Oral Answers to Questions
Virendra Sharma Excerpts(1 year, 5 months ago)
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Grant Shapps
I can confirm that that is the intention with Great British Nuclear. I know that areas such as Wylfa Newydd—if I am pronouncing it correctly—in my hon. Friend’s constituency could well be in line to benefit. However, as she can tell from my Welsh pronunciation, I suspect that I will be on the English side tonight.
Mr Virendra Sharma (Ealing, Southall) (Lab)
Yesterday, I hosted a roundtable meeting for businesses in my constituency. They were worried about late payments and a Government who are not helping them. Fifty thousand businesses close every year due to late payments, and small businesses account for two thirds of UK private sector employment. Will this Government act before the worst of the Tory-led recession bites to save millions of jobs?
Kevin Hollinrake
I thank the hon. Member for his question. He is absolutely right to bring up this matter. It is one of the concerns that has been raised most frequently with me since taking on this role. We are tackling the culture of late payments with measures including the Payment Practices Reporting, the Small Business Commissioner and the Prompt Payment Code, but I am determined to see how much further we can go to be effective in this area.
Oral Answers to Questions
Virendra Sharma Excerpts(2 years, 1 month ago)
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Mr Virendra Sharma (Ealing, Southall) (Lab)
The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)
As the hon. Gentleman knows, the energy price cap continues to protect consumers in a world where gas prices have more than quintupled in a year, and I strongly expect that it will continue to do so.
Mr Sharma
I thank the Secretary of State for that answer. Given the pressure that families are facing in this cost of living crisis, does he agree that the best way to help families to pay their bills is through a windfall tax on oil and gas producers in the North sea to give the poorest up to £600 off their bills?
Kwasi Kwarteng
As the hon. Gentleman will know, we believe that a windfall tax in this situation would be a tax on jobs, destroy investment and add to the uncertainty in oil markets. It would send completely the wrong message to investors, as well as to people who are invested in markets. Every one of us, anyone with a pension, would be adversely affected by such a tax.
Oral Answers to Questions
Virendra Sharma Excerpts(2 years, 2 months ago)
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Kwasi Kwarteng
That is why we have £155 million that can be applied discretionally, particularly to protect these vulnerable consumers. Labour’s whole approach to energy security has been woeful. Labour destroyed the nuclear industry we had, without any progress, and it has created massive uncertainty in energy supply through its proposed windfall tax, which is not the way to produce energy supply that secures low-cost energy for our people.
Mr Virendra Sharma (Ealing, Southall) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (George Freeman)
I am grateful for the hon. Gentleman’s question on the importance of research into neurodegeneration and Parkinson’s, a cause I was proud to champion as Minister for life sciences. We are investing £20 million a year, including £14.8 million through UK Research and Innovation and another £6 million through the National Institute for Health Research. We continue to fund the UK Dementia Research Institute, and in the autumn we announced another £375 million for neurodegenerative diseases over the next three years.
Mr Sharma
More than 150,000 people in the UK will have Parkinson’s by 2030. Parkinson’s UK is clear that, to accelerate the search for a cure, research must be supported by improved infrastructure, including the use of digital technology and better clinical trial design. Will the Minister meet me and Parkinson’s UK to discuss how its proposal for a challenge fund could help to defeat Parkinson’s?
George Freeman
Yes, I would be delighted to meet the hon. Gentleman. He makes an important point. The truth is that the next frontier in neurodegenerative science will be a mixture of neural pathways, neural mapping, digital science and deep-tissue phenomic and genomic science, which is why I was recently in Switzerland at the institute of neuroscience in Lucerne to see whether we can establish a collaboration.
Nuclear Power Funding
Virendra Sharma Excerpts(2 years, 5 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Virendra Sharma (in the Chair)
Before we begin, I remind Members that they are expected to wear face coverings when they are not speaking in the debate. This is in line with current Government guidance and that of the House of Commons Commission. I remind Members that they are asked by the House to have a covid lateral flow test twice a week if they come on to the parliamentary estate. That can be done either at the testing centre in the House or at home. They should also give one another and members of staff space when seated and when entering and leaving the room. I call Virginia Crosbie to move the motion.
Virginia Crosbie (Ynys Môn) (Con)
I beg to move,
That this House has considered funding for nuclear power.
