Nuclear Energy (Financing) Bill

Nigel Evans Excerpts

2nd reading
Wednesday 3rd November 2021 Commons Chamber

[Virginia Crosbie (Ynys Môn) (Con)]

It is a pleasure to follow my hon. Friend the Member for Waveney (Peter Aldous), who is so erudite and passionate, and to speak on Second Reading.

My constituency of Ynys Môn is known as “energy island”: we have wind, wave, solar and tidal. We are soon to have hydrogen, and we have a long history in nuclear. Back in 1963, construction began on an £80 million nuclear power station at Wylfa head, near Cemaes on Anglesey. It was chosen for its strong rock foundation and its access to sea water. Its two nuclear reactors went live in 1971. At the time, Anglesey was considered to have

“leapt dramatically forward into the space age”.

The station was described as

“the nation’s biggest and most powerful…yet interfering as little as possible with the beauty of the Anglesey scenery”.

Some 3,000 people were involved in its construction and in 1964, 20 local 16-year-olds became the first apprentice intake. They trained to become

“the youngest engineers to take charge of an atomic power station in the world”.

At its height, Wylfa employed around 500 people. Just along the coast, an aluminium smelting works, employing a similar number of people, was built in Holyhead to be able to access cheap electricity direct from Wylfa.

In 2006, however, as the lifespan of Wylfa power station was drawing to an end, the Isle of Anglesey County Council voted to support the construction of a second plant. Wylfa B, now known as Wylfa Newydd, was intended to take over from Wylfa as it came to the end of its working life. Employment was a key factor. Losing so many jobs would be tough on any part of the UK, but on Anglesey there simply was not any comparable industry on the island for people to move to. It is estimated that at the height of construction, Wylfa Newydd, or new Wylfa, would employ around 9,000 and in steady state production would have a workforce of around 900.

The old Wylfa ceased generation in 2015. The aluminium works closed shortly afterwards and just under 1,000 jobs disappeared almost overnight, yet Wylfa Newydd is still on the cards. The people of Anglesey have been on a 16-year rollercoaster journey, with the prospect of quality new careers constantly just over the horizon. The majority of Anglesey residents actively support Wylfa Newydd, but they feel forgotten. They have had enough of being offered carrots only to receive disappointment. That is why the Bill is so important to my constituency of Ynys Môn.

When Hitachi withdrew the development consent order for Wylfa Newydd at the start of this year, it cited programme financing as the main factor. I am co-founder and chair of the nuclear delivery group, which I set up with my fellow atomic kitten, my hon. Friend the Member for Copeland (Trudy Harrison), who is a passionate advocate for nuclear. Over the past 18 months, we have regularly raised new-build financing as a significant concern. I am delighted to see BEIS respond to this issue and bring this Bill to the table. Companies such as Bechtel and Rolls-Royce are already keen to establish new nuclear at Wylfa Newydd, so this proposed regulated asset base model offers significant hope to Anglesey.

The Bill could be the starting point for regenerating an area that desperately needs levelling up. It could finally lead the people of Anglesey over the horizon into a whole field of carrots. With that in mind, I appeal to my constituents and the people of north Wales, who would also benefit: now is the time for us to come together as a community and embrace the opportunity that the Bill offers us. We cannot afford to stay in our partisan corners, we cannot afford to stay silent, and we cannot afford to let this opportunity slip through our fingers.

In 2015, the Welsh Government described Wylfa Newydd as a “once in a generation opportunity” and estimated that it could be worth £5.7 billion to the Welsh economy. Ten years on, this project will be a game changer locally, regionally and nationally. Nearly two decades of waiting for Wylfa Newydd may finally be coming to an end. Wylfa Newydd is rightly described as the best nuclear site in the UK. The Prime Minister has said that he is a “fervent supporter”.

I welcome the Bill and, for the sake of our young people and future generations, we must put aside our political differences and work together. Diolch yn fawr, Mr Deputy Speaker.

[Mr Deputy Speaker (Mr Nigel Evans)]

Diolch yn fawr.

