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Nuclear Power

Part of the debate – in the House of Commons at 7:47 pm on 22nd October 2002.

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Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry) 7:47 pm, 22nd October 2002

I have tried to deal with the arguments that I think are being advanced for the Government intervention. I shall move on to the future and consider the Government's intentions.

The first question that we need to ask is how the Government will get their #650 million back. That is an important question, because we know that the budget is not as comfortable as it was six months or a year ago. How is the money to be retrieved? As far as I understand it, the loan is not secured. It was made to a company that was losing money in the previous financial year at a rate of #500 million a year. The energy market is not improving, so how will the money be generated? Another #1 billion-worth of creditors have secured their loans. Where will the money go? I have a very strong suspicion that it will simply be lost.

The Government have aired in public a series of options for retrieving the situation. The approach will involve one of two things. Either they will scrap the energy market that they have created, do a complete volte face in respect of the whole principle of competition in energy supply and go back to the days of direction and quotas, or the companies will find money through a different route—in other words, a hidden subsidy rather than an overt one.

I believe that two mechanisms are being seriously negotiated in Government. The first is exemption of the nuclear power industry from the climate change levy. At first sight, that seems perfectly sensible. After all, the nuclear power industry does not produce any carbon dioxide, so why should it pay a climate change levy? If the Government had listened to our advice and established a proper carbon tax that was charged upstream on gas, coal and oil, the problem would never have arisen. However, what they call a climate change levy is not such a levy at all; it is an energy tax that is arbitrarily applied to a set of industries. If they now exempt the nuclear power industry while applying the measure to other suppliers despite the fact that nuclear energy generates its own environmental problems, they will create severe problems in ensuring a level playing field in the market that they have created. The possibility of such an approach also raises the question of where the money to pay for the exemption should come from. The Chancellor said clearly that the funds need to be offset against employers' national insurance, so any rebating will have to be found through that mechanism, which will impose a charge on the rest of British industry.