It is a pleasure to speak in this important debate on funding for nuclear power. The UK has a long and proud history of pioneering nuclear power. In the 1940s, British scientists were pre-eminent in the development of nuclear energy. In February 1955, the Government published a White Paper entitled “A Programme of Nuclear Power”, announcing the first purely commercial programme, building between 1,400 and 1,800 MW electrical Magnox capacity by 1965, and investigating the future use of fast breeder reactors. In 1956, we established the world’s first civil nuclear programme, opening our first nuclear power station, Calder Hall, at Windscale. At the peak of 1997, 26% of the nation’s electricity was generated from nuclear power. Since then, several reactors have closed, and the share is now about 16%. However, almost half of our current capacity is due to be retired by 2025, and other plants are rapidly reaching their use-by dates.
Our most recent plant, Sizewell B, began to generate electricity more than 25 years ago. Hinkley Point C, which has been under construction since 2014, is expected to begin generating energy by at least 2026, with a construction cost of about £23 billion. Therein lies the problem. Before we discuss it in more detail, I should like to put into context why nuclear power is important at the moment. First, I urge Members to consider our commitment to the planet. The Government have committed to achieving net zero by 2050, and as the Prime Minister has rightly said, our strategy sets the example for other countries to build back greener, as we lead the charge towards global net zero. He has stated that the world is at “one minute to midnight”, having run down the clock and waiting to combat climate change. It is time to move from “aspiration to action” if we are to slow global warming.
While our seven advanced gas-cooled nuclear reactors have been the most productive low-carbon assets in Britain’s history, all will be retired by 2030. Even before those retirements take effect, we have begun to see increased, not decreased, carbon emissions. This year, our emissions from energy generation are expected to be higher than they were last year—the first year-on-year increase since 2012. If we do not replace the current fleet, it is estimated that emissions will increase by 200 million tonnes by 2035.
Secondly, I urge Members to consider our commitment to the people of the UK. In the past few weeks, we have seen that both our energy security and our stability are at risk. In September, a fire at the Kent interconnector, which connects the UK and French power systems, led to soaring energy prices in the UK. Britain usually imports 3 GW of power from France—enough to supply 3 million homes—and the fire showed just how fragile our energy security is when we rely on other countries for production.
The fire coincided with cold weather, post-covid increased commercial demands for power, gas supply issues from Russia and Norway, and unusually cloudy but calm conditions, which created price increases and what the media dubbed “an energy crisis”. That combination of events illustrates how much our power systems are under pressure from the closing of conventional plants and our growing reliance on inconsistent renewable energy such as wind and solar.
Meeting the sixth carbon budget’s requirements will require all new cars, vans and replacement boilers to be zero carbon in operation by the early 2030s. Meeting the sixth carbon budget’s requirements will require all new cars, vans and replacement boilers to be zero carbon in operation by the early 2030s. However, to move people towards the use of electricity while hitting net zero production by 2035, we must quickly move away from generating that electricity from fossil fuels. Britain currently has slim spare capacity in electrical power generation to feed those changes, leaving both our energy supply and our security under threat.
We should also consider the wider role that nuclear energy can play in achieving net zero. As well as my passion for nuclear, I am a fan of hydrogen. I am delighted that the Government are supporting the Holyhead hydrogen hub in my constituency of Ynys Môn. Our nuclear industry stands ready to provide a significant kick-start to the UK’s hydrogen economy, which will enable us to pull ahead in the global hydrogen race. Others are moving fast to beat us. Emmanuel Macron wants France to be a world leader in green hydrogen by 2030, achieved by producing green hydrogen at scale from nuclear energy. We can outmanoeuvre France and other nations by taking steps such as expanding the renewable transport fuel obligation to cover nuclear, even if just for a time-limited period, to stimulate investment in hydrogen production and support a quicker roll-out of hydrogen, with buses, trains, lorries, ships and planes, all of which can be made in the UK.
Finally, I ask Members to consider jobs and our levelling-up agenda. When we are importing gas from Russia and electricity from France, where are the jobs generating that power located? Who is getting the value added from what we are paying for that power? British people are paying their electricity bills and they are not always funding jobs. At its peak, a large-scale nuclear plant employs around 10,000 people. At the moment, while constituencies such as mine of Ynys Môn suffer low gross value added, underinvestment and a lack of quality, well-paid local jobs, we are paying our continental neighbours to provide us with energy. For all those reasons, the UK needs to look closely and urgently at its energy strategy.
There is an answer. The road map to net zero published earlier this year by the all-party parliamentary group on nuclear power states:
“Nuclear is the most powerful and jobs-rich form of low-carbon energy.”
