Nuclear Power

Greg Clark Excerpts

Monday 4th June 2018 Commons Chamber

[The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)]

With permission, Mr Speaker, I would like to make a statement on the proposed Wylfa Newydd nuclear power plant.

Britain was the world’s first civil nuclear nation. Nuclear energy has powered homes and businesses in this country for over 60 years and currently provides about 20% of our electricity needs with low-carbon, secure and reliable baseload power. Nuclear has an important role to play in the UK’s energy future as we transition to the low-carbon economy. However, we have always been clear that no technology will be pursued at any price: new nuclear must provide value for money for consumers and taxpayers.

In 2016, we agreed to support the first new nuclear power station in a generation at Hinkley Point C in Somerset. Developers have set out proposals for a further five plants to come online over the next few decades. As I said at the time the contract for Hinkley Point C was agreed, the Government expect future nuclear projects to provide lower-cost electricity than Hinkley Point C.

The next project in this pipeline is the proposed Wylfa Newydd power station, based at Anglesey in north Wales. The project developers, Horizon Nuclear Power, which is owned by the Japanese company Hitachi, has developed proposals to build two reactors with a combined capacity of 2.9 GW. Hitachi’s reactor design has been deployed on time and on budget in Japan, and last December, having satisfied our strict safety standards, it completed the generic design assessment process run by the UK’s independent nuclear regulators. Horizon submitted its application for development consent to the Planning Inspectorate last Friday.

I am pleased to confirm today that Hitachi and the UK Government have decided to enter into negotiations in relation to the proposed Wylfa Newydd project. This is an important next step for the project, although no decision has yet been taken to proceed and the successful conclusion of these negotiations will of course be subject to full Government, regulatory and other approvals—including, but not limited to, value for money, due diligence and state aid requirements.

A key focus of discussions with Hitachi has been, and will continue to be, achieving lower-cost electricity for consumers. Both the National Audit Office and the Public Accounts Committee have recommended that the Government consider variations from the Hinkley Point C financing model in order to reduce costs to consumers. In line with the NAO and PAC’s clear findings and recommendations, for this project the Government will be considering direct investment alongside Hitachi, Japanese Government agencies and other parties. Our partnership on this project will serve as a further example of civil nuclear collaboration between the UK and Japan, building on the memorandum of co-operation that was signed with that country in 2016.

The UK is likely to need significant new nuclear capacity to meet our carbon reduction commitments at least cost, particularly as we electrify more of our transport and heating, so alongside entering negotiations in relation to Wylfa Newydd, the Government will continue to engage with the other developers in the UK new nuclear market on their proposals for further projects. This currently includes EDF over its plans for a follow-on EPR project at Sizewell C, CGN—China General Nuclear Power Corporation—over its proposals for an HPR1000 reactor at Bradwell, and Toshiba regarding the future of the NuGen project at Moorside, as well as Hitachi over potential further ABWR units at Wylfa and Oldbury.

It remains the Government’s objective in the longer term that new nuclear projects, like other energy infrastructure, should be financed by the private sector. Alongside our discussions with developers, we will be reviewing the viability of a regulated asset base model as a sustainable funding model, based on private finance for future projects beyond Wylfa, that could deliver the Government’s objectives of value for money, fiscal responsibility and decarbonisation.

Support for nuclear is reiterated in the nuclear sector deal that we will publish with the sector shortly. That deal, which the Government have developed in close partnership with the nuclear sector, will include ambitious proposals to drive down costs across the sector, including by reducing the cost of construction in new build and by investing in innovation in advanced nuclear technologies.

If the Wylfa project were to go forward following this period of negotiation, it would provide about 6% of our current electricity needs until nearly the end of the century, while supporting thousands of jobs, particularly in Wales, during its construction and operation. The actions this Government have taken will support a long-term pipeline for new nuclear projects in this country, and will provide the visibility needed to enable the industry to invest in skills, including through the National College for Nuclear, and UK supply chain capabilities across the country. I will continue to keep the House informed during the negotiations, and I commend this statement to the House.

