I can assure the hon. Gentleman that each project is taken on its merits. Britain is open for business. We are very keen to see investment from overseas in our new nuclear, but it is very clear that the UK supply chain will provide an enormous amount of the jobs and growth that we are looking for in this country.
Wednesday 17 June 2015
[Mr Peter Bone in the Chair]
New Nuclear Power
That this House has considered new nuclear power.
Nuclear power was promised as an energy source that would be too cheap to meter. It is now too expensive to generate. If we were planning a nuclear policy from scratch, would we choose to do a deal with two French companies, one of which is bankrupt, while the other, Électricité de France, has a debt of €33 billion? Would we also collaborate with a country with a dreadful human rights record—China, whose national investment department is coming into the arrangement—and with Saudi Arabia, with its atrocious record on human rights, where people are executed on the street? We are left with the dregs of investment from throughout the world—fragile and tainted. The sensible money deserted Hinkley Point years ago. Centrica had an investment of £200 million, and it abandoned it and ran away, because it saw the project as a basket case.
Still, nuclear power has wide support in this House, from almost all parties except the Scottish National party. I hope that this morning the new Minister, whom I welcome to her new work, can apply her distinguished forensic skills to taking a fresh look at the situation. Many people are gravely disturbed by the prospect of new nuclear power. That is particularly so among Treasury civil servants. We are in an extraordinary situation, where there is still public support in spite of Fukushima. One of the main reasons for that is that the British public were “protected” by a skilled public relations operation from knowing the terrible cost of Fukushima—between $100 billion and $250 billion. Radiation is still leaking four years after the event, and tens of thousands of people cannot return to their homes. Other populations were not protected from knowing about Fukushima by an obedient press. However, former lobbyists for nuclear power appeared as independent witnesses, such as Malcolm Grimston, who was on television every day during the Fukushima events, praising the explosions of hydrogen as something of benefit. There is ludicrous PR spin, to the extent that this week two different people from a public relations agency that works for nuclear power rang me up and offered to write my speech for me. They inquired who the Chair would be, as if that might be important. Those are lobbyists and spinners, presenting a favourable case for nuclear power.
Hinkley Point B is a European pressurised reactor. There are some under construction in Finland, France and China. Not one of them has produced enough electricity to light a bicycle lamp. They are all in serious trouble, so why do we continue with our belief in Hinkley Point C? The EPR in Finland was due to generate electricity in 2009. There has been a series of delays, problems and cost overruns, which have themselves now overrun, and the bill is €4 billion greater than anticipated. The possible opening date has been moved year after year and is now set at 2016, at a cost of €8.3 billion. However, other problems have come up. There is another station under construction at Flamanville. It was due to be completed at a cost of €3.3 billion and now has an overrun of nearly €5 billion. There is a serious problem at Flamanville which will affect all the reactors—the carbon level in the steel for the pressure vessel is too high. That means that the steel is brittle and could crack open, with catastrophic results. That affects the planned reactors in China, Finland, France and of course at Hinkley Point. It is a catastrophic problem and will mean a major delay. There is no way of reconstituting that steel.
The way the deal was done is almost unbelievable. We agreed under pressure, because there were Government promises and political pressure, to do a deal at almost any price to justify Hinkley Point C. We struck a deal for £92.50 per MWh. That is twice the going rate for electricity now, and we said that we would guarantee that deal for 35 years. That was two years ago. Since then, the price of energy throughout the world has gone down a great deal, because of shale gas and the drop in the price of oil. The price we agreed was ludicrous at the time—far too generous. The head of INEOS, the company in Grangemouth, has struck a deal since then with the same company— Électricité de France—for less than half that price. The country was ripped off, and we cannot seem to get out of it. We must do something about the strike price that we agreed.
In the world as a whole, nuclear powered energy generation peaked in 2006. Since then it has been in decline. It has gone down by 10% in Europe. Most energy consultants say that the total cost of the project is indefensible. We omit something from our calculations of historical costs and pretend that nuclear is cheap, when we forget about the cost of waste. In fact we do not know what the cost of the waste from Sellafield is. We are still adding up the bill. The latest estimate for clearing up Sellafield—just one site—is £53 billion. It is thought that the figure will exceed £100 billion eventually. When those costs are added to the historical costs of nuclear power it will not be found to be competitive any more.
Also, we now have alternatives. We are not in a situation where nothing else is available. The world has moved towards renewables, including the clean renewables, to a far greater extent. The Government are to be congratulated on having put forward a package and the money for tidal lagoons in the Severn estuary. An enormous tide of water sweeps up that estuary twice a day. That is vast untapped energy—British, free, eternal and entirely predictable. The technology involved is simple and has been working successfully in France for 50 years, producing the cheapest electricity in the world.
