All 1 George Freeman contributions to the Nuclear Energy (Financing) Act 2022

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Nuclear Energy (Financing) Bill

George Freeman Excerpts
Alan Brown Portrait Alan Brown (Kilmarnock and Loudoun) (SNP)
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Not for the first time I think I am going to express a minority view in the Chamber, but I am sure everyone will listen carefully and, once I present my arguments, change their minds and agree with our point of view.

The real debate is whether we need new nuclear or not. I intend to spell out why we do not need new nuclear and, therefore, why we do not need the Bill. Before doing so, I want to highlight the UK Government market failures that have led to the Government scrambling to bring forward the Bill.

We know that Hinkley Point C is currently under construction, but it is under construction as the most expensive power station in the world. There are several reasons for that and how it came about. First, successive Governments seem to have developed a groupthink, following lobbying from the nuclear industry, that somehow nuclear is a prerequisite for our future. Then came the rationale that building a suite of new large-scale nuclear power stations would lead to competition and cheaper costs. However, that philosophy was flawed in that there were not enough competitors to start with and then a piecemeal approach was taken by nominally awarding sites to different preferred bidders. For Hinkley Point C, that meant EDF was the only game in town, so there was no competition when negotiating the contract. EDF had already been beset with problems with its EPR prototypes in Finland and France, so it had to be more cautious in its pricing. It is little wonder then that the UK Government ended up with such a bad deal. They have since tried to tell us that the eye-watering strike rate of £92.20 per megawatt hour for a 35-year contract, while the cost of offshore wind dropped to £40 per megawatt hour for just a 15-year concession, meant that the nuclear deal was a good deal.

In a letter last week, the Minister of State, Department for Business, Energy and Industrial Strategy, the right hon. Member for Chelsea and Fulham (Greg Hands), was effectively saying, “By the way, the Hinkley Point C deal was actually rubbish and poor value for taxpayers, so now we have an alternative funding model and we’re bringing that forward.” Interestingly, it was stated in the letter that the new funding model could potentially save the taxpayer £30 billion to £80 billion. How much money do the Government estimate has been wasted on Hinkley? How many billions of pounds are the Government willing to commit bill payers to if they say they can save up to £80 billion? Logic says that hundreds of billions of pounds would have to be spent to be able to argue that there could be a saving of £80 billion. I will happily give way to the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Mid Norfolk (George Freeman), if he can tell me how much money that £80 billion saving is estimated on? The right hon. Member for Chelsea and Fulham would not give way, but I am happy to give way if the hon. Gentleman can tell me how much the Government estimate—[Interruption.] I take it that he will not give us a figure. The Minister will not come forward and give a figure. That does not add confidence. The Government are saying the saving could be between £30 billion and £80 billion. That is a huge range and that does not give confidence to the estimating proposals either.

George Freeman Portrait The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (George Freeman)
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Just to correct the record, it does not at all mean I am not going to answer the hon. Gentleman’s question. It means that I will do it in the usual way, when I wind up at the end of the debate.

Alan Brown Portrait Alan Brown
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I was so hopeful that I was getting an answer there on the hundreds of billions of pounds that are being committed.

Returning to Hinkley Point C, we hear how advanced the project is and how well it is going, but the reality in terms of cost is that it is £4.5 billion over the initial estimates, which is 25% over budget. On progress, the commissioning date for unit one has now been put back to June 2026, instead of the anticipated 2025, but they also admit there is a programme risk of up to 15 months on top of that. That means that it could be September 2027 before unit 1 of Hinkley is operational and unit 2 will then follow a further year behind. So it is realistic to say that Hinkley Point C will not be fully operational until 2027-28, which is 10 years after we were initially told that Hinkley Point C was required to stop the lights going out. Given that the lights have not gone out, that undermines the original case for Hinkley.

We have to bear in mind that the EPR system has still not been shown to be successful. Flamanville in France is expected to start generating to the grid in 2024, 12 years late. Finland’s project has been delayed yet again, until next year, and it is 13 years late. Both have been crippled with spiralling cost increases.

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George Freeman Portrait The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (George Freeman)
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It is a pleasure to follow the hon. Member for Greenwich and Woolwich (Matthew Pennycook), and I want to thank him and all hon. Members who have spoken in this important debate. We have had more than 15 speeches and a number of important interventions. I also want to thank the right hon. Member for Doncaster North (Edward Miliband) for his constructive approach to this important piece of legislation.