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

There is cross-party consensus that new nuclear will continue to play a vital role in the UK’s energy mix, and I am therefore pleased to hear that progress has been made, after some uncertainty, on the Wylfa nuclear plant. Given the well-documented failings of the Hinkley Point C deal, however, I am deeply concerned by the way in which the financing has been or will be negotiated—namely, the lack of transparency and parliamentary scrutiny thus far.

On 15 May, I wrote to the Secretary of State requesting information about the negotiations and I am yet to receive a response. Until the last few days, we have had to piece together snippets of information from the Japanese press, and titbits from energy and environmental groups. We have finally heard today that a deal will be negotiated with Hitachi, which media reports suggest will include a guaranteed strike price, loan guarantees and an equity stake in the project in exchange for direct Government investment.

I must say that this is a surprising shift from the Government’s ideological position against Government investment in new energy infrastructure, and I wonder whether the shift applies to other renewable technologies, for which support has been repeatedly cut by this Government. I suspect not. I must sound a note of caution. Without sufficient detail and transparency, the House is unable to determine the risks and benefits borne by consumers and taxpayers in the proposed deal.

Last year, the National Audit Office concluded on the Hinkley Point C deal that the Department had

“not sufficiently considered the costs and risks of its deal for consumers.”

The NAO made a series of recommendations, including mechanisms for reviewing value for money and the affordability of the deal; making it clear who is accountable for oversight and governance; ensuring that the cost and timing implications of alternatives are shown clearly; and developing a plan to realise the benefit across local economies and supply chains. Last year, I asked the Government to adopt those recommendations. So will the Secretary of State say whether he has done so and, if not, why not? However, if the Government have done so, will he publish all relevant documentation showing that each recommendation has been followed in relation to Wylfa or, indeed, confirm that they will be followed if they have not been processed yet?

Negotiations between the Government and Hitachi thus far appear to have been conducted behind closed doors. Will the Secretary of State say whether the House will be given time to scrutinise the proposed deal outline, or is this simply a done deal? If so, have any binding commitments been made or, for example, have any preliminary heads of terms or memorandums of understanding been issued? The NAO stated that

“making commitments to investors can limit flexibilities to react to a change in circumstances.”

The implications of that need to be understood and communicated clearly to decision makers. It is important to ensure that the cost and timing implications of alternative funding arrangements are shown clearly—again, that is advocated by the NAO. If such alternatives have been, or will be, examined, can the Secretary of State provide the House with details today?

I move on to safety issues. It has been widely reported in the press that Hitachi is seeking to “reduce or eliminate” its financial responsibility for accidents. Will the Secretary of State say whether that is true? If so, where will such liability lie and what safety impact assessments have or will be carried out from construction and operation through to decommissioning? Indeed, on the issue of decommissioning, will he explain who will bear that liability and how much the cost is likely to be?

Despite the good news for Wylfa, subject to the queries that I have outlined, it appears that further down the Welsh coast the news is not so good for renewables generation. Media speculation suggests an impending negative decision on the much-anticipated Swansea tidal lagoon project after years of planning and campaigning by Tidal Lagoon Power, the Welsh Government, environmental groups and MPs across the House. If that is true, it is outrageous. To assume that Swansea is somewhat redundant, given the plan for investment in Wylfa, is very short-sighted.

I understand that Tidal Lagoon Power has offered to negotiate further, but has not received a response from the Government. Under the plans, there would be a zero-carbon power plant producing energy for over 100,000 homes, creating thousands of jobs across Britain; turbines built in a wall in the sea that harness the power of the tides, so that we can turn the kettle on in the morning; world-leading infrastructure built in Britain using British steel to last more than a century; and the potential to export our expertise and products across the globe. An ambitious, decisive and forward-thinking Government would jump at a project like that, just as they have done with Wylfa. Well, perhaps not. Recently, someone joked to me that the desk of the Secretary of State was where good ideas went to die. I hope that that is not the case with the Swansea tidal lagoon, and I implore the Secretary of State one last time to stop messing about, and to sit down with the company and the Welsh Government to develop a deal urgently.