It is a curious thing, but the Secretary of State for Energy and Climate Change in the previous Parliament had an impeccable record on energy some years ago, when he launched the Liberal Democrat energy policy under the heading “Say No to Nuclear”, saying that
“a new generation of nuclear power stations will cost taxpayers and consumers tens of billions of pounds”.
That is absolutely right. He went on:
“In addition to posing safety and environmental risks, nuclear power will only be possible with vast taxpayer subsidies or a rigged market”.
That was the man who, when the red boxes and chauffeur-driven car arrived, changed his mind altogether and did a terrible financial deal to get Hinkley Point on the road. We will be paying for that for many years. The cost of Hinkley Point has been estimated as an additional £200 a year for every consumer in Britain. That is billions of pounds in subsidy over 35 years. The Government have guaranteed £16 billion in subsidy for a technology that has not been proved to work and is not working anywhere. Almost any alternative is better than pressing on with Hinkley Point. There are older nuclear designs that we could use, but we are heading into a technological jam where there will be difficulties. We are proposing to invest tens of billions in a system that has not been proved to be effective, and has certainly never proved to be economic.
There have been many problems at Flamanville, near Cherbourg, which are not limited to the pressure vessel. There have also been problems with the valves and the whole cooling system, following a warning in April from the French nuclear safety regulator about an excessive amount of carbon in the reactor vessel. That is not a journalist causing trouble but the head of the French nuclear industry talking about a potential disaster in the making.
What is likely to happen in future? There is a nuclear disaster almost every 10 to 15 years, due to various causes. The result of Three Mile Island, Chernobyl and Fukushima has been great fear among the population. That is what happened in Germany, which felt the full force of the truth about Fukushima and sensibly cancelled its whole nuclear programme. Germany is now going into solar power and many other alternatives that are available to us. Tidal power is not available to Germany, but we have that great opportunity ahead.
There will almost certainly be problems in future. Some hazards today were unknown in the past. I recall going to an exhibition called “Atoms for Peace” as a young boy in 1948, when we believed that nuclear would be the answer, but experience has taught us otherwise. The possible accidents range from simple mechanical errors, such as not having enough carbon in the steel, to the simple human errors that happened at Three Mile Island and Chernobyl. Technical faults also occur, but the greatest risk we now face is terrorism. Older nuclear power stations were not built to withstand terrorist attacks by drones and all the means by which people could attack them. Anyone living anywhere near a nuclear power station must be in a state of anxiety about that possibility, because of the accidents and disasters we have seen.
Fukushima was built to withstand a tsunami, but it could not withstand the tsunami and earthquake that came together. Any of these natural disasters are possible. We have not had a tsunami for some time along the Severn estuary, but we had one in 1607 when part of the area that I represent and the area where Hinkley Point now stands was flooded by a tsunami that came up the Bristol channel. It is believed to have come from underwater activity out in the deep ocean, so a tsunami is unlikely but possible there. We cannot guard against it. Why on earth risk a catastrophic accident when alternatives are available?
I am encouraged to see reports that many civil servants in the Treasury are deeply unhappy about the financial situation of nuclear power. There was a story that if Labour had been elected, it would have turned its back on nuclear power. I believe that to be true. There have been reports in The Times and elsewhere—authoritative reports from serious journalists—that groups in the Treasury are saying that it will be a terrible mistake and a financial catastrophe if we go ahead. May I say to those civil servants that it is their job to speak publicly? We know now what happened in Scotland during the referendum debate, when Sir Nicholas Macpherson decided to leak—to publish—a report of his advice to the Chancellor. His reason for doing so was that he thought the likely effects of Scottish independence would be catastrophic for the country and for Scotland. He justified that leak, which was almost unprecedented among senior civil servants, on the basis that it was in the national interest. He was supported by the head of the civil service, Sir Jeremy Heywood, and condemned by a Committee of this House.
Look at the past; look, for example, the commercial advantages of the steam-generating heavy water reactor, which produced nothing and was useless, but cost £200 million. That was many years ago. There was also the decision to treat Concorde as a commercial venture that would succeed. There were civil servants who quite rightly opposed those, but the ethos of the civil service is the unimportance of being right. The careers of civil servants who go along with the ministerial folly of the day prosper, while the careers of those who are right in the long term wither. It is different now. There is some heroism in civil servants speaking truth to power and saying to their masters, “This should not go on. There are alternatives. The time has gone for nuclear power.” Civil servants who know the new ethos in the civil service should regard it as their patriotic duty to speak truth, not only to power but to the nation, by saying that the time for nuclear power is over.
Nuclear energy plays a critical role in the Government’s security of supply and decarbonisation goals. The UK’s nine existing nuclear power plants generate around 20% of our electricity. However, all but one of them are currently expected to retire by 2030. Nuclear power is one of the cheaper forms of low-carbon electricity, reducing pressures on consumer electricity bills, relative to an energy mix without nuclear. Nuclear power provides reliable base-load electricity with lifecycle carbon dioxide emissions similar to those from wind power and much less than those from fossil fuels. New nuclear power is a vital part of the investment needed in our electricity sector that will boost the economy, create thousands of jobs and help to keep the lights on.
