Martin Horwood (Cheltenham) (LD)
I beg to move,
That this House notes that both the Coalition Agreement and numerous ministerial statements have committed the Government to provide no public subsidy to new nuclear; further notes that negotiations are currently ongoing between the Department of Energy and Climate Change and new nuclear suppliers to fix the strike price in advance of the legislation on energy market reform; is concerned by wider issues of subsidy and transparency and in particular that this process pre-empts the legislation; is further concerned that new evidence suggests that this constitutes an unjustifiable subsidy to a mature industry; and therefore calls on the Government to pause the process so that the Public Accounts Committee can examine whether the contract for difference being offered for new nuclear power generation offers genuine value for money.
I thank the Backbench Business Committee for generously allowing time for this debate. This motion is not about whether nuclear power is a good thing in principle; nor is it about whether the Government’s whole energy policy is on the right track. For the record, I think it is. My right hon. Friend the Secretary of State—he has just taken his seat—should be congratulated on the green deal, the world’s first green investment bank, the carbon floor price and most of the energy market reforms contained in the Energy Bill, as should his predecessor. It may be a bit optimistic to say this now, but I hope that Chris Huhne’s time in this House will be remembered for the great work he did in shaping a greener future for the UK.
The Department has chosen a particular method for locking in green investment: the contract for difference. Contracts for difference are normally a kind of bet on future asset prices that might be expected to carry some kind of health warning, to the effect that those participating in them could lose a significant amount of money. In this case, of course, the potential loss is to British energy bill payers, as the contracts for difference will effectively guarantee a certain price for energy generated from particular sources even if the market price falls lower than that price. The difference will not then be paid by us as taxpayers, but as energy consumers through our electricity bills.
I would still say, so far, so good. There are a number of justifications for contracts for difference—for taking that risk on behalf of energy consumers—in the case of renewables and carbon capture and storage, and not just because they are low carbon. First, these are new technologies, at least at scale, that represent a significant risk to investors precisely because they are new and still emerging. Investors in such a market need significant reassurance and reduced risk, and contracts for difference can do just that by promising predictable revenue streams which will in turn make it easier and cheaper for energy generators or CCS developers to secure finance. In the longer run, encouraging renewables will also help consumers, because the cost of renewable generation is on an historic downward trend, unlike fossil fuels or nuclear. Once established, renewables and CCS should provide a cheaper and more diverse range of energy supplies that will make British energy supply much more resilient in the face of fluctuating global energy prices.
The second reason why renewables and CCS need this kind of price-based support is that they include many new and diverse technologies: from good old hydroelectric to onshore and offshore wind; from geothermal to heat exchangers in the air and in the oceans; from photovoltaics to concentrated solar power; from tidal flow turbines to barrages, tidal fences, tidal lagoons and wave power; from biogas and biomass to anaerobic digestion and more exotic forms of energy from waste, such as gas plasma. We might even one day be able to add artificial photosynthesis and who knows what else to that list. Government should not pick winners from among these myriad emerging technologies, let alone the various suppliers and developers. Price-based contracts for difference, properly negotiated, offer a means by which technologies and developers can be supported, but still be incentivised to keep on reducing costs and become more competitive.
David Mowat (Warrington South) (Con)
I am listening very carefully to my hon. Friend’s argument as to why contracts for difference should apply to those technologies and not nuclear. He says that Government should not be choosing winners and losers, and I agree. Does he therefore think that the contract for difference price—the strike price—should be the same for all the technologies he has just listed?
Martin Horwood
Clearly not, because in the case of onshore wind, for example, there are many competitive developers developing different varieties of technology. It is a competitive market still, in a way that nuclear, as I shall explain, is not.
The goal, of course, is to provide clean, sustainable and cheap energy while meeting challenging but critically important greenhouse gas reduction targets. Do these contracts for difference represent a subsidy? Well, as the Treasury has confirmed to me in a written answer, yes, of course they do. Every energy bill payer is a taxpayer in their time off; but subsidy is justified for renewables, for all the reasons I have given. However, would it not be extraordinary if into this exciting, young, diverse and competitive energy market, a 56-year-old freeloader—a tailgater, a leftover from another era—tried to slip unnoticed and pick up all the same kinds of advantages and support? Would it not be even more extraordinary if that old freeloader was not even represented by a diversity of competitive companies, but just one or two; and more extraordinary still if the most significant of those turned out to be the state-nationalised energy supplier of another country, already subsidised by its own taxpayers?
That is precisely what is happening with the nuclear industry, and what is more, the level of support—the precise contract for difference and the strike price for specific energy sources—is being negotiated behind closed doors as we speak, before the relevant legislation has even passed through this House. The details are set to be revealed to us only after the event—after the deal has been sealed.
Martin Horwood
I first give way to my hon. Friend the Member for Richmond Park (Zac Goldsmith).
Zac Goldsmith
I hate to jump in front of the Chair of the Environmental Audit Committee, but I am pleased to be allowed to intervene. Only a couple of days ago, EDF issued a warning, effectively, to the Government that unless they guaranteed it profitability—or words to that effect—it would follow Centrica’s lead and abandon nuclear in the UK altogether. If that is not a request for a subsidy, it is hard to imagine what is.
Martin Horwood
The hon. Gentleman is exactly right. In fact, the energy chief executive of Electricité de France, Vincent de Rivaz, told the Financial Times:
“the only thing missing is the contract for difference. Once we have that, we’ll have a compelling investment case to attract partners into the project”.
In other words, “If you don’t subsidise us, there is no business case.” Even with the prospect of subsidy, the business case is not that compelling. On Monday, Centrica pulled out of its partnership with EDF, writing off a cool £200 million and launching a share buy-back scheme to return another £500 million of unused capital to its investors. Like RWE and E.ON before it, and like any sane investor in my view, it has decided that it is not going to touch these new nuclear plans with a bargepole.
Joan Walley
I am most grateful to the hon. Gentleman for bringing this debate to the House this afternoon. Let us consider things in the light of what the House decided last week on the importance of the Liaison Committee and the scrutiny that there should be of all Government policies. This is a cross-cutting issue that affects the Public Accounts Committee, the Environmental Audit Committee and the Select Committee on Energy and Climate Change. Given all that, if we are really going to get transparency about what is going into the contracts for difference, so that we can determine whether there is or is not a subsidy, should there not be proper scrutiny by one Select Committee or a combination of Select Committees of this House? That transparency is what the hon. Gentleman is asking for in bringing this issue to the House this afternoon.
Martin Horwood
The signatories to the motion have included the Public Accounts Committee in it, but the hon. Lady makes a good case for perhaps extending that level of scrutiny to her own Committee. Of course because there is commercial sensitivity about some of these negotiations, it would be possible for those Committees to meet in private, as other Committees of this House do when dealing with sensitive subjects.
As I was saying, like RWE and E.ON before it, Centrica has decided that it is not going to touch these new nuclear plans with a bargepole—and it is not hard to see why. I do not know of a nuclear power station anywhere in the world that has been completed on time, on budget and without public subsidy. The new third-generation pressurised water reactors planned for the UK—sometimes called European pressurised reactors or EPRs—are already in deep trouble elsewhere. The Olkiluoto plant in Finland was begun in 2005 and should have gone on line in 2009. The latest estimate is that it will not be generating power before 2015, at least six years late. The first cost estimate was €3.7 billion, but now that has risen to €8 billion. Construction in Flamanville in France began in 2007. The Flamanville facility is now four years late and counting, while the costs have escalated even further and faster than those in Finland, from an original guess of €3.3 billion, according to Le Monde, to the €8.5 billion announced just in December. One French commentator said that this latest announcement undermined the credibility of EPRs as a technology export, and Centrica was obviously listening.
Will anyone take Centrica’s place? EDF is apparently talking to partners it has worked with in China, but I would just warn the Secretary of State that, according to the recent Nuclear Materials Security Index report, China ranks 29th among the group of 32 nuclear nations on nuclear security and materials transparency. Given wider security—
Martin Horwood
I am sorry but I cannot give way because of the time limit.
Given wider security and international relations concerns, it would seem to be worth thinking twice, just as the Americans have recently done, about allowing Chinese companies to take a major stake in any strategically important British energy supply projects.
Hitachi stepped in to replace E.ON and RWE on the other projected new nuclear plants, but Hitachi has only taken an option on UK new build. Its proposed advanced boiling water reactor design is still perhaps some four years from regulatory approval and Hitachi, too, is waiting on the strike price negotiations.
More and more research is questioning the cost-effectiveness of nuclear. The Energy Fair group of energy consultants and academics has stripped out all subsidies and says that the real cost of nuclear power is at least £200 per MWh, which is much more than the cost of offshore wind power at £140 per MWh or that of onshore wind power at less than £90 MWh. If EDF has done similar sums—there have been rumours in the industry of asks as high as £165 per MWh for the strike price—that raises the extraordinary possibility that nuclear power, a mature and not very competitive industry started in 1956, might be asking for a strike price comparable with or even higher than that of the newly emerging wind industry. Frustratingly, even Parliament does not know whether that is the case.
Finally, I come to the rather obvious point that nuclear is a fossil-fuel technology. If the worldwide investment in nuclear continues in China and elsewhere, despite all these risks, the price of uranium also will inevitably rise, making nuclear here even more uneconomic. Nuclear sceptics may have a very unlikely ally in this debate. The Treasury’s levy control framework, which caps the costs that can be added to consumers’ bills, currently specifies a figure of £2.6 billion a year. Tom Burke, writing in The Guardian, cites estimates that the cap would have to rise to £12.5 billion or more to provide 16 GW of nuclear power by 2025. As he says:
“Anyone who thinks that the Treasury will agree to a levy cap this large is dreaming.”
The risk, of course, is that support for nuclear will therefore squeeze out possible support for renewables.
Let me remind hon. Members on both sides of the House that the coalition agreement in May 2010 promised
“the replacement of existing nuclear power stations provided... that they receive no public subsidy.”