[James Daly (Bury North) (Con)]

It is a pleasure to follow such a powerful, articulate, passionate speech, as I think everybody would agree, and I want to develop some of the points that were made by my hon. Friends the Members for Ynys Môn (Virginia Crosbie) and for Waveney (Peter Aldous).

I wanted to take part in this debate not because of any great knowledge of the nuclear industry, but because of the impact that it has on my region and the people in it. I am the chair of the all-party group on youth employment. We constantly strive to find new industries—new technologies—or developing existing industries to provide the high-skilled, high-paid jobs that people want in my constituency, in the constituency of my hon. Friend the Member for Bolton West (Chris Green) and in the whole of the north of England. The north of England has a great legacy in nuclear. It was the home of the first nuclear power station 65 years ago and now houses close to half the country’s 60,000 employees in the civil nuclear workforce. They are all based in our region.

Therefore, what opportunities are we talking about? What opportunities does new nuclear present to the north of England? There is support for investment in businesses in the north in line with the Government’s levelling-up agenda. Jobs and skills were mentioned in various speeches by my hon. Friends. There is the preservation and growth of an expert, 60,000-strong supply chain, which includes Sillavan metals in my constituency, a company that is expanding, developing technology and giving young people opportunities through apprenticeships. All these industries are related to this Bill.

It is also fair to say that many jobs in the north of England have been revitalised by Hinkley Point C. Those jobs, skills and investment across the supply chain in the north of England come from investment in nuclear, but we also have clean growth, with low-carbon, always-on power to support renewables and facilitate the development of other clean tech such as hydrogen, direct air capture and small modular reactors to accelerate clean growth and new industries across the region, including decarbonisation clusters in Teesside and in Yorkshire and the Humber. There is energy security, with firm, clean base-load power to the grid that will support renewables and give us greater control in our transition to net zero while helping to wean Britain off its reliance on energy imports.

This truly is a Bill that is at the heart of the north of England and can have an impact on many, many lives. The regulated asset base that the Bill introduces has been articulately covered by other hon. Members, so I will speak about Sizewell C, about which I agree with every point that my hon. Friend the Member for Waveney made. I also agree with the shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead): essentially, I interpret the Bill as finding a way to finance Sizewell C and its positive impact.

Hearing of the developments happening in Waveney bring joy to my heart as chair of the APPG on youth employment, but there is no reason why those opportunities cannot be spread more widely, including in the north of England. Sizewell C is the only nuclear project that is ready to start construction and realise the benefits of new nuclear for the north of England, hopefully within this Parliament.

More than 90% of the UK’s civil nuclear workforce is based outside London and the south-east, with nearly half in the north of England. More than 500 businesses based in the north of England are currently involved in the construction of Hinkley Point, so Sizewell C presents a huge long-term opportunity for the north of England.

I am sure that many MPs have been contacted by the consortium that is involved and wish to take the project forward. We cannot ignore the fact that the consortium has pledged £2.5 billion of private sector investment and 13,000 jobs just in the north if Sizewell C goes ahead. There is a downside if it does not go ahead: there could be up to 10,000 losses due to the failure to properly transition workers from the Hinkley Point project.

Sizewell C is a legacy project that will generate 3.2 GW of clean, low-carbon electricity—enough to power 6 million homes, including across the north. What is there not to like about the Bill? As ever, the Government are levelling up, creating opportunities and ensuring that we have a clean, reliable, resilient source of the power that our country needs.

[Mr Deputy Speaker (Mr Nigel Evans)]

We now come to the wind-ups, but the shadow Minister is slightly detained.

[Dr Whitehead]

He’s gone to the loo, Mr Deputy Speaker.

[Mr Deputy Speaker]

He has, yes.

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

rose—

[Mr Deputy Speaker]

What do you want to say, Mr Goodwill? You have only just come in.

[Mr Goodwill]

Well, I could say a few words if we have time. [Interruption.] Oh, he’s here now.

[Mr Deputy Speaker]

None the less, thank you for your consideration. Seamlessly, we now move on to the wind-ups. I call Matthew Pennycook.

Nuclear Energy (Financing) Bill

Nigel Evans Excerpts

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

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

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss the following:

Amendment 1, in clause 1, page 1, line 15, at end insert—

“(6) “Owned by a foreign power” means owned by a company controlled by a foreign state and operating for investment purposes.”

