Amendment proposed: 3, 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.”—(Dr Whitehead.)
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.
Question put, That the amendment be made.
I beg to move, That the Bill be now read the Third time.
I want to start by following right hon. and hon. Members in paying my respects to the late Member for Birmingham, Erdington (Jack Dromey). His constituency has lost a dedicated public servant and a real champion of local industry. I am sure that all our thoughts are with his wife and his family.
Civil nuclear power has worked for this country and it works for consumers, but we all know that the existing financing scheme has led to too many foreign nuclear developers walking away from projects, setting our nuclear industry back a number of years. While the contract for difference model was right for Hinkley Point C, the lack of alternative funding models has contributed significantly to the cancellation of recent potential large-scale projects, including Hitachi’s project at Wylfa and Toshiba’s project at Moorside. We urgently need a new approach to attract capital into the sector, and therefore we are introducing the new nuclear RAB model, which will deliver nuclear projects at a lower cost for consumers.
This new funding model is a win-win for nuclear and for our country. Not only will we be able to encourage greater diversity of private investment; we will also be able through this mechanism to lower the cost of financing new nuclear power and reduce costs commensurately to consumers and to businesses. New nuclear is absolutely essential if we are to have security of energy supply and diversity to ensure resilience.
We have heard from MPs across the House about how the nuclear industry in their constituencies has created and will create jobs—from Wylfa to Hartlepool to Hinkley. All those hon. Members are powerful advocates in this place for the future of the nuclear industry. Thanks to the Bill and other steps we are taking, I firmly believe that we are at the beginning of a new age, a new renaissance, of nuclear energy in the UK.
We have already made a commitment to bring at least one further large-scale nuclear project to final investment decision by the end of this Parliament, subject of course to value for money and relevant approvals. We are also creating not only an ability to invest in large-scale nuclear but a £120 million future nuclear enabling fund to tackle barriers to deploying new nuclear technologies. I am particularly pleased to refer to the fact that we have committed £210 million to back Rolls-Royce’s plan to deploy small modular reactors.
The one thing that perplexes me about this Bill is that it is for nuclear only. If the RAB model is the way forward, why is it not also available for other technologies, such as tidal?
I am pleased that the hon. Gentleman mentions tidal, because for the first time, I think, in the history of the technology—in the history of the world—this Government committed to supporting tidal stream only last year. I am pleased that he should support that initiative.
I would like to make a few brief comments on some of the key themes that the debate has covered. One of the Labour party’s amendments would have put investment in new nuclear in the deep freeze. It would have prohibited investment from abroad. The very purpose of the Bill is not only to reduce the UK’s reliance on overseas developers for finance, but to widen—and this is often overlooked—the pool of potential investors, including British institutional investors and investors from some of our closest allied countries. That is why we rejected the Opposition amendment and why we feel that the Bill broadens our ability to finance new projects. The amendment would have ruled out many companies and prevented like-minded allies such as Canada, Norway and Singapore, with their large pools of capital, from being able to invest in our industry.
I sincerely congratulate my right hon. Friend on bringing forward this Bill. There is absolutely no doubt that nuclear provides the zero-carbon baseload that we need in our transition to net zero, and this is really going to help, so many congratulations to him.
I thank my right hon. Friend for her intervention. The House will know that she and I worked very closely in the Department for Business, Energy and Industrial Strategy, and she was one of the first in the new Parliament to realise the key importance of nuclear. I pay tribute to the work that she, among others, did to drive this agenda. Clearly, this Bill is timely because, as she said, we cannot reach net zero without a substantial commitment to nuclear.
My right hon. Friend will be aware that the small modular reactors cannot be brought onstream in the next few months, but with the right investment and the right incentives, all this technology can be brought onstream very quickly. I cannot say that it will be five years or 10 years, but it will be brought onstream and will help us to reach the decarbonising targets that we have set ourselves.
I must make progress—forgive me.
Since the publication of the Prime Minister’s 10-point plan in November 2020, £6 billion of new investment has already poured into the energy sector—just in a period of barely 15 months. It was notable at the global investment summit in October last year that a further £9.7 billion-worth of deals was announced. Foreign investment is particularly eager to help to finance our way to net zero. But I have to state that foreign investment must not come at the expense of our national security. That is precisely why the National Security and Investment Act 2021 was introduced to safeguard our key strategic industries.