Nuclear has the ability to give the UK energy security and stability for decades to come, but we need to get to grips with nuclear sooner rather than later. For years, successive UK Governments have prevaricated, argued and changed position about what we are going to do with nuclear energy. I was delighted when the Government announced their Nuclear Energy (Financing Bill), which had its Second Reading last week. My hon. Friend the Member for Copeland (Trudy Harrison) and I have been pressing for that since setting up the nuclear delivery group last year.
The need for that Bill brings me back to the fundamental problem with nuclear. Yes, it has by far the lowest land footprint and thus the lowest knock-on environmental impact of any clean energy source. Yes, it would create an estimated 90,000 well-paid, quality UK jobs, along with huge supply chain opportunities. Yes, it would keep producing reliable energy regardless of whether it is sunny or windy. And yes, it would give the UK energy security and stability. But—and it is a big but—building a large nuclear plant takes time and money, and therein sits the big grey elephant in the room.
As I have already outlined, Hinkley Point C began construction in 2014 and it is not expected to begin energy production until at least 2026. It is not possible just to say, “I’m going to build a nuclear plant,” and then begin construction. It takes years to go through the planning and environmental concerns, submit a development consent order, and consult, debate and clarify before getting an agreement even to stick a spade in the ground. Fifteen years is a long time to expect an investor to wait to see any return on their capital, and that is why the financing of large nuclear plants has been such a big issue. It was cited as the main reason why Hitachi withdrew from Wylfa Newydd in my constituency of Ynys Môn, pulling the plug on nearly 20 years of hope for my constituents. Traditional sources of private and commercial funding for large-scale infrastructure developments include pension funds and investment vehicles, but they are generally less willing to come forward for projects that will take 10 to 15 years before there is any return on investment.
Financing for small modular reactors is potentially more straightforward, and I welcome the Government’s work on funding for SMRs. I also welcome the fantastic news today that Rolls-Royce has funding for its SMRs, thanks to a lot of hard work in both private and Government funding for this UK initiative. As modular builds, advanced modular reactors require less in up-front costs and time, but they are intended for local energy production and are still in the development stage. A single SMR on Anglesey could produce enough energy for north Wales, which is primarily a rural area, and a large plant in the same location would power the whole of Wales, with a little bit left over for England, if we were feeling generous.
That is why the Government are progressing the Nuclear Energy (Financing) Bill through Parliament, to de-risk new nuclear projects and attract private sector financing for large-scale and advanced nuclear power projects through the RAB—regulated asset-base—model. Under this model, an independent regulator sets a price which a developer is subsequently allowed to levy on consumer bills in return for the provision of certain power infrastructure, even before they begin generating power. This allows developers to have a guaranteed return on their investment and lower costs when raising the capital required for building a power station, which accounts for much of the costs of nuclear projects. RAB is already used in other UK infrastructures, such as the Thames Tideway tunnel.
After months of raising the issue, I am keen to see the Bill progress, and I hope that it will lead to large-scale new nuclear power development across the UK. I implore colleagues to support its passage through the House. Although the debate last week was poorly attended compared with other more thrilling rides, such as the Environment Bill, it could none the less be the most significant piece of legislation that we pass for the long- term benefit of our country.
We should seek to use the Bill to fund not just one but several large new nuclear builds. Building one plant takes time, as we see at Hinkley Point C, but if we act now, those specialist resources can be redeployed on our next plant, and the next and the next. With each plant, we develop more specialists, which means that build time is shorter, costs are relatively lower and efficiency is greater. Each time, we will develop local specialists, employ local apprentices and leave generations of local people with high-quality, specialist well-paid local employment.
The Bill is incredibly welcome, but we may need other financing tools initially in addition to the regulated asset base and contract for difference models. We must continue to explore other innovative ideas. We need to give our scientists and innovators the help and support that they need to overcome barriers beyond financing. The Advanced Research and Invention Agency Bill is a great example of how we can do that.
The recent Budget allocated £1.7 billion of public funds to support new nuclear projects, and we have seen the Government commit to £385 million in the advance nuclear fund; £215 million for small modular reactors; £170 million for research and development on advanced modular reactors; £120 million for the enabling fund announced in the net zero strategy; and an additional £40 million for developing regulatory frameworks and supporting UK supply chains.
By embracing nuclear we can secure not only our future energy security, but our future employment security, as the levelling-up agenda and the net zero agenda coincide. When Hitachi withdrew its development consent order for Wylfa Newydd at the beginning of the year, citing programme financing as the main factor, my constituency was devastated. Companies such as Bechtel, Westinghouse, Shearwater and Rolls-Royce are all keen to establish new nuclear on Anglesey and are looking at other sites in the UK.