This amendment is a definition of “foreign power” set out in Amendment 2.

Amendment 2, in clause 2, page 2, line 14, at end insert—

“(c) the nuclear company is not wholly or in part owned by a foreign power, and

(d) the fuel rods for the company’s reactor are supplied by a UK based company.”

This amendment prevents the Secretary of State from designating a nuclear company owned or part-owned by the agents of a foreign power and ensures that the fuelling of the designated company’s reactor is provided by a UK based company.

Amendment 6, in clause 3, page 3, line 8, at end insert—

“(e) detail of any public funding agreed as part of the project development and the services being provided for this funding.”

Amendment 9, page 5, line 21, at end insert—

“(4A) The Secretary of State must lay a report before Parliament in respect of each project in relation to which a nuclear company has been designated under section 2(1) before exercising the power under section 6 (1), setting out—

(a) the expected overall capital cost of the prospective project,

(b) the expected up-front cost of the prospective projects,

(c) the general terms of the project for the sale of electricity onto the grid, including—

(i) a statement of whether the Government has offered the nuclear company a minimum floor price mechanism for the sale of electricity onto the National Grid,

(ii) the minimum floor price mechanism included in any arrangement including any inflationary or baseline indices, and

(iii) the duration in years of any such arrangement under sub-paragraph (ii); and

(d) how decommissioning costs of the project will be met, including in the event of insolvency of the nuclear energy company, setting out any role for—

(i) revenue collection contracts, including any percentage specifically dedicated to decommissioning costs;

(ii) protection of decommissioning payments for time of need;

(iii) insurances; and

(iv) consumer risk.”

In respect of new nuclear projects, this amendment would require the Secretary of State to lay before Parliament a report on the up-front and overall expected cost of the project, details of any agreement reached terms for the sale of electricity onto the National Grid and how decommissioning costs will be met, including in the event of the nuclear company becoming insolvent.

Amendment 8, page 6, line 15, at end insert—

“(n) provision about penalties the Secretary of State may apply if the level of power outages of a nuclear reactor results in up to 60 non-operational days in a 12 month period.”

Amendment 3, in clause 7, page 7, line 8, at end insert—

“(3A) When exercising the power in subsection (1), the Secretary of State must not cause the excess of expenditure being incurred over the allowable revenue cap to lead to further charges upon revenue collection contracts.”

This amendment prevents the Secretary of State from allowing the levy of further consumer charges should an increase in allowable revenue be agreed following increases in costs or timescale of a nuclear project.

Amendment 4, page 7, line 8, at end insert—

“(3A) When exercising the power in subsection (1), the Secretary of State must publish a statement setting out how an adjustment in the company’s allowed revenue is to be made without relying on revenue collection contracts.”

This amendment requires the Secretary of State to set out how an adjustment to allowed revenue, following an increase in costs or time, is to be provided for by means other than additional customer levies.

Amendment 7, in clause 11, page 10, line 2, at end insert—

“(1A) The Secretary of State must exercise the power under subsection (1) to require each designated nuclear company to make an annual report of—

(a) the number of outages of each reactor, the reasons for outages and the total number of non-operational days per outage, and

(b) an assessment of the operational lifespan of the reactor and its key components and details of all safety inspections carried out.”

Amendment 5, in clause 32, page 24, line 24, at end insert—

“(5A) In the event that a relevant licensee nuclear company cannot be rescued as a going concern, or if a transfer of the undertaking to a wholly owned subsidiary does not result in the establishment of a going concern, the Secretary of State must establish a Government-owned company into which the assets, liabilities and undertakings of the relevant licensee nuclear company may be transferred in order to allow electricity supply to be commenced or continued at the nuclear installation in respect of which the relevant nuclear licensee holds a nuclear licence.”

This amendment ensures the continuation of a nuclear project where a failed company cannot be rescued as a going concern or successfully have its assets transferred to a subsidiary.

Amendment 10, page 24, line 26, at end insert—

“(7) Prior to a transfer falling within section 32(3), the Secretary of State must lay a report before Parliament.

