Wylfa Nuclear Power Project: Taxpayer Liability for Safety

(Limited Text - Ministerial Extracts only)

Tuesday 24th July 2018 Westminster Hall

[Albert Owen (Ynys Môn) (Lab)]

It is always a pleasure to serve under your chairmanship, Mr Robertson. On this last day of term, I welcome the opportunity to highlight the benefits to the economy of new nuclear power and low-cost carbon, and also to promote Wylfa Newydd, which is in my constituency. The hon. Member for Kilmarnock and Loudoun (Alan Brown) did not notify me that he would discuss it; I saw it on the Order Paper. I think it is custom to do so, but I will let it go for now, because I will have the opportunity to deal with many of the issues that he raises.

I recently wrote a booklet, called “Resetting the Energy Button”, for a number of reasons. Its purpose is to show how my constituency, the Isle of Anglesey, can play a major role in the move forward towards a low-carbon economy. Ynys Môn has a proud history of electricity generation. It has the natural resources, it has an experienced workforce and it very much mirrors the British Isles.

[The Minister for Energy and Clean Growth (Claire Perry)]

Will the hon. Gentleman be so kind as to send me a copy of his booklet? I am in need of some good holiday reading for the summer.

[Albert Owen]

Absolutely. In fact, I will also send one to the Chair, because I know that he is interested in this subject. Indeed, I should send some to the entire Scottish National party group in the House. I will do that over the summer. That is a promise.

Many energy developers have recognised the potential of the Isle of Anglesey to contribute to this major investment not just in new nuclear, but in marine energy and other technologies. You will know, Mr Robertson, from the time that we have spent together in the House that I am pro-renewables, pro-nuclear and pro-energy efficiency. I see no contradiction in that: I think that all three are needed if we are to meet our climate change goals and reduce emissions.

In the decade from 2001—when I entered the House—to 2011, the House of Commons was moving towards consensus on this issue. That was important. I accept that it was not universal, but there was a view that we needed a rich and diverse energy mix and that new nuclear was part of that mix. I was very proud to vote for the Bill that became the Climate Change Act 2008, because that was very pioneering of the UK; we were the first nation to introduce such a law. However, to achieve the objective, we need rich, diverse energy. We need base-load, and I will argue with the hon. Member for Kilmarnock and Loudoun that nuclear does provide base-load. He talks about offline, but this is factored in. Base-load is important, as is the intermittent status of renewables and, in particular, wind. He talks about figures, but I point out to him that we have had a very hot period over the last 28 days, and wind energy, offshore wind, contributed just 3% for that period. The rest came from base-load such as nuclear; the nuclear percentage went up in that period. I am therefore arguing convincingly for both—that we have the intermittent energy that we need in hot periods, but also, when we have cold periods, that we have the full load that is provided by nuclear and renewables. We need that balance.

New safe nuclear generation started in my constituency in 1963. Indeed, my father worked on the construction of the first Wylfa power station. The hon. Member for Kilmarnock and Loudoun had family who were in the nuclear industry: he told us in a previous debate that his brother-in-law was. Many families, across the United Kingdom, have benefited from the high-skilled, long-term employment opportunities that nuclear offers. The nuclear power station in my area was opened in 1971 and it produced up until the date of closure, which initially was 2010; that was extended to 2015. We are talking about 44 years of generation. I mention the jobs issue, because many of my peers at school left school and worked in the nuclear industry at Wylfa for all their working lives. Very few other industries can offer the longevity of employment and quality of jobs that nuclear brings; indeed, jobs for life are very rare.

Construction jobs are also important. In the move forward to Wylfa B or Wylfa Newydd, as it is correctly known now, we see an important uptake of skills for nuclear engineers and apprentices, and many people are training for the construction jobs—plastering, building, welding and so on. That is hugely important for areas on the periphery of the United Kingdom, such as at Wylfa in my constituency and, indeed, in Scotland. Scotland has benefited from nuclear over many years and still does today; £1 billion of gross value added comes from the nuclear sector—the two power stations. I believe—I will take an intervention if I am wrong on this—that the life of the two nuclear power stations has been extended by the SNP Government. Safe generation of nuclear energy is hugely important in Scotland, Wales and England. If we did not have it, we would be importing nuclear at this time of year either from England into Scotland or from France into the United Kingdom.

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[The Minister for Energy and Clean Growth (Claire Perry)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Robertson. While I have the floor, may I take a moment to thank the Clerks and those who work so hard across the House of Commons to ensure that these debates take place? I particularly thank the Hansard reporters who are a miracle of accuracy, regardless of the quality of the debate—I just wanted to put that on the record before we go off on our summer holidays, although as we know, none of us are going on holiday; we will all be working hard in our constituencies.