The final issue that we have debated is the necessity of ensuring that there is adequate protection for consumers. With this approach, private investors will be given greater certainty through a lower and more reliable rate of return, but that will, in turn, lower the cost of financing projects and ultimately, in the medium term, help sharply to reduce consumer electricity bills. To protect consumers, the Government will of course put any potential projects through a rigorous due diligence process, allowing detailed scrutiny of a project’s cost along with its delivery plans. The RAB regime will be designed to incentivise the company to deliver the project to time and to budget.
Britain once led the world with our civil nuclear industry, and we fully intend to clear a path to leadership and innovation in this critically important piece of infrastructure.
If there is such a desire for investment, why was £1.7 billion allocated in the last Budget just to develop this project to final investment stage? What are we getting for that £1.7 billion of taxpayers’ money?
We all know that the hon. Gentleman’s party is against nuclear, but we also appreciate that the comprehensive spending review that he alluded to was all about ensuring our commitment in the 10-point plan to at least one further final investment decision before the end of the Parliament, and that is the sum of money that we have allocated to ensuring that that happens.
I look forward to following the progress of this Bill and pursuing our plan for greater nuclear investment, greater resilience and greater affordability in our energy mix. On that basis, I commend the Bill to the House.
The Bill, as its title suggests, is about how to finance nuclear power. We know that the Climate Change Committee has indicated that some nuclear power is needed in the future as part of an overwhelmingly renewable energy mix. The Bill is therefore important in ensuring that we get at least the next, and only, nuclear power plant that can generate power by the early 2030s in place and developing, as the prospects of a new plant elsewhere seem bleak.
We welcome the arrangements that the Bill will make for financing nuclear power. We need to remember that there has been a 10-year hiatus, during a time of Conservative Government, in bringing forward any nuclear power, so the Bill is welcome, but overdue. We hope that with the RAB model in place, Sizewell C will be able to reach financial closure and go ahead.
We ought to understand both the advantages and possible problems of a RAB model, in the context of the people who will fund it from their bills. Although RAB has been used for other projects, a RAB model of the size and scale needed for Sizewell C has never been attempted. We urge the Government to be very careful about how they deploy the RAB model in terms of the customer interest, to not just regard customers as a milch cow for overruns or time delays in nuclear power for the future, and to ensure that the customer contribution is properly regarded as far as nuclear power development is concerned. We think the Government should pay closer attention to customer involvement in RAB, particularly because, on this occasion, the customer is funding the nuclear plant before, and not after, it develops. Careful stewardship and close custody of how that RAB model is used is vital.
The question of ownership of plant is important for UK national security. Although the Government have rejected our amendments about foreign influenced or owned investment in nuclear power in the future, we all know what that is actually about—the role of China and the Chinese state nuclear corporation, the China General Nuclear Power Corporation, in Sizewell C, and the possibility of them owning the nuclear power plant at Bradwell in the future. Despite the Government’s bluster, we know the arrangement is now in place for that development to succeed. Is that a wise way to go with nuclear power in the future, we ask?
We consider it imperative that the Government are clear about what they think about Chinese involvement in the very near future, and that they plot a clear course whereby this RAB investment is not the vehicle for the realisation of China’s developing and owning a nuclear plant in the UK, with all the security implications that has. I urge the Government to come forward at an early stage with clarity on what they consider to be the future for that arrangement. As the Secretary of State knows, that was not arranged on his watch, but in 2013 to 2016, before he was a Minister. I hope he will be able to cast an eye over the arrangement, with a view to the future that he has set out today.
With my party being in favour of nuclear power, I repeat the question asked by Alan Brown about the £1.7 billion in the Red Book at the last Budget for the completion of the project. Is it about buying off China? Is it about developing this project? Is it about funding further nuclear power for the future? We have no clarity at all, as we have only one line on that investment, which is not good enough. We need much more clarity for the future.
The health and welfare of Springfields is vital to this development, as it could be and should be supplying nuclear fuel rods to the new plant, and we hope the Government will look carefully and sympathetically at the future of that company, because the delivery of British fuel rods to a British nuclear reactor is very important for the future. It is vital that the Government do not allow the company to slip away under their watch when its contribution could be so important to the future of nuclear power in the UK.
Overall, we see much to support in this Bill and believe that, properly executed, its provisions will be able to establish a viable way forward for UK nuclear power. We therefore wish to support its Third Reading.
We have two nuclear power stations in my constituency. I cannot say how glad I am to hear the news that the Bill will proceed, and I am elated that the shadow Minister has endorsed it. I have been talking about it for many years, and this is a great day.
I remember the coalition era, when private enterprise had to fund nuclear power, and now we are taking steps to safeguard our own energy supply and, more to the point, to safeguard jobs in my constituency, because we have two nuclear power stations that are due to cease production within the next decade. This is £40 million to my local economy and jobs—nuclear is the largest employer in my constituency. I wholeheartedly back this Bill.