(8) The report under subsection (7) must set out—

(a) the liabilities associated with the nuclear company;

(b) any estimated costs of getting the plant operational again if it has been temporarily shut down;

(c) the estimated lifespan of the nuclear power station; and

(d) decommissioning costs and confirmation of any funding provided by the nuclear company for this purpose.”

This amendment would require the Secretary of State to publish a report on the matters listed prior to any transfers falling within clause 32(3).

[Alan Brown]

I express my condolences on the untimely passing of Jack Dromey. I pass on my sympathies to his family, particularly the Mother of the House.

I rise to speak to new clause 1 and amendments 6 to 9 in my name. I make it clear at the outset that I still oppose the Bill. The strategy is completely wrong, but I tabled these amendments to seek transparency and to see whether there is any seriousness to ministerial words about their willingness to consider amendments and their openness to further parliamentary scrutiny.

Let me start with amendment 9, which is all about ensuring that Parliament has a fuller understanding of what sums are involved and what commitments the Government will be making as regards any new nuclear project. The Minister has been very good at telling us about the mythical savings that will accrue via the regulated asset base funding model introduced by this Bill—they are estimated at between £30 billion and £70 billion.

What the Government are not so good at is telling us what money they want to commit for the likes of Sizewell C. In effect, they are telling us, “Let’s save money for bill payers by signing up to a less bad deal for a new nuclear project.” According to the impact assessment, the capital and financing cost is going to be in the region of £40 billion to £60 billion for a new nuclear power station. It is a strange logic to tell us that £50 billion being added to our energy bills at the time of a cost of living energy crisis is somehow a good thing. By default, the Government are also confirming just how much of a stinking, rotten deal Hinkley Point C was for bill payers if we are saying that we can save that much money compared with the contracts for difference model for Hinkley C.

We know that eye-watering sums are intended to be committed, but the Bill, as it stands, gives the Secretary of State carte blanche to sign off on a new nuclear deal. Amendment 9 tries to address that by setting out key criteria that should be laid in a report before Parliament. In Committee, and at other times when there has been quizzing on cost transparency, we have been given the con trick, “We cannot share that information for commercial confidentiality reasons.” If Parliament is told that the capital cost of a new power station is some £23 billion, which is the current estimated cost for Hinkley Point C, we do not know what the breakdown of that £23 billion is, so there is no way that that would breach commercial confidentiality. We have a right to know what up-front costs are being committed to or forced on bill payers, and it is important we know that for any deals on the sale of electricity. As I said, at the moment the Government tell us how much money the RAB model will save, but they want to continue to be vague on how much a new project will actually cost. We have the smoke and mirrors argument that it is a basic RAB payment that somehow, in the future, gets partially negated with the sale of electricity to the grid.

In Committee, the Minister also argued that if the capital cost of the project was somehow known, it would be harder to raise capital in the private markets. That is a nonsense argument, given that other infrastructure projects have their costs put in the public domain while capital is still to be raised. I would have thought it advantageous for it to be in the public domain how much capital is required to be raised, in order to generate competition for that capital investment. Initial capital-raising discussions would need already to have been held to get some assessment of the viability of the project as it was being developed. Lines about market sensitivity and best value just do not stack up as a counter argument.

We also need to know what other costs are committed to during the anticipated construction period. Under the RAB proposals, consumers will start to pay money as soon as construction begins, but they are not committed to the full construction cost because that gets spread out over the 60-year operational contract period. It is only right that bill payers know what costs are being committed to at the outset before that final sign-off of a 60-year contract.

Amendment 9 also tries to get transparency about the sale of energy. We are told there will not be a strike rate, but to me it is not credible to believe that some £50 billion-worth of capital and financing costs will be committed for a 60-year operational plan without sufficient confidence on the returns from the sale of electricity. Ministerial clarity is required, and that is why it would be good to have the Government commit to having to report on that.