Agreed coalition policy was restated by the former Secretary of State in the annual energy statement a few months later:
“new nuclear can go ahead so long as there is no public subsidy.”—[Official Report, 27 July 2010; Vol. 514, c. 868.]
He did not say, “no unfair subsidy” or, “no unjustified subsidy”; he said, “no subsidy whatsoever”.
Liberal Democrats and Greens have long opposed nuclear power. But Conservative Members, with their strong commitment to sound finance and their horror of unjustified subsidies, should be alarmed too, even if they reject Électricité de France’s accusation of jingoism against the hon. Member for Bracknell (Dr Lee), who dared to question the cost-efficiency of adding our own subsidy to that of the French taxpayer. And Labour MPs should remember the mantra that their Government maintained throughout many long hours of debate on their last Energy Bill, which I remember because I was a shadow environment spokesperson; again, the line was, “No public subsidy”.
The request in this motion is modest. It seeks not the instant abandonment—
Margaret Hodge (Barking) (Lab)
I am sorry to intervene on the hon. Gentleman, and I congratulate him on raising very important issues. For the Public Accounts Committee, issues of transparency and subsidy are hugely important. However, the PAC’s remit is to look at contracts after they have been signed; we cannot take away the job of the Government, which is to decide. We will hold contracts rigorously to account, and we are already ready to examine this contract once it has been signed. Will he accept that our role is in ensuring value for money after the Government have decided? We would hope that our inquiry would also inform future Government contracts in relation to nuclear power.
Martin Horwood
The difficulty is that this one may be the main contract for nuclear power, so the suggestion from many non-governmental organisations—not only what we might call the usual suspects, but organisations such as the Consumers Association—is that an independent panel of experts should be convened. That might be an alternative, as the Chair of the PAC has made some reasonable points.
As I said, the request in the motion is modest. It seeks not the instant abandonment of nuclear power, nor the overturning of Government energy policy—far from it. It merely seeks a pause and a referral of the strike price negotiation to the Public Accounts Committee, other Select Committees or an independent panel of experts—such approaches would be equally acceptable. The body can sit in private if issues of commercial sensitivity are involved.
On the face of it, Électricité de France is trying to pull a fast one on British energy bill payers, taking a subsidy designed for clean, green, new, emerging, competitive technologies with falling prices, and claiming it for a 56-year-old industry with precious little competition and a continuing history of spectacular cost overruns, for which we stand to pick up the bill. I ask hon. Members to support the motion.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I remind Members that the following debate is heavily subscribed, so I am going to reduce the limit to eight minutes.
Mr Iain Wright (Hartlepool) (Lab)
I welcome the Backbench Business Committee’s decision to select this important subject for debate, and I come to the debate from two distinct but somewhat interrelated perspectives. I will speak in a moment about the general economic competitiveness of our nation and a need for nuclear to be part of our energy mix to help with that competitiveness, but the first point I wish to make is a constituency one.
Hartlepool has had a nuclear power station for about 30 years. It is currently operated by EDF Energy and it generates about 2% of Britain’s energy requirements. More than 500 people are employed at the station in my constituency; it provides highly skilled, well-paid jobs, and those wages are then pumped back into the local economy. In the past couple of years, the station has had its operational life extended to 2018-19. There is the scope for Hartlepool to have a replacement power station, but we are in the second wave of such replacements and any replacement would not be expected to be operational until 2025 at the earliest.
I am passionately for the idea of a replacement power station, as the commissioning of such a station would provide a much needed short-term and long-term boost for my local economy. Tees Valley Unlimited has estimated that such a new nuclear build in my constituency would generate 12,000 construction jobs, as well as a net increase of more than 5,000 jobs in operations and 1,000 in manufacturing. Given that Hartlepool has one of the highest levels of unemployment, particularly youth unemployment—one in four young men is not in employment or training—the prospect of a long-term well-paid secure job in building and running a new power station is very attractive for school leavers. The Teesside sub-region has a number of major players in the nuclear supply chain, such as AMEC and Aker Solutions, so the wider north-east economy would also benefit.
I am very concerned—this is my second point—for the economy of my constituency and the general competitiveness of our country. I am concerned that we will see a gap between current stations going offline and their replacements becoming operational. In Hartlepool, we will see a gap of about five or six years at best, meaning that we will find it difficult to avoid power cuts and brownouts. That will not help us in the global economic competitiveness race and it will not help consumers in this country.
In such circumstances, it is vital that our argument is not so much about subsidy as about clarity and stability in policy to provide investors with as much confidence as possible so that they invest in the long term. However, the only thing that seems to be clear is that have we no clear strategy on nuclear energy.
The hon. Member for Cheltenham (Martin Horwood) mentioned Centrica’s decision not to invest in the UK nuclear sector. The company believed that returning half a billion pounds to their shareholders was a better use of its money. I was reading the Lex column in the Financial Times this week and it said that Centrica’s decision
“suggests that developing the next generation of nuclear power is too daunting a task for the private sector”.
Given that, according to the Nuclear Energy Agency, some 60% of the total lifetime costs of a nuclear plant must be allocated to investment and construction, investors will be paying out substantial sums of money without seeing returns for the best part of 12 to 15 years. In such circumstances, it is obvious that construction and investment risk must be mitigated as much as possible and to that end investors need to be reassured that long-term stable agreements will be put in place.
Martin Horwood
The explanation that Centrica gave was not that there was insufficient public support—that was expected, as the contract for difference negotiations are ongoing—but that there would be escalating costs and a worsening prospect of a return on investment because of the history of plants going over budget and over time.
Mr Wright
The hon. Gentleman mentions contracts for difference and he also did so in his speech. That is my major criticism of the Government, because when people are thinking about investing for 40 or 50 years it is important that we try to mitigate the risks as much as possible. That is presumably the rationale behind contracts for difference.
As I have said, I have a power station in my constituency and want another one, but we still have great uncertainty about how CFDs will operate, including about the length of contracts, how contracts will be allocated or paid for and the process for setting the reference and strike prices. In such circumstances, investors who want to invest for the long term are naturally jittery. In its report on planning for economic infrastructure last month, the National Audit Office identified policy uncertainty as a key risk, concluding that such uncertainty
“could result in project sponsors, lenders and contractors deferring or abandoning UK projects in favour of opportunities elsewhere. Financing charges for projects may rise as investors and lenders perceive policy uncertainty as a risk.”
That certainly seems to have happened in the nuclear sector, with the loss in recent years of E.ON, RWE and SSE, and now Centrica.
I mentioned that I was reading the Lex column in the Financial Times this week, and it concluded:
“low-carbon nuclear must be part of the global energy mix. If governments want to attract private capital, they must be more realistic about pricing, cost and regulation.”
That is as true for the UK sector as it is for the global energy mix.
David Mowat
I agree with just about everything the hon. Gentleman has said and would make the point that Hartlepool puts more into the grid than the entire onshore wind sector in this country. He is correct to make his points about up-front investment, but does he agree that the CFD structure, with a strike price lower than that agreed for wind, is the best way of achieving that?
Mr Wright
Let me make two points in response. The hon. Member for Cheltenham said that in many respects this is an either/or game and that we choose nuclear or renewables. In my area, which has a long and proud history of engineering, manufacturing and energy production, it is not an either/or game. We can have a fantastic offshore wind-processing facility in my constituency, where we have a great supply chain, as well as having nuclear. We can have a ready supply of school leavers to go into the energy engineering sector. I want the Tees valley to be a centre of excellence for energy.
The second point made by the hon. Member for Warrington South (David Mowat) is valid and goes back to what I was saying earlier. Investors are unclear about what is going on and there is no stability with CFDs. As the investment time scale lasts 40 years with up-front costs, that must be addressed.
The Government must act in a more focused way than they have in the past to provide clarity to investors for the long term. If we do not have that, our competitiveness as a modern economy and our ability to attract large-scale financing for such projects will be undermined still further. We will not be able to keep the lights on and stay competitive as a nation if the Government maintain their current approach and that is why I hope that they will address the risks today.
Mike Weatherley (Hove) (Con)
As someone who has witnessed first hand the long-lasting devastation of a nuclear accident at Chernobyl, where signs of contamination remain to this day—even affecting Cumbria, when the disaster struck 25 years ago and 1,200 miles away—I believe that nuclear should be an option of last resort on risk and environmental grounds alone. The debate is not about environmental risk but about price and the coalition commitment not to subsidise any new nuclear.
The set price under negotiation would guarantee income levels for companies generating electricity. In other words, should the market price fall below the set price, taxpayers will be responsible for footing the bill. The contracts envisaged are expected to last up to 35 years, so nuclear power companies would be immune to future changes in the market demand for their products.
EDF’s recent statement that it, like Centrica, might abandon its nuclear reactor construction plans if the Government fail to pledge an adequate minimum electricity price demonstrates the extent to which future nuclear plants will rely on taxpayer funding. That subsidy by any other name shifts the notoriously high economic risk from nuclear corporations to the consumer and will be presented to Parliament as a non-reviewable contract that is likely to be binding for decades. That outrageous deal, forged behind closed doors, directly contravenes our coalition commitment and wholly pre-empts the energy market reform legislation and the proper democratic process of parliamentary scrutiny.
I am a committed free marketeer as I believe that the free market is far and away the best method by which to allocate resources efficiently. Consumers should have the ultimate say on how products are delivered and at what price. I accept that the utopian free market ideal is sometimes not possible, especially when considering high-cost barriers to entry.
Mark Tami (Alyn and Deeside) (Lab)
The logic of the hon. Gentleman’s argument means that, if we leave it entirely to the free market, all we will build over the coming years will be gas turbines.
Mike Weatherley
The hon. Gentleman is entirely wrong, and I shall come on to the reasons for that later. Many alternatives from emerging markets must be considered, rather than the obsolete and declining markets.
We should try to keep as close to a free market as possible, whenever possible, rather than take the easy state intervention option. Indeed, my political hero, Sir Keith Joseph, emphasised that by saying that market competition
“contains within it the source of constant improvement”.
