local leaders will take on powers whereby they can demonstrate capacity and sound financial management. Giving all towns and cities the tools they need to create good jobs and attract investment, including longer-term funding settlements for local government, is important for our collective future.

We do not intend to divide the Committee on the order. We hope that more progress and ambition across England can be shown when it is made.

I welcome the hon. Member for Oldham West and Royton to his place. It is good to see him back on the Front Bench.

As I said earlier, the order is widely welcomed by the people of York and North Yorkshire. It is a significant development for the whole area, which is largely rural as well as including significant towns and coastal communities, along with the amazing city of York. It makes an important contribution to the Government’s levelling-up agenda.

The hon. Gentleman mentioned the Greater Manchester Combined Authority, on which he served. That combined authority was created and the powers were conferred on it by this Government. Even the bus network, which the Mayor of Greater Manchester is now delivering, is being delivered through powers that the Government conferred. The hon. Gentleman also mentioned the West Yorkshire Combined Authority. Guess what, Mr Hosie? That, too, was created by this Government. We also created the South Yorkshire Mayoral Combined Authority. The Government are truly driving devolution forward. When the last Labour Government were in power, the only area in England that had a devolution agreement was London. Labour even tried a failed devolution experiment, whereby the toon was to run the borough. We rejected that universally because devolution has to be locally led. That is the principle that we have adopted. We will not force devolution on any area that does not want it.

As part of our levelling-up missions, as set out in the levelling-up White Paper and now the Levelling-up and Regeneration Act 2023, we have provided that every area that wants a devolution deal by 2030 will have one. We have made that commitment, but we will not force any area into going down the devolution road if it does not want to do that. Devolution must be bespoke and fit the area’s needs.

I am delighted that York and North Yorkshire have chosen to take the level 3 devolution step, as have Hull and East Yorkshire, which the hon. Gentleman mentioned. A mayor is not necessarily the right fit for every area. Not long ago, I was in the constituency of the hon. Member for Blackburn, who is here, where we discussed the Lancashire devolution deal, which does not come with a Mayor because that is not right for the people of Lancashire—it is not what they chose.

The deal that the order implements will make a significant contribution to the future economic development and regeneration of York and North Yorkshire—God’s own county if anybody asks me, though I recognise that hon. Members from Lancashire may take a different view. The order will empower local leaders to invest in local priorities, and again I commend it to the Committee.

Question put and agreed to.

Committee rose.

Draft Hydrogen Production Revenue Support (Directions, Eligibility and Counterparty) Regulations 2023

The Committee consisted of the following Members:

Chair: James Gray

† Britcliffe, Sara (Hyndburn) (Con)

† Cairns, Alun (Vale of Glamorgan) (Con)

† Cowan, Ronnie (Inverclyde) (SNP)

† Fletcher, Mark (Bolsover) (Con)

† Gibson, Peter (Darlington) (Con)

Greenwood, Margaret (Wirral West) (Lab)

† Hart, Sally-Ann (Hastings and Rye) (Con)

Hodgson, Mrs Sharon (Washington and Sunderland West) (Lab)

† Howell, Paul (Sedgefield) (Con)

† Kniveton, Kate (Burton) (Con)

† Mishra, Navendu (Stockport) (Lab)

† Norman, Jesse (Hereford and South Herefordshire) (Con)

Sobel, Alex (Leeds North West) (Lab/Co-op)

† Solloway, Amanda (Parliamentary Under-Secretary of State for Energy Security and Net Zero)

† Tracey, Craig (North Warwickshire) (Con)

† Wakeford, Christian (Bury South) (Lab)

† Whitehead, Dr Alan (Southampton, Test) (Lab)

Kevin Maddison, Committee Clerk

† attended the Committee

Fourth Delegated Legislation Committee

Tuesday 12 December 2023

[James Gray in the Chair]

Draft Hydrogen Production Revenue Support (Directions, Eligibility and Counterparty) Regulations 2023

I beg to move,

That the Committee has considered the draft Hydrogen Production Revenue Support (Directions, Eligibility and Counterparty) Regulations 2023.