Unlike David Morris, I do not support the Bill, which may come as a surprise to some.
The basis of the Bill, as outlined by the Secretary of State, is that the Government recognise market failure in nuclear power, with Hitachi and Toshiba walking away from the sites they were developing. It is interesting that the Government now admit what we have said all along, which is that Hinkley Point C is a bad deal for bill payers. The Secretary of State dresses it up as being the right deal at the right time but, if we look at the impact assessment, it says the new RAB model could save up to £80 billion. By default, the impact assessment is telling us that the Government believe the model for Hinkley Point C cost bill payers an additional £30 billion to £80 billion.
Looking at the 35-year contract for Hinkley Point C, this means the Government are now telling us that bill payers will pay an additional £1 billion to £2 billion every year of that 35-year contract if Hinkley Point C starts generating electricity. That is a disgraceful waste of money.
My hon. Friend is making a good point about the waste of money. It sounds like he agrees with my constituent Maureen from Kelvingrove, who says she believes
“the money being poured into this would be better spent on smaller scale more local solutions such as tide, wind, solar, hydro…and of course the key to it all, energy storage.”
Does my hon. Friend agree?
I agree wholeheartedly, and I said earlier that the £1.7 billion allocated for the final investment stage of Sizewell C could deliver two pumped-storage hydro schemes in Scotland—two schemes that provide dispatchable energy when it is required.
My other big concern about the Bill and the RAB model itself is that the savings will not accrue and, worse, bill payers will carry too much of the construction risk. We keep hearing how successful the RAB model has been for other infrastructure projects, but nobody can demonstrate that it is proven to work for delivering nuclear power stations. As we discussed earlier, the examples from the United States suggest otherwise. Abandoned projects are costing bill payers billions of dollars, including $9 billion for the abandoned South Carolina project.
At the present time, in the here and now, we have a cost of living crisis, so it is absolutely scandalous to commit an estimated £50 billion to £60 billion in capital and finance costs and pass those on to bill payers. The Government tell us that is only £10 per household over the construction period, but what they do not tell us is how much more it will be when the 60-year RAB model contract kicks in.
We are in a bizarre situation where the trade body Energy UK supports the RAB model while arguing that consideration needs to be given to the removal of levies from our existing electricity bills due to the impact on the cost of living crisis. That is contradictory. Why support a payment mechanism with contractual payments of some 70 to 75 years being added to our bills during the current energy price crisis? E.ON has confirmed that it opposes such a move, and particularly the concept of bill payers starting to foot the bill as soon as construction commences.
Instead, if we retrofitted 11 million homes with energy efficiency measures, it is estimated that peak heat demand could fall by 40%. That is where the Government should start the targeted investment. We do need to consider whether we need new nuclear at all, and therefore whether we need this Bill or alternative funding mechanisms. Of the eight existing power stations, Dungeness went offline last year, seven years early; Hunterston B has now stopped production; Hinkley Point B will stop later this year; and Heysham and Hartlepool will stop in 2024. So five of the existing eight stations will be down by 2024, way before Hinkley will be up and running.
If nuclear is so critical to baseload, how will we live without it for these years? It actually undermines the Government’s own argument, particularly when we realise how often nuclear power stations go down and outages need to be managed. The wind might not be blowing and the power stations might go down as well, so what is the answer then? That is why we need investment in alternative renewables.
Worse still, the proposed EPR model developed at Hinkley looks set to be used at Sizewell. There is no functioning EPR model anywhere in the world. Taishan in China is still shut down, and according to a French whistleblower more fuel rods are damaged than China has acknowledged. Indeed, at Flamanville in France, which is already predicted to be 12 years behind, construction has stopped again because the French nuclear authorities are investigating a possible flaw in the EPR design. Surely this Government would not be so daft as to sign a new nuclear contract with an EPR design that has still not been shown to work.
This Bill represents the wrong priorities for the Government. Instead of mitigating the cost of living crisis and the cost of energy crisis, they are looking to compound the misery by adding further burdens on bill payers. I know that the Labour party has said that it will support the Bill, but I strongly recommend that it reconsiders its position, given the commitment of £50 billion to £60 billion in capital and finance costs being added for bill payers. We do not require another Tory white elephant nuclear project. I will certainly be voting against it.
I wish the Secretary of State, the Minister and the Bill every success. I think we might call this Secretary of State brave, because experience tells us that it is extremely difficult to land one of these really big projects and keep it to time and budget, and it is extremely difficult to get agreement to cheaper power. I am delighted that Ministers are motivated by the wish to have both more reliable generating capacity and more affordable power. Those are two excellent objectives of energy policy.