The model proposed in the Nuclear Energy (Financing) Bill could be the starting point for regenerating areas of the country that desperately need levelling up. Alongside the Advanced Research and Invention Agency Bill and other initiatives and legislation, it offers hope for a new tomorrow. With that in mind, I appeal to colleagues across Westminster: now is the time for us to come together and embrace the opportunities before us. We cannot afford to stay in our partisan corners and we cannot afford to stay silent. We cannot afford to let this opportunity slip through our fingers. New nuclear has the potential to be a game changer locally, regionally and nationally.
To conclude, I welcome with open arms the finance and support structures that the Government have put in place for new nuclear. For the sake of our young people and future generations, I ask that we all put our political differences aside and work together to make them a reality. Diolch yn fawr.
Several hon. Members rose—
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
I would love it if my hon. Friend were here, Mr Sharma, but sadly he is in his constituency. I am sure Hansard will correct the record shortly.
Gavin Newlands
That is okay, I am used to it—although my hon. Friend has a ginger beard, so I am not sure what that says. I congratulate the hon. Member for Ynys Môn (Virginia Crosbie)—I will try to pronounce her constituency correctly—on securing today’s debate. It is an issue, to be honest, that deserves a better turnout than we have today, although she said there was a poor turnout for the Bill last week, so it is probably no surprise that a Westminster Hall debate on the same issue will not generate a large crowd either.
She said it was one minute to midnight, which we have heard a number of times from different politicians over the past few weeks, particularly at COP26, and she is right about that. As a Scot and SNP Member of Parliament, that makes me wonder why the Government continually put up barriers to Scotland’s renewable industry, not least by not getting involved in the grid connection charges, as Scotland has the highest in Europe.
Had I known that there would not be many Members here today, I might have prepared a longer speech. I will certainly leave plenty of time for the hon. Member for Southampton, Test (Dr Whitehead). The hon. Member for Ynys Môn spoke about the elephant in the room. With this Government, it is the mammoth in the room, such is the old-school thinking on this country’s future energy needs, and the fact the Government are utterly blinkered on the issue of nuclear. Nuclear industry lobbying has convinced them that nuclear is not only desirable but essential for the future. That is simply not the case.
Hinkley Point C is the most expensive power station in the world. The Government’s rationale was that building a suite of large-scale nuclear power stations would lead to competition and cheaper costs. However, the piecemeal approach of nominally awarding sites to different preferred bidders meant that EDF was the only game in town. There was no competition whatsoever when negotiating the contracts. EDF had been beset with problems with prototype stations in Finland and France, so it had to be a bit more cautious in its pricing. It is no surprise to anyone that the UK Government had to sign such a bad deal. The extraordinary strike rate of £92.20 per megawatt-hour for a 35-year contract, compared with the cost of offshore wind at £40 per megawatt-hour, for just a 15-year concession, meant that Hinkley C was not just a bad deal, it was economically illiterate.
In the Budget, the Chancellor committed £1.7 billion to progress Sizewell for a final investment decision. That was in addition to the £500 million earmarked for the development of nuclear. As I said, the Government’s previously stated position was that building a suite of new large-scale nuclear power stations would lead to competition and cheaper costs. If they are using the same design as Hinkley, and a second station is easier and cheaper, as they have told us time and again, why do the Government need to commit a further £1.7 billion up front for outline design and costings? I am sure the Minister will answer that in his summing up.
Let us remember that that is essentially £1.7 billion just to make a final decision on its construction or otherwise. The truth is that not only is nuclear hideously expensive now and for the 35 years following construction, it will be horrendously expensive for hundreds of years to come. It will cost £132 billion just to deal with the existing nuclear waste legacy. Tories are usually keen on dealing with issues now and not leaving them for future generations to deal with. That is the excuse they give us when they freeze public sector pay or remove the £20 universal credit uplift. Why do they want to create another costly, needless and dangerous waste legacy for future generations to deal with?
The Minister rather let the cat out of the bag by essentially admitting in a recent letter that accompanied the Bill that the Government were introducing an alternative funding model that might save the taxpayer between £30 billion and £80 billion, and that the Hinkley Point C project was very poor value for money. I am certainly not going to argue with that. That being the case, how much money does the Minister estimate has been wasted on Hinkley? Crucially, how many billions of pounds are the Government willing to commit bill payers to, and what are all the future costs locked into nuclear power? If they say that they can save up to £80 billion, there would surely have to be a commitment of hundreds of billions of pounds.