The regulations were laid before the House on 8 November. On 26 October, the Energy Act 2023 received Royal Assent. It provides a legislative framework for hydrogen, including provisions that relate to the hydrogen production business model, which is a funding model for supporting the production and use of low-carbon hydrogen in the United Kingdom. Delivering that policy is essential to kick-starting the hydrogen economy and moving towards the Government’s ambition of up to 10 GW of low-carbon hydrogen production capacity by 2030, as set out in the British energy security strategy.

Under the business model, projects will be paid a subsidy for the hydrogen they produce through a revenue support contract, similar to the highly successful contracts for difference for low-carbon electricity generation. The business model contracts for hydrogen will be managed by a hydrogen production counterparty. Initial projects are to be selected through allocation rounds run by the Department for Energy Security and Net Zero. To receive business model support, a project must be an

“eligible low carbon hydrogen producer”.

Where such a project is allocated support, the Secretary of State will issue a direction to the hydrogen production counterparty to offer to contract with that project.

Hydrogen projects have already been shortlisted through the track-1, phase-2 cluster sequencing process and invited to negotiations for the 2022 hydrogen electrolytic allocation round.

I will now outline the detail of the regulations and their important role in all that. Fundamentally, the regulations satisfy the duty in section 66(4) of 2023 Act by determining the meaning of “eligible” in relation to a low-carbon hydrogen producer. They tell the world who can be eligible for support.

The regulations set out that only new hydrogen production facilities, or existing facilities that add new production capacity, which can demonstrate that their proposal for the production of hydrogen is capable of complying with the UK low-carbon hydrogen standard, will be considered eligible. That ensures that eligibility will keep pace with the way in which the Government define low-carbon hydrogen.

I recall that several amendments that were tabled during the passage of the 2023 Act sought to ensure that regulations on eligibility referred to the low-carbon hydrogen standard. I therefore hope that the regulations will be welcomed.

The regulations also set out the process whereby the Secretary of State may direct a counterparty to offer to contract with an eligible low-carbon hydrogen producer. That follows a similar approach to the contracts for difference, with which industry is very familiar.

Similarly, the regulations include requirements for a counterparty to publish the full contracts entered into and to establish a public register of key information. As we would expect, such publication is, of course, subject to redaction of confidential information and personal data.

The regulations set out various requirements in respect of the Secretary of State’s directions to a counterparty. They also include the circumstances in which directions cease to have effect, and enable the Secretary of State to revoke a direction before it has been accepted.

Furthermore, the regulations require a counterparty to promptly notify the Secretary of State if it is—or considers that it is likely to be—unable to carry out its functions. Committee members may think that such a provision sounds familiar, and indeed it is. It is a similar approach to that in the Nuclear Regulated Asset Base Model (Revenue Collection) Regulations 2023.

The Department has considered the content of the regulations extremely carefully. It carried out a full public consultation earlier this year, seeking views on the principles enshrined in the regulations and satisfying the statutory requirement to consult, as set out in the 2023 Act. We received 28 responses from various organisations and members of the public. We carefully considered all responses, though I am pleased to say that the majority supported our proposals.

Accordingly, in our Government response, published on 30 October, we set out plans to proceed largely as proposed, albeit with some amendments in response to the feedback received.

This secondary legislation represents an essential step towards implementing the hydrogen production business model to ensure that we can support the deployment of low-carbon hydrogen projects to achieve our 2030 ambitions, improve energy security and help achieve net zero.

I commend the draft regulations to the Committee.

It is a pleasure to serve under your chairmanship, Mr Gray. You chaired a substantial part of the proceedings on the Energy Bill and you will therefore be well aware of the consequences of that labour of Hercules that we undertook between us to get the measure on the statute book. The statutory instrument is one of the first to follow from the 2023 Act.

As the Minister explained succinctly, the regulations cover the process whereby the hydrogen low-carbon business plan is implemented during the initial allocation period of contracts for hydrogen producers in order to achieve our target of 10 GW of hydrogen production. As the Minister also said, qualifying schemes have already been substantially identified through track-1, phase-2 of the cluster process. Schemes will be identified and quality-assured by the Minister, who will then direct the hydrogen counterparty, which is identical in structure to the low-carbon contracts company, to provide contracts for companies that have been deemed eligible. So far, so good. That is absolutely the right thing to do to develop the outline in the Act into some detailed legislation to make the whole thing work, particularly the initial allocation process.