In the seven minutes available to me to wrap up the debate, I want to try to deal with as many of the points that have been made as possible. First, I would like to remind the House of what the Bill really signifies and what it does. The net zero strategy, published earlier this month, sets out our vision for a decarbonised economy by 2050. This will see the power sector fully decarbonised by 2035, with nuclear power playing a key role alongside renewables. As the Prime Minister set out from the Dispatch Box earlier today, he and the Cabinet are putting every effort at COP into delivering that international leadership to that end.

This Bill creates a new funding model for future nuclear projects that will support our transition to a secure, resilient and affordable low-carbon electricity system. The measures in the Bill are critical to ensuring that we have the option to bring forward further nuclear capacity, delivering a system that is lower in cost for consumers than if we relied on intermittent power sources alone. While consumers will contribute to the cost of new nuclear projects during their construction, analysis shows that lowering the cost of financing new nuclear will save roughly £30 billion over the life of this refinancing, compared with relying on existing mechanisms.

It is good to hear that the Opposition will, sensibly, not vote against the Bill tonight. I would be surprised if any Member decided to vote against it—

Alan Brown Portrait Alan Brown
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Will the Minister give way?

George Freeman Portrait George Freeman
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No, I will not give way. I am under time pressure and I need to deal with all the points that have been raised—[Interruption.] I have at least half an hour of questions to answer, not least from the hon. Member himself.

The Bill will make it easier to attract, and reduce the cost of, capital. However, a number of points have been raised by hon. Members. I pay tribute to my right hon. Friend the Member for Kingswood (Chris Skidmore), who raised the urgency of tackling the downscaling and ending of the existing nuclear fleet, the urgency of getting this new financing in place and the role of nuclear in levelling up in Somerset and elsewhere in the country. My hon. Friend the Member for Gloucester (Richard Graham) powerfully set out the importance of tidal. My hon. Friend the Member for Morecambe and Lunesdale (David Morris) set out the importance of the nuclear cluster in his constituency and the importance of the 24/7 supply of nuclear for reliability, resilience and baseload.

My hon. Friend the Member for Bolton West (Chris Green) highlighted the role of nuclear in developing apprenticeships and skills, and the role of this model in funding fusion. My right hon. Friend the Member for Beckenham (Bob Stewart) and my hon. Friend the Member for Workington (Mark Jenkinson) raised the question of security. My hon. Friend the Member for South Cambridgeshire (Anthony Browne) made a very powerful speech on the failures of the environmental movement, which has put such irrational fear in the way of the nuclear industry, setting us back two decades.

My right hon. Friend the Member for Vale of Glamorgan (Alun Cairns), the former Secretary of State for Wales, powerfully made the case that Wales stands to benefit substantially but we need to get the cost and the risk assessment right. He also highlighted the role of small modular reactors. My right hon. Friend the Member for Clwyd West (Mr Jones) highlighted the role of the Welsh cluster, and my hon. Friend the Member for Waveney (Peter Aldous) highlighted the role of Lowestoft in this industry in tackling coastal regeneration. I should also like to thank my hon. Friend the Member for Ynys Môn (Virginia Crosbie), who has been a formidable campaigner for energy in her constituency and the whole of north Wales, and my hon. Friend the Member for Bury North (James Daly).

Given the extraordinary benefits of this extraordinary sector—60,000 people employed in the UK, with 90% of those jobs not in London and the south-east but across the country; each worker in the nuclear sector contributing an average of £96,000 gross value added to the economy, 73% higher than the rest; and a median salary of approximately £45,000—it is extraordinary why anyone would oppose it, particularly hon. Members from Scotland, which has huge potential. The local economic impacts are huge: look at Hinkley Point and its well over 10,000 job opportunities and more than 3,600 British companies in its supply chain. Overall, the project is on course to create 25,000 jobs.

It is even more extraordinary to hear Scottish nationalist party Members when it is not just Conservatives, not just the nuclear industry and not just Her Majesty’s Opposition who favour it. Sir David Attenborough himself said:

“I do not question the use of nuclear energy as a way of solving our energy problems in the short term”

until we can solve

“the problems of storage and transmission of power.”

The UN Economic Commission for Europe said:

“International climate objectives will not be met if nuclear power is excluded.”

If that is not good enough for SNP and Liberal Democrat Members, Zion Lights, former Extinction Rebellion activist and founder of Nuclear for Net Zero, said:

“renewables alone would require unfeasibly massive amounts of storage”—

which we do not have—

“to keep the lights on… we are in a climate emergency and need all the clean energy we can build right now”.