[Greg Clark]

I am disappointed that the hon. Lady did not continue in the spirit in which she opened her contribution. This is an important moment, and we are beginning a negotiation on a project that will supply energy to this country for the next 60 years, until towards the end of the century, which will create jobs and reduce our carbon emissions. She said that her party supported the proposal and that there was cross-party consensus—one could be forgiven for missing that in her tone—and it is important to establish that, because it is evident that any 60-year project will take place over the life of successive Governments. This country has given nuclear investors confidence over time that there is a strong commitment to such major infrastructure projects, so I hope that she will back the commitments that she and her party made in their manifesto last year to support new nuclear and recognise the considerable opportunities, as she put it, for nuclear power internationally and domestically.

The hon. Lady asked about the financing model. She urged me in a letter to reflect on the recommendations of the National Audit Office and the Public Accounts Committee to explore alternative financing models that can reduce the price of the electricity that is generated. That is exactly what I have set out—I have followed the recommendations of the NAO and the PAC. We are entering a negotiation—I think somewhere in her remarks there was a welcome for that—but the essence of doing so is that a deal has not been agreed. We need to explore that, and it is subject to the very tests that she set out and that the NAO and the PAC observed are required, including on value for money.

On safety, the hon. Lady should be reassured—there are many hon. Members who are familiar with the nuclear industry in this country—that the safety standards operated through our independent nuclear inspectorate are the highest in the world, and that the generic design assessment is the most exacting in the world. We always abide by the rulings and requirements of the independent regulators so that we can have full confidence in the safety of this important industry.

Finally, the hon. Lady mentioned other potential investments, including the proposal for renewable power in Swansea. She knows—we have had exchanges about it across the Dispatch Boxes—that I believe in a diversity of energy supply, but we need to make sure that value for money is offered for taxpayers and bill payers. A rigorous assessment is required and, as I have done today, I will update the House when the process is concluded.

[John Redwood (Wokingham) (Con)]

How will the Government ensure, if they have a stake in the proposed investment, that when it comes to buying power they are fair between that investment and other people in the market?

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[Greg Clark]

My right hon. Friend takes a great interest in this issue. When I made my statement on Hinkley he advised that we should consider using the Government’s balance sheet in that way, and we will consider that as part of the discussions. As for the contracts that are entered into, one of the requirements of the state aid regime is that any contracts have to be on a non-discriminatory basis, which will guide the letting of any such contract.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I thank the Secretary of State for early sight of his statement but, to be truthful, it did not tell us any more than we have been able to glean from the media today. I find the Government’s nuclear obsession mind-boggling. When Hinkley was first proposed all those years ago it was on the basis that it had to be commissioned by December 2017 or there would be a risk of the lights going out. All these years later, it will not be generating at full capacity until something like 2030, which seems to undermine the need for new nuclear.

Hinkley is shocking value for money, with a 35-year megawatt-hour strike price of £92.50, whereas recent offshore auctions have returned bids of £57.50 per megawatt-hour over a 15-year period. That is the real cost benchmark that the Government should use. Considering that the National Audit Office concluded that it would be impossible to know for decades whether building Hinkley represented good value for money for UK taxpayers, it is utterly incredible that we are diving headlong into another costly venture. The Secretary of State has said that he wants to do a sector deal, but we do not know what value for money that will provide. It has been reported that the strike price for the new power station will be something like £15 per megawatt-hour cheaper than at Hinkley, but how much of that cost reduction is due to the billions of pounds of direct investment from the taxpayer?

Given the company’s questionable track record on safety, will the Government confirm that Hitachi will be financially liable in the event of any accidents? Given the unprecedented level of taxpayer investment, how will the Government demonstrate that they have met the Public Accounts Committee’s demand for a full value for money assessment before they finally sign off the deal, and how will Parliament be able to scrutinise that? When will we know the level of the financial commitments?