The hon. Member for Ynys Môn alluded to the announcement made yesterday that Rolls-Royce has essentially match-funded the £210 million from the UK Government to develop small modular reactors. Initially, the hope is to have five SMRs at an estimated £2 billion a pop. We all know what happens with estimates in the nuclear industry, but that is another £10 billion that will likely end up on our energy bills in capital cost alone.
What else could we do with that amount of money? For starters, as the Minister has heard many times from my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown), Scotland is crystal clear. We do not want any new nuclear power stations. A YouGov poll showed that only 30% of Scots want nuclear to have a major role. The experts are clear that we do not need nuclear energy to decarbonise. In the 2019 world nuclear industry status report, Mycle Schneider, who was the lead officer of the report, said that nuclear power
“meets no technical or operational need that these low-carbon competitors cannot meet better, cheaper, and faster.”
The previous chief executive of National Grid, Steve Holliday, said that the idea of large power stations for baseload was “outdated”. He went on to say:
“From a consumer’s point of view, the solar on the rooftop is going to be the baseload.”
We could upgrade our homes to energy performance certificate band C. We could have wave and tidal generation, in which Scotland currently leads the world. This is a position that will be under threat unless this Government can find a fraction of the money that they are committing to new nuclear to help scale this up. There needs to be much greater investment in carbon capture and storage. The Government really must reverse their disgraceful decision not to select the Acorn Project cluster bid at St Fergus—the stand-out project—as one of the track-1 CCS projects. If the Tories were serious about decarbonisation, they would have approved the St Fergus carbon capture, utilisation and storage site, instead of the lesser pork-barrel options in the red wall.
There is a false argument, made by many in this place, that nuclear is required for when the sun does not shine and the wind does not blow. Pumped storage hydro, a renewable energy source that utilises surplus grid energy to fill the reservoirs and dispatch electricity when required, is cheaper, greener and more efficient. Pumped storage hydro is the perfect complement for intermittent renewables. An Imperial College London report suggested that there could be a system saving of £700 million a year from using pumped storage hydro instead of nuclear. Why should Scottish bill payers be forced to pay for nuclear energy that they do not want or need? This is another democratic deficit for Scotland, especially when so much of our renewable energy is not being supported at the moment and we are stuck with the highest grid charges in Europe.
To conclude, Scotland is very poorly served by UK Government energy policy. It is crystal clear that we need to control our own energy decisions through independence; that day will be coming a lot sooner than the Members in this room think.
Mr Virendra Sharma (in the Chair)
I want to apologise for getting mixed up with the names.
Dr Alan Whitehead (Southampton, Test) (Lab)
I have been confused in the past with Phillip Whitehead, the MP from some while ago, and also I have been called Alan Whitehouse on a number of occasions, which is a slightly less felicitous comparison.
I am delighted to say a few words on behalf of the Opposition. First, I congratulate the hon. Member for Ynys Môn (Virginia Crosbie) on securing this debate, and on putting her case so well and succinctly. She is a powerful advocate, from the point of view of her constituency, for the future of Wylfa nuclear power station. I share her great concern that what looked like a future for the new Wylfa power station a little while ago was dashed in the way that it was. I had conversations about that with her predecessor, Albert Owen, who was also a strong advocate for Wylfa and the area.
The case the hon. Member makes is essentially about how Government can secure the future of power stations by ensuring that they are financed and organised in the best possible way so that they actually do go ahead. The UK has had a serious problem over the past 10 years or so. Originally a number of consortia were interested in bringing forward a nuclear power station. There was the Horizon consortium, associated with Hitachi, which brought forward the Wylfa proposals. There was NuGen, associated with Toshiba, which brought forward proposals for a power station at Moorside. There was also, of course, the EDF consortium, which at the beginning of the decade brought forward proposals for Hinkley C, which is now being built, for Sizewell C and for Bradwell in Essex.
All of those consortia have, in one way or another, bit the dust. They have suspended their operations. In the case of Wylfa, the Horizon consortium first suspended operations and has now this year finally declared that it no longer has an interest in Wylfa as part of its future nuclear programme. All of that came about essentially because of the Government’s insistence on trying to secure new power stations by means of private sector investment. Wylfa and Moorside were closed down even after discussions with Government about assistance; the consortia did not like the way in which the arrangements would have been structured. There were some quite high-level discussions with the Japanese corporations involved in both of the consortia that I mentioned. A combination of their own balance sheets, their ability to fund those projects themselves and what they thought was on offer from the UK Government led them to decide that the projects should not go ahead.