Any new subsidy to this mature market is an affront to that principle and will artificially restrict the growth and innovation of the sector in an age of feasible new green and renewable energy.
David Mowat
I, too, am a free marketer in general. In this case, however, if we leave it to the market alone, the answer will be coal or maybe gas. Does my hon. Friend not believe that carbon is a bad thing for society, that the Government must therefore intervene to put a price on carbon, and that the CFD structure that they are introducing is a mechanism for putting a price on carbon, which is good for us and good for the planet?
Mike Weatherley
I thank my hon. Friend for his intervention. If I may, I will ask him to listen to my concluding remarks, which will show conclusively that by not subsidising nuclear, we will have a greener economy, rather than a carbon-dependent one.
If new nuclear is unable to meet the free market test, showing that it is competitively viable in the long term, it should yield to other forms of energy, particularly green forms of energy. When it comes to striking a price now, there are so many unknown variables that this can be done only by accepting that any price agreed will need future Government support. Members in favour of nuclear seem to accept that, which is horrific, given the coalition agreement.
The first of these unknown variables is the decommissioning of nuclear power sites. Decommissioning is a multi-faceted and complex process in which costs are hard to estimate accurately. The Public Accounts Committee last week noted the huge decommissioning failures at Sellafield, where the clean-up will take 120 years and cost £100 billion—twice the original estimate.
Mike Weatherley
I am sorry. I cannot give way because I am allowed only two lots of injury time.
Other factors can cause decommissioning costs to jump. Current laws can be amended. The 2002 White Paper “Managing a Nuclear Legacy” identified exactly this point as being a factor in the Sellafield costs. Secondly, fuel and waste management represent additional unknown financial burdens. Fuel management is particularly problematic. The Nuclear Decommissioning Authority notes, for example, that oxide fuel must be stored for decades before it is possible to place the fuel in a geological disposal facility. That brings me on to a crisis point: no GDF exists in any country. The UK Government have yet to locate an appropriate site for one on UK land. The full cost of constructing and operating such a facility is therefore unknown. Some £400 million of Government funding was spent examining a potential site for a GDF in Cumbria, only for Cumbria county council to vote against the plans last month on safety concerns.
Thirdly, the need for public funding is unlikely to abate over time. As the BBC journalist Richard Black points out, with the full life-cycle of nuclear power stations stretching over such long time frames, it is impossible to guarantee that companies originally involved in the running of the power plants will still be in existence or financially capable of meeting some of the costs of the decommissioning processes. Fourthly, aside from the decommissioning and other costs mentioned previously, the financial burden that a nuclear accident would place on UK taxpayers would be enormous, and this potential liability needs to be built into any pricing structure. Operators have some obligation to limited liability to cover accident costs, but these are capped, with Government underwriting the costs above the cap.
In March 2012 the Government response to the consultation held on increasing nuclear third party liability admitted:
“An incident of the scale of Fukushima would lead to costs that far exceed an operator liability limit.”
The response confirmed that Government intervention would very likely be needed. Proponents of nuclear will say that the likelihood of accidents is low, but the Government’s own advisers have confirmed that it is “not zero”. As recent history has shown, severe accidents do occur—five major incidents worldwide so far.
Mike Weatherley
I will try to give way before the end, if I can.
A good indicator of commercial viability is where the sector’s insurers stand. A 2010 Department of Energy and Climate Change working paper concedes that commercial insurance companies would not be willing to cover some of the nuclear industry’s liabilities.
The UBS financial group said recently that investing in nuclear power is a
“courageous 60-year bet on fuel prices, discount rates and promised efficiency gains.”
As my hon. Friend the Member for Cheltenham (Martin Horwood) noted, the EPR design planned for Hinkley Point has been planned twice before—once in France, where the costs have more than doubled and construction is five years behind schedule, and in Finland, where costs have almost trebled and construction is six years behind schedule.
A further cost which needs to be considered is that of protecting nuclear facilities from terrorist attacks. This includes protecting nuclear facilities from cyber-terrorist threats and providing adequate protection for nuclear materials in transit. Again, the cost is unknown.
Margaret Thatcher was a key advocate of removing subsidies from
“outdated industries, whose markets were in terminal decline”.
Today the market in decline is the British nuclear power industry when pitted against the alternatives.
I leave the Secretary of State with four questions and one frightening statistic. First, why is DECC being permitted to agree a contractual set price for nuclear power, in contravention of the coalition agreement not to allow nuclear subsidies? Secondly, why will this contract be presented as a non-reviewable document to Parliament? Thirdly, will the risks detailed earlier in my speech be taken into account in any price agreed? Fourthly and most importantly, will the Secretary of State consider delaying the negotiations until the relevant Committees have had a chance to review whether it represents value for money?
Finally, the frightening statistic: using formulas developed by Steve Thomas of Greenwich university and Peter Atherton of Citi, at a strike cost price of £161 per megawatt, which they have calculated, set against today’s wholesale price for electricity of around £51 per megawatt, and a 30-year contract life for the two proposed plants at Hinkley and Sizewell, it would cost householders and businesses or taxpayers £155 billion by 2050, and that is without any of the additional costs that I identified earlier. Imagine the renewable energy industry if we had invested over £155 billion in it. We would be world leaders, and I have every confidence that it would be low carbon and meeting all our energy needs.
Paul Flynn (Newport West) (Lab)
I agree with every word said by the hon. Members for Hove (Mike Weatherley) and for Cheltenham (Martin Horwood). We are in an extraordinary situation in relation to our nuclear policy, charging ahead to a certain financial train crash. Huge sums will be spent and Parliament is to be kept in ignorance of the details of what is going on. That must be changed. We have heard the Chairman of the Public Accounts Committee say that her Committee has no responsibility until the contract has been signed. By then, it will be too late and we will have committed ourselves to a period of probably 30 years at least to pay an enormous cost to a company that is not British, that is in France and that is already subsidised. It is crazy.
We have seen the stampede of all the companies—E.ON, RWE and now Centrica—away from investing in nuclear power, and for very good reason: it is a financial basket case. I will not repeat the figures relating to the two new nuclear stations, in Finland and at Flamanville. They are the future, but one is four years late, and the other is six years late; one is €3 billion over budget, and the other is €5 billion over budget.
Albert Owen (Ynys Môn) (Lab)
My hon. Friend and I will never agree on nuclear power, but to set the record straight, there are nuclear power stations that were built on time and on budget in Taiwan and many other places by Hitachi with Japanese technology. My hon. Friend identifies one technology in one country.
Paul Flynn
My hon. Friend, like my hon. Friend the Member for Hartlepool (Mr Wright), has a point of view. They have nuclear power stations and nuclear jobs in their constituencies, and naturally they have to fight for their constituents. One can understand the distortions of view that inevitably result from that.
The history of nuclear power has been a story of false dawns all my life. I can remember as a schoolboy going to an exhibition in Cardiff called “Atoms for Peace”. I remember ZETA, a fusion reactor that was going to produce electricity that was too cheap to warrant a meter. We had the steam-generating heavy water reactor, one of the worst civil investment decisions since the building of the pyramids—huge investment that produced nothing of value. Margaret Thatcher had plans to build 10 nuclear power stations, but only one was actually built. My party was seduced by the pied piper of nuclear power fairly recently.
Mark Tami
Let me put it on record that I do not have a nuclear power station in my area. Is it not the logic of my hon. Friend’s argument that instead of building a great new green generation of stations, this country will import electricity from abroad, probably from French nuclear power stations?
Paul Flynn
That is a very limited view of the history of the matter, which I will come to. As recently as 2007, however, my party took the view that nuclear was economically unattractive. That was in one of our manifestos. But an event took place in Downing street where there was a PowerPoint presentation to the then Prime Minister that said, “Mr Blair, there’s going to be a gap in our electricity supply because the advanced gas-cooled reactors are going to become obsolete and that will create a problem in a number of years that will have to be solved.” Within a year of the Labour Government changing their policy on nuclear power, having decided that what had been economically unattractive was okay, the life of the AGRs was lengthened and the gap had disappeared. The spin had taken place, and we were seduced into the view that nuclear was inevitable.
All parties, I believe, went into the last election with the promise that nuclear was acceptable if there were no subsidies, but where are we now? There are enormous subsidies. In 2008, I heard a debate in this House about the insurance costs for the Government of nuclear power. The most recent figure that we have for the cost of a nuclear accident is £200 billion for Chernobyl, and the taxpayer would have to pay that.
Martin Horwood
I agree with much of what the hon. Gentleman says, but I must correct him on one thing. He said that all the parties went into the last election supporting nuclear power. The Liberal Democrats did not—we were opposed.
Paul Flynn
I am delighted to be reminded of that. However, I could spend the rest of my speech quoting what the Secretary of State and many other Liberal Democrat Members have said about this. Why has their position changed? As the hon. Gentleman rightly said, they were not in favour of nuclear power; I was suggesting that they went into the election promising no subsidies. The Secretary of State has been attracted by the red boxes or by other considerations, and he has had some kind of ministerial lobotomy whereby he can no longer see what is obvious—that nuclear power, which he never believed in until only two years ago, is a false trail.
Martin Horwood
Obviously I cannot speak on behalf of the Secretary of State, but I remind the hon. Gentleman that when the national policy statement passed through this Chamber, not even Liberal Democrat Ministers voted for it. Under the terms of the coalition agreement—I think we might have had to strike a similar deal with his party—we abstained at that time.
Paul Flynn
I have some hope that the Liberal Democrat party will return to the paths of virtue.
A few hours ago in this Chamber, I asked the Business Secretary a question in which I praised him for what he has done with Greencoat UK by investing money in wind power and urged him to do the same in relation to tidal power. Let me say a few words about tidal power, because it is ignored.
Paul Flynn
I cannot do so any more because I have run out of injury time.