If the Secretary of State is so willing to commit taxpayers’ money directly for stakes in projects, will he consider paying for national grid upgrades to further facilitate the deployment of renewables, instead of tagging such upgrades on to the costs of renewable projects? As bad as the Government’s obsession with nuclear is, this is also about their attacks on renewable investment. When will they have a coherent energy policy and proper investment in future technologies rather than a technology that has had its day?

[Greg Clark]

I thank the hon. Gentleman for his comments. On statements to the House, I think all Members would recognise that I have come to the House at the earliest possible opportunity. It was today that the decision was taken to enter into negotiations. Members will know that I always keep the House updated and always will.

It is a bit rich of the hon. Gentleman to complain that new nuclear power will come online later in the 2020s, given that he and his colleagues have resisted the replacement of our nuclear fleet, which we have known needs to be replaced for all this time. It is an act of responsibility on the part of this Government that we are planning ahead for the replacement of the 20% of our electricity that is currently generated from nuclear power. It is important for consumers in Scotland and in the rest of the United Kingdom that we do that.

The hon. Gentleman criticised what he regarded as the value for money of the Hinkley project. He will have heard me say at the time that that represents the highest price we will pay for new nuclear. I expect future new nuclear power stations to come in at a lower price. I have made it explicit today that that is a requirement of the negotiation. However, this is the beginning of a formal period of negotiation.

The recommendations of the Public Accounts Committee and the National Audit Office have shaped the approach we are taking. The value for money test has to be met, and at all the key milestones I will ensure that Parliament has the opportunity to scrutinise the progress of the negotiations.

[Sir Michael Fallon (Sevenoaks) (Con)]

Does my right hon. Friend agree that this welcome announcement and the lower strike price that is being targeted underline the importance, if we want to keep costs falling, of securing continuity in the nuclear programme, so that the supply chain and the skills academy can look beyond Wylfa to Sizewell C, Oldbury, Bradwell and Moorside?

[Greg Clark]

My right hon. Friend is absolutely right. He contributed with distinction as an Energy Minister and therefore recognises that if we are to achieve not only the full cost benefits but the industrial and employment benefits, it is necessary to show that we have a pipeline that is being delivered in a steady and orderly way. If we do that, as we have done with offshore wind, in which he was instrumental, we can establish an industry that not only supplies to UK consumers at a lower cost but offers a big export opportunity.

[Rachel Reeves (Leeds West) (Lab)]

A thriving nuclear sector depends on the ability to move nuclear materials around safely and securely. At the moment, we do that via our membership of Euratom. What assurances has the Secretary of State been able to give Hitachi about our future relationship with Euratom, about nuclear co-operation agreements with other nuclear states and about the ability of the Office for Nuclear Regulation to recruit the safety inspectors we need?

[Greg Clark]

The hon. Lady will know from her involvement in the scrutiny of the Nuclear Safeguards Bill that we have made very good progress both on the proposed agreements with other nuclear countries and on our intended association with Euratom. I regard this as an area in which it is clearly in everyone’s interest to have the greatest possible continuity of the existing arrangements. That is no secret; it is known to any partner and any investor, including Hitachi.

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

I welcome my right hon. Friend’s statement. He will know that the Wylfa Newydd project will be the largest construction project in Wales for more than a generation, so what discussions is he having with the Welsh Government to ensure that we maximise the opportunities for the Welsh supply chain, which will be the backbone of delivering this important project in Anglesey?

[Greg Clark]

Of course, the opportunities for Wales follow from exactly the point that my right hon. Friend the Member for Sevenoaks (Sir Michael Fallon) made. The knowledge of the investment that will be made there provides great opportunities for people in north Wales and beyond to develop the skills that will be in high demand and to ensure that the engineering companies and other suppliers can gear up for this important work. Before I came to the House today I discussed the matter with the First Minister, and my right hon. Friend the Secretary of State for Wales spoke to Ken Skates, the Cabinet Secretary for Economy and Transport. We will work closely together to ensure that across Wales and, indeed, the United Kingdom, these opportunities result in real jobs and prosperity for the people of Wales and the UK.