As the hon. Member for Ynys Môn mentioned, building and financing a nuclear power station is a really hefty commitment. One has to put the money forward and not get any return on it for about 14 years, while the processes of generic agreement for the reactor, planning, construction and so on all proceed. One does not make a penny from the production of electricity from the power station before that. We know that funding new nuclear by private sector means is not a viable way of financing new nuclear. We must put that behind us.
EDF is building Hinkley C power station partly with its own finances, and that has caused a lot of problems for the viability of the company as a whole. However, it is aided in this build by a second form of nuclear financing, which is, effectively, a foreign Government part-financing the operation. In this instance, that is the 35% interest in Hinkley of the China General Nuclear Power Group, which was the result of a deal brokered by the then Chancellor, George Osborne, in 2015. The Chinese state nuclear corporation would have a 35% stake in Hinkley C, a 20% stake in Sizewell C and complete control of the third programme in that consortium’s plans, the Bradwell power station, whereby the China General Nuclear Power Corporation would install its own reactor—known as the Hualong One, I think—and have complete control of the financing, the planning and the operation.
As we have seen, that way of doing things appears to no longer be regarded as tenable. The Government have not said this explicitly—it would be interesting to hear whether the Minister is able to do so this afternoon—but the Bradwell proposal under Chinese control is no longer a reality because of the Government’s desire to remove Chinese influence from the future of the UK nuclear programme. I am sure we will discuss that further when we debate the Nuclear Energy (Financing) Bill over the next few weeks, as mentioned by the hon. Member for Ynys Môn. That second financing option—namely, getting a foreign Government involved—is probably not a good idea. As the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) said, the latest Budget costings include a sum of £1.7 billion, which I understand is to be put towards not only the development of and early works on Sizewell C, but buying the Chinese out of their Sizewell stake. I do not expect the Minister to confirm whether that is the case, but I think it is fairly probable that at least part of that sum will be directed towards removing that 20% stake from Sizewell C.
Further on financing, there is the possibility, as was tried with Hinkley, of funding the end product of the power station—that is, the energy that comes out when the permissions, the planning and the construction are finally complete. In the case of Hinkley, that will happen a long time after the original date of 2026 or 2027. I distinctly remember the then chief executive officer of EDF saying we would be roasting our Christmas turkeys on new nuclear power from Hinkley C in the winter of 2017. That is how far they are behind the original plans. I have on my wall the chart of the original EDF plans for the development process for Hinkley.
As the hon. Member for Paisley and Renfrewshire North said, the contract for difference arrangement for Hinkley was probably one of the worst deals that could be entered into for nuclear funding. Although it was supposed to introduce a back-loaded arrangement to secure the price for production and therefore increase investor confidence that the project would generate income when construction was concluded, the deal struck was disadvantageous for the customer and for this country’s electricity production. The CfD deal is at twice the likely market price for electricity over the period, and we are stuck with that for 35 years down the line. It is very unlikely that such a deal would be repeated, especially since it does not overcome the problem of how investors get any money back from their investment before the plant has started production. Hence the RAB—regulated asset base—arrangement that the Minister and I will discuss over the next few weeks as the Nuclear Energy (Financing) Bill makes its passage through the House.
The RAB arrangement has advantages and risks. An advantage is that it enables investors who might not have put their money into Wylfa or Moorside to invest in a project because they know they will begin to get a return on their capital before production starts. The RAB model, among other things, allows that to happen by setting, as the hon. Member for Ynys Môn mentioned, an allowable cost ceiling, which enables that cost to be distributed throughout the life of the project rather than only at a certain point. It has a substantial advantage from that point of view, but at the same time it has risks. It is a deal that lands on the public consumer’s purse. It effectively puts a levy on energy bills for the whole life of the project––40 years from now for Sizewell C––on consumers’ backs at various levels at various points of the process. There is a high levy during construction and a tail-off as the project proceeds.
Should the project not go well––go over cost or, as at Hinkley, go well over time—there is an increased risk to the consumer. There is an even worse risk if the project does not go ahead, as was the case with a couple of projects in the United States that were built on the RAB model. Consumers then have nothing to show for a large amount of money they have spent in their bills in the expectation that there might be a plant that would give them cheaper electricity in the end. I know that the Government have taken some steps in the Nuclear Energy (Financing) Bill to mitigate that risk and ensure that there are ways out of a company being unable to deliver. Nevertheless, the risk remains. Using RAB repeatedly for new projects simply adds to the cost of consumer bills by aggregating the total levies, making it potentially even worse for the consumer, if that is the model that is proposed.