The explanatory notes state that the initial allocation gives way to a competitive tender process later. The directions therefore concern the initial allocation process in the first instance, but they are all to be informed by the centrepiece of the SI—the low-carbon hydrogen standard, which is generally called “the standard” in the regulations. It refers to a detailed document, which sets out the greenhouse gas emissions and sustainability criteria that programmes that apply for an allocation contract should follow.

The document is entitled, “UK Low Carbon Hydrogen Standard” and was published in April. It is interesting to note that the standard rightly provides for stringent qualifying criteria for a project’s eligibility. For example, it requires a project not to exceed a certain level of carbon emissions, and to measure fugitive hydrogen for its duration, the process whereby hydrogen is produced, transport and other things. It is a system-wide standard for the low-carbon nature of the hydrogen.

For a project to get a direction from the Minister to be awarded a contract by the hydrogen counterparty, it must comply with the standard when it receives agreement to proceed. However, as hon. Members will have observed, that standard is evolving. Indeed, the standard to which the SI refers is version 2 of the “UK Low Carbon Hydrogen Standard”. That version has evolved from the initial standard, which was produced immediately after the Act was passed. Version 2 has emerged from consultation and correction of various elements of the initial standard that could have caused difficulties, and has tightened up several matters that were uncertain, difficult or in need of clarification.

The document and the explanatory notes say that it is intended that the standard will evolve. That means that the Department envisages that it will produce further iterations of the standard in future. The low-carbon hydrogen standard as it currently stands may therefore change. That is fair enough given that we want the standard to progress, but a question then arises. If a company or body wishes to get a low-carbon hydrogen contract, what are they signing up for when they apply? Clearly, the companies that sign up want to comply with version 2 of the standard, but they will not necessarily comply with versions 3 or 4. Those companies will presumably want some assurance that they will not be knocked out of their contracts if the standard evolves.

I am grateful to the hon. Gentleman for his careful rehearsal of the background, but surely the regulations contemplate a series of private law contracts, the circumstances and detail of which will be whatever is agreed under the law. Why is he pressing the Minister on this matter now? Does he believe that the law is defective?

No, I do not think that the law is defective, but, as I have tried to explain, it is evolving as the contracts are given out, possibly into a different form. That is an inevitable consequence of the 2023 Act being distilled into secondary legislation. As the process has gone on, the standard has evolved. My central question is whether the Minister is clear that companies that are compliant with the current standard can safely put in their bids for contracts under that standard, and will not be disadvantaged should it change in the future. I think the regulations contain provisions giving the Minister some discretion in that respect.

Conversely, if the terms are relaxed in a future iteration of the standard—I do not anticipate this happening—and compliance becomes less onerous with regard to carbon emissions, for example, might companies that are already contracted ask to sign up to the new less onerous version and continue their contract? This is evolving and it can go in two ways.

I am grateful for this clarification, although obviously the Minister will want to speak for herself and for the Government. It does not sound as though the hon. Gentleman opposes the regulations— he may wish to comment on that—but is he not flagging a difference between the evolution of the law, by further amendment in statutory instruments considered in Committee, and evolution of a contractual situation that operates within that process? If it is the latter, any Government can give an indemnity against future changes to the rules if they wish, but it is not unknown for people to sign a contract and then, further down the track, think, “If only I’d struck this contract earlier. I’d’ve got a better deal,” or vice versa. Is that not a matter of private law and negotiation between the parties, and why is it a matter for this Committee?

It is a matter for this Committee inasmuch as the standard is the centrepiece of how the regulations will work, but that standard is itself evolving. Contracts are being given as this piece of law is evolving. Obviously, contract law applies to those contracts, which bind the company applying for the contract to a certain standard of operation, which may well put the company to quite a lot of expense and planning. It is a bit like a boxer going into training and having to reach the weight for the upcoming fight, and having reached it, then having to keep to that weight after the fight takes place, because that is the continuing standard for their operation.

What methods of verification, challenge and judgment will be used to determine whether companies are continuing to adhere to the standard, once the standard has been set in the contract? That is my final question for the Minister. Is she satisfied that that will work well? As the low-carbon standard evolves, it may well be a case that a company says, “Well, that’s my hard luck, because I signed up for something that was a bit more onerous than it is now, but I ought to stick to it anyway,” or is the Minister suggesting that companies could relax their adherence to the standard if the standard itself is relaxed? Indeed, the regulations suggest that the Minister can or may—the famous “may”—do that if she so desires.