[Sir Edward Davey (Kingston and Surbiton) (LD)]

The Secretary of State knows that there have been two major revolutions in electricity since Hinkley Point C was initially agreed to: a dramatic cost reduction for large-scale renewable power and huge advances in storage technology. Given that renewables and battery storage will soon offer cheaper and more flexible security of supply than nuclear, where are those two historic shifts in electricity technology in his decision today?

[Greg Clark]

The right hon. Gentleman makes the very important point that we have seen progress in renewables and that we are seeing progress in storage. Today, nuclear provides just over 20% of the electricity we consume and wind provides 5.5%. My view is that we should have diversity in our energy supply—the wind will not supply all our needs every day. His point about storage technology is correct and he knows from the industrial strategy that we are investing in its development, but it is not at the stage where it can offer the reliable baseload power that nuclear, which supplies 20% of the UK’s electricity, offers now. That is a very important part of the mix.

[Mr Laurence Robertson (Tewkesbury) (Con)]

Horizon Nuclear Power employs 350 people in my constituency, and I visited Hitachi in Tokyo fairly recently, so I welcome the Secretary of State’s announcement today. Does he agree that the fault over the past 30 years has been the failure of successive Governments to replace the existing nuclear power stations? I urge him to press ahead with these projects for the very reasons that he has given, of security of supply and the reduction of emissions.

[Greg Clark]

I agree with my hon. Friend. It is not a positive reflection on previous Governments that, knowing that this important contribution of more than 20% of our power supply was coming to the end of its life in the decade ahead, no plans were made to replace it. The fact that we now have a pipeline of nuclear power plants will provide confidence that that source of energy will be maintained and, as we have discussed, provide important economic opportunities for people to enjoy successful careers and prosperity in that industry.

[Albert Owen (Ynys Môn) (Lab)]

The Secretary of State’s statement on Wylfa Newydd is good news for my constituency, good news for north Wales, and good news for the UK nuclear industry and wider industry. If we are serious about tackling climate change, we need to be serious about new nuclear and get on with it as quickly as possible. My constituents will welcome this announcement, but they will want assurances that the skills agenda is going ahead and that local people can have the quality jobs that previous generations in my constituency have had for over 40 years. I invite the Secretary of State to come to talk to training providers, local government and the Welsh Government so we can get this agenda up and running.

[Greg Clark]

I am grateful for the hon. Gentleman’s welcome. He knows very well the potential of the development for his constituents and those beyond. I had the pleasure, during the Anglesey Day he hosted, to meet many of the companies that would benefit. It is the case, I think, that some young people already working on the site have been to Japan for training purposes, deepening their skills and broadening their horizons. They will be very important engineers of the future in the UK. I am delighted that, subject to the success of the negotiations, this opportunity will be available for them.

[Rebecca Pow (Taunton Deane) (Con)]

Does my right hon. Friend agree that, particularly with the electrification of more of our transport and heating, new nuclear is an essential part of providing the right energy load—including Hinkley Point C, adjacent to my constituency, with all the spin-offs it will bring—to meet our Government’s highly commendable carbon reduction commitments at least cost?

[Greg Clark]

I am grateful to my hon. Friend and I agree with her that nuclear should be a part of our energy mix. To be resilient, we should have a diverse energy mix. It is important that the cost of any project should be acceptable and affordable for bill payers as well as taxpayers. That will be an important principle in the negotiations, but if we are successful in that, it will make the contribution my hon. Friend describes.

[Caroline Lucas (Brighton, Pavilion) (Green)]

May I put it on the record that there is not cross-party consensus on nuclear power? My question is about renewables. Investment in renewables is at an all-time low. Funding streams for clean energy are at their lowest level since 2008, despite solar and wind being the cheapest form of new electricity generation. I want to ask the Secretary of State again how he can justify this multimillion deal to prop up an outdated and hugely costly technology. The chief executive of National Grid himself has said that baseload is an outdated concept because the cost of batteries will come down very quickly and that technology will be much cheaper than new nuclear by the time it comes on board. Renewables are much cheaper and safer, and they are ready now. Why does he not choose them?