However, I fear that what I have learned from this debate, and from previous debates like it, are these things. First, we are going to have less nuclear power in 2030 than we have today, whatever Ministers do—they are prisoners of their inheritance. Secondly, it will be difficult signing up big projects in particular, or getting smaller projects that are available and working in good time so that there is more nuclear, rather than less, in the decade that follows, and it will be difficult securing that at prices that customers think are good.
In the meantime, we have the problem that, on a typical day, we are already 10% import dependent for our electricity—I think it should all be generated in the UK—and that we are very dependent on the sun shining and the wind blowing, but the wind not blowing too much. When those things did not happen towards the end of last year, we had to reopen three old coal plants. People would rather not have to burn coal, but coal stations were reliable and actually worked when the wind did not blow and the sun did not shine. If the plan is to close them down and make them unavailable in future before we have anything else as a good stand-by, we will be trying the patience of the international community and trying our own luck rather too far.
I urge the Secretary of State, on the back of this Bill, to consider ways of increasing reliable power for this coming decade—the decade that we are living in and that we will be battling over in immediate elections to come—because that is what will matter to our voters. We should have in mind security of supply, availability of supply and affordability as the crucial things that we need to take care of so that we do not have a self-imposed energy crisis. Linking us into the European system is not a secure thing to do, because those countries are chronically short of reliable green power. Poland and Germany are in the middle of trying to phase out coal and lignite. Germany is in the middle of phasing out nuclear altogether. France needs to think about replacements for its ageing nuclear fleet and it is chronically short of gas, which is a sensible transition fuel, so it needs to rely on Putin and Russia.
We talk again and again in this House about Britain being a global leader. Does the right hon. Gentleman agree that Britain could be a global leader in renewable energy? We are not making the most of the areas in which we could be a global leader, which are renewable energy from tidal, wave and offshore and onshore wind power.
I would be delighted to see a mixture of renewables, so that the reliability issue is taken care of. The problem with wind is that it is erratic. In the industrial revolution, people tended to prefer water power over wind power because it was a bit more reliable. The hon. Lady must understand that, like me, she is answerable to constituents who will expect the lights to stay on throughout this decade and will expect electricity and gas and other main energy sources to be affordable and available. The danger is that, if we do not do more to expand our capacity of the transition fuels as well as working on improving and increasing renewables, we will not be able to guarantee the crucial features of a good energy policy: availability and affordability. So, yes, fine to the Bill, but it is about the 2030s. We need also to think about the 2020s.
We have heard a lot today about offshore wind and how it could be the saviour of our energy system. Is my right hon. Friend aware that the levelised cost of energy of our largest offshore wind farm last year was £140 per megawatt-hour, which is twice the price of nuclear energy, if not more?
I have learned enough about energy to know that people produce figures that suit their case. I agree with my hon. Friend that we can say that wind energy is a lot dearer than its advocates suggest. It depends on whether we cost out the back-up power and the back-up arrangements. Obviously, once the windmills are turning they deliver very cheap power, but there is a lot of sunk cost to take care of, and we do need to account somehow for the cost of the alternative when the wind does not blow. We would need to do quite a lot of homework, and probably not in a Third Reading debate, to crack what exactly is the true cost of wind power.
I urge Ministers to think again about availability and affordability now as well as their nuclear ideas.
I rise tonight to put on record my sincere thanks to the Secretary of State and to the Minister for Energy, Clean Growth and Climate Change, my right hon. Friend Greg Hands for the support they have shown to Springfields nuclear fuels, which is located in my constituency. I did a Westminster Hall debate a few months ago to highlight the importance of Springfields. It is the only nuclear fuel manufacturer in the UK, and it contains some of the most highly skilled people in the world when it comes to nuclear fuel design and manufacture. Part of that site is also the National Nuclear Laboratory. This is integral to the future of UK energy security and the next generation in the UK nuclear story.
I really want to thank the Government for everything they are doing and continuing to do. I know how hard they are working to secure the future of that plant and its workforce and to ensure that Springfields has an incredibly important part to play in the future. Let us be in no doubt that those of us on the Government Benches have always been committed to nuclear. We have not always pushed it as far forward as I would have liked, but no one can doubt the efforts the Government are making to ensure that nuclear plays an incredibly important part in Britain’s industrial renaissance and in our low carbon journey. I will support this Bill on Third Reading.
Question put, That the Bill be now read the Third time.