If the right hon. Member for Hereford and South Herefordshire is in any doubt, I stress that we do not oppose the SI and we want it to succeed. There is a provision, which does not always apply in regulations, that the SI comes into force tomorrow. I am sure that we will all happily agree to that. As soon as we have agreed to the regulations, they will come into force so that the contracts can be pursued.

It is important that we are clear about how the standard works on an evolving basis, but I do not wish to impede the issuing of the contracts or the forward march of hydrogen production and use in future.

I shall keep my remarks short and sharp. It does not mean that the Minister will like them, but at least they will be brief. I turned up for this Delegated Legislation Committee at six o’clock last night, so I cannot be accused of being late to the show, but I think that the UK Government can. In 2021, the UK was ranked as the second most attractive market for hydrogen, but the UK Government’s lack of commitment means that the UK is now ranked eighth. It has slipped behind Germany, Japan and Canada. That is because the UK Government continually change their attitude to renewable energies.

The UK Government’s ambition is 10 GW by 2030. I hope that the Minister can tell me what will kick on after that. What is the final ambition? By when? The Scottish Government have an ambitious hydrogen plan to produce 5 GW by 2030 and to increase that to 25 GW by 2045. They are investing £100 million in the development of Scotland’s hydrogen economy. If the UK invested at the same scale, we would be looking at a bare minimum of £1 billion. Will the Minister clarify what the financial investment will be? The Government cannot continue at a pedestrian pace.

My concern is that lack of ambition is restricting our ability to create a net zero environment. The UK target is 2050; Scotland’s is 2045. I hope that the Minister will allay my fears. What do we kick on to after 10 GW? When will that happen and how much will it cost the taxpayer?

I thank right hon. and hon. Members for their valuable contributions. I will try to answer the questions succinctly and appropriately. If anything remains outstanding, I will write, as usual, with further information.

The hon. Member for Southampton, Test talked about the low-carbon hydrogen standard. Projects that seek support under the hydrogen production business model are required to show, as part of their application for revenue support, evidence that they are capable of meeting the UK low-carbon hydrogen standard.

The hon. Gentleman asked about the standard evolving over time. Regulation 2(6) makes clear that once a producer is deemed eligible under the regulations, they will not be subsequently rendered ineligible merely because of the publication of a new version of the low-carbon hydrogen standard. However, a direction issued by the Secretary of State pursuant to section 66(1) of the 2023 Act—

Yes! The direction may require a hydrogen production revenue support contract to be offered on terms that require compliance with the later version of the standard.

To provide certainty for investors, we intend any review and updates to the standard to occur in advance of allocation rounds rather than during them. Where it is considered necessary to introduce updates during an allocation round—that is, in the period between the launch of the application window and contracts being awarded—we would aim, as part of the allocation or negotiation process, to provide projects with plenty of notice about any potential changes.

We propose that the review points for the low-carbon hydrogen standard should coincide with future contract awards through the hydrogen production business model. We would not expect any changes to be applied retrospectively to contracts that have already been awarded through these schemes. That means that the hydrogen production business model contract will not require producers to comply with any amendments made to the low-carbon hydrogen standard after the date on which the contract was signed. That will give producers confidence that the rules with which they will need to comply to receive support under the contract will not be changed retrospectively. Subject to the final contract terms and conditions, we expect that producers will be able to follow, where relevant, future changes to the LCHS, should they choose to.

Our ambition for the United Kingdom to have up to 10 GW of low-carbon hydrogen is both stretching and credible, and positions us at the front of the pack internationally. It will help us to realise a hydrogen economy that could potentially support over 12,000 jobs and result in up to £11 billion in private investment in the UK by 2030. Low-carbon hydrogen is considered to be an essential part of our future energy mix, and the hydrogen production business model seeks to address one of the key barriers to deploying low-carbon hydrogen: the higher cost of low-carbon hydrogen relative to high-carbon counterfactual fuels. We intend to launch the second hydrogen allocation round this year, following the announcement of the projects that were successful in the first hydrogen electrolytic allocation round.

The regulations are vital in enabling contracts to be awarded, so that projects can take investment decisions that will kick-start the deployment of low-carbon hydrogen production in the UK. I commend them to the Committee.

Question put and agreed to.

Committee rose.