My constituency, like that of several other Members on the English side of the Bristol channel, is washed by an enormous cliff of water that travels up and down the estuary twice a day. There is immense power there that is unused and wasted. This can be tackled, but not by a barrage, which has so many difficulties and objections that it would be impractical. It is not necessary to build a brick wall across a tidal flow to get energy from it. Water wheels work very simply: the water flows and they tap the energy. The best way in which we could get that energy cheaply and cleanly is through a series of small machines in the water to tap the energy that could then be linked with a pump storage scheme, possibly in the valleys of south Wales. That would provide demand-responsive energy—base load energy—that was entirely predictable and did not alter like wind or any other sources. It would be available, clean, British—
Paul Flynn
My hon. Friend says that it is expensive, but it is very cheap. He should take a trip to La Rance in Brittany, where for more than 30 years there has been a tidal power station producing the cheapest electricity in France.
Thanks to the Public Accounts Committee, we now have a clear picture of the future. Let us look at the enormity of the sums involved. Professor Tom Burke, who was an adviser to a previous Government, has said:
“The scale of the proposed investment is very large. The contract will last for a very long time at a strike price of £100/MW and a 30 year contract like this would require a subsidy of £1 billion/year above today’s wholesale price for electricity. This would lead to a transfer of £30 billion to EDF”—
Électricité de France, a French company—from the pockets of British taxpayers. He continued:
“Should the whole of the 16GW of new nuclear anticipated by the Energy Minister be financed on similar terms it would cost householders and businesses £150 billion by 2050.”
Back in 2008, I tabled an early-day motion forecasting that any profits that might be made from nuclear power would be enjoyed by foreign companies. We have seen the stampede that is now going on with E.ON, RWE and Centrica, and that is all for business reasons. Any profits would be enjoyed in France, but the enormous cost would be paid by British taxpayers.
There are huge liabilities involved. We hear about £67.5 billion—an astonishing figure—for dealing with nuclear waste. The Flowers committee report said in 1976 that it was irresponsible to go on generating electricity from nuclear power without a solution to the waste problem.
Paul Flynn
I cannot give way any more.
The waste problem is continuing at a cost of £1.5 billion a year. We still do not have the solution and we are in the same position with the £67.5 billion. The answer used to be to dig a hole and bury it. Now, thanks to Cumbria council’s decision, quite rightly, not to build—
David Mowat (Warrington South) (Con)
Thank you, Mr Deputy Speaker. I am pleased to have the chance to speak in this debate, and I congratulate the hon. Member for Cheltenham (Martin Horwood) on securing it.
Before I begin my remarks, I want to address two of the points that the hon. Gentleman made. First, on the subsidy issue, of course it is true that we are paying more for nuclear than we would pay if we let the market ride, because the market would take us to coal, and if not coal, to gas. Whether we call that a subsidy or a price for carbon, I do not know. I personally believe that we must address the decarbonisation issue, that nuclear power is part of the solution, as is wind, and that the contract for difference mechanism is a way of acknowledging a price for carbon. If we want to call that a subsidy, I accept that.
Secondly, the hon. Gentleman said, as I have heard others say, that it is reasonable to subsidise new technologies such as wind, solar and all the rest, but not nuclear, which is an old technology dating back to 1956. That is a false argument. It is a little like saying that physics is an old technology because it started in about 1900 and we have had it for all that time. Nuclear is changing and evolving, just as wind power did. There are different types of nuclear power. Is thorium technology new, or are the different types of reactors new? It is a very difficult argument to maintain. If we are serious about decarbonisation, it is hard not to see nuclear as part of the solution.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
My hon. Friend makes an excellent point. Does he agree that the latest design approved by the Office for Nuclear Regulation for the new reactors that EDF proposes to use shows that those reactors are more efficient than before, and so we are rewarding that investment in technology to ensure that we get more value for money?
David Mowat
My honest answer is that I do not know if they are more efficient. I assume that they are—why would they not be?
I am of the view that we should not go nuclear if there are low-carbon technologies that can outperform it at scale and within the time frames that we need, because I accept that there are issues with nuclear. For example, we have not solved the waste problem. The question for the House, though, is whether that problem is more severe than global warming. We must make choices. We need to decide whether the waste issue is containable—no pun intended—whereas the global warming issue is not containable. However, it is nonsense to pretend that nuclear is not part of the decarbonisation of the world.
Albert Owen
The hon. Gentleman is making a sensible and powerful argument. On waste, the House needs to recognise that we are talking predominantly about legacy waste that successive Governments have not dealt with but needs dealing with now. That waste comes not only from civil nuclear but from the defence industry and the health sector. On the other hand, we will be some 50 years into the future before anything of that kind comes out of a new-build nuclear power station.
David Mowat
I agree with the hon. Gentleman that the issue of legacy waste is not relevant to this discussion, but neither is it a great advert for the nuclear industry. It is true that much of the waste that is causing the difficulties in Cumbria is military and health waste, rather than waste from nuclear power stations. However, it is also true that the old stations were not designed with the disposal of waste in mind and we are paying the price of that.
David Mowat
I have given way twice, so let me see how I get on and I will try to come back to the hon. Gentleman.
I support the broad thrust of the Energy Bill. The DECC assumption is that we need to construct 60 GW of capacity by 2035 and that up to a third of that will be nuclear. Much of the rest will be made up by renewables, including wind and biomass, but I am afraid that some of it will come from gas.
There are three competing targets in energy policy. The first is cost, which we talk about very little, the second is energy security and the third is decarbonisation, which we talk about a lot. I will say a little about each of those targets.
Cost matters and fuel poverty matters. We need to decarbonise our economy, but old people being cold and dying of hypothermia is not a price worth paying for that. We should be very circumspect about cost and we must consider the cost equation for the different technologies. I accept that the cost of renewables is coming down, albeit from a very high base. We also need to consider the cost to our industries. I gently tell the House that a large part of the GDP in the north comes from heavy industries. If we want to rebalance the economy, we must bear it in mind that GDP growth correlates with energy use. We will not achieve that aim if we have differentially higher energy prices. We must be careful about that.
The UK faces unique issues in respect of energy security. We have decided to decommission 20 GW of nuclear and coal capacity over the next five or six years. The figures vary depending on who looks at the matter and when, but by 2017 we will have a capacity excess of about 4%. That is dangerous and we need to address it. If it is not addressed in time, the default will be to use fossil fuel. Gas power is about the only thing that can be produced at scale quickly enough. We cannot build wind capacity at that level quickly enough.
We often talk as if this country is one of the worst performers in Europe on carbon, but both the absolute figures and the trajectory on carbon per head and carbon per unit of GDP show that the UK is one of the best performers of the major economies in Europe. I will not end the comparisons with Germany because it uses 20% more carbon per head and 23% more carbon per unit of GDP than us, and yet it has three to four times more renewables. Why is that? The answer is that it burns substantially more coal than us. The trajectory appears to show that it will burn yet more coal than it has in the past. The way to decarbonise is to get off coal, and nuclear power can be part of that.
What are our options? The first option is to use less power. I hope that the green deal works because there is no question but that it is the best thing that we can do. The option that I like least is imports. There is a risk that the Government will go down that route. The fastest growing source of electricity is imports coming in from France through the interconnector with Holland.
David Mowat
I am afraid that I cannot.
I am not very impressed by the interconnector with Ireland or with our building a big wind farm in the middle of Ireland and sending the jobs over there. Another option is gas. For pragmatic reasons, that will be part of the solution. It replaces coal and creates much less carbon.
I welcome the use of wind and solar energy. However, we debate these options as if they are mutually exclusive. If our 2050 target was to be met entirely by wind power, the 4,000 wind turbines that we currently have would have to be multiplied by a factor of about 30.
David Mowat
I will not give way. The hon. Lady might have wanted to talk about offshore wind. That could be part of the solution. However, these technologies have a lot of ground to make up on price.
Carbon capture and storage has been talked about a little. That is part of the solution. I regret that this country has not moved faster on CCS. One reason for that is that we have over-emphasised renewables because they are subject to an EU directive. Progress on CCS would not have counted towards that directive, even though it would have helped us to decarbonise.
I think that there are problems with the case for nuclear. As I said at the start of my remarks, the problem of waste has not been fixed. It is perfectly legitimate for people to think that that is a reason not to go ahead with new nuclear. However, I believe that the risks from waste are smaller than the risks from global warming and that we therefore need to decarbonise. I say to the Secretary of State that unless nuclear can prove that it has a cheaper strike price than other low-carbon technologies, there will be questions about going ahead with the deal. Although nuclear produces less carbon than renewable technologies—for example, it produces significantly less carbon per kilowatt-hour than solar—there is still the issue of waste. I do not know how the caps that have been put into the deal will work. The hon. Member for Hove (Mike Weatherley) made the point that the probability of an accident is never zero. That is true, but it does not mean that we should never do anything.
Of course, nuclear provides base power, whereas renewables are intermittent. Even with the waste issue, I believe that we must move ahead with nuclear as part of the mix in the way that the Government are doing. I wish them luck with the negotiation, although I regret that they are negotiating with only one company. Frankly, the Labour party is the cause of that because it sold off vast tracts of our nuclear industry.
In my last 40 seconds, I will ask some questions of the Secretary of State. As I said, we now produce less carbon than most OECD countries and European countries. The Secretary of State must therefore be circumspect in ensuring that the cost of our electricity supply is competitive and that we do not move ahead a lot more quickly than the rest of Europe. As I said at the beginning in response to the hon. Member for Cheltenham, I do not understand why the contract for difference price for other low-carbon technologies is so much higher than that for nuclear. I will finally just say that—
Joan Walley (Stoke-on-Trent North) (Lab)
I apologise to the Secretary of State that I will not be here for his winding-up speech. In the short time that I have, I want to put on the record a couple of important points relating to last week’s Liaison Committee debate in the House about how Parliament can best scrutinise Government policy.