[Greg Clark]

The hon. Lady has, as she describes, a fundamental disagreement: she does not see any benefit from nuclear to the resilience and supply of our electricity. That has long been her view, but I am surprised that she would talk down our country’s achievements on renewables. She should know that as a result of decisions taken by this Government and our predecessor, we are now the leading nation in the world for the deployment of offshore wind. Taking a strategic approach and investing in the future with a pipeline, just as we propose for new nuclear, has resulted in jobs being created around the towns and cities, in particular the coastal towns, of this country. I would have thought she would recognise and welcome that.

[Mr John Whittingdale (Maldon) (Con)]

Does my right hon. Friend agree it is important to maintain not just diversity of supply but diversity of suppliers within the nuclear industry? Will he therefore welcome the progress made in the construction of unit 3 of the Fangchenggang power station in China, which is the reference plant for the proposed HPR1000 reactor at Bradwell-on-Sea? Will he reaffirm his support for that project, subject to the generic design assessment and regulatory approvals?

[Greg Clark]

I agree with my right hon. Friend that having a diversity of energy sources is important, but so is having some degree of competition between suppliers. That is why I referred in my statement to the pipeline that is in prospect. On the GDA process, we of course welcome progress through that. For each of these projects, it is foundational that the safety case is demonstrated. It is important that they should meet that, but it is also important that they demonstrate that they offer value for money for both the taxpayer and the bill payer. In each of these cases, negotiations will focus on that as well as on other aspects.

[John Woodcock (Barrow and Furness) (Ind)]

Is not a key part of lowering the strike price for Wylfa that the Government are now proposing a direct stake in the project? If that is the case with the Japanese firm Hitachi and the Japanese Government, surely the Secretary of State will offer the same deal to Toshiba for NuGen in Moorside, which will sustain up to 20,000 Cumbrian jobs.

[Greg Clark]

I recognise the support for the nuclear industry that the hon. Gentleman espouses. This is a statement about a very good development in a particular negotiation. He refers to the project at Moorside. As he knows, it is not at the same stage. We are responding to recommendations of the National Audit Office and the Public Accounts Committee to consider other financing models. It is the start of a negotiation, but I feel confident that we should take that step to commence.

[Sir Desmond Swayne (New Forest West) (Con)]

But it is a nationalisation, isn’t it?

[Greg Clark]

No. The NAO report noted that all major energy projects have some involvement with the state. That is a feature of the current market not just in this country but around the world. We want to drive the best value for money for both the taxpayer and the bill payer.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Now that the British Government have decided to invest directly in nuclear projects, surely they will be doing the same for other energy projects, such as the Swansea Bay tidal lagoon, or will this be determined solely on the basis of the contract for difference financing model?

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[Greg Clark]

We have decided to enter a period of negotiations and consider the NAO and PAC recommendations. This is an announcement about this particular project. The House will see me make an update as we progress with the negotiations.

[Bob Blackman (Harrow East) (Con)]

One of the consequences of the Labour party’s prevarication on the nuclear industry has been the deskilling of that industry. Will my right hon. Friend expand on his plans for skilling up our workforce, particularly our young people, so they get the opportunity to work in this thriving industry?

[Greg Clark]

My hon. Friend is absolutely right. I had the pleasure of visiting the National College for Nuclear in Somerset a couple of weeks ago. Seeing the opportunities that will be available to the next generation of nuclear engineers is an inspiring sight. I am pleased that this is now available for them.

[Matt Western (Warwick and Leamington) (Lab)]

The Secretary of State will be well aware that several years ago the German Government took the decision to decommission their nuclear reactors and invest heavily in renewables and other suppliers. Given the significant cost advantage of offshore wind and the UK’s geographic advantage in delivering it, what do the UK Government know that the German Government do not?

[Greg Clark]

I am surprised the hon. Gentleman mentions that, because one of the problems Germany has faced is that the return to coal has increased the pressure on its greenhouse gas emissions. I checked before I came into the Chamber, and coal was contributing just 1% of our current electricity generation, compared with 20.5% from nuclear. If we are serious about meeting our climate change ambitions, we have to take decisions that are consistent with that.