For example, in a briefing in favour of the Bill, the Prospect union has come up with the ridiculous supposition that if energy prices in the market are at the right level in the future, RAB payments could reduce to zero. Are we seriously supposed to believe that is a credible proposition? Equally, are we supposed to believe that if wholesale electricity prices drop to a certain level way below the operational costs of the nuclear plant in generating electricity, the nuclear company will just carry on regardless, because it carries all the risks? It might not be a strike rate as we understand it in terms of the contract of difference scheme, but given the scenarios I have painted, some sort of guarantee will be looked for and it might be a minimum floor price on the sale of electricity. If so, we should know about it as parliamentarians and bill payers. If there is not a minimum floor price in future and the risk lies with the developer or is somehow baked into the RAB payments, we should know and understand that as well. Otherwise it is about continued closed-door negotiations hidden from the public who are actually paying for it.

Amendment 9 tries to shine a light on what would otherwise be that closed-shop negotiation by a Government who still have not learned the lessons from their desperation to sign off on Hinkley Point C at any cost whatsoever and seem destined to do so again with Sizewell C, just this time with a different model and the bill payers carrying a greater level of risk through the RAB model. I would expect any parliamentarian here who believes in some form of parliamentary scrutiny to be happy to have the Secretary of State obliged to report on the capital cost, any up-front committed costs and any future sale of energy contracts as a basic form of transparency, as amendment 9 seeks.

--- Later in debate ---

[Wera Hobhouse]

I will not give way again.

Renewable energy is the future, and we in the UK are ideally placed to take advantage of the wind and wave power all around us. When UK tidal wave projects were cancelled in the past, that was always on a cost basis. Why do we not look at those projects again? They are truly renewable and truly the future. We could be an exporter of renewables. Onshore wind is now the cheapest form of electricity generation in the UK—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I have been incredibly generous, as I was to Sir John Redwood. Could the hon. Lady tell me which clause she is speaking to?

[Wera Hobhouse]

Thank you, Mr Deputy Speaker; I am coming to the end. I could not miss the opportunity to speak in this debate because I believe that the whole Bill is a complete failure. However, I will be supporting all the amendments that are proposed today because they will improve it, but I will vote against the Bill.

--- Later in debate ---

[Several hon. Members rose—]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. It would be really useful when people are contributing on Report if they could mention some of the amendments or the new clause now and again.

--- Later in debate ---

[Wera Hobhouse]

We always say that in the past it delivered so much energy, but what about the radioactive waste that is still there? We just close our eyes to that.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I just remind Richard Graham before he continues that the new clause and amendments should be spoken to, as opposed to a general debate.

[Richard Graham]

I am grateful, Mr Deputy Speaker. I would have made precisely the same observation—that we must focus on new clause 1 and the amendments. In that context, it is worth mentioning that there was undoubtedly a strategic error of no new investment in nuclear during the period from 1997 to 2010, when the Opposition were in power. That is precisely why we are here today to discuss the Nuclear Energy (Financing) Bill.

--- Later in debate ---

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

I rise to speak to the amendments tabled on Report. You will be interested to know, Mr Deputy Speaker, that I would also like to talk about the Bill and its contents.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Dr Whitehead, do you intend to keep your mask on?

[Dr Whitehead]

Sorry, no—I have a general habit of wearing a mask whenever possible.

The Bill essentially falls into three parts. Part 1 concerns the designation of a company for the receipt of regulated asset base payments. Part 2 concerns the collection and disbursement of funds through the regulated asset base arrangements. Part 3 sets out a special administration regime, should a nuclear power plant be unable to carry out its obligations arising from the institution of the regulated asset base arrangement.

The Bill, essentially, is trying to produce a method for funding and getting over the line one particular nuclear power plant: Sizewell C. That is the only plant that is developed enough to be able to generate by 2030. A substantial part of the Bill is not about the general future of nuclear, or the relationship with nuclear renewables; it is about how one plant is to be financed over the next period so that it can actually start producing energy, hopefully by the end of this decade or shortly thereafter.

The Labour party supports nuclear power for the future and is particularly concerned that, for example, the Climate Change Committee has indicated that some 8 GW of nuclear power might be put in the mix for low-carbon renewable power for the future. Sizewell C is an important part of that process—indeed, getting it going is long overdue. Perhaps I can put the record straight, because the previous Labour Government, as the 2007 nuclear White Paper and the strategic planning documents of 2009-10 show, laid the basis for the present number of sites to be considered and, therefore, for nuclear power going forward.