I congratulate the hon. Member for Cheltenham (Martin Horwood) on securing this Back-Bench debate. The issue that he has raised is whether new nuclear will go ahead with or without public subsidy. The plain truth is that we have no means of finding out. Because of the commercial confidentiality surrounding the discussions about the contracts for difference, there is no way of telling how much of the Treasury money that was intended to be used for feed-in tariffs and to provide the long-term investment in renewables that we need is being diverted into nuclear power. If that money is being used, it is in direct contradiction to the coalition agreement that any new nuclear would come forward on the basis of market forces.
It is impossible to understand how Government policy is being taken forward in this area, because of the complete lack of transparency and of an evidence base. There is real urgency, not only because we have to act on climate change, keep the lights on and invest for the long term, but because the Energy Bill is going through the House and all the decisions are going to be made with no possibility of scrutiny. As the Chair of the Public Accounts Committee has said, she will be able to scrutinise the decision only after it has been made. This is a complete double whammy and we have no way of knowing about the situation.
Will the Secretary of State look again—if not now, he should do so in future discussions with the Liaison Committee—at Energy and Climate Change Committee recommendations stating that it was a mistake by the Government to muddle together nuclear with renewables? Will he, together with his Cabinet colleagues, look at the implications for the green economy and the long-term investment that is needed? If that has to be done in private, he should do it in private with Privy Counsellors or whoever, but we need genuine scrutiny of what the contracts for difference comprise.
I want an energy policy that is fit for purpose, creates jobs and reduces carbon levels, but I believe that the current lack of transparency is not in the interests of good governance or science-based evidence. If the Government chose, they could, with the support of the Liaison Committee, look urgently at a way of getting that information on to the public record.
Michael Ellis
Will the hon. Lady also accept that there is a priority and that the Government should focus, as should we all, on an issue she has not mentioned—energy security? Would she be content if the Government were not conscious of that and were held over a barrel by others because our energy security had not been properly considered?
Joan Walley
Energy security is top of my list as well, but I would not want the Government—not just now but in 2050 and beyond, which is why we are looking at the decommissioning of nuclear waste—to be held over a barrel as a result of a decision made now that will have a lasting legacy in years ahead.
Zac Goldsmith
Given recent threats from EDF Energy over the past couple of days, it seems to me that we are already being held over a barrel in relation to the strike price. We are being asked for extraordinary levels of subsidy by an industry whose subsidy appetite should be not disappearing but declining after 50 years. Instead, it seems to be increasing.
Joan Walley
I agree with the hon. Gentleman, and given what has happened this week with Centrica, and the uncertainty over how the new nuclear power stations will be constructed, everyone is being held over a barrel. That does not mean, however, that we should not sit down and work out together transparently a way of creating an energy policy that is fit for purpose and that our constituents deserve.
David Morris (Morecambe and Lunesdale) (Con)
Our future energy needs and how we meet them are critical to this nation. I congratulate my hon. Friend the Member for Cheltenham (Martin Horwood) on securing this debate, and I also pay tribute to the hon. Member for Hartlepool (Mr Wright), who is a friend outside this Chamber.
My constituency is one of the biggest energy producers in the country and my area contains gas, onshore and offshore wind, and—biggest of all—two nuclear power stations. I am incredibly supportive of the nuclear industry and have established Conservative Friends of Nuclear Energy to help advocate it. The nuclear industry is worth protecting and developing. Indeed, I would go so far as referring to it as the ultimate low-carbon industry.
People in my constituency are sick of onshore wind blighting the countryside. My mailbag is always full of letters from various conglomerates that want subsidies to develop onshore wind. Our nuclear power station is a huge employer and incredibly popular among those who live closest to it. In fact, my constituency has been designated for a third nuclear reactor, and we have a good chance of getting it built. For all the good news, however, there are many misconceptions about the industry.
Zac Goldsmith
On that point, is my hon. Friend saying that subsidies are acceptable for nuclear power but unacceptable for onshore wind? That seems to be where his speech is going.
David Morris
No, I think that wind has an important part to play in the mix, but I am unequivocal when I say that we should have subsidies in the nuclear power industry as well.
There are many misconceptions about the nuclear industry, not least the energy market reforms that are hugely generous to companies such as EDF. The reality is rather different. All three new-build companies—Horizon, EDF and NuGen—are building plants at their own expense. Contracts for difference guarantee a price for the electricity produced, but that is done for one simple reason: it is impossible to raise £7 billion to build a nuclear power station unless the banks have some idea of what the turnover will be. That is why we need contracts for difference to bring predictability to the price.
A recent report by the Department of Energy and Climate Change suggested that contracts for difference could lead to a fall in bills of between 6% and 8%—welcome news during these difficult economic times—but to characterise that as a subsidy is wrong. In fact, DECC has made it clear time and again that it will not subsidise new nuclear energy. I have not always supported that position, but it would be remiss of me not to point out that the Department is firm in its view.
Every study I have seen shows nuclear energy as one of the cheapest large-scale low-carbon technologies. It is also a huge employer and will soon account for 0.4% of British GDP, equating to 32,500 jobs. I believe that nuclear is the future of low-carbon technology. It is clean, cheap and provides employment opportunities in areas that really need them. I support nuclear energy and the energy market reforms. They are the way forward and will keep the lights on for decades to come.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I congratulate my hon. Friends the Members for Cheltenham (Martin Horwood) and for Hove (Mike Weatherley) on securing this important debate.
New nuclear power will not be subsidised. That is what my hon. Friend the Minister of State, Department of Energy and Climate Change (Mr Hayes) said, as did his predecessor, my hon. Friend the Member for Wealden (Charles Hendry), and it is also stated in the coalition agreement. Since the Government have been clear about that, perhaps this debate is really about a non-existent subsidy and we should instead be debating our future energy needs.
Dr Coffey
Not yet. I will go a bit further. As my hon. Friend the Member for Warrington South (David Mowat) pointed out, we should be focusing on carbon. My hon. Friend the Member for Northampton North (Michael Ellis)—I have just realised that neither of my hon. Friends is in his place—mentioned energy security, and that is why I believe nuclear power is key to the mix in the short term. The hon. Member for Newport West (Paul Flynn) referred to other energy sources, and we must develop low-carbon technology as well as storage, which is currently one of the barriers to many sources of renewable energy.
Paul Flynn
On energy security, after Fukushima, every single one of the 52 reactors in Japan closed down and Germany turned against nuclear power. If there is another accident—we have one every decade—would not the danger when the lights go out be the public’s reaction and a refusal to allow the generation of nuclear power in this country, just as happened in Japan after Fukushima?
Dr Coffey
I believe that the public are reassured by the work of the Office for Nuclear Regulation, and Dr Weightman, a world-renowned specialist, went to Fukushima to help sort out some issues. I do not know exactly why Fukushima ended up as it did but, in addition to the tsunami, there were other issues definitely related to that. I think the situation in Germany is more of a political situation.
Dr Coffey
I will not give way further on that matter. It would not surprise me if Germany is burning more coal and importing electricity from Poland in the short term.
I welcome the contracts for difference mechanism introduced by the Government. Such contracts will not be exclusive to nuclear but will include all the large-scale, low-carbon elements such as renewables and carbon capture and storage that we require for a reliable mix of energy supplies. I often refer to my constituency not simply as Suffolk Coastal but as the green coast. We have offshore wind at Greater Gabbard and at Galloper, and we will have the East Anglia offshore array. It has been suggested that those wind farms in my constituency could produce 8.2 GW for the country. If that is combined with Sizewell B and the proposed Sizewell C, it is possible that my little bit of Suffolk will generate about a quarter of the nation’s electricity needs. We are truly fizzing in that part of East Anglia.
Crucially, once the Government agree a strike price with the generator that is fair and sustainable, whatever the source of energy might be, the contract will provide stability for consumers and operators alike. The market price will be topped up when below the strike price, but when it is above that level—people do not think that that will happen, but I can see it happening—the generator will have to pay back the difference. The Library suggests that that two-way relationship is a “key advantage” of the Government’s policy. We should recognise that it means the Government can strike a fair deal that runs both ways.
The motion states that there is “new evidence” proving that CFDs amount to a subsidy, but the supposed exposés in the press in recent months are hollow claims. It has been suggested that the Government will secretly funnel money to operators, but they have been clear on their intention to publish the contracts, except where there is a need for commercially sensitive information to be kept private on a very narrow range of points. The Government do not negotiate in public when they are spending money in other areas, and we should not expect them to do so in this case.
Martin Horwood
Does the hon. Lady remember any other occasion on which the House was asked to agree to the Government committing up to £30 billion of taxpayers’ money without public scrutiny?
Dr Coffey
That figure has been mentioned several times, but I do not recognise it. My expectation is that the money is included within the Department of Energy and Climate Change budget or that it has been set aside by the Treasury. I am therefore not sure I agree with the hon. Gentleman’s point. The Government certainly do not get involve in commercial negotiations on similar matters.
Dr Coffey
I will make more progress, but I will give way to the hon. Gentleman if I have time later.
In my view, despite those claims, support for new nuclear is not about subsidy, but about stability. A stable and open regulatory regime is vital to unlocking the potential benefits that energy investment, and particularly nuclear, can bring.
The first-round consultation for Sizewell C closed yesterday in my constituency. If it goes ahead, it will be immensely important for the local economy. It is estimated that new nuclear projects such as Sizewell C could boost our gross domestic product by up to £5 billion and create more than 30,000 jobs. Those will be highly skilled, well paid and high-value jobs. For example, an electrician working in the nuclear industry can probably earn the best part of £40,000 to £50,000, if not £60,000. That is not too different from MPs’ salaries.
Dr Coffey
The skills are transferable, even if people need specialist additions. The general investment in energy skills we are making is important, but the skills are transferable from renewable to nuclear, oil and gas. However, I recognise the hon. Gentleman’s point. The critical mass of employees needed for the construction and operation of the plants is vital to ensuring those high-value earnings.