[Mr David Jones (Clwyd West) (Con)]

I congratulate my right hon. Friend on his statement, which will be widely welcomed in north Wales where Wylfa is such an important part of the regional economy. On timescale, he mentioned that the negotiations will be subject to, among other things, the requirements of state aid. Are we to infer from that that he anticipates the negotiations will be complete before 29 March next year, after which one would hope state aid would not be a consideration?

[Greg Clark]

My right hon. Friend is ingenious in his scrutiny of the timetable. If we start the negotiations on the regime while a member of the EU, it seems to me that we would not want to delay their completion until the date of Brexit.

[Catherine West (Hornsey and Wood Green) (Lab)]

What reassurances can the Minister give on genuine consultation with local communities over the long-term considerations of nuclear waste?

[Greg Clark]

The hon. Lady raises a very important point. The treatment and storage of nuclear waste is part of the consultation at the moment. Part of the safety assessment for all new and current nuclear plants is to make sure that the waste is stored and eventually disposed of safely, and part of any contract needs to provide for the money to address that.

[Richard Graham (Gloucester) (Con)]

I totally agree that starting the negotiations with Horizon, based in the Gloucester business park, to secure replacement nuclear capacity and to deal with increased demand for electricity is a very good thing. I wish my right hon. Friend all good luck in securing a balance of advantages to the taxpayer between a lower strike price on the one hand and—no doubt—some cost and construction risk on the other. The aspects he highlighted—greater security, low carbon, greater diversity, jobs, supply chains—all apply equally to the fabulous tidal lagoon project mooted for Swansea. I do hope he can secure a positive response to the Hendry review as soon as possible.

[Greg Clark]

I anticipated the direction in which my hon. Friend was heading. He will know that, as we have done in this case, we need to offer and obtain value for money for the taxpayer and the consumer. Just as in this case, that is part of the assessment to be made of the tidal lagoon proposal.

[Mr Clive Betts (Sheffield South East) (Lab)]

One aspect of a future nuclear strategy the Secretary of State did not deal with is small modular reactors. I have written him several emails about this. Davy Markham, in my constituency, is one of the few places that can actually machine the largest parts for these reactors, but it is in receivership. The receiver is selling off this capacity, and currently it looks as if it will go overseas. Will the Secretary of State take another look to see what role he and his Department can play in drawing up a plan to save that capacity for this country and make sure it forms an important part of his future industrial strategy, rather than simply being sold off to the highest bidder overseas?

[Greg Clark]

I referred in my statement to the nuclear sector deal and, in particular, investment in innovation in advanced nuclear technologies, which is the area the hon. Gentleman mentions. That initiative, which we will launch with the sector, is forthcoming, and of course I am happy to meet him to discuss the firm in his constituency.

[Mr Robert Goodwill (Scarborough and Whitby) (Con)]

The Secretary of State in his statement highlighted the need to drive down the cost of the construction and operation of this new generation of nuclear reactors. In that regard, are we likely to see more reliance on offsite modular construction techniques? If so, will that present opportunities not just for Wales but right around the country, including for the expertise that already exists on the Tyne, the Wear, the Tees and, of course, the Humber?

[Greg Clark]

My right hon. Friend is absolutely right. In the sector deal, we will set out the opportunities for small modular reactors, which we have been discussing and developing with the sector.

[Chris Ruane (Vale of Clwyd) (Lab)]

I pay tribute to my hon. Friend the Member for Ynys Môn (Albert Owen) for his tireless efforts in lobbying for this. He is Mr Energy Island. This £13 billion investment could be multiplied if we get the timing, co-ordination and planning right. Central Government need to co-operate with the Welsh Government, local government, the rail companies, further education, higher education and the private sector. Will the Secretary of State meet a cross-party delegation of north Wales MPs to make sure we get this crucial aspect right?

[Greg Clark]

I certainly will. The hon. Gentleman is absolutely right. As we have discussed across the Chamber, one of the benefits of a clear pipeline is the ability to plan ahead and maximise the local opportunities to the benefit of his constituents and many others in Wales.