I thank the hon. Member for Kilmarnock and Loudoun (Alan Brown) for securing this debate. We have had important conversations today, including two very stirring speeches from the hon. Members for Ynys Môn (Albert Owen) and for Glasgow North East (Mr Sweeney). I could not have made the case better myself—I will not try to, because Members probably do not want to hear me talking about that—but a point was made about having an energy supply that is diverse, strong, reliable, low cost for consumers, low carbon and, crucially, able to create innovation for reinvestment in the UK and for export.

I pay tribute to the long experience of the hon. Member for Glasgow North East in the shipyard. As he will know, if we had thought more about export potential when making some industrial decisions in the past, we would not have lost those high-skilled jobs. To reassure him, I was at the Cammell Laird shipyard two weeks ago to help to launch Boaty McBoatface. It was wonderful to see what £200 million of Government investment in polar research has delivered for that shipyard—thousands of jobs have been created and it has been able to bid for large-scale projects again. I enjoyed the speeches.

I will try to address the specific questions about safety, incidents and long-term liabilities. The hon. Member for Ynys Môn made a powerful case about our heritage. We should all be proud that we are leaders in the global civilian nuclear community in terms of safety and regulation, which we have built up extremely well over the years.

In this country, we do not set energy policy on the basis of ideology but on the basis of the test that I have discussed, so we will not make the mistakes of countries such as Germany. Last year, I was at the Conference of the Parties in Bonn to debate climate change, and barges of brown coal were sailing past the COP site—putting two fingers up to those who believe in reducing emissions and getting coal off the grid.

We all like to look at our apps, and there is an excellent one that tells us about the energy mix in the last 24 hours. We have burned no coal, which is excellent, and we used a bit of wind, which made up about 6% of the energy supply. Of the rest, 25% was from nuclear, 50% was from combined-cycle gas plants, some was from biomass and some was from interconnectors.

[Mr Sweeney]

Last year, for the first time since industrialisation, the country did not burn coal for energy generation, which was a huge milestone. The Minister talks about the huge industrial benefits and the benefits to the wider economy. Does she also recognise the benefits of the nuclear advanced manufacturing research centre in Rotherham, which has re-established large-scale casting capabilities in Sheffield—an industrial capability that had been lost in the UK?

[Claire Perry]

The hon. Gentleman is absolutely right. I will make reference to the nuclear sector deal that invests in the small modular reactor technology that he talked about and that engages with the industry and its supply chain by investing in innovation and skills and by thinking about what we can generate and export in the UK. I also pay tribute to the organisation that he mentioned.

[Alan Brown]

The Minister quoted the figure that 25% of electricity generated in the last 24 hours was from nuclear. In 2016, on average, nuclear supplied 21% of the energy mix, so 25% is not a huge variation and does not demonstrate the massive reliance that would mean we need to have nuclear forever.

[Claire Perry]

The hon. Gentleman and I know, because we form a holy trinity of debating on energy matters with my friend, the hon. Member for Southampton, Test (Dr Whitehead), that we all look forward to that 100% renewable future, but the problems of intermittency and storage will not be solved in the near term. We will not make ideological decisions that will put up costs and restrict energy supply if we do not have to—and we do not have to, because we have one of the best and most diverse energy mixes in the world.

[Albert Owen]

The figures that the Minister mentioned put gas at 50%. The big challenge is getting rid of gas boilers, which are in most houses. Moving to electricity will require a base-load from somewhere other than gas, which could well be nuclear.

[Claire Perry]

The hon. Gentleman is right, but we should start from where we are on energy policy. There is a role for further decarbonising gas to keep it in the mix, which is why I am keen to investigate, using excellent environmental standards, the potential contribution of onshore shale gas. [Interruption.] He is chuntering; he may not agree.

We have an independent regulator, the Office for Nuclear Regulation, which has scrutinised the proposed reactor design for Wylfa. The design has received design acceptance, which means that all regulators are satisfied that the reactor meets the regulatory expectations on safety, security and environmental protection at this stage of the process.

The hon. Member for Southampton, Test invited me to talk about the media reports—he is doing better than I am if he is reading the Japanese newspapers. I reassure him that any operator in the UK is required to obtain insurance to fulfil their financial responsibilities in the event of an accident, and as he referenced, international treaties, such as the Paris and Brussels conventions, provide the framework for the management of nuclear liability in the UK.

This deal will be no different. I emphasise that we are still going into negotiations and having conversations—we have not done the deal yet—but we are absolutely clear about the commitment to insurance for any form of accident. Not putting decommissioning liabilities on the taxpayer, as the hon. Member for Ynys Môn pointed out, is also part of those calculations. I agree with him that we did not think hard enough about that in the past; successive Governments had not worked out how to include those liabilities. We have learned, however, and we are moving forward with that.

Before the reactor can be built and operated, it will need a nuclear site licence. Wylfa will also always be subject to environmental permitting through Natural Resources Wales. A development consent order process that will run under the Planning Act 2008 will scrutinise the construction and operation proposals for the project.