New nuclear will be a global asset for this country. It could be an export market, whereas we currently import. It is therefore good that the Government are backing the nuclear sector, which is a major driver of growth in many ways. It is absolutely right that they are committed to making the UK the most attractive country in the world for nuclear investment. Hitachi has not signed a cheque yet, but has indicated its decision to invest £700 million in this country. Unfortunately, the inactivity in the UK under the previous Government means that a nuclear plant has not been completed in recent times, and we desperately need one.
There are many other advantages to new nuclear. For example, nuclear power is already a highly cost-effective option for energy projects. The annual report submitted to the Select Committee on Energy and Climate Change inquiry stated that nuclear power is the cheapest available generating technology over the lifetime of a plant, at an average of £74 per MWh. The Department of Energy and Climate Change estimates that projects starting in 2018 will generate energy for £64 per MWh. The range of possible costs is also the smallest for any generation type.
As I have said, the advantages of nuclear will be more than just economic—other advantages include the stability and security of supply. We will not be dependent on the wind or the sun, and nor will we need to rely on overseas places that might turn off the supply of oil, coal or gas. On the point eloquently made by my hon. Friend the Member for Warrington South, carbon emissions are low for nuclear power plants—they emit 18 times less carbon over their lifetimes than coal-fired plants.
The hon. Member for Cheltenham referred to projects in France and Finland, but he should congratulate the Office for Nuclear Regulation on its thorough work on the Nuclear Decommissioning Authority. I understand that in France the design was not completely nailed down and permission was given more quickly than would have happened in this country. I am confident that there will be less opportunity for things to go wrong here. We have reduced the risk of the construction price, even if it has taken longer to get to this point. Hon. Members have discussed Centrica. I am not surprised, because the matter was trailed some time ago. It is a passive investor in the project, so I am not surprised that funds are being used elsewhere.
I am sure hon. Members from Cumbria share my disappointment that the county council overrode the district councils’ views, which supported the site. However, community benefits are important—rightly, because communities put up with disruption during the construction of nuclear power plants. I will not go into all the details of potential benefits for my constituency. There will be jobs, but there will also be significant disruption. It is important that my constituents are catered for and that the disruption is minimised, which is difficult. I am sure many hon. Members would agree with the idea of giving free electricity to people within a certain range of the nuclear power station, as happens in France. I am sure such a measure would be popular in parts of Suffolk.
There is a lot going for new nuclear. We have not rushed; no one can say we rushed the negotiations, which are ongoing. There would be more hon. Members in the Chamber, but the Energy Bill Committee is sitting. It is right that the Government are taking their time to ensure that the deal with EDF and other energy suppliers is balanced so that the taxpayer is not saddled with an unfair deal.
I commend the Government for the scrutiny they have proposed for contracts for difference. I mentioned the Bill and the parliamentary process. The Government have committed to putting the contracts to the House before and after Royal Assent. They will commission an external, independent view of the contracts and publish a summary of the report, plus a value-for-money assessment and a fairness opinion. The process is not rushed or opaque. I recommend that Members oppose the motion, but I will not press it to a Division.
Simon Hughes (Bermondsey and Old Southwark) (LD)
I am very glad to have a few minutes to make a contribution to the debate. I apologise to you, Mr Deputy Speaker, and to hon. Members because I could not be here at the beginning of the debate. I had made a prior commitment to a constituency engagement in a primary school ahead of Chinese new year.
I was brought up on the Welsh side of my family in north Wales. In the ’50s, ’60s and ’70s, nuclear power became popular in north Wales, because there was a power station to be built, which produced jobs in Meirionnydd that would not otherwise have existed. The power station gave both construction and nuclear power employment. I therefore understand why colleagues who have nuclear power stations in or near their constituencies become advocates for the cause. The hon. Member for Newport West (Paul Flynn) made that case adequately.
I also understand the scientific appeal of modern nuclear technology. I looked around Sizewell before it was finished—it was the last reactor to be built. It was fantastically interesting, and I am excited by such modern technology. However, since I have been a Member of the House, every time the Liberal party and the Liberal Democrats reviewed energy policy, we have consistently concluded that there are very strong reasons for not going down the nuclear road. That is not for theological reasons but for rational reasons, which, in my view, are as strong now as ever.
Simon Hughes
I do not accept that. I was the Liberal Democrat shadow Secretary of State for Energy and Climate Change in the previous Parliament—the right hon. Member for Don Valley (Caroline Flint) is now the Labour shadow Secretary of State. I therefore did not just speak in debates in the House but went round the country to look at offshore and onshore wind sites, the nuclear industry and so on. I am very clear that the Liberal Democrats have been enthusiastic supporters of both onshore and offshore wind power, and of tidal and solar power. The reality is that if we had had an integrated EU energy policy a long time ago that harnessed hydroelectric power from Scandinavia, solar power from the Mediterranean and other power sources—not least from countries such as Ireland and our own with fantastic wind and wave power—we would probably not be having this debate, because there would have been no question of going down the nuclear road as we would have our own energy sources shared around the continent. However, because we are not there, we import energy from abroad. We are having a debate about how to become self-reliant, and nuclear energy is back on the table.
The arguments for not going down the nuclear road are that it is hugely expensive and whatever the future might hold the past shows that nuclear power programmes have not been delivered on time or on budget around the world. Secondly, it has never been proved that we can deal with the waste in a secure and safe way indefinitely. There may be adequate, secure ways of holding waste in the short term, but there is no scientific evidence that there is a permanent way to ensure that waste can be held and then disposed of. One reason why the debate in Cumbria the other day went the way it did was that people have not been persuaded, even in areas where it brings a lot of jobs, that this is the sort of industry they want.
Mark Tami
I do not know whether the right hon. Gentleman has been to Finland, but it has a waste solution that works. The problem is that those who are opposed to new nuclear build cling to the idea that there is no solution on waste, because they know that if they lose that argument, their case is lost.
Simon Hughes
I have been to Finland, though not to look at the waste issue. When I was party spokesperson, I went to Sellafield and had tours of the site. I am very happy to go to Finland again.
I was making the point that there are three strong arguments. I have made the arguments that on cost and on safety in the long term, nuclear does not work. Thirdly, it is the most depersonalised form of power in the world—there is no community control. It becomes the plaything and business of the few, rather than the energy of the many. It is not something that a community, village, town, city, region or country can control, but something that is developed and run internationally. We need to have control of our power sources, and the best way to achieve that is through renewables and energy that we produce and control ourselves.
The debate is about what we do now and what we ask the Government to do. The Secretary of State for Energy and Climate Change, who has been a friend of mine for many years, has an important responsibility. Our party kept its anti-nuclear position right up to the general election, and it was in our manifesto. When we negotiated the coalition agreement with the Tory party, which is pro-nuclear, with a few dissenters, obviously we had to come to a deal. We would have had to have the same conversation in negotiations with the Labour party, because it is overwhelmingly pro-nuclear too. It would not have been any different; it would have been the same. I guess that we would have had the same outcome and retained our anti-nuclear position as a party. The deal we were willing to do in Government was that we would let it go ahead if it was needed, provided there was no subsidy. When we voted on the plan there was, as my hon. Friend the Member for Cheltenham (Martin Horwood) said, an opt-out clause for Liberal Democrats and we did not vote in favour of the plan that included nuclear. The big question therefore remains: what is a subsidy?
Paul Flynn
Can we anticipate another principled stand by the Liberal Democrats, like the one they took on boundaries, to oppose any subsidy on nuclear power?
Simon Hughes
The hon. Gentleman is being mischievous. He and I are on the same side in this argument, so he should love and care for his friends, and not seek to be rude. Indeed, the Welsh Labour party was desperately pleased that the new boundaries did not go through, so let us have a little less of the attack on us.
We have our position that we negotiated in the coalition agreement; that is fine and we will deliver on it. However, my job and that of my hon. Friend the Member for Cheltenham is to hold my right hon. Friend the Minister, the Department and the Government to account. That is why we need to nail what is currently going on and stop—either in the Energy Bill, which is in Committee and will be coming back here, or elsewhere—any mechanism whereby power is given to Ministers to do deals with companies such as EDF that could produce the sort of hidden subsidy mentioned by the hon. Member for Newport West.
The hon. Gentleman referred to Professor Tom Burke, who is a friend and constituent of mine, and I had a long and up-to-date conversation with him on this issue only this weekend. I am clear that the figures cited by the hon. Gentleman are the figures we are talking about. The reality is that if the strike price is £100 per megawatt and there is a 30-year contract life, that would be a subsidy of £1 billion a year above today’s wholesale price for electricity. That would be £30 billion to EDF from Britain’s householders and businesses—the very people we are trying to protect from high energy bills. If the whole of the 16 GW nuclear energy currently planned by the Government were financed on similar terms, that figure would be £150 billion by 2050.
Somebody asked—I cannot remember who it was; I think it was my hon. Friend the Member for Cheltenham —whether there had ever been any suggestion of such a large amount of money going through without scrutiny. The answer, as you will know as well as anybody, Mr Deputy Speaker, is that in this place we have often authorised huge amounts of expenditure with no debate. Indeed, when my right hon. Friend the Minister was a spokesman on Treasury matters for the Liberal Democrats he used to complain that we would spend lots of time debating taxation, but almost no time debating spend. Consolidated Fund Bills relating to billions of pounds of expenditure would go through with no debate at all. We are trying to say that we should stop and check now because we believe there is a danger of a really big subsidy being agreed under the table, as it were, in terms of parliamentary transparency, that we cannot then pull out of or unscramble.
David Mowat
We have established that this technology is more expensive than coal, but it is not more expensive than other carbon-free types of technology. In the view of the right hon. Gentleman, is the price for carbon a subsidy? He seems to be implying that it is.