[Mark Menzies (Fylde) (Con)]

I welcome the Secretary of State’s statement and continued support for the nuclear industry. Will he look at Springfields, the nuclear fuel manufacturer, which employs 1,200 people in my constituency, and do everything he can to ensure that the next generation of nuclear fuel is made right here in the UK?

[Greg Clark]

My hon. Friend is a consistent and passionate advocate for Springfields in his constituency. The Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Watford (Richard Harrington), who is responsible for industry, will be visiting very shortly. It is a matter for the company where it sources its fuel, but I know that my hon. Friend’s representations will be heard.

[Nigel Mills (Amber Valley) (Con)]

I urge the Secretary of State to back small modular reactors, which could be the solution for lower-cost nuclear energy. Is there more the Government can do to help the industry bring forward these ideas so that we can be a leader in the world and not a follower?

[Greg Clark]

My hon. Friend is absolutely right. We announced £56 million of research and development for small modular reactors last year, and we are now looking at the financing and the regulatory framework. I mentioned the forthcoming nuclear sector deal. He will see substantial reference to this point in that agreement.

[Mark Pawsey (Rugby) (Con)]

Today’s announcement is important and good news for the supply chain for the new nuclear plants. I wonder if I might join my hon. Friend the Member for Gloucester (Richard Graham) in asking the Secretary of State whether he anticipates a similar good news announcement for companies in the supply chain for the Swansea Bay tidal lagoon, such as GE Power based in Rugby.

[Greg Clark]

My hon. Friend tempts me to make a different statement from the one I made, but I note and have heard before his consistent advocacy of the benefits of that project to his constituency.

[David T. C. Davies (Monmouth) (Con)]

Has my right hon. Friend noted a cross-party view in the House that £92.50 is the absolute maximum we should be paying for energy generation, and will this feature in his deliberations on further energy projects?

--- Later in debate ---

[Greg Clark]

We made a commitment that the strike price agreed for Hinkley would be the high-water mark for new nuclear, and I note my hon. Friend’s recommendation that that apply more generally.

[David Morris (Morecambe and Lunesdale) (Con)]

In my constituency, we have two nuclear power stations, which is welcome news for my constituents, but we need a third. We have the site—the seventh site—and I could line up five developers under this proposal. Would the Secretary of State like to meet to discuss this further?

[Greg Clark]

I am happy to do that. I fondly remember a visit I made to a nuclear power station in my hon. Friend’s constituency some years ago. Perhaps he could bring me up to date with developments since.

[Several hon. Members rose—]

[Kevin Foster (Torbay) (Con)]

Thank you, Mr Speaker; obviously you are saving the best till last.

I welcome today’s statement and the Secretary of State’s commitment to a new generation of nuclear reactors. He will be aware of the close link in France between nuclear and the navy and civil nuclear power in terms of long-term careers for those who serve in the submarines providing the deterrent. Will he do the same with our industry?

[Greg Clark]

My hon. Friend makes a very good point. The engineering skills we need in the armed forces and their civil applications can lead to careers that cross both. I will make sure that his recommendation is followed through.

[Chris Philp (Croydon South) (Con)]

I warmly welcome this announcement, which, as the Secretary of State says, will help us to maintain a balanced, low-carbon energy mix. So many of these projects can be beset by delays—Hinkley C is an example—so may I urge him to progress this initiative with a sense of urgency and to carry forward the small modular reactor competition as quickly as possible?

[Greg Clark]

I will indeed. We will have more to say in the sector deal about small modular reactors. I stress to the House that we are entering a period of negotiations, and they have to meet some important requirements, but it is in all our interests that they proceed in an orderly way. The purpose of today’s announcement is to allow us to do precisely that.

[Mr Speaker]

In a moment I shall call the hon. Member for Walthamstow (Stella Creasy) to make an application for leave to propose a debate on a specific and important matter that should have urgent consideration under the terms of Standing Order No. 24. The hon. Lady has up to three minutes in which to make her application.