Nuclear Sector Deal

Debate between Drew Hendry and Ian Liddell-Grainger

Wednesday 11th July 2018 Westminster Hall

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Owen, especially since in such debates as this we often refer to developments in your constituency.

I congratulate the hon. Member for Copeland (Trudy Harrison) on securing this important debate. We have heard a lot of enthusiasm for new nuclear, but I will change that, because I do not share that enthusiasm. In fact, the Government have many questions to answer on their path towards new nuclear, in particular on new developments.

The disastrous Hinkley Point C project exemplifies the Government’s regressive energy strategy and lack of a long-term plan that could cost taxpayers billions. The project at Wylfa is no different: total project costs are unclear, but have been trailed to be about £20 billion—more expensive than Hinkley’s £19.6 billion—a figure that could rise with inevitable delays. The direct investment represents a reversal of decades of opposition to investing taxpayer money in new nuclear.

The Government must fulfil the Public Accounts Committee’s recommendation of a full value-for-money assessment before signing any deals, and they must consider the National Audit Office’s report on Hinckley Point C. Consumers already face the impact of a bad deal made by the Government. Hinkley Point is set to cost consumers a fortune because of the appalling strike price deal that the UK Government made with EDF. As a result of the bad deal, consumers are set to pay at least £30 billion over the 35-year contract through their electricity bills.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

I apologise for being late, Mr Owen. I had a supply chain meeting.

I invite the hon. Gentleman to come to Hinkley C—I mean that sincerely. I will host him and I will show him around the site and what is going on at Hinkley C so that he can see on the ground what is happening there and at the National College for Nuclear. I think that it would give him a new perspective on the situation.

[Drew Hendry]

I am grateful to the hon. Gentleman for the invitation to Hinkley Point C, but seeing the construction and the rest of the work, however good the quality, would not change the fact that the deal is disastrous for the taxpayer. It is also unlikely to get any better, because we face paying for another failing nuclear project.

The strike price for the new project has been trailed at £77.50 per megawatt-hour, which is down from Hinkley Point’s £92.50 through UK Government support for capital costs. That figure, however, is still significantly more than for offshore wind at £57.50 per megawatt-hour, even including intermittency costs of about £7 per megawatt-hour. How can the Minister justify that cost to the taxpayer?

My second question concerns financial liability for nuclear power station safety. Liability for nuclear developers is capped at €1.3 billion in the event of a nuclear incident, as agreed in the Brussels and Paris conventions. An event such as the one at Fukushima, however, would cost hundreds of billions of pounds. Moreover, The Times reported that Hitachi “won’t pay” for nuclear accidents at Wylfa and that, according to Nikkei reports, some of Hitachi’s directors want

“safeguards that reduce or eliminate Hitachi’s financial responsibility for accidents at the plant”.

Hitachi has already had two serious safety breaches at its nuclear developments, one of which resulted in a $2.7 million fine by the US Government.

Decommissioning costs ate up around half the budget of the now disbanded Department of Energy and Climate Change after the liabilities for cleaning up old nuclear plants were in effect nationalised in 2004 and 2005, when British Nuclear Fuels Ltd and British Energy faced financial problems. At the moment Hinkley C’s decommissioning costs are estimated at between £5.9 billion to £7.2 billion. Dr Paul Dorfman notes that given that decommissioning costs have been consistently underrated, and the precedent set by the Government’s taking ownership of liabilities of these companies more than a decade ago, it is highly likely that the Government will be forced to shoulder further costs if Hinkley developers have a shortfall. Again, will the Minster give an urgent assurance that taxpayers will not be left liable for safety failures at the Wylfa nuclear plant? That is wrong headed, especially for Scotland.

The announcement comes at a time when the prices of offshore wind, other renewables and storage solutions have dropped dramatically. Let us remember that the UK Government made the shameful decision to pull the rug out from under their long-term carbon capture and storage scheme in Peterhead. By cancelling the £1 billion competition just six months before it was due to be awarded, after spending £100 million on it, they broke their own election manifesto promise and left Peterhead—a key candidate for support—behind. The decision left a huge and damaging legacy to investment incentives and consumer confidence in the UK. Their new idea for carbon capture and storage is not the £1 billion minimum required, but a tenth of that—£100 million—which equals what was already wasted.

While the UK Government continue to fail Scotland’s energy sector, the Scottish Government see carbon capture utilisation and storage—CCUS—as an important decarbonisation infrastructure requirement and essential climate change technology. Scotland remains the best-placed country in Europe to realise CCUS on a commercial scale. That is why the Scottish Government support the Acorn CCS project at St Fergus, which has also secured €1.9 million in funding. The Scottish Government have delivered an exceptional range of support for the oil and gas sector. They have delivered an increase of £270 million to the economy, jobs and a fair work portfolio, including an uplift of more than £194 million in the enterprise and energy budget to support entrepreneurship, construction and productivity. That additional funding contributes to investment of almost £2.4 billion in enterprise and skills through our enterprise agencies and skills bodies.

I could go on and give a lot more detail on the Scottish Government’s support, but I will welcome one thing that the UK Government did recently: introducing the transferable tax histories mechanism in the 2017 Budget. But why has that been deferred by at least a year, when it is a crucial time for industry? That incentive could have been used to realise long-life assets.

The Scottish Government are doing everything they can with a world-leading climate Bill and bold support for renewable energy. The Scottish Government’s forward-looking agenda puts Westminster’s to shame. The UK Government should do more to support oil and gas and far more to support renewables opportunities. They should not make this mistake with nuclear. It is high time that they abandoned their costly love affair with nuclear and instead focused investment that can make a real, positive difference for our environment, jobs and our economy.