Nuclear Energy (Financing) Bill

Clive Lewis Excerpts

Report stage & 3rd reading
Monday 10th January 2022 Commons Chamber

[Alan Brown]

The RAB model has been used successfully for some infrastructure projects, but as outlined earlier it has not been very successful in the United States when applied to nuclear power stations. Can the hon. Gentleman tell me of a successful application of the RAB model to a nuclear power station?

[Clive Lewis (Norwich South) (Lab)]

rose—

[Richard Graham]

May I answer the intervention from the hon. Member for Kilmarnock and Loudoun (Alan Brown) first? We are more interested in what has been tried and tested here in the United Kingdom than in what may not have succeeded in a different model in a different sovereign country. Obviously, this is the first time it has been used for nuclear power here, but let us not forget, as I have pointed out, that there was a whole generation in which no nuclear power stations were built at all. When it came to the funding for Hinkley C in around 2010-11, I remember well the debates that we had at that time and, of course, the uncomfortable truth that we had lost the expertise to build these things ourselves, so we needed to bring in both foreign finance and foreign expertise. The situation today is different, because we are building on what we have already learned and achieved so far in the process at Hinkley Point.

I agree with the Government that this is a time to choose to move to regulated asset financing, because the crucial difference is that the businesses involved will be able to finance at lower rates and, as I understand it, two thirds of the cost of electricity from Hinkley Point C will come from the cost of capital. Making access to income available during the construction period will both reduce the costs of the project and make it more attractive to institutional investors, who are quite happy with a lower but steady return on their investment. I believe that that is the key reason—and I am comfortable with it—for adopting that approach to this nuclear power station and, I hope, others to come in the future.

--- Later in debate ---

[Richard Graham]

I am very grateful to my hon. Friend for that intervention, because I was coming on to what seems to be a curious irony in the position of Her Majesty’s loyal Opposition, particularly the hon. Member for Southampton, Test (Dr Whitehead), for whom I have a lot of respect on energy issues. It seems ironic that, as my hon. Friend has pointed out, amendment 2 would make it virtually impossible for a company partly or wholly owned by a foreign power to build and run a nuclear entity. Of course, since British Energy was sold by the last Labour Government in 2009, it is not possible for a company that is entirely British owned to do the work. In that context, the amendment seems rather ironic. Perhaps the fact that it would be a UK subsidiary of EDF answers the question; otherwise, I am inclined to agree with my hon. Friend that amendment 2 should be ruled out immediately by Members on both sides of the House on the basis of it being wholly impractical.

I am conscious that my right hon. Friend the Member for Wokingham wants to intervene, but I think the hon. Member for Norwich South (Clive Lewis) was first.

[Clive Lewis]

The hon. Gentleman is being very generous. Some of us on the Opposition Benches consider energy to be a public good, and therefore if we are talking about the optimal way of funding this public good, it would be via the state. The RAB system that he is talking about is very complex and is actually being backed by the state, not the market. Ultimately, if he wants to bring the costs down and make the system more cost-effective and to be optimal—that is the term he used—we would have the state funding this area fully, as well as the rest of the energy roll-out that he is talking about.

The final point I will make is that the hon. Gentleman gave some examples about Heathrow and other large-scale projects, but the difference here is that the system that he is advocating will mean that bill payers will foot much of the risk and much of the bill if there is an overspend. The problem is that that proposal is regressive—it is like a poll tax on energy. The far more progressive way to fund things would be through progressive taxation.

[Richard Graham]

We may be straying a bit from the subject and scope, Mr Deputy Speaker, so I will try to come back to the road of virtue as quickly as I can, but the hon. Member raises interesting points about what structure of ownership is required to develop nuclear power stations effectively. To be honest, it was his party that decided to sell—to privatise—British Energy. I think it is too late to try to row back on that and recreate that situation, unless he is proposing an interesting new Anglo-French argument over nationalising EDF Energy in the UK. We have to accept that things have moved on, and we must focus on the amendments proposed today.