Hinkley Point C Reactor

James Heappey Excerpts

Tuesday 8th March 2016 Commons Chamber

[George Kerevan]

If my hon. Friend has been reading the French media over the past few days he will know that it is not just the French unions. Practically the entire French media are now referring to Hinkley Point and the EPR reactor as the “English threat” to EDF.

Hinkley is the biggest power project we have ever seen, at £25 billion and rising. Under our current energy plan we are dependent on it to deliver 7% of the UK’s generation capacity, at a moment when our capacity margins are close to zero. Having mortgaged the UK’s energy future to Hinkley C, the Government have failed consistently to keep Parliament informed about the crisis on the EDF board, up to and including last weekend when the person in charge of the company’s finances—the chief financial officer—was in effect forced to resign because of his resistance to going ahead with this project.

If a major UK engineering company had a contract with the Government, and its chief financial officer was opposed to that contract and was fired, imagine the scandal there would be. However, the Government are happy to stay quiet while the senior management of EDF are removed in order for the project to go ahead.

[James Heappey (Wells) (Con)]

Will the hon. Gentleman concede that the chief executive of EDF, both in the UK and France, has been consistently committed to the project, as indeed have the UK and French Governments? I am not quite sure what else it is we might like to know in this House, given that that commitment has been unanimous and unstinting.

[George Kerevan]

I am aware of that—that is the problem. Why is there a revolt on the board? It is not just the trade union members. It is true that a third of the EDF board is allocated to union members, union representatives and staff representatives. They are in favour of nuclear power, but they are worried about the impact on the company’s future. Why is there a vote? Why was the chief financial officer against this? EDF has a negative cash flow. Its debts are twice its company valuation. Its share price has halved in the past 12 months. How is it paying its dividend? It is doing so by issuing more shares and giving them to the shareholders. Imagine how insane that is.

--- Later in debate ---

[Andrea Leadsom]

As I have explained, the strike price has been agreed, and we expect a final investment decision in the very near future.

The deal has already been through a number of rigorous approvals processes, both within the Government and within the European Union. In October 2013, the Department of Energy and Climate Change and EDF agreed the strike price for the electricity to be produced by Hinkley Point C. In October 2014, the European Commission approved the Hinkley Point C state aid case, following a lengthy and rigorous investigation by the Commission. Notwithstanding the ongoing opposition of a small minority of member states, we are confident that the decision is legally robust and will stand up to challenges.

In October 2015, EDF and its partner of 30 years, China General Nuclear, signed a strategic investment agreement in London. That commercial agreement set out the terms of EDF's partnership in the UK with CGN, starting with Hinkley Point C. EDF and CGN agreed to take a 66.5% stake and a 33.5% stake in Hinkley respectively. At that point, the final form of the contracts was agreed in substance. My right hon. Friend the Secretary of State made it clear at the time that she would make her final decision on Hinkley once EDF had reached its final investment decision.

The Government’s position has remained unchanged while the final details of the contracts have been ironed out. In November, we set out that we expected to conclude the deal in the coming months, and the Secretary of State made it clear that she was minded to proceed with the contract for difference support package for the deal, subject to any change in circumstances. We remain confident that all parties are firmly behind Hinkley Point C and are working hard towards a final investment decision. We have received assurances from EDF and the French Government—EDF’s largest shareholder—on this point. Hinkley is a large investment for EDF and CGN, so it is only right and proper that they take the necessary time now to ensure that everything is in order so that they can proceed smoothly once they have taken a positive final investment decision.

[James Heappey]

Does the Minister share our impatience, however, at the delay in the decision? Will she perhaps use this opportunity to encourage EDF to make all haste in arriving at that final investment decision?

[Andrea Leadsom]

I hear my hon. Friend, and I can tell him that we are ready and keen to proceed as soon as EDF announces its final investment decision. However, this is a commercial matter, and it is for EDF to finance Hinkley Point C and to deliver that final investment decision. We are aware of the financial issues it is dealing with, and we remain in regular contact with the corporate leadership of EDF and with the French Government. We have been assured by both that they are taking the necessary steps to reach a final investment decision as soon as possible. We are confident that this is a matter of when, not if. Specifically, we have been reassured that the resignation of the EDF finance director will have no impact on the timing of EDF’s final investment decision.