Simon Hughes
That is exactly the debate we are engaged in. What are subsidies and what are equal subsidies? When we agreed that there should be no subsidies for nuclear power in the coalition agreement, which is the programme for the Government, my understanding was that that did not mean that we would define subsidy differently. The agreement said no subsidy for nuclear power. The Government have to take a different view, if they wish to, on whether they want to subsidise any other form of power and renewable energy. In the past, we have subsidised renewables to get them off the ground and get the market going. We do not believe there is any justification for subsidising the nuclear industry. Irrespective of the carbon price, the European debate and what we do with other elements of the energy industry, we say that the deal between the parties in the coalition clearly states no subsidy.
The call is for the Government to understand that, but the call today is to ensure that my right hon. Friend the Minister, on behalf of the Government, gives an undertaking that there will be independent scrutiny of this whole exercise before the Government make any commitment without parliamentary assent. Our constituents do not want to be locked in to a nuclear industry indefinitely at great expense. We have a responsibility to make sure that that does not happen.
Caroline Flint (Don Valley) (Lab)
I congratulate hon. Members on securing this debate. Even if we hold different views, it is important that we find time to debate the role of nuclear power in our energy mix. I think we have heard nine speeches in this short debate so far, and all of them, in their different ways, were reasonable contributions.
At the outset, I will make my position clear: we strongly support and are absolutely committed to new nuclear build in Britain. In our view, the challenge of climate change is so great that there will be a role for new nuclear power in our energy supply in the future, alongside an expansion of renewable energy and, we hope, investment in carbon capture and storage. Let me set out why we support nuclear power, what assurances we are seeking from the Government and the nuclear industry for future nuclear build, and why we will not be supporting the motion before us.
I have always been clear that an effective energy policy must meet three criteria: it must be secure, it must be low-carbon and consistent with our climate change obligations, and it must be affordable. Let me start with security. Today, nuclear power accounts for about one sixth of the electricity we generate. In the next 20 years, however, all Britain’s remaining nuclear power stations are scheduled to close. Of course we support energy efficiency measures to reduce demand, and we look forward to the Government bringing forward proposals in the Energy Bill. However, even if demand does not increase, which seems unlikely, we will still need new electricity generation to replace power plants as they close.
Unless we replace Britain’s nuclear power stations as they come offline, we will leave a significant gap in our electricity generation capacity. As for what we replace them with, my view is that the best way to secure our energy supply is to encourage a diversified mix of generating technologies. A diverse energy supply makes the system more resilient and reduces the risk of interruptions or sudden, large spikes in electricity prices. Not allowing energy companies to invest in new nuclear power stations would increase our dependence on fewer technologies and expose the UK’s energy supply to risk.
Clearly a secure energy supply must also be safe. Every Government have the responsibility to remain vigilant and ensure that our regulatory regime in the nuclear industry is robust. Although there is no room for complacency, I draw the House’s attention to the Weightman report, which was published after the Fukushima disaster in Japan. Dr Weightman was tasked with investigating the implications for nuclear safety in the UK. He found no fundamental weaknesses in the current licensing regime or safety principle, and concluded that there were no grounds to restrict UK nuclear reactors or stop building new ones. On that basis, we believe that investing in nuclear power supports the security of our energy supply.
Paul Flynn
Does my right hon. Friend recall that Dr Weightman was expressly forbidden from considering the costs of Fukushima, which—it is quoted—could have been an extra £2 billion for one new reactor? Today’s debate has been about costs. Surely we cannot rely on Weightman for that.
Caroline Flint
I was talking about safety, but I will come to costs later. It was absolutely right for the Government to commission that report. Regardless of that report, however, I believe we should always be vigilant and not complacent. I feel assured that we in the UK can be justly proud of the regulatory system, the way it operates and our safety record.
Let me turn to our climate change obligation. Based on the significant evidence available, the life-cycle carbon emissions from nuclear power stations are significantly lower than for fossil-fuel generation and about the same as for electricity generated from wind. Investing in new nuclear is therefore consistent with decarbonising the power sector by 2030 and reducing our carbon emissions by 80% by 2050. No one would pretend that new nuclear alone can solve climate change; equally, no one should deny that new nuclear power stations could make a significant contribution to tackling it. By way of illustration, if our existing nuclear power stations were all replaced with fossil fuel-fired powered stations, our emissions would be anywhere between 8 million and 16 million tonnes of carbon a year higher as result. As I have said, investing in new nuclear should come not at the expense of demand reduction or investment in other clean energy, but alongside it.
Let me turn to affordability. There has been much speculation about the strike price that the Government will agree for new nuclear developments. Obviously I am not privy to the Government’s negotiations, which are ongoing. Estimates of the future costs of generation from technology are often uncertain and vary widely. However, according to the most up-to-date research commissioned by the Government, when we take into account the lifetime levelised costs of the various sources of energy and the up-front capital, fuel, maintenance, decommissioning and waste costs, the latest estimate still has nuclear as the cheapest of the various clean technologies. At a time when energy bills stand at a record high of more than £1,400, we must secure and decarbonise our power supply in the most cost-effective way possible. On the basis of the information we have today, I do not see how we can do that without investing in new nuclear.
Having set out in broad terms why we support new nuclear, let me say a word about what, in return for that investment, we should expect of the nuclear industry and ask of Government. First, new nuclear build has the potential to contribute to economic growth and job creation—a point eloquently expressed by my hon. Friend the Member for Hartlepool (Mr Wright)—but developers have a responsibility to support young people into work and provide them with the skills and training that will allow them to progress in a career in the nuclear industry. Secondly, I can assure the House that we take the issue of waste seriously and understand that the public are rightly concerned about it. As we established in the Energy Act 2008, and in the light of the Public Accounts Committee report on Sellafield, which was published on Monday, operators of new nuclear power stations must meet the full costs of decommissioning and their full share of waste management costs, not leave taxpayers to foot the bill.
Thirdly—and perhaps most topically, given that the Energy Bill is being debated in Committee as we speak—the process for agreeing contracts for difference for new nuclear must be robust and transparent and deliver value for money for consumers. We support new nuclear power, but it is for energy companies, not the Government, to fund, develop and build new nuclear power stations. The development of new nuclear capacity must happen without Government subsidy. Having looked carefully at the proposals for contracts for difference in the Energy Bill—which do not involve any direct transfer of Government money to nuclear generators or provide nuclear power with any support that is not also available to other forms of clean energy—I am satisfied that that is the case. Also, in the event of the market price being higher than the price that nuclear generators have agreed with the Government, generators must pay back the difference.
However, there is a role for the Government in ensuring that we as a country attract the investment we need to keep the lights on, cut our carbon emissions and keep the cost of electricity as low as possible. That means that safeguards must be put in place to ensure that bill payers—who will ultimately be funding this investment—get value for money. I do not think the proposal in today’s motion is the best way of achieving that; however, I do think there are issues that Ministers should address before the Energy Bill returns to the Chamber on Report. From the exchanges at Energy and Climate Change questions last week and from the points my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) has made in Committee, the Secretary of State knows what improvements Labour would like to see.
We would like the investment contracts that are agreed to be laid before Parliament within three days of being entered into. We would like provisions to ensure that any change to investment contracts are published and subject to proper scrutiny. We would also like greater protection to ensure that if construction costs are lower than those projected, a compensatory mechanism will ensure that the strike price reflects a fair return to the company, but also a fair deal for bill payers. I think those are all fair points. From what the chief executive of EDF said when he appeared before the Energy Bill Committee, I think he regards them as legitimate concerns too. With an eye to what we might inherit in 2015, I hope the Secretary of State will consider those ideas and amendments in the constructive spirit in which they are made.
In summary, we recognise that new nuclear power cannot be a one-way thing, where energy companies get the necessary planning permission and price agreement from the Government without offering something in return that benefits the local community where the plant is built, as well as the wider economy. However, I am pleased to have the opportunity today to reaffirm the position of Her Majesty’s Opposition and put it firmly on the record that we believe that nuclear power will have an important role to play as part of a more balanced, secure and low-carbon energy supply for the future.
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
I am grateful to the Backbench Business Committee for the opportunity to set out the coalition Government’s policy on new nuclear power. This has been a well- informed and constructive debate. A wide variety of views have been expressed, so let me start by putting my views on the table and setting out how I see the political reality of nuclear power and policy.
Notwithstanding some of the sentiments expressed today against nuclear power, the coalition Government policy on nuclear power enjoys wide agreement in this House, as we heard from the right hon. Member for Don Valley (Caroline Flint) just now. The national policy statement for energy infrastructure on nuclear power generation, which was debated in the House on 18 July 2011, detailed the case and the need for new nuclear power stations in the UK. It set out how a new generation of nuclear power stations are a key part of our future low-carbon energy mix, tackling climate change and helping to diversify our supply, contributing to the UK’s energy security. That policy statement passed with only 14 votes against. Both the Conservative party and the Labour party are in favour of new nuclear power. That makes for a majority in this House of 450-plus.
The reality of the overwhelming support in Parliament for nuclear power is reflected in the coalition agreement, as set out by my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes). We have implemented a process allowing Liberal Democrat MPs to maintain opposition to nuclear power, while permitting the Government to put in place the requirements for new nuclear construction. I completely respect those who have long been opposed to nuclear technology on principle. I have had my concerns in the past, as the record shows, but I am now satisfied that the safety and legacy issues are manageable. My remaining concern—this has always been my principle concern—is about the cost of new nuclear. I will deal with that later in my speech.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. As a matter of courtesy, after walking into the Chamber Members usually sit for a little bit longer than the hon. Lady has before intervening. I know she has a keen interest in this issue and that the Secretary of State has given way, but I hope she will not intervene again.
Caroline Lucas
It is very kind of the Secretary of State to give way. The Under-Secretary of State for Health, the hon. Member for Broxtowe (Anna Soubry) will testify to the fact that that we were both on a late train. I apologise.
The Secretary of State is right to say that the majority of the House is in favour of nuclear power, but this motion is not about nuclear power per se; it is about public subsidies, and I am not sure that a majority is in favour of the huge subsidies that will go to nuclear power.
Mr Davey
I am grateful to the hon. Lady and am glad that her train arrived. I will deal with the issue of subsidy later.