That leaves one method of financing, which is simply that the Government pay for the construction of a new nuclear power station and then lease it out to the operator at the end of the construction period. I am not suggesting that the Government get together their own workforce to build it. They would put the contract out for bids to build the power station, which would be owned by the public and leased out for operation. That will have to be considered for any further nuclear power stations, rather than these various devices that, to a greater or lesser extent, have either failed or have some risk attached to them.
From our side, as the Minister knows, we gave the Second Reading of the Nuclear Energy (Financing) Bill a clear run and we look forward to Committee discussion when we deal with some of the finer points of RAB. Nevertheless, we will go forward on the basis of a supportive environment for the construction of Sizewell C, since it is the only nuclear power station that could conceivably get under way before 2030, because of all the other withdrawals.
We look forward to our debates in the House and to discussing some of the issues I have raised this afternoon about how best to finance nuclear power for the future. The hon. Member for Ynys Môn made a powerful case for ensuring that Wylfa at least gets noticed in the next phase of discussions, but I suspect that if that happens, it may be under yet another model of financing and different from Sizewell C’s.
Mr Virendra Sharma (in the Chair)
Before I ask the Minister to respond, I would appreciate him leaving a few minutes for the hon. Member for Ynys Môn (Virginia Crosbie) to wind up.
Budget Resolutions and Economic Situation
Virendra Sharma Excerpts(3 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Virendra Sharma (Ealing, Southall) (Lab) [V]
Thank you, Mr Deputy Speaker, for giving me the opportunity to speak in this vital Budget debate. This Government are endangering our NHS through their lacklustre approach to the coronavirus pandemic, hospital services and the social care crisis. Last Wednesday, it was clear that there is no plan for a recovery in NHS finances. In fact, the NHS was only mentioned once during the Chancellor’s entire speech.
During the pandemic, nurses and NHS workers have gone above and beyond to contain this hideous disease. Their sacrifice has been immense, which makes the 1% pay increase offered by the Chancellor all the more insulting.
Like the PM, I suffered and was saved by brave frontline staff. Having received world-class care himself, the PM and his Government cannot be so miserly and must reward our NHS heroes with a substantial pay rise.
In my own constituency, after years of dedicated campaigning by local Members of Parliament such as myself, we saw off the “Shaping a Healthier Future” programme. However, its toxic legacy lives on. Ealing Hospital has lost full A&E services, which we badly need. We have lost our maternity ward and we have lost in-patient paediatric care. The closure of the maternity unit in particular—where my own grandchildren were born—has been very harmful to my community. The Government must put their money where their mouth is and properly fund our NHS, and level up areas such as mine, with a densely populated and fast-growing population.
Finally, I want to speak about social care services, which at present are in the midst of a severe crisis. Some 40,000 older people have tragically died in care homes since the beginning of the pandemic, yet, in the Chancellor’s speech last week, there was no mention of social care. The Government have nothing to say to the hundreds of thousands of older people, neglected by a broken system that denies them the care that they so desperately need.
Instead of papering over the cracks, as this Budget does, I urge the Government to tackle these inequalities head on, properly fund social care and give NHS staff the pay rise they truly deserve. Only then will the Government be able to say that they are truly committed to levelling up our society, ensuring that no one, regardless of their wealth and background, is left behind.
Oral Answers to Questions
Virendra Sharma Excerpts(3 years, 5 months ago)
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Kim Johnson (Liverpool, Riverside) (Lab)
Mr Virendra Sharma (Ealing, Southall) (Lab)
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
Employers must have the flexibility to offer different terms and conditions. However, using threats about firing and rehiring as a negotiating tactic is unacceptable. The Government are working with ACAS to convene a roundtable of business organisations and employee representatives to discuss these issues.
Paul Scully
It is a commercial matter, but businesses do need flexibility with regard to terms and conditions—both for them and their employees—to protect jobs. We expect all employers to treat employees fairly and in the spirit of partnership. The very threat of fire and rehire is totally unacceptable, and we hope that all the businesses cited will reach a negotiated outcome with their employees.
Mr Virendra Sharma [V]
I hope that the Minister will give a more open and clear response to my question. Heathrow airport is pushing staff to strike—a measure that garnered support in a ballot ending last week. Its behaviour now amounts to bullying. Staff are being summoned to meetings before the consultation is finished and without support. Will the Secretary of State say that this is wrong, condemn this behaviour and agree that this business has relied on the support of the community, who are owed something back in these troubled times?
