Nuclear Update

Alan Whitehead Excerpts

Thursday 17th January 2019 Commons Chamber

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I thank the Secretary of State for his statement, but he must recognise that the Government’s new nuclear strategy, adopted by the Conservatives and spearheaded by their Liberal Democrat coalition partners in 2013, is now in complete meltdown. The Government have reacted far too slowly to ongoing concerns from nuclear partners, such as Hitachi’s UK nuclear arm Horizon, which have been raising concerns over funding mechanisms since purchasing the project from RWE and E.ON back in 2012. Today’s decision to withdraw from the Wylfa nuclear power plant lays a significant blow on our economy.

The company’s statement reads:

“Horizon Nuclear Power has today announced that it will suspend its UK nuclear development programme”.

That sounds very much like not only is Wylfa on the chopping block, but so, perhaps, are plans for Hitachi’s other nuclear project—the Oldbury nuclear power plant in Gloucestershire. The Secretary of State has stated that Hitachi wants to work on new projects at Wylfa and Oldbury. What does that mean in the light of the clear statement Horizon has made this morning?

Only two months ago, the Government’s lack of clarity over funding for new nuclear led Toshiba to withdraw from its new nuclear project in Moorside. With the three reactors expected at Moorside and two each in Wylfa and Oldbury, that makes a total of 9.2 GW of new nuclear energy that will not now be built. Can the Secretary of State tell us where he will find this power—not only through the next winter, but over the next 10 years?

The long-term coherence of the UK capacity arrangements is now significantly disrupted. With the capacity market also falling foul of legal challenge, these elements add up to a strategic energy sector that is now being grossly mishandled by this Government. Now that their nuclear plan has gone up in smoke what plan can the Secretary of State spell out to us for finding new backers for these projects? Given the apparent capacity constraint, is he intending to uprate the coming contracts for difference auction, removing the caps on capacity and funding that he has imposed to provide further opportunity to build new renewable energy capacity to replace what has been lost?

For this plant at Wylfa alone, Hitachi had planned to invest £16 billion. Does the Secretary of State have contingency plans, rather than warm words, that he can announce today for the economies of Anglesey and north Wales, where Wylfa was projected to create up to 10,000 jobs at peak periods of construction and 850 permanent jobs? For that matter, what about Moorside and the plant it lost two months ago? Government dithering leading to the cancellation of that plant has seriously undermined the UK’s energy security, its decarbonisation goals and the economy of Cumbria. The people of Moorside expected the plant, and roads, infrastructure and even apartment blocks had been built in preparation, all of which will now go to waste.

I come back the issue of Wylfa. Given that it is the Welsh economy that has lost £16 billion of inward investment, will the Secretary of State think about the £1.3 billion—less than a tenth of the price—required to build the Swansea tidal lagoon?

Given that energy is one of the sectors that creates the most carbon, today’s news deepens our profound concern about the Government’s ability to meet their own climate targets. The Labour party is proud to have announced our goal of reaching net-zero greenhouse gas emissions before 2050 and we congratulate the Government on attempting to catch up with our green ambitions. But given that the clean growth plan was already falling short and the Government were already failing to meet those targets, can the Secretary of State give us some detail today on how he expects to meet UK carbon budgets in the light of today’s developments? Can he assure us he is not intending to replace the low-carbon power that has been lost with new fossil fuel plants?

Finally, there appears to be some confusion about what was and was not said about nuclear power when the Prime Minister met Japanese Prime Minister Shinzō Abe last week. Did she raise Wylfa nuclear power station when she met the Japanese Prime Minister? It is an odd coincidence that this decision from Japan-based Hitachi has come so close to those meetings. Either they talked about the project and what was said was unsatisfactory, and the project was cancelled, or the Prime Minister did not think it worth mentioning, and it was still cancelled.

Confidence in the Government is a very live question today. The people of north Wales and Moorside have every reason to have none in this Administration.

[Greg Clark]

I will respond to the hon. Gentleman’s points, but I will start by saying one thing about nuclear investment. I have been clear in maintaining my support and that of the Government for new nuclear, but, for investments of over 60 years, a degree of cross-party support is required for those commercial investments, which, as we have seen, are difficult to secure.

The hon. Gentleman expressed disappointment that the investment was being suspended, but he himself has said we do not need nuclear power. The Leader of the Opposition has said he is passionately opposed to nuclear power and nuclear weapons in equal measure, the shadow Chancellor said he would end nuclear power within the first 100 days of a Labour Government, and the new Welsh First Minister said:

“I think the attitude to nuclear power we have here in Wales is to be sceptical about it”.

If we in this House want to encourage international investors to invest in new projects, it behoves us to express solidarity and consistency of purpose.

I have been very clear about why Hitachi made this decision. We understand it. It is was commercial decision. The hon. Gentleman did not say whether he would have gone further than we were willing to go. Is he proposing that we take more than one third of the equity—in effect, take Government control and all the risk attached to such an investment? He did not say whether we should be providing a contract for more than £75 per MWh, which would go straight to the bills of customers—both industrial and residential. It is hard to say how we can go beyond financing all the debts. I think, then, that fair-minded Members would accept that we have made a substantial and generous offer, but unfortunately it has not been possible to achieve the outcome that all sides wanted.

The hon. Gentleman asks how we can continue discussions and why the company has suspended, rather than cancelled, the proposals. It is for the reasons I have said. We are going to look at new financing models, including the regulatory asset base model recommended by the Public Accounts Committee. I think it makes sense to do that.

On our future energy needs, the hon. Gentleman was wrong to talk about the next 10 years, because we are talking about supplies beyond that. There is no issue with the future security of supply; National Grid itself has said that. Plans for Wylfa are long term and there is time for the market to react to this announcement. In many ways, the challenge of financing new nuclear is one of falling costs and greater abundance of alternative technologies, which means that nuclear is being out- competed. Far from there being a difficulty with future supply, those are the reasons why the competitiveness of nuclear is more difficult.

The hon. Gentleman mentions the other projects, including at Moorside in Cumbria. As I said, that decision was taken for different reasons, but in the review and the White Paper we will publish, that model will be available to all such sites. Finally, in the case of other renewables, we have seen a great expansion in renewable capacity, and that will continue. He mentioned the case of the Swansea tidal lagoon. No one is more enthusiastic than I about innovation and new technologies, but the truth is that the costs of the proposed project were three times that of Hinkley Point C, and a full programme would make a tiny contribution to our energy supply for a much greater cost.

I hope that we can work together in the weeks and months ahead. The hon. Gentleman is an expert and a dedicated student of energy policy. In considering the White Paper, I hope that we can agree an approach that will command the support of international investors, so that this country can continue to be a nuclear nation.