The Energy Act 2008, passed by the Labour Government, introduced the funded decommissioning programme that moved the dial on who pays for decommissioning liabilities. It is now the case that all operators of new nuclear power stations are legally required to have secure financing arrangements in place to meet their full share of the costs of decommissioning and of waste management and disposal. We are absolutely committed to managing radioactive waste safely, responsibly and cost-effectively for the long term, but also to looking at other opportunities to reprocess some of that waste, as the hon. Member for Glasgow North East said. We will not repeat past mistakes where the taxpayer had to foot the bill for decommissioning.

There were some questions about liability in the event of an accident. I am happy to say that the last significant incident was the Windscale fire in 1957, and we are light years away from that plant in terms of nuclear operating technology and the safety regime that we operate. The Nuclear Installations Act 1965 makes the insurance that I mentioned a requirement, without which operators cannot operate. As the hon. Member for Southampton, Test mentioned, we also have legislation based on the Paris and Brussels conventions. If the total cost of claims ever exceeded €1.2 billion, a further €300 million would be provided by all contracting parties to the Brussels supplementary convention. Any further claims above that total would be met at Parliament’s discretion.

The only liability-based agreement with Hinkley Point relates to insurance failure, and the Government will provide an insurance product in the event that one cannot be obtained on the market. I am not in a position to comment on what might be the case with Wylfa, but I emphasise that the operator of the plant at Wylfa will have the same obligations as all other nuclear power stations and installations in the UK, and will be required to fulfil those obligations in the event of an incident.

Hon. Members have asked about what happens with the Brexit negotiations. Nuclear safety is and always will be our top priority. We will continue to apply the international standards on nuclear safety specified by the International Atomic Energy Agency irrespective of our future relationship with Euratom. I emphasise that we want a close association with Euratom: a new relationship that is broader and more comprehensive than any existing agreement between Euratom and a third country. The Nuclear Safeguards Act 2018 provides the reassurance of a backstop in the very unlikely event of any changes.

Alongside that, the UK is negotiating nuclear co-operation agreements to add to those already in place. On 4 May, we signed a bilateral NCA with the United States, and we have further arrangements with Japan, Canada and Australia that are also on track. Those relationships facilitate the sharing of best practice in terms of nuclear operations and liability management. As I said, we are considered to be a proud leader internationally in the field of nuclear safety and regulation.

Further investment will bring huge benefits through innovation. My right hon. Friend the Secretary of State travelled to Wales to launch the nuclear sector deal on 28 June, which was a fitting setting to underline how the nuclear industry provides economic opportunities across the UK, particularly in more remote areas, as we have heard from many hon. Members. The nuclear sector deal is worth more than £200 million. It focuses on innovation and skills, which we can then use to export, and by striking it we aim to ensure substantial cost reductions across the nuclear sector, to ensure that the sector can remain competitive with other low-carbon technologies, because I constantly have to balance all investments with the potential pressure on consumers’ bills.

[Dr Whitehead]

It would be really helpful if the Minister were able to indicate, either today or very shortly, when she will be able to place on the record the shape of the negotiations on Wylfa—the main components of the negotiations, what has already been agreed in principle and what remains to be discussed. I do not know whether she can do that in the near future, but it would be helpful if she could indicate at an early stage when it might be possible.

[Claire Perry]

I appreciate the hon. Gentleman’s desire for transparency, but obviously I cannot do that, because doing so would prejudice negotiations that are ongoing. He will know, based on his long experience, that there is an interplay of costs, of contracts for difference numbers, and of potential asks from the UK Government and from shareholders, and these negotiations are long and complicated.

Part of the challenge, if you like, with large-scale nuclear is that a very large, up-front cost is associated with it; it is a very capital-intensive investment, although one that we want to make for the reasons I have mentioned. However, the conversation that we had earlier was about small modular reactors, which require less up-front investment, have more flexibility and allow us to invest in multiple sites, which are reasons why such reactors are so attractive; they allow us to spread those up-front costs much more widely.

In conclusion, this debate has been a very good opportunity to emphasise again the value of nuclear in our energy mix; to reassure people in this House and elsewhere that the UK Government will not make energy policy based on ideology but will soberly assess the cost, the innovation, the carbon and the security as we go forward; to celebrate the fact that we have one of the most robust nuclear safety regimes in the world, including world-leading independent regulation; to note the fact that people are hungry to see the details of the Wylfa deal and I will make sure that my right hon. Friend the Secretary of State, who is of course conducting those negotiations on our behalf, is aware of that; and, essentially, to reassure the House and others that—as is the case with all other nuclear generation in the UK—Wylfa will be a safe source of energy and one that minimises any form of liability being borne by the taxpayer.

[Mr Laurence Robertson (in the Chair)]

I call Alan Brown to wind up.