Paul Scully
I know how important Heathrow and the airlines sector is to the hon. Gentleman’s constituents, which is why we put so much support into that sector. I come back to the fact that we expect all employers to treat employees fairly and respectfully, no matter what job, what position and what community they live in.
Oral Answers to Questions
Virendra Sharma Excerpts(5 years, 1 month ago)
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Mr Virendra Sharma (Ealing, Southall) (Lab)
At the last general election, Labour promised to introduce a “Post Bank” to combat financial exclusion and ensure that everyone has access to banking services in their community. Does the Secretary of State agree that introducing a Post Bank to provide banking services in post offices would do wonders for the high street, as well as reducing financial exclusion?
Kelly Tolhurst
The hon. Gentleman gives me an opportunity to talk about the fact that we already offer banking services in our post offices. As I outlined earlier, we are doing the most we can to make sure that post offices and sub-postmasters are remunerated for the work they do.
Oral Answers to Questions
Virendra Sharma Excerpts(5 years, 3 months ago)
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Greg Clark
I am working closely with Sir David Metcalf, the director of labour market enforcement. On his particular recommendation about increasing penalties, we just have increased the penalties and it is reasonable to look at their effectiveness. I have made the commitment to the House that, of course, we will increase them if that proves necessary, but one of the other reforms that we are making is to boost the enforcement of workers’ rights by bringing together the different enforcement bodies so that such employers—the minority that do play fast and loose with the rights to which employees are entitled—should expect justice to be brought about. This will be part of the package that we have tabled.
Mr Virendra Sharma (Ealing, Southall) (Lab)
The Minister for Energy and Clean Growth (Claire Perry)
I want to pay tribute to our UK negotiating team, which did such a fantastic job at the recent conference of the parties in developing a robust set of rules that will take us forward to achieve what we need, which is further hardcore nationally determined contributions in 2020. We want to use our leadership in this space to continue progress, which was why I was pleased to announce our expression of interest in hosting the 2020 COP right here in the UK. I hope the hon. Gentleman will support that.
Claire Perry
We do not have the power to sanction under international law—or, indeed, under the current United Nations proposals—but we can work positively through initiatives such as the Powering Past Coal Alliance, which I was pleased to set up with my Canadian equivalent last year, to encourage all countries that, like us, are committed to phasing coal out of their energy system in a short period. We now have more than 80 members a year after launch, so we can continue to lead by example.
Oral Answers to Questions
Virendra Sharma Excerpts(5 years, 10 months ago)
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Claire Perry
I must pay tribute to my hon. Friend’s brilliant chairmanship of the all-party group on this technology area. He is absolutely right: we do think that water power has incredible potential. That is why the Government have invested over £100 million since 2010 in investigating various forms of the technology and why we are keen to continue to pursue opportunities, but they have to be at the right price for consumers.
Mr Virendra Sharma (Ealing, Southall) (Lab)
Richard Harrington
As I hope the hon. Gentleman is aware, I meet the steel industry regularly, and I am very interested to meet him to hear his views on the subject. I can assure him that everything that can possibly be done to deal with tariffs is being done. I had a meeting with all the chief executives of the steel business. I went to Brussels last week and met the director general of trade, as well as other CEOs and European colleagues.
UK Oil and Gas Industry
Virendra Sharma Excerpts(6 years ago)
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Mr Virendra Sharma (in the Chair)
Order. The Minister will get a chance to respond to the debate, and I would appreciate it if she would—
Kirsty Blackman
Thank you, Mr Sharma. In terms of ideological decisions, the onshore wind decision, taken on a blanket basis across the whole United Kingdom, could be applied flexibly to Scotland, and we would very much like that. There would still need to be a planning process, but it would be great if the blanket ban was not there.
Colin Clark
Almost 50% of turbine applications called into Holyrood to the reporter are then given permission. The hon. Lady just said that the Scottish Government have decided not to allow fracking—as I said in my speech, I think it is nimbyism, frankly, but fair enough, because that is their right—but if local communities and local councils say—
Mr Virendra Sharma (in the Chair)
Order. The hon. Member for Aberdeen North (Kirsty Blackman) is not responsible for the Scottish Government. Rather than directing questions to the Scottish Government through her, it is better to ask her a relevant question.
Colin Clark
Thank you, Mr Sharma. I will keep my question to the hon. Lady. Does she agree that there is a contrast between the two positions? Can one give permission for turbines that people do not necessarily want in their local community when one may not believe in having fracking in Scotland? Perhaps she does believe in having fracking onshore.