I urge the hon. Lady and, indeed, all colleagues to consider that the environmental case for new nuclear has got stronger in the past decade or more. I am one of those from the green movement who have been prepared to recognise the low carbon benefits of nuclear generation, which remain even when life-cycle analysis of carbon for a new nuclear station is taken into account. I believe that nuclear, alongside ambitious energy efficiency, renewables and carbon abatement, can play an important role in reducing greenhouse gas emissions.
Nuclear’s cost-effectiveness has to be seen in the context of climate change and decarbonising our power sector. It is right that this House asks the tough questions on the affordability, value for money and cost-effectiveness of nuclear power, for those questions are at the heart of this Government’s policy on nuclear power.
Before I turn to the key issue of the cost of nuclear and of subsidies, let me briefly address recent issues affecting nuclear policy and this debate. The first is GDF—the geological disposal facility for nuclear waste—and what will happen after the recent vote in Cumbria. It was the priority of the previous Government, as it is of this Government, to ensure the safe management of nuclear waste. Britain has a huge legacy of nuclear material to store and dispose of, whether or not we build a single new nuclear reactor. As we develop our new nuclear build programme, it is right that we press ahead with tackling that legacy. I believe that geological disposal is the right policy for the long-term safe and secure management of higher-activity radioactive waste.
Indeed, what happened in Cumbria convinced me even more so, for both Copeland and Allerdale councils voted to participate in the next phase of the work to identify potential sites for geological disposal. The communities that were most likely to host the facility wanted it. However, the Government agreed that Cumbria county council also needed to vote in favour in order to proceed to the next stage, but it did not, which is disappointing. However, the invitation for communities to come forward remains open.
This is a long-term programme, looking at the next century and beyond, to site and build a geological disposal facility. The views in Copeland and Allerdale make me confident that the programme will ultimately be successful. Last week’s decision does not undermine the prospects for new nuclear power stations, but it does require us to redouble efforts to find a safe, secure and permanent site for disposal.
Albert Owen
The Secretary of State is right to say that we need to deal with the legacy waste now. In fact, we should have done so generations ago. Does he also agree that all parties in this House have a responsibility to contribute to that debate, including the Green party, which I know has concerns about it? Much of this waste is not civil nuclear; as I said in an earlier intervention, defence and health projects contribute to some of it. We need to dispose of it safely and quickly.
Mr Davey
No, I want to make some progress.
On new build, is it is for energy companies themselves to construct, operate and decommission power stations. Industry has set out plans to develop about 16 GW of new nuclear capacity in the UK. This level of new build equates to some £60 billion of new investment, with up to 19,000 jobs created at peak construction, benefiting the communities directly concerned and driving growth right through the supply chain. We want to make the UK a leading destination for investment in new nuclear, which will play a key role in our future energy mix.
We welcome EDF Energy’s continued commitment and determination to take forward the Hinkley Point C project. Centrica’s decision to withdraw from the consortium reflects that company’s investment priorities and is not a reflection on UK Government policy. Indeed, the recent purchase of Horizon Nuclear Power by Hitachi is clear evidence of the attractiveness of the new nuclear market in the UK.
On subsidy, there has been understandable concern about how the programme for new nuclear power will be paid for. After all, expensive mistakes have been made in the past. I welcome this opportunity to explain the no-subsidy policy in the context of electricity market reform.
This far-reaching reform of the UK electricity market will encourage investment in low-carbon electricity generation, which is critical to tackling climate change and meeting our legally binding carbon targets. Electricity market reform is the most transparent and most market-based means of bringing forward the transition to a low-carbon economy. Under EMR, as set out to Parliament in October 2010, new nuclear will receive no levy, direct payment or market support for electricity supplied or capacity provided, unless similar support is also made available more widely to other types of generation.
By similar, we do not mean the same. Whether similar support is being provided must take account of the material circumstances. It is not a mechanical exercise; it is a matter of sensible judgment. It is obvious that the characteristics of a small onshore wind farm are very different from those of a large offshore wind farm and, indeed, those of a nuclear plant. The obvious example is that an offshore wind turbine is expected to last for about 25 years, while a new nuclear power station could potentially generate electricity for more than 60 years. Nuclear energy would provide base-load generation, whereas other forms of low-carbon electricity would be intermittent. These different characteristics are likely to require differences in the support provided under our electricity market reform.
A key element of EMR is contracts for difference, as my hon. Friend the Member for Cheltenham (Martin Horwood) rightly pointed out in his speech. Contracts for difference have been designed to stimulate investment in all forms of low-carbon generation, including renewables, nuclear and carbon capture and storage. They provide a stable price for operators to encourage investment, making it easier and cheaper to secure finance for low carbon.
The key point is that we recognise that CFDs significantly reduce risks to developers and incentivises investment in low carbon. It is right that new nuclear power will be entitled to benefit from Energy Bill measures such as contracts for difference and investment contracts.
Paul Flynn
I have a simple question. Is the Secretary of State able to provide an assurance that there will be no subsidies to nuclear power without the full knowledge and consent of this House?
Mr Davey
I am trying to explain our policy on no subsidy, but the hon. Gentleman interrupted me. If he will listen, the position is being put on the record in a way that I have never had a chance to do before.
Our aim is for a broadly standardised approach to contracts for difference that will allow for comparability between technologies and the introduction of competition for CFDs. I do not think that what is needed is a line-by-line comparison of the terms of each contract. That is not what our policy says or requires. In fact, there are likely to be variations in CFD designs between one technology and another, and perhaps also between different projects within the same technology. What is important is that the terms agreed deliver a similar result across technologies and projects, and that they result in a proper allocation of risk. In addition, each contract will need to deliver value for money for the consumer and be compatible with state-aid rules. A contract with a nuclear developer that does those things would be compatible with our no-subsidy policy.
Let me be clear—this is not about getting a deal at any price. We have put in place rigorous processes to ensure that any contract for Hinkley Point C, the most advanced nuclear project, represents the best possible deal for consumers. We are also committed to transparency with regard to any contracts for new nuclear—more transparency on nuclear than this House has ever seen. Under the Energy Bill, all investment contracts must be published and laid before Parliament. We have commissioned expert technical and financial advisers to conduct open-book scrutiny on the developer’s project plans and costs, and we will also publish a summary of the reports from our external advisers and our value-for-money appraisal for Hinkley Point C. Hon. and right hon. Members will be able to see the evidence and judge for themselves.
Tessa Munt
Will the Secretary of State clarify a point for me? I understand that, in chapter 5 of the Energy Bill, a single sentence gives effect to schedule 3 of the legislation and that it has been drafted with intentional obscurity to give the Secretary of State the power to make an agreement with the generator to purchase electricity at a fixed price, as well as the power to vary the price that has been set in the contract and to keep secret any details of the price except the reference price and the strike price.
Mr Davey
I might have to write to my hon. Friend about the note on schedule 3 to the Bill. I would say to her that we are being very open and transparent about the approach, as she has previously recognised.
Nuclear power remains a key part of the Government’s strategy for transition to a low carbon future. I recognise the strong concerns that have been expressed about affordability; I share them. That is why this is not a deal at any price. Nuclear power must be affordable and must offer value for money. We have a huge challenge ahead of us. We need to replace a fifth of our power generation in this country in this decade. We need to decarbonise our electricity sector to meet our emissions targets and our responsibilities to the next generation. We are embarked on the largest infrastructure programme in Government, with £110 billion of investment over 10 years. Are there risks? Of course, but the risks to the country and to the planet if we do not meet this challenge are infinitely worse. Affordable, low carbon new nuclear is just one part of the answer, but let the House be in no doubt that it is part of the answer.
Martin Horwood
This has been a tremendous debate and we have aired some important issues about the phenomenal subsidy that might be on the point of being given to Électricité de France. The hon. Member for Hartlepool (Mr Wright) made some important points. We do not agree on much on nuclear policy, but at least he was honest in making a straightforward request for public subsidy. The hon. Member for Newport West (Paul Flynn) and my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) made a powerful case about the sheer scale of the subsidy. We could be talking about £30 billion being transferred over 30 years to Électricité de France, not from the Department, as the hon. Member for Suffolk Coastal (Dr Coffey) seemed to think, but from British householders and businesses. That is an extraordinary level of transfer to be committing to without any real scrutiny.
The Chair of the Public Accounts Committee, the right hon. Member for Barking (Margaret Hodge), and the Chair of the Environmental Audit Committee, the hon. Member for Stoke-on-Trent North (Joan Walley), also made a powerful case for greater scrutiny of that process. I think that those on the Labour Front Bench were going in that direction, although the request that details of the deal should be laid within three days of the event is not much of an improvement on their being laid months later. A miss is as good as a mile, I am afraid.
The hon. Member for Hove (Mike Weatherley) talked about the other hidden subsidies as well as the contracts for difference. They include the unknown liabilities relating to geological storage and disposal, and the £1.2 billion cap on the liability for nuclear accidents when the actual cost of the Fukushima nuclear accident was $250 billion or more. We can say that we have a very good safety record and that we have never had a nuclear accident, but that is what Japan could have said, the day before Fukushima, and it is one of the most technologically advanced countries on the planet.
In the light of some of the technical issues raised by the Chair of the Public Accounts Committee relating to the motion, and of the interest in the next debate on emergency medicine—which I share, as my own emergency department is at some risk—I am content to ask leave to withdraw the motion. I would like to put on record my gratitude for the support of the hon. Members for Hove, for Brighton, Pavilion (Caroline Lucas) and for Newport West, my hon. Friend the Member for Wells (Tessa Munt), my right hon. Friends the Members for Bermondsey and Old Southwark and for Hazel Grove (Andrew Stunell), my hon. Friend the Member for St Ives (Andrew George) and other hon. Members who could not be here today. There will be opportunities as the Energy Bill progresses to revisit these important issues relating to the public subsidy of nuclear power, which have not received sufficient scrutiny and attention, but we have made enormous progress on that front today. I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.