As set out in the Conservative party’s manifesto, we are committed to a significant expansion in new nuclear in the UK. The Government have prepared the ground for new nuclear power stations through a package of reforms and regulatory measures that will remove barriers to investment and give developers the confidence to take forward projects that will help to deliver secure, low-carbon and affordable energy. We have also ensured that operators of new nuclear power stations put in place robust plans for the finance and management of their waste and decommissioning from the outset.
We are seeing significant progress. The first new nuclear power station in a generation moved a step closer last year, as the European Commission announced on 8 October 2014 that it has approved the Hinkley Point C state aid case. The Government and EDF are currently in discussions to finalise the contract for Hinkley, which is expected to start generating electricity from 2023. In total, industry has set out plans for five new nuclear projects in the UK for a total of up to 16 GW of new nuclear capacity, providing around 35% of electricity generation.
In total, industry has set out plans for five new nuclear projects. The Government are clear that the UK is open for business. We want to see high-quality investment from overseas. The nuclear programme represents a tremendous opportunity to establish the UK as a key nuclear country, with the potential to export capabilities to other countries. That includes capabilities in decommissioning, in which we are already a world leader. This offers us an opportunity to develop our domestic supply chain and to realise economies of scale. It is also an opportunity to make the UK an even more attractive partner for international research and development collaboration.
To deliver the ambitious new build programme on time and on budget, a skilled workforce in the UK is essential. The scale of the industry’s new build aspirations, the length of time since the last new build project and the high average age of the existing nuclear workforce mean that it is essential to take action now to prevent skills gaps from developing in the course of the new nuclear programme. The Government recognise that this is a big challenge, particularly with the ongoing need to maintain and decommission existing nuclear power stations, so we have introduced the National College for Nuclear, which will work collaboratively with the wider industry, skills bodies and training providers, and will utilise international best practice to develop an industry-wide curriculum.
Moving on to the vital issues of safety and security, we are confident that the UK has one of the most robust regulatory regimes in the world. As the global expansion in nuclear continues, the UK will ensure that any technology used in this country meets the rigorous safety, security and environmental standards. The importance that we attach to safety is shown through the UK’s independent nuclear regulators—the Office for Nuclear Regulation and the Environment Agency—which ensure, through regular reviews and inspections, that operators are fulfilling their duties and that robust safety and security measures are in place right across the industry.
With plans for 16 GW of new nuclear capacity in the UK, the Government are firmly committed to delivering geological disposal as the safest and most secure means of managing our higher-activity waste in the long term. We need a permanent solution following more than 60 years of producing radioactive waste from various sources, including electricity generation from nuclear power.
I would like to get on to answering the hon. Gentleman’s specific questions. He talked about delays at other sites where there are EPR reactors. I can tell him that officials have visited Olkiluoto to get first-hand experience of the build programme there, as well as the other EPR builds at Flamanville in France and Taishan in China. Experience gained through the EPR family—it is a new technology, as he points out—is now being systematically shared between the three current build sites, and Hinkley Point will become part of that arrangement. Experience in Finland and France, particularly in relation to the order in which key parts of the nuclear island are built and how they are fabricated, has benefited the project in Taishan, such that that project is now running to time and to budget.
The hon. Gentleman also asked about the strike price potentially being too high in relation to the EDF plant. I can assure him that our estimate of the future price of wholesale electricity is that it will rise into the 2020s. That has been a careful assessment. Nuclear electricity is a key part of our energy mix. He will know that other technologies also involve a very high cost to the consumer right now. The mix is vital, so we believe that this is not too generous. EDF aims to have the plant up and running in 2023. We expect that, with a significant proportion of our power stations due to close over the coming decades, we will need that level of investment to replace that capacity.
The hon. Gentleman also asked about tidal power. Personally, I am as excited as he is about the prospects for marine and tidal power, but again he will accept, I am sure, that this is another new technology, as yet unproven. We have taken the first steps. We expect it to be a big contributor to our energy mix, but not the only one.
I emphasise that, as Energy and Climate Change Minister, I have two priorities: security of supply and keeping the lights on. In securing those priorities, I want to keep bills as low as possible. With new nuclear in the energy mix, I believe we can achieve all those things. Nuclear power is a low-carbon, proven technology that will increase the resilience of the UK’s energy system and, rather than costing more money, the full nuclear programme will, on current projections, save households about £78 on their bills in 2030.
I congratulate the hon. Member for Newport West on his attention to this very important subject, but I want to be clear that the Government believe that developing energy from new nuclear is the right thing to do in the UK.
Motion lapsed (Standing Order No. 10(6)).