That includes nuclear.

The GMB, Unite and Prospect trade unions are all strongly in favour. I could not put it better than Charlotte Childs, the GMB national officer:

“Our environment, our economy and our communities need Ministers and MPs to back new nuclear.”

I hope all will tonight. Even a member of the Green party, Josh Stringfellow of the Kingston Green party, said:

“As Greens we trust the science on climate change. As Greens we should also trust the science on nuclear”.

Across the board, there is recognition that we will not hit net zero unless we accelerate our investment in new nuclear. This Bill provides the framework for reducing the cost of capital and increasing our options for private investment, which makes it all the more extraordinary that we have had the opposition we have. The hon. Member for Southampton, Test (Dr Whitehead), in a thoughtful speech, mentioned a decade of dither and delay. I assume he means from 1997 to 2007, when the then Labour Government completely turned their back on the nuclear industry.

Interestingly, the Scottish nationalists like to have their cake and eat it. The hon. Member for Kilmarnock and Loudoun (Alan Brown) is opposed to nuclear power but, of course, Scottish consumers will benefit from being on the grid. They will benefit from the baseload, resilience and security it gives us. I hear loud and clear his call, and the call of others including my hon. Friend the Member for Gloucester, for more investment in tidal. I reassure the House that we are looking at making sure contracts for difference provide strong support for that sector.

The hon. Member for Richmond Park (Sarah Olney), in a thoughtful speech, set out the importance of supporting net zero, which makes it all the more strange that the Liberal Democrats seemingly have an almost religious objection to nuclear energy. I was a Parliamentary Private Secretary in the Department of Energy and Climate Change when both the right hon. Member for Kingston and Surbiton (Ed Davey) and Chris Huhne were Secretary of State, and it was they who put in place the contracts for difference funding mechanism for nuclear, which did not work and which we are now having to sort out. It is easy to oppose with the benefit of hindsight, but the truth is that this is urgent and the Bill provides the basis for it.

The hon. Member for Richmond Park is right that household insulation is important, which is why we provided an additional £1.75 billion in the Budget to upgrade the homes of those on low incomes through the social housing decarbonisation fund and the home upgrade grant. The Government are consulting right now on raising the standards for home insulation in new houses that are built.

A number of Members mentioned wave and tidal, and I am delighted to confirm that not only is this Department funding great science and research in tidal, wave and other renewables but that at the global investment summit last week I visited wind and tidal technologies and we secured nearly £9 billion of private investment in the international renewables sector. We are actively considering whether we should ringfence tidal technologies in the next round of CfD, and it will be eligible under pot 2.

The hon. Member for Kilmarnock and Loudoun challenged the £30 billion cost saving. The full analysis and methodology is set out in the impact assessment accompanying this Bill, and I confirm the current contract ensures that consumers will not pay for any overruns at Hinkley Point C.

The hon. Member for Edinburgh North and Leith (Deidre Brock) mentioned radioactive waste, and the truth is that we have been producing and managing radioactive waste perfectly successfully, without accident or danger to health and safety, for decades. Some 94% of the waste is very low level, and the Government, like previous Governments, have a strong plan for a geological disposal facility.

A number of colleagues raised the issue of national security. I want to make it clear that the Bill is not concerned with making it difficult for any particular country or company to apply. The quality of the bids will be considered in due course by the Secretary of State, with full accountability to Parliament. The Bill does not determine any future nuclear project’s ownership structure; it simply creates a new financing model that broadens our options for new nuclear.

As a package, the legislation before Members will help to end our reliance on overseas developers for finance, which has led to the cancellation of nuclear projects in the UK. Instead, the Bill ensures that our new nuclear power plants can be financed by British pension funds and institutional investors. However, this is not about shutting out individual companies or countries, and the Government have already taken significant powers through the National Security and Investment Act 2021.

A number of colleagues have raised the issue of the scrutiny of risk assessment, and I want to reassure Members that the Secretary of State will be required to act transparently and with full disclosure to the House. I close by thanking Members from across the House for their contributions, highlighting that I hope very much that the Scottish nationalists will not divide the House tonight on something that Scottish voters will benefit from. I strongly believe that this new funding model acts in the interests of the whole of this country, and I commend this Bill to the House.

Question put, That the Bill be now read a Second time.