Swansea Tidal Lagoon — [Mr Graham Brady in the Chair]

Backbench Business – in Westminster Hall at 11:30 am on 8th March 2016.

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[Mr Graham Brady in the Chair]

Photo of Graham Brady Graham Brady Chair, Conservative Party 1922 Committee 2:30 pm, 8th March 2016

Many colleagues have indicated that they would like to speak in this debate, so it might help if I point out that we anticipate Divisions in the Chamber at 3.50 pm. It is entirely up to hon. Members whether they wish to continue the debate after 3.50 pm. If so, we will have to come back after an adjournment.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

I beg to move,

That this House
has considered the potential economic benefits of the Swansea Tidal Lagoon.

The 2015 Welsh Conservative manifesto said:

“We know how important Wales is to the UK’s energy security…We’re entering into the first phase of negotiations on a Contract for Difference for Swansea Tidal Lagoon to recognise Wales’
potential to become a major hub for tidal and wave power. This project will create thousands of jobs and attract millions of pounds worth of investment into Wales. We will continue to support strategic energy projects in Wales to boost the Welsh economy and help secure Wales’
energy future.”

So far so good. It is unusual in this day and age for a manifesto commitment to have the widespread support of quite so many interested groups. They include the UK Government, all parties in this House, the Welsh Government, all parties in that Assembly and local government in areas where the lagoon might be constructed and other areas in Wales that will reap the benefits of it. Environmentalists by and large see it as a clean form of renewable energy; economists across the UK and further afield recognise the long-term value of the project; and, almost without exception, the local communities affected directly or indirectly support the proposal. I can remember few, if any, commitments from any party’s manifesto that have such widespread and cross-party support.

Photo of Angus MacNeil Angus MacNeil Chair, Energy and Climate Change Committee

The hon. Gentleman did not mention the Scottish National party—perhaps for understandable reasons—so may I say, as an SNP Member, that I am very supportive of it as well?

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

The hon. Gentleman makes a good point. The only reason I did not mention the SNP is that I forgot. I hope he does not take that to heart.

The Swansea bay tidal lagoon project ticks a lot of boxes—to use that rather awful expression. If I make only one point this afternoon, it is this: it must not be seen as a one-off project or a stand-alone proposal. It is part of a four-part proposal for the Severn estuary. It will lead to other projects around the UK coast, and after that—who knows?—perhaps across the rest of the globe. We have a chance to be a global leader in this technology; to start it down with us in the Swansea bay. It is equally important that the Government look at it not as a stand-alone project, but in the context of the proposals for Cardiff and Newport. This is not about just Swansea, Wales or the UK; nor is it about just renewable energy, which has been debated so often here.

I have four issues that I will deal with as quickly as I can, given your steer, Mr Brady: the current situation; employment opportunities; the question marks about costs, which have been reported in the press; and other benefits, which sadly do not seem to have been reported at all. On the current situation, this is about a long-term plan for the UK and beyond. Over the next 10 years, the UK will lose 11 of its coal-fired power stations, followed by our ageing nuclear capability. In technical terms, that is the same as a 25 GW reduction out of a total capacity of 85 GW across the UK. As yet, nobody has made it entirely clear how we will fill that void. Hinkley Point is 10 years off, and today further questions were raised about the speed and certainty of that project. No new gas-fired power stations are under construction in the UK.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

I congratulate my constituency neighbour on securing this debate and on his opening remarks, many of which I agree with. The big issue with Hinkley C is the strike price. The problem with the tidal lagoon is that the financing model that is envisaged for it is the contract for difference. Does he agree that we should perhaps look at other models, such as direct public investment? If we go for a CfD, the cost ends up with the consumer. If we go for direct investment, it ends up with the public, but it is far cheaper than a CfD.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

The hon. Gentleman makes a very good point. I will come to that issue later in my speech. That is an important message to the Government. I entirely agree that using a model for this form of energy infrastructure simply because it is used for other forms, such as offshore or onshore wind, is potentially a mistake. There is an opportunity, especially with the Government review, to look at other models to see whether we can make it work over a longer period using different technology.

Photo of Richard Graham Richard Graham Conservative, Gloucester

My hon. Friend is being very kind in giving way. He is making a series of very good points. Does he agree that time is of the essence not just for the company and its employees, but for investors, for the communities that he mentioned and for our ability to show technological leadership, which could lead to a great export business?

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

My hon. Friend is spot on. Many people are watching the Government’s approach to this—not only investors, but people who question whether we have the technical capability and the political will to proceed with this type of project. He is absolutely right that, as long as the Government do not prevaricate about the outcome of the review, they have the chance to put right the concerns that he raises.

Photo of Craig Williams Craig Williams Conservative, Cardiff North

I apologise for turning up late because of the vote in the Chamber. I commend my hon. Friend for securing this debate. Is not the issue that we are at the proof of concept stage? The review is very welcome. I know that we need time on our side, but proof of concept is a difficult stage for any project. Although we wholly support it, we need to review it and look at the financing.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

I think I understand my hon. Friend’s comment. I should have said earlier that we are not unique in using tidal power. This technology has, in various forms, been tried and tested in other parts of the world, so there are not significant doubts about its workability. We should look elsewhere to ensure that the lessons learned from projects in other parts of the world are applied here.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

I will. The chances of us finishing at 3.50 pm are getting slimmer by the moment, but we will do our best.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour, Ogmore

I congratulate the hon. Gentleman on securing this debate and on his opening remarks. This project is as significant as the previous investment in the offshore wind industry in the east of England, which included £60 million of pump-priming for port infrastructure and so on. This project is as significant, not only because it will have an immense impact on the region, but because it will make us a global leader. The hon. Gentleman is right that there are those looking to take it elsewhere if we do not get on with it.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

I will devote a section of my speech to concerns about the cost, which are raised in the media. I want to address those points, because at the moment we are looking at added value or some of the other elements that move this project from being simply a good idea to being an irresistible one. However, I will hopefully deal with the hon. Gentleman’s point properly in a moment.

Before I took those interventions, I was talking about the uncertainty about Hinkley Point. Until literally the last few days it was seen as the saving grace of UK energy production, but suddenly we discover that we are back in the land of the unknown. An important message for the Government is that an energy void needs to be filled, about which we know very little. I do not want to sound too melodramatic, but there will be a lights-off moment in about a decade’s time unless the Government—I would say this to any Government—take it seriously. They must act with haste, as my hon. Friend Richard Graham said, to ensure that no uncertainty creeps into the proposals.

It is also reasonable to say that everyone who supports the proposal understands that it is not a silver bullet. Our energy demands will be met by a range of different options, of which this happens to be one, but it is an important one. Tidal lagoons can provide—there is no doubt about the statistical back-up for this—8% to 10% of the UK’s total requirements. That is an extraordinarily tempting prospect. To quote, or possibly misquote, the Secretary of State for Energy and Climate Change, it is home-grown, reliable, affordable, sustainable and clean, and I am not aware of any other current proposed energy projects that can boast such descriptions.

The second thing that I want to cover is the added value, which has not been discussed in great detail in this House or in the wider media. It is important to point out that the Swansea bay tidal lagoon will employ nearly 2,000 people at its peak construction period. The programme over the whole of Wales—including Cardiff, Newport and Colwyn Bay—if it goes ahead, will consist of a £20 billion investment, which will need an average of 12,000 jobs for 12 years and result in more than 2,000 full-time positions. That does not even begin to touch on some of the supply chain, tourism and leisure benefits associated with the proposal.

Photo of Angela Smith Angela Smith Labour, Penistone and Stocksbridge

The statistics for the steel required for the project include 8,000 tonnes in the mechanicals package, 60,000 tonnes of rebar and 3,000 tonnes of structural steel. Furthermore, Sheffield Forgemasters and DavyMarkham, another world-class manufacturer in Sheffield, are both well placed to work on several of the core turbine and generator components, remembering that the project includes 16 turbines. On that basis, it would be good just to get on with this—UK steel would be helped enormously to get over its difficult period if the project were given the go-ahead as soon as possible.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

The hon. Lady makes a good point, although of course I want all the construction work, including the steel, to be in Wales and, preferably, with bits of it in Pembrokeshire. However, I recognise with a heavy heart and rather grudgingly that we may have to extend our reach to Sheffield—

Photo of Angela Smith Angela Smith Labour, Penistone and Stocksbridge

This is a UK debate, but nevertheless DavyMarkham has said that it will invest in Wales as a result of the project, so I think we are all friends on this.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

I accept the hon. Lady’s polite reprimand in the spirit in which it is intended. According to my figures—I will come on to steel in a moment—we are talking about 370,000 tonnes of steel for the Swansea project alone, and double that as we scale up to include Newport and Cardiff. As that figure goes up, it brings a whole range of other possibilities for UK steel, which, given the state of the industry at the moment, can only be welcome. I take her point.

Photo of Jason McCartney Jason McCartney Conservative, Colne Valley

To keep the Yorkshire theme going, one of the chief advisers for the Swansea tidal lagoon project is my constituent Bernard Ainsworth, who has also managed construction of the Shard and the millennium dome. Does my hon. Friend agree that this project, as Angela Smith has just said, is not only about boosting the economy and confidence of Wales, but about benefiting all of us across the whole of the United Kingdom?

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

My hon. Friend is of course absolutely right. At least 50% of the £20 billion investment figure to which I referred is to be in Wales, so by definition the other half is not. My very next comment was to be that more than 1,000 companies have already expressed interest in this project, or these projects. I have seen a rough outline map of that, and the whole of the UK is covered. The line-up is impressive, and includes companies such as General Electric, Andritz Hydro, components suppliers, construction companies and a whole range of small and medium-sized enterprises from sandwich makers to pretty much every area of SME activity in Wales and beyond. Everyone in the Chamber will have a bite of the cherry, in terms of constituency interest, as might plenty of those who are not present and do not yet realise it—our job is to remind them of that.

My third point is about cost, which has been cited regularly as a major obstacle to progress on the project, despite its being a manifesto commitment and Government having trawled the numbers for a long time—it cannot come as a particular surprise that the costs are what they are. However, over 90 years—this is key—the Swansea bay tidal lagoon needs a contract for difference, or CfD, of £118 per megawatt-hour, which is the same as for offshore wind projects that already have consent. So Government have already taken a favourable view of projects at that cost, admittedly possibly over a different timescale. None the less, the revised figures show a more attractive number as far as value for money for the British taxpayer is concerned and, once we add in Newport and Cardiff, the cost actually falls to £68.3 per megawatt-hour, which really gets it into the realms of acceptability in anyone’s language—even that of the Treasury during these difficult times.

That means that if the Swansea project alone were to be built at the current cost, arguably 10p per annum would be added to energy bills throughout the UK. If we add Newport and Cardiff into the scheme, let alone all the other places that we are talking about, annual bills would be reduced by between £8 and £12. So Swansea alone will add 10p per household bill per year, but Swansea with Cardiff and Newport will start to make significant reductions to householders’ energy bills.

That leads me to my fourth and final point, which is the other benefits. We have not learned much about them so far. Starting with leisure and tourism, the comparable Rance project in France attracts between 70,000 and 100,000 people a year, and there is no reason to believe that the same level of attraction cannot be generated for Swansea and the other tidal lagoons. There is already interest in individual sporting events around the lagoon constructions, which could attract up to 8,000 people a year. Plans are afoot for an offshore visitor centre, sailing and boating centres, and a hatchery. Local and national sporting groups have put in for a sailing triathlon, and there are rowing, canoeing, open-water swimming and sea angling ideas and concepts. There is no shortage of significant extra activity around the lagoon constructions, which can only be good for the tourism offer and employment in Wales.

The great unknown is the export of technology. The lagoon products will be at the cutting edge of global technology, so we have the possibility of creating and growing our own experts in the field, with our own concepts, ideas and plans, which could be exported to 30 or 40 countries, all of which have potential capacity for tidal lagoon generation.

That leads me to steel. I have had various conversations with interested parties, and the fairly modest figure for the steel requirement on the Swansea bay project alone is 370,000 tonnes. Anyone who has been following the plight of the steel industry in Wales and beyond will prick their ears up at that potential for rescue and sustainability. In passing, one potential investor in the project is Liberty Steel, which has already stated that it would move its operation to Wales in the event of the go-ahead from the UK Government, because it sees the opportunity for a UK recycled steel project. At the moment, recyclable steel is exported, recycled and then reimported for use in the UK, which is a crazy situation in anyone’s language. Now we have investors thinking that the scale of the tidal lagoon projects is sufficient to enable them to set up shop properly in the UK, thereby forgoing the need to export 5 million tonnes of recyclable steel. We could do it all here, with significant benefits for the country that are not only to do with tidal lagoons.

Photo of Guto Bebb Guto Bebb Conservative, Aberconwy

My hon. Friend is making a strong case for looking at the development in the round. Is it not also the case that a tidal lagoon in north Wales would not only be an energy and tourism-generating opportunity, but play a significant part in flood defences? That is another issue that should be brought into the equation.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

My hon. Friend makes a good point. Many people have raised issues with me in support of tidal lagoon technology but I had not heard that one. It is useful to use occasions such as this in Westminster Hall to bring to the Minister’s attention the added benefits that somehow never seem to get into the Treasury calculations as prominently as they might.

Photo of James Davies James Davies Conservative, Vale of Clwyd

I thank my hon. Friend for calling for the debate and for his reference to north Wales. It is important to protect national infrastructure such as the A55 and the north Wales branch of the west coast main line. In fact, tidal lagoons on the north Wales coast offer an opportunity for that as well as for development in areas currently categorised as flood risk zones.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

My hon. Friend reinforces the earlier intervention. It would be helpful to hear from the Minister on that.

We have a Minister representing the Department of Energy and Climate Change here, which is welcome, but I hope that she will share her thoughts with the Treasury, because it is as much a decision maker in the process as her Department. I know that she takes our manifesto commitment seriously and recognises that the project comes with almost unique widespread support, and I hope that she recognises the huge economic, social and practical benefits that this and other projects will bring, should they be rolled out. Her Department is aware of the safe and clean nature of the proposal and the longevity it offers the country in an uncertain time.

Back-Bench Members welcome the Government’s review, but we have all been down the review road before on various issues and so often we have come away disappointed that instead of “review” we could have said “delay”. I have no doubt that the review is genuine, but that needs to be demonstrated—the Minister has an opportunity for that—because as colleagues have mentioned, investors and interested parties do not want prevarication, delay and doubt; they want us to honour our commitment, stick to our word and see the project through under the new, revised terms. DECC has already been involved in negotiations on this project and others for five years, so it has got a lot of the information it needs and it has already granted the development consent order, so it is not as if the project is coming out of the sun without having been seen before. A lot is known about it, so there is no reason to delay matters beyond the lifespan of the review.

I hope that the Minister will address the issues that colleagues have raised and that above all she will recognise and confirm that Swansea on its own is not the entire picture. We are looking at a range of projects of which that is just one, but it is important because it is the first one. I hope that she recognises that, for Wales and the wider UK, there is nothing but upsides from the project and that, as a result, the Government will give it the go-ahead at the earliest opportunity.

Several hon. Members:

rose—

Photo of Graham Brady Graham Brady Chair, Conservative Party 1922 Committee

Order. Before I call Mr Flynn, it may be helpful to say that, because a large number of hon. Members have indicated their desire to speak, I propose a five-minute limit for Back-Bench contributions in the debate.

Photo of Paul Flynn Paul Flynn Labour, Newport West 2:53 pm, 8th March 2016

I am filled with optimism, because Simon Hart, who called for this debate, recently had a debate about S4C and, lo and behold, the Government miraculously found some funding for it. Therefore, this debate might well presage good news about investment in the tides.

This is an ancient dream. There is a nineteenth-century painting of a Severn barrage—somebody foresaw it in Newport—and an inquiry in 1980 looked at it in great detail. I wrote an article for the Western Mail in which I foresaw a series of barrages that would make use of the tides all around the Welsh coast—different pulses of electricity come at different tides—which, to ensure that the project was demand-responsive, were locked into pumped storage schemes in the valleys of south Wales. When the high tide came in at about 3 o’clock in the morning, the water would be pumped up the hills in the valleys and then it would be let down. Dinorwig has proved to be a battery for all of Britain.

When I dug out that article, which I wrote 40 years ago, I was struck by the fact that in all that time we have ignored what is the great source of untapped power, certainly of Wales, but of all the British Isles: the great cliffs of water that surge around our coasts twice a day. Immense amounts of untapped power are wasted. As the hon. Gentleman said, such power is clean, green and, unlike most other renewables, it is entirely predictable. We know exactly when it will happen and it will last as long as the human race inhabits the planet. What are we doing with it? Very little. The great example is in Brittany, where a barrage was opened across the Rance river and now, 50 years later, the turbines are in pristine condition and, without carbon or pollution, it produces the cheapest electricity in Europe. Of course, we should go ahead.

There is now another reason why we need to invest in the project: what I believe is the collapse of the Hinkley Point C project. All that is left promoting it is the stubbornness of the French and UK Governments and the reluctance to accept the mountain of evidence that says that the project cannot work. It has not worked in the past, it is not working now and it will not work in the future. Even today, in The Times, following similar articles in the Financial Times and many other papers in the last seven days, I note the realisation—it was in the main headline—that £17 billion could be saved if we abandon Hinkley Point. There is no rational case left for European pressurised reactor projects. Have they worked anywhere? Three are being built in the world but none is working. The one in Finland, due to cost €6.4 billion, should have been generating electricity in 2009.

Photo of Richard Graham Richard Graham Conservative, Gloucester

You will have to rule as to whether this is the right place for an anti-nuclear campaign, Mr Brady. May I gently suggest that many of us here believe that we need more energy full stop, from nuclear and from tidal lagoons?

Photo of Paul Flynn Paul Flynn Labour, Newport West

Yes. At the moment the Government are approaching an impasse, because Hinkley Point is doomed, and that is crucial to where else they can go. They must go somewhere else to create energy for the future, so it is crucial to the debate that we understand what the entire scientific establishment and the two chiefs of EDF have recognised: it cannot go ahead. EDF is €37 billion in debt—if it were anything other than a nationalised company, it would be bankrupt and out of business. Its share price has collapsed by 10% in the past 24 hours.

EPR electricity has not worked anywhere. The other great EPR project is in Flamanville, where there is a serious problem with the roof of the reactor vessel, which means it may never be completed—it will certainly be delayed for years. Again, that project is billions over budget. How on earth can anyone rely on that?

Photo of David Jones David Jones Conservative, Clwyd West

Does the hon. Gentleman not agree that the difference between nuclear power projects such as Hinkley—which he is dilating on at the moment—and the proposed technology at Swansea bay and around the Welsh coast is that in lifespan, while nuclear projects are finite and have potential unforeseen consequences in terms of disposal of waste, tidal lagoons provide a clean source of power that, built on a Victorian scale, will last for many decades if not centuries?

Photo of Graham Brady Graham Brady Chair, Conservative Party 1922 Committee

Order. Mr Flynn, before you respond, I hope you will use your last two minutes to focus more on the tidal lagoon side than the nuclear side.

Photo of Paul Flynn Paul Flynn Labour, Newport West

Of course. The right hon. Gentleman is absolutely right about every comparison we make on what tidal has to offer. It has cleanliness as a source of power, it is ours—it is British—and it is eternal. It does not have to come from anywhere else. There is a simplicity in taking moving water, getting it to turn a turbine and then generating electricity.

It is time now for this dream to come true. The Government are into investing in huge projects. They have spent £1.2 billion on their railway project, but they have not built an inch of track yet. Those projects they have taken on are long term, and some of them have failure written into them, but this project has success written into it. Tidal power has simplicity and works in several other ways, whether it is through a lagoon or some other project.

We should look at the serious objections there have been in the past 40 years to building a barrage, particularly from those in the natural world who say that building a brick wall across the Severn will have all kinds of repercussions for the natural world. That is not a problem that occurs with lagoons. In order to provide electricity for the future that is green, non-carbon, eternal and everlasting, it must be tidal power.

Photo of Byron Davies Byron Davies Conservative, Gower 3:01 pm, 8th March 2016

I congratulate my hon. Friend Simon Hart on securing this important debate. It is a pleasure to represent my constituency of Gower, part of which this tidal lagoon falls into, in the Mumbles area.

The lagoon is the result of five years of hard work on the part of the developers, and we have now arrived at the point of the strike price. The pilot scheme at Swansea may, as has been said, move forward to bigger projects at Cardiff, Newport and elsewhere in Wales and, indeed, the UK. The lagoon has the potential to produce energy that is cheaper than even nuclear and gas. The potential future investment in Wales alone is more than £10 billion, and more than 3,500 jobs will be generated over a decade in Wales, with many more generated in the supply chain across the UK. That is a particularly important point.

Photo of Angus MacNeil Angus MacNeil Chair, Energy and Climate Change Committee

The hon. Gentleman makes a good point about the economic benefits of the project. The Chancellor has talked about a northern powerhouse; this would strike me as being a western powerhouse. At a time when borrowing costs are low, there is a need for demand in the economy—Martin Wolf is even talking in the Financial Times about helicopter drops—this lagoon would add to our energy security and strengthen the economy in Wales, which needs to happen. Wider interconnectivity would benefit not only Wales but Europe, and that is another reason the project should be supported.

Photo of Byron Davies Byron Davies Conservative, Gower

I totally agree with the hon. Gentleman; I could not have put it better myself.

More than 1,000 companies in the supply chain across the UK have registered their interest in such projects. The scope for further investment in other lagoons and in the export market will eventually give rise to a contribution to the UK balance of payments of tens of billions of pounds.

Photo of Chris Davies Chris Davies Conservative, Brecon and Radnorshire

I thank my hon. Friend Simon Hart for securing this debate. I want to add to the comments being made by my hon. Friend Byron Davies by saying that the whole community of Britain will benefit from this project. I represent one of the largest landlocked constituencies in England and Wales, so Members are probably wondering why I am praising a tidal lagoon that is many miles away from Brecon and Radnorshire, but it really will benefit our people. We will have a lot of people travelling down to work there. Businesses will benefit on a daily basis from the tidal lagoon, and the people of Brecon and Radnorshire are very keen that it goes ahead.

Photo of Byron Davies Byron Davies Conservative, Gower

Indeed; I totally agree with my hon. Friend, who makes a valid point.

A study by the Centre for Economics and Business Research has found that a national fleet of six tidal lagoons would contribute something in the region of £27 billion to UK GDP during construction, as well as creating or sustaining 35,000 jobs on average and roughly 70,000 jobs at its peak. When operating, the fleet would contribute just more than £3 billion per annum to UK GDP.

I am sure Members will be aware that Gower was the first area of outstanding natural beauty in the UK. It is a great tourist attraction, and I am sure that the development of the tidal lagoon will add to that. Swansea bay tidal lagoon would be the birth of a new industry based in Wales, and it now needs our support to get it into construction. Where that project leads, others will follow.

Photo of Carolyn Harris Carolyn Harris Labour, Swansea East

Does the hon. Gentleman agree that, since the mention of a tidal lagoon being in Swansea, his constituency, my constituency and the constituency of my hon. Friend Stephen Kinnock have seen a great increase in the feel-good factor and a driving of the agenda to take forward other projects that would be less exciting without a tidal lagoon?

Photo of Byron Davies Byron Davies Conservative, Gower

The hon. Lady makes a good point. The tidal lagoon has great benefits, including from a health point of view.

Tidal Lagoon Power started work on Swansea bay in 2011 and has spent more than £30 million on the project to date. The company has been wholly privately financed by a number of private individuals, and more recently by a small number of institutional investors. The enterprise is therefore a purely UK-led initiative in the area of tidal power.

In February, the Department of Energy and Climate Change announced an independent review of tidal lagoon energy, which I support and believe is the right decision. Swansea bay tidal lagoon has development consent, while the other projects do not. This has to be looked at in the round, and DECC is making the right decision in considering it properly. Tidal Lagoon Power has welcomed the review as a clear signal that tidal lagoons are being taken seriously and are no longer simply a footnote to UK energy policy. With negotiations on Swansea bay progressing in parallel, it should be possible to sustain investor confidence and ensure that this first-of-its-kind project at Swansea bay is ready to go, should the review conclude that the UK needs tidal lagoons.

In conclusion, I am concerned that the project has been used as a bit of a political football locally. We need to come together on a cross-party basis to provide the project with the support it needs. I know there is support in the Swansea area from other politicians. We all want to see the project develop for the benefit of our communities and the Welsh economy, so we need to lay aside political differences and have a serious and sensible dialogue, as we are today, on the way forward for the lagoon.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon 3:07 pm, 8th March 2016

It is a pleasure to serve under your chairmanship, Mr Brady. I congratulate Simon Hart on securing this debate. The presence of so many hon. Members here today shows why the project is of such importance. I rise today to urge the Government to give this vital project the go-ahead soon.

I believe that the tidal lagoon should be approved for the following reasons. First, it offers Wales, and the Swansea bay region in particular, an unrivalled opportunity to place itself at the forefront of what this year’s World Economic Forum in Davos called the “fourth industrial revolution”—an industrial revolution that will be characterised by new forms of renewable energy and by the exponential outward expansion of technological innovation. We can be at the vanguard of that revolution, and the Swansea bay tidal lagoon could be a catalyst for it.

To have the first project of this type in Wales—not only in Wales, but in my constituency of Aberavon and, I hasten to add, that of my hon. Friend Carolyn Harris—would be a source of tremendous national and local pride. The project would also provide a significant alternative to carbon-intensive industry.

This is a chance to harness the natural environment and the unique nature of Swansea bay to our advantage. It is an opportunity to use the environment to protect the environment, power the local community and local homes and to save money—because, secondly, the tidal lagoon will help not only to tackle climate change, but to save money in the long run. The lagoon requires a strike price of £96 per megawatt-hour. That is 16% below the cost of any offshore wind farm ever granted a contract.

Photo of Antoinette Sandbach Antoinette Sandbach Conservative, Eddisbury

I am interested in that strike price. Will the hon. Gentleman explain what period that is over? My understanding is that it is over a period of 90 years, rather than the 35 years that would apply, for example, in a wind farm contract.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

The hon. Lady is correct. My argument is still that that strike price, as a unit price, is very attractive, particularly when we consider the economies of scale that would come from the construction of further tidal lagoons. We will see a downward trend in that strike price, which is a very convincing economic argument.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

The hon. Gentlemen rose at the same time. I will, in a very biased way, give way to my hon. Friend.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour, Ogmore

I understand that the Government want to get the financial details right and the best value for money for the taxpayer and bill payer, but on the basis of such unanimous cross-party support throughout Wales—at Assembly, ministerial and MP level, as well as right across society; there are no dissenting voices—should it not be the case that at the end of the consultation we have the deal on the table and we go ahead?

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

I agree entirely with my hon. Friend and also with the hon. Member for Gower. There is a cross-party consensus and what seems to be a rare outbreak of unanimity. Let us take that opportunity to move forward.

Photo of Angus MacNeil Angus MacNeil Chair, Energy and Climate Change Committee

I am grateful to the hon. Gentleman, who is losing time because of interventions; he is very kind. To put the matter into some context, the strike price for nuclear will be for 35 years, but we must remember that nuclear has been on the go for 60 years in the UK. So 60 years after it first came along, it is still getting support for a further 35 years—95 years in total—and the strike price being talked about for the barrier is for only 90 years. I do not want to get into a debate about tidal versus nuclear, but that is interesting for context and background.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

I agree with the hon. Gentleman, and I would add that we have seen a disastrous overrun in the cost and timing in Flamanville and in Finland, so let us give the tidal lagoon a chance, because in the long run it looks like a very good investment.

Over the project’s life span, it will deliver cheaper-than-wholesale electricity. The combination of the Swansea and Cardiff tidal lagoon projects, the first two of their kind in the world, would, over the course of their lifetimes, deliver the cheapest form of electrical generation on the UK grid. Thirdly, the project will create thousands of highly skilled, well paid jobs locally, supporting hundreds of local businesses. Indeed, it is already having a positive impact in the local area, as my hon. Friend the Member for Swansea East mentioned, giving rise to plans for many small businesses in the city bay region and feeding into the strategy for the Swansea bay city deal. This is exactly the kind of project that must go ahead if we are to see the rebalancing of the economy that this Government are so keen to talk about, but are apparently not always so keen to act upon. Well, here is the chance: approve the tidal lagoon and create jobs; support small business in the area; help to rebalance the economy and produce green energy.

Finally, as hon. and right hon. Members will be aware, the Welsh steel industry is going through testing times. Nowhere is that more acutely felt than in my constituency, where we are recovering from the devastating news two months ago of 750 job losses at the Tata steelworks in Port Talbot. With the Swansea bay tidal lagoon, there is a real opportunity to support not only the local community, but the local steel industry. The turbines and generator package are worth around £300 million, and Tidal Lagoon Power has committed to sourcing all the major components from the UK.

The company has detailed plans in place for a turbine manufacturing plant in Swansea docks and heavy fabrication in Pembroke, and the generators are to be manufactured in Newport and Rugby. This is all welcome, but I want to see the Government go further when approving the project, and show real leadership by committing to help to source all or as much of the steel for the turbines from the British steel industry. Not only would that help to create jobs across the Swansea bay area, helping some of those highly trained and skilled men and women who were made redundant at Port Talbot in January; it would also help to support local jobs at the Port Talbot steelworks, supporting local jobs and Welsh steel.

Photo of Jessica Morden Jessica Morden Opposition Whip (Commons)

I thank my hon. Friend for giving way so near to his closing remarks. I want to reiterate that we in Newport also urge the Government to get on with the Swansea bay lagoon. We can also see the benefits further down the line in terms of procurement—my hon. Friend mentioned the steel industry—and in terms of investment, construction and long-term jobs.

Photo of Stephen Kinnock Stephen Kinnock Labour, Aberavon

My hon. Friend and I stand shoulder to shoulder on this issue.

A positive decision on the lagoon would put a much needed tick in the Government’s green credentials and deliver a massive boost to the local economy and steel industry. This project needs and deserves rapid advance. The Government need to get off the fence and fast, because each day of delay is costing months or years of progress. The recently announced review cannot be another airport-style case of kicking things into the long grass. While welcoming the review, the chief executive of Tidal Lagoon Power, Mark Shorrock, stated:

“A welcome review should not be a substitute for action.”

He made it clear that unless work starts on the lagoon now, and unless structuring and commercial negotiations are concluded in the next six weeks,

“the opportunity will be lost and the review will be all for nothing.”

That was almost a month ago to the day. That gives the Government just two weeks if the project is to go ahead on schedule. The clock is ticking. If the Government want to know what the time is, it is time to act now.

Photo of Antoinette Sandbach Antoinette Sandbach Conservative, Eddisbury 3:14 pm, 8th March 2016

I am grateful to my hon. Friend Simon Hart for securing this debate. I sat on the Environment and Sustainability Committee in the Assembly for a year and we did an inquiry into energy in Wales. I know very well the potential for tidal power in Wales, but I would like to sound a small note of caution. My hon. Friend made a very good speech that highlighted the sunny uplands, which will no doubt be reflected in the beauty of his constituency. However, on the plains of Cheshire, the concerns of my constituents are about the cost of electricity. I think this project is fantastic, but not at any price.

I currently sit on the Energy and Climate Change Committee, and I have real and substantive concerns about the reported strike price.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire

My speech was not an entirely optimistic picture of energy production in the UK; I hope my hon. Friend accepts that. My point is that her constituents will not have any electricity at all, expensive or cheap, unless we fill the void that will be staring us in the face in about a decade’s time.

Photo of Antoinette Sandbach Antoinette Sandbach Conservative, Eddisbury

I am grateful for my hon. Friend’s intervention. He will know about the excellent progress being made by the Horizon project and the Wylfa nuclear power station in north Wales, which will provide a large amount of generation. I am delighted because that is a very good project that will proceed at an even lower strike price than Hinkley Point’s, which is £92.50 per MWh. That is my real concern around this.

Photo of Antoinette Sandbach Antoinette Sandbach Conservative, Eddisbury

I will just finish making this point. Citizens Advice has issued a report that highlights that, per unit of output, this would be the most expensive significant renewable energy project in Britain with an impact on those who can least afford to pay the bills because, as was pointed out earlier, the project would be funded by contract for difference, which gets added on to consumer bills. That means that the poorest and least able to pay would have the levy on their bills to pay for the project. I therefore welcome the review that the Government have announced, because there are other tidal projects and other forms of tidal energy and research coming forward.

Value for the taxpayer is absolutely key. As has been pointed out, the technology in itself is not new and would not attract a patent that could then be sold around the world. It may lead to some experts who could go and deliver that expertise elsewhere, but in terms of the unique deliverability of the technology, the project is using already established technology. There are no doubt potential benefits in relation to coastal protection.

Photo of Carolyn Harris Carolyn Harris Labour, Swansea East

To go back to the hon. Lady’s comments on Wylfa and nuclear, does she not agree that the decommissioning costs of any nuclear project far outweigh any benefit that there would be in the on-costs to begin with?

Photo of Antoinette Sandbach Antoinette Sandbach Conservative, Eddisbury

The hon. Lady will know that the strike price that has been agreed includes the decommissioning costs, and that Wylfa is a project that is very much welcomed in north Wales. Voters on the Isle of Anglesey are extremely supportive of the Horizon project going forward.

Citizens Advice said there was a danger that the project would repeat the mistakes that were made at Hinkley. It highlights an

“opaque negotiating process, lack of scrutiny of cost effectiveness and excessive politicisation of the decision”.

I am aware, as is every Member in the Chamber, that Assembly elections will take place in May. No doubt the project is being used to sell the dream. On behalf of my constituents, and particularly those who have difficulty in paying their bills, I welcome the review and urge an element of caution before we commit ourselves to a hugely expensive project. If it can deliver, and at the right price, it clearly needs to go ahead, because of the many advantages that have been and no doubt will be outlined in the debate. However, I want to say to the Minister that it should not be at any cost—only at a cost that is reasonable for the taxpayer. The clear, substantive advantages can be argued for, but I have concerns about the project.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

The hon. Lady is making her point clear. Is she ideologically opposed to direct public investment, if she is opposed to the contracts for difference model?

Photo of Antoinette Sandbach Antoinette Sandbach Conservative, Eddisbury

My understanding is that the rate of return to the investors in the project is 12% to 15%, which is very high. It is a very high cost to taxpayers and I query where else in the market anyone could get that kind of return. When we are talking about payments over 90 years, I urge caution. I do not say “Don’t go ahead”: I say that the review is appropriate. There could be clear advantages, and the boost that would be given to the steel industry and, no doubt, the domestic supply chain would be welcome. There are positives to be expressed, but there are also concerns, and it is right that if we are debating the project in the House we need to know some of the risks as well as potential rewards.

Photo of Carolyn Harris Carolyn Harris Labour, Swansea East 3:21 pm, 8th March 2016

It is a pleasure to serve under your chairmanship, Mr Brady. I congratulate Simon Hart on obtaining the debate. The issue is close to my heart, and the heart of my hon. Friend Stephen Kinnock.

We have heard that Tidal Lagoon Power is entirely privately owned, so when in February the Department of Energy and Climate Change announced an independent review of the tidal lagoon project I was shocked and disappointed, because the Government have been in talks with the company for more than a year. What stone has been left unturned? Surely we must all acknowledge that the tidal lagoon is a new approach, which will bring considerable environmental and social advantages to every region in the United Kingdom. There are plans for future lagoons. Tidal Lagoon Power is developing five full-scale tidal lagoons to employ the blueprint that needs to be established in Swansea bay. Between them, those projects would represent more than 15 GW of installed capacity, 8% of the UK’s total electricity requirement, and more than £40 billion of capital expenditure. Each project would secure a home-grown power supply for 120 years. Those are phenomenal figures.

The economic case is astounding. Six tidal lagoons would contribute £27 billion to UK GDP during construction, creating nearly 36,000 jobs on average, and 71,000 at the peak. Once in operation, the fleet would contribute £3.1 billion per year to UK GDP and sustain or create as many as 6,500 jobs. What region can afford not to welcome that? What Government can afford to risk that potential? As to the UK supply chain, Tidal Lagoon has set a target to achieve 65% of project spend in Swansea bay on UK content; with 50% of that staying in Wales. Wales cannot afford to miss this opportunity. There are phenomenal financial implications, with turbines, generators and turbine houses to be manufactured locally in Pembroke, Llanelli and Swansea. Detailed plans are in place for a turbine manufacturing plant in Swansea docks—a part of the city that has been left for a considerable time, since the decline of the dock—heavy fabrication in Pembroke and generator manufacture in Rugby and Newport. The turbines and generation package for Swansea bay are worth £300 million with almost all the parts to be UK-sourced.

As for employment, up to 1,900 full-time equivalent jobs will be created and supported during construction, and up to 180 will be created and supported through the operational life of the lagoon. There will be up to £316 million of gross value added during construction. So it goes on; the figures just keep coming. The project is a win-win all round, for Swansea East, Aberavon, the Gower, Wales and the UK—we all gain from every aspect of the project. The region needs the project, and so does my city—and the UK. It is an opportunity for us to become global leaders in a new and exciting technology; let us not let anything stop that.

Photo of Graham Brady Graham Brady Chair, Conservative Party 1922 Committee

I propose to take the winding-up speeches at 3.30.

Photo of Mark Williams Mark Williams Liberal Democrat, Ceredigion 3:25 pm, 8th March 2016

It is a pleasure to serve under your chairmanship, Mr Brady. I will be very quick. I congratulate Simon Hart on securing the debate. He alluded to the consensus, and I feel like a bit of an interloper in the debate, following Carolyn Harris, who has done so much in her constituency to champion the cause. I speak as a Welsh Member, to reiterate the point made by the hon. Member for Carmarthen West and South Pembrokeshire about the consensus on the issue between all the political parties. Stephen Kinnock got a few of us to sign an important letter to the South Wales Argus last year, to reiterate the case, and on 2 December our colleagues in the National Assembly unanimously voted to urge the UK Government to take action.

I suppose if I were to characterise the debate as encompassing the caution of Antoinette Sandbach and the enthusiasm of the hon. Member for Swansea East I would on this occasion side with Swansea East. Although the review has been acknowledged by Members all around the Chamber—with some more enthusiastic about it than others—the key point is that if it is happening, to quote the chief executive of the lagoon project, it is not “a substitute for action”. The debate is about timing.

Photo of Mark Williams Mark Williams Liberal Democrat, Ceredigion

If the hon. Gentleman will forgive me I will not take an intervention, because we want to hear the winding-up speeches.

There is a question of timing. We have a consensus, and the hon. Member for Carmarthen West and South Pembrokeshire talked about the need not to prevaricate. If concern is felt in some quarters that the project is being put into some kind of grass—long or otherwise—I hope that the Minister will dispel that.

We have heard all the evidence. The Swansea bay tidal lagoon project is critical for Swansea and the adjacent areas. It is critical for Wales and the UK, not just as a means of reducing our reliance on fossil fuels, but also to increase the important renewables sector and for the Welsh economy. The technology is not new. Some of us have been on the Welsh Affairs Committee for quite a long time. Mr Jones is nodding. I remember a trip in a rubber dinghy in the Bristol channel with the predecessor of the hon. Member for Swansea East and the present shadow Secretary of State for Wales, Nia Griffith. It was an intriguing experience bobbing around in the Bristol channel with my colleagues; but we were there because, even 10 years ago, we were looking at the potential for such approaches. I cannot go back quite as far as Paul Flynn did in his speech, but we were talking about it 10 years ago.

Although it is not new technology, we need to look at other precedents around the world in France, Canada, Korea and elsewhere. We have the opportunity to be at the forefront of the technology. The lagoon could be the first of many such projects around the UK and elsewhere, if it is shown to be a success, bringing down the price of technology substantially and allowing us in Wales to export that technology around the world. I will repeat the figures: the Centre for Economics and Business Research has estimated that a UK tidal lagoon industry could increase our exports by £3.7 billion a year—for Swansea and the south-west of Wales. There would probably not be many jobs in Ceredigion; maybe a few. Setting the industry up would provide about 2,000 jobs, and much-needed high-skilled work in areas where that has sometimes been lacking. There would be several hundred ongoing jobs when the project was completed. We have heard about the tourist potential. In the years since I used to go there on holiday as a child, a huge amount of regeneration has happened in Swansea. We could build on that massively if this project moved ahead speedily.

If we are to meet our climate targets, it is vital that we invest up front for these kinds of projects and do not allow short-term thinking to scupper the long-term ambitions for our environment and economy. We need to ensure that we are at the forefront of encouraging the development of green technologies at a time when, if I am allowed briefly to be slightly party political in the last 30 seconds, there have been concerns about the direction of travel of the Department of Energy and Climate Change since the general election—but I say that only in passing.

The message of this debate is that politicians from all political parties—from direct engagement in Aberavon, the Gower and the city of Swansea, and from those of us from further afield—are urging the Government to get on with it. Have the review, but at the end of it, have some outcomes from which this project can grow and the communities we have heard about can prosper.

Photo of Phil Boswell Phil Boswell Scottish National Party, Coatbridge, Chryston and Bellshill 3:30 pm, 8th March 2016

It is a pleasure to serve under your chairmanship, Mr Brady. I thank Simon Hart—a quite beautiful part of the country—for bringing this key debate to the House and all the Members who have taken part. I feel that all the speakers today have contributed significantly and that many excellent points have been made.

A comprehensive and concise case was made by the hon. Gentleman, much assisted by contributions from Members across all parties. He reminded us of the Conservative manifesto and made key points about how with the STL we could, and should, be a global leader. That sounds very much like the positive argument for carbon capture and storage, and we all hope that, unlike with CCS, the Government will look to the longer term in this case and push forward. He spoke of a lights-off moment and the problems that would create in respect of black start, and the many benefits of added value, which I will come to later and which have been commented on by many Members. Critically, he corrected the common misconceptions about pricing, which were also covered by other Members.

The economic benefits that the project would bring to south Wales were particularly well covered by the hon. Members for Ceredigion (Mr Williams), for Newport West (Paul Flynn), for Aberavon (Stephen Kinnock) and for Swansea East (Carolyn Harris). The point was well made that the Swansea tidal lagoon will bring fantastic economic benefits to the local area, creating thousands of jobs and permanent roles in tourism-related industries for Wales and beyond. Over 2,800 construction jobs will be created, as well as up to 40 permanent roles in tourism industries. The Centre for Economics and Business Research, which was well quoted by Members, has estimated that the tidal lagoon could result in an annual boost to Welsh gross value added of 0.14% and would create direct and indirect jobs for the Welsh economy.

It is vital not only that Wales benefits as much as possible from this huge and exciting project, but that local communities benefit from energy developments. The community share offer made by STL will give the local community a direct stake in the project’s success, which will of course increase public support. It is also important that Tidal Lagoon Power works with the region’s universities and colleges to ensure that young people are encouraged into the green energy sector and that apprenticeship schemes are made available at the site. North Wales is also home to world-class marine science and energy research departments, which should work in tandem with the project. This should not just be Wales-wide; we should expect it to go beyond that and be UK-wide.

A positive point about UK fabrication, particularly in relation to steel tonnages, was made by the hon. Members for Penistone and Stocksbridge (Angela Smith) and for Aberavon. We must not forget the cautionary note that Antoinette Sandbach sounded about the strike price or the points made about the politicisation of this project in the upcoming elections.

Contributions were made by many about the role of Wales and how it is well placed to take advantage of the increased demand for renewable energy, with its vast coastlines making it a fantastic place to harness tidal energy. Wales is home to the second highest tidal range in the world, in the Severn estuary, and has 1,200 kilometres of coastline—however, as yet none of it is being utilised.

Plaid Cymru is committed to making Wales self-sufficient in renewable electricity by 2035, and tidal power is a crucial part of that plan. Wales is already an energy-rich nation. It produces almost twice as much electricity as it uses, but at the moment only 10% of that is generated from renewables, compared with 32% in Scotland and 14% across the UK. This project will help Wales on its way to achieving the 2035 renewable electricity goal and will hopefully create a template for the proposed Cardiff tidal lagoon, which would generate enough electricity to power the whole of Wales. This is a long-term investment in the future of Wales. It is hoped that the success of the project would make the cost of any future projects based on it cheaper, through lessons learned, the evolution of design and technology, and so on.

A point was made about the potential flood defence benefits, which is another dimension of the project that will doubtless be investigated. STL is just the start. The hon. Member for Newport West spoke about the future of the project technology as a veritable eternal dream come true. The hon. Member for Aberavon spoke of the fourth technology revolution.

The UK Government have demonstrated that they are not fully committed to investing in renewable energy and meeting targets. Points on that were well made by the hon. Member for Newport West, who predicted potential miraculous funding, and we hope that comes to fruition. In February this year, the Government were criticised by the European Commission for failing to make sufficient progress towards Europe-wide renewable energy targets.

Sitting suspended for Divisions in the House.

On resuming—

[Mr Philip Hollobone in the Chair]

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering 4:03 pm, 8th March 2016

Sorry for the delay. The debate will finish at 4.28 pm. Mr Boswell is halfway through his remarks, so he has another five minutes. There will be 10 minutes for the Opposition and Government Front Benchers, and then we have the delight of Mr Hart having two minutes to sum up the entire debate.

Photo of Phil Boswell Phil Boswell Scottish National Party, Coatbridge, Chryston and Bellshill

In February 2016, the UK Government were criticised by the European Commission for failing to make sufficient progress towards Europe-wide renewable energy targets. The Government’s recent record of industry disappointment in constant policy changes is well discussed and recorded, particularly in respect of the early closure of the renewables obligation for onshore wind, solar energy subsidy cuts, privatisation of the green investment bank, carbon capture and storage and the legislative changes on oil and gas. Do not let the Swansea tidal lagoon project be the next renewable energy disappointment in that growing and far from comprehensive list of UK Government fails. Is it any wonder that the energy industry has somewhat lost faith in the Government? The continual moving of the legislative goalposts has seriously damaged market confidence.

There is an opportunity in Swansea for the UK Government to get back on track not only in respect of Britain’s commitment to green energy targets, but in reinstating investor confidence to some degree by delivering a best-value strike price for the people of south Wales and Britain as a whole. The anticipated and very real delay failures of Hinkley Point C have been well covered by hon. Members. Those extensive, real concerns should be a catalyst for moving forward with the Swansea tidal lagoon project.

In summary, tidal energy as a real contributor to our UK-wide climate change targets must be taken seriously. This project in south Wales is perfectly placed to take advantage of that need and must therefore be enabled to play its part in our collective success. Like, I am sure, the rest of the hon. Members present, I have been struck throughout this debate by the high level of cross-party support for STL. The fantastic ambition and progress made by the devolved nations on renewable energy cannot be held back by the regressive energy policies of this Government. I urge the Minister to get off the fence—as urged by the hon. Member for Aberavon, who is no longer in his place—and do everything in her power to ensure that the project goes ahead. It is about time this country had a good news story on renewables, or no one will take us seriously in our attempts to hit climate change targets and to keep the lights on.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Minister (Treasury), Member, Labour Party National Executive Committee 4:05 pm, 8th March 2016

It is a pleasure to serve under your chairmanship, Mr Hollobone. It is also a pleasure to debate opposite the Minister for the first time. It is fitting that two ladies are representing the Government and the Opposition on International Women’s Day. I congratulate Simon Hart on securing this debate. In his opening remarks he eloquently explained why the Swansea bay tidal lagoon is a particularly exciting subject.

The construction of a tidal low-carbon power plant represents a real opportunity for the UK to be at the forefront of renewable technology innovation. That fundamental point has been echoed by other hon. Members today. I do not intend to go over those remarks, as Philip Boswell has already done so rather articulately.

This debate has been a fantastic opportunity to highlight the potentially huge economic benefits of encouraging tidal lagoon power. Of course, we have also heard the hopes of hon. Members on both sides of the House that the Government will come to an agreement on the level of state support required to get this project off the ground. Indeed, the Conservative party’s manifesto contained a commitment to the Swansea tidal lagoon as a source of

“secure, affordable and low-carbon energy”.

However, there is a fear in many quarters that, since then, the Government appear to have kicked the project into the long grass. I hope that this debate will help to remind the Government of their commitment and that we will see some movement towards meeting it.

As we have heard, the proposed Swansea bay tidal lagoon has clear environmental benefits, as it harnesses a sustainable source of energy to generate a significant amount of carbon-free electricity over a long lifespan. Tidal Lagoon Power, the company that will construct, own and operate the plant, has suggested that it will generate enough electricity to power 90% of homes in Swansea bay over a 120-year lifespan. Indeed, as the generation of power relies only on the tide, it is an entirely predictable source of renewable energy.

Given the Government’s cuts to other renewables, we hope that tidal lagoon technology will not be the next to suffer, particularly because the economic case, as we have heard today, is as strong as the environmental case. For instance, a key benefit of developing the Swansea bay tidal lagoon is the number of jobs that it will create and support during its construction and lifetime. Tidal Lagoon Power estimates that the project will support 1,900 jobs during construction and 181 jobs during each year of operation. That is supported by research by the Welsh economy research unit at Cardiff University, which estimates that 1,850 full-time equivalent jobs will be supported across the region for the three-year construction period.

Such employment opportunities will be incredibly beneficial to the Swansea bay area of Wales, which has a somewhat high rate of economic inactivity and has recently been dealt a blow with the loss of jobs in the steel industry, another sector that, frankly, the Government should be doing much more to support. In fact, today we heard that an estimated 370,000 tonnes of steel are required for this project alone.

The Swansea bay tidal lagoon presents a real opportunity to rejuvenate the area, offering employment in a new, growing industry. As the Cardiff University research unit explains,

“integrating construction demand with local manufacturing inputs and new industry will be an important means of strengthening prospects in these important parts of the regional economy.”

Similarly, trade unions have added their voice to business leaders and academic experts. Unite Wales, for example, hailed the project as

“both superb and significant in terms of the vision, energy and employment potential it could bring to Wales.”

Furthermore, the local community will benefit greatly from the plans for the lagoon area itself. We have heard today that Tidal Lagoon Power has outlined its ambition

“for the lagoon to become a major attraction and recreational amenity…showcasing tidal range technology and providing a unique venue for opportunities in the arts, culture”.

Photo of Jonathan Edwards Jonathan Edwards Shadow PC Spokesperson (Treasury), Shadow PC Spokesperson (Business, Innovation and Skills), Shadow PC Spokesperson (Transport), Shadow PC Spokesperson (Foreign Intervention)

I am grateful to the hon. Lady for giving way and for confirming from the Front Bench that the Labour party is fully behind the project. The key question for her as someone who aspires to be in the Minister’s seat is this: how would a future Labour Government pay for the project if they were in charge of it? Would they use a strike price model via a contract for difference, or does she agree that we should consider direct public investment, as a far cheaper way for the public to finance the scheme?

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Minister (Treasury), Member, Labour Party National Executive Committee

The hon. Gentleman raises some interesting and pertinent points. I hope that the Minister has considered them, and that the Government will address many of those issues in the review currently being undertaken. We as a party will comment on them when the facts and information become available in due course.

Photo of Glyn Davies Glyn Davies Conservative, Montgomeryshire

It is clear from the debate that everybody, across parties, thinks that this is a wonderful scheme and would like it to go ahead, but we know from experience that such schemes go ahead only if a satisfactory economic case is made. Does the hon. Lady welcome the review and the work going forward? The Government will be in a position to recognise the benefits, and it will confirm that the scheme is based on value for money as well as ticking every other box.

Photo of Rebecca Long-Bailey Rebecca Long-Bailey Shadow Minister (Treasury), Member, Labour Party National Executive Committee

Yes. I welcome the hon. Gentleman’s comments and those made earlier by Antoinette Sandbach. The scheme needs to represent value for money, but that must be assessed in the context of the whole economy, not just the specific project. As we heard earlier, it is not just a stand-alone project and should not be treated as such. If we consider it in a national context along with the other projects in the offing, I think that we will see throughout the review—I hope that the facts are presented as I have been told they will—that it will represent more value for money than a single project in Swansea alone.

The Cardiff University research unit also considered community benefits. Tidal Lagoon Power has suggested that the lagoon could become a foundation venue for local and national sports use, as the lagoon wall would provide a track for cycling, walking, angling and running and the lagoon itself could be perfect for swimming, rowing and sailing.

Not only will the project be a fantastic source of job creation and regeneration for the Swansea bay area, but it is expected to have a huge impact on the Welsh economy in general. A 2014 report by the Centre for Economics and Business Research estimated that the impact on Welsh gross value added could amount to approximately £76 million a year, in 2014 prices, over its 120-year lifespan. The development of such a new and exciting industry could also provide a much-needed boost to UK exports. Tidal Lagoon Power estimates that the potential to export UK content to a new global tidal lagoon market has been valued at £70 billion. The review should refer to the wider global impact.

Tidal power is an easily replicable new industry. The UK could be a world leader in exporting the technology and manufacturing across the globe. I am sure that the Minister will agree that at a time when the balance of payments leaves much to be desired, the development of a new exportable industry would be highly beneficial to the country. In short, investment in renewable energy technologies is a long-term win for everyone, saving jobs, money and the environment.

The Opposition understand that the Government are not set against this or other tidal lagoon energy projects in principle but have announced a six-month independent review, delaying any decision until autumn. However, Tidal Lagoon Power has said that it will need a decision on a much faster timetable. I welcome any reassurance that the Minister can give us that the project will not be allowed to fail simply due to the timescale of decision making. In conclusion, it is clear that the potential economic and environmental benefits of developing the Swansea bay tidal lagoon are huge. I hope that the Minister can assure me that the Government are doing all that they can to agree a level of state support to make the project viable.

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change 4:14 pm, 8th March 2016

Mr Hollobone, it is a great pleasure to serve under your chairmanship. I congratulate all hon. Members on this interesting debate—I mean that sincerely—in which some good points have been made. I welcome Rebecca Long Bailey to her place on the Front Bench. It is a pleasure to speak with her for the first time in this debate. Interestingly, we both have landlocked constituencies, yet we share a keen interest in this project.

I congratulate my hon. Friend Simon Hart on securing this debate. His chosen topic is of great interest to the Government, and I sincerely welcome this opportunity for an exchange of views. He, like others, from the south Wales region and beyond, is keen to understand better how the proposed Swansea bay tidal lagoon project, if it goes ahead, would benefit the local economy.

I want to clarify one important thing: my hon. Friend is absolutely right to mention that the Swansea bay project was in our manifesto. The Government absolutely recognise its potential to deliver low-carbon, secure energy for the future. However, as I am sure he will accept, it was not a commitment to deliver a contract for difference. This Government are absolutely determined to prioritise keeping costs down, to be on the consumer’s side and to decarbonise at the lowest price while keeping the lights on. Although the project is of huge interest to us, I am sure that he will appreciate that we must keep a close eye on the cost.

Photo of Neil Parish Neil Parish Chair, Environment, Food and Rural Affairs Committee, Chair, Environment, Food and Rural Affairs Sub-Committee

The Bristol channel has the second highest tidal rise and fall in the world. We must harness it. We look to the Minister to find a way to fund that over a long period, because I think it has a timescale of more than 120 years. Once the lagoon is built, if the banks and turbines can be repaired, it will have an infinite life. If we can get the funding right, the power will be right, because the tide will be there, hopefully. As long as the moon is there and the earth revolves around the sun, we will have a tide.

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

My hon. Friend makes a good point. I agree completely. As I said, we are keen on the project, but not at any price.

Since the Government entered bilateral negotiation with Tidal Lagoon Power Ltd on a possible contract for difference for the project, my officials have been undertaking due diligence to establish a better understanding of the project, including detailed scrutiny of its costs, timescales and potential benefits. I assure my hon. Friend Antoinette Sandbach that the bilateral negotiation process is set out in a stakeholder engagement document that my Department published in January 2015, so it is not an opaque process. I urge hon. Members to read it.

Let me be clear that this Government continue to recognise the potential for the deployment of tidal lagoons in the UK. The scalability of the technology is of genuine interest to us. We are attracted to the proposed Swansea bay tidal lagoon because of its potential to unlock larger, more cost-effective developments elsewhere in the UK.

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

I will answer the hon. Gentleman’s point, which I know he has made twice already. I will come to it in a moment.

There is speculation, following recent announcements, that this Government have kicked the project into the long grass. The simple truth is that the developer’s current proposal for a 35-year contract is too expensive for consumers to support, and the deliverability of the wider lagoon programme is too uncertain at this point. The developer is seeking a very significant amount of financial support for the project from consumers, and its most recent proposals for a longer contract would be a significant deviation from where Government policy is just now.

For that reason, it is only right that we take more time to consider the proposals. As I have said, the Government cannot support the technology at whatever cost to the consumer. It must represent good value for money and be affordable. We have told the developer that Department of Energy and Climate Change and Treasury officials stand ready to continue discussions. In parallel, there will be an independent review to assess the strategic case for tidal lagoons and whether they could represent good value for consumers.

The independent strategic review was mentioned by my hon. Friends the Members for Gower (Byron Davies), for Eddisbury and for Montgomeryshire (Glyn Davies), as well as Mr Williams. It will consider a number of issues, including the potential scale of the opportunity in the UK and internationally, including, importantly, supply chain opportunities.

Shortly, we will set out more details about the review, including the name of the person who will lead it. I hope that it will be possible to complete the review by the autumn. It will help us to consider further what role tidal lagoons could have as part of our plans to secure clean and affordable energy for families and businesses across the country.

Photo of Carolyn Harris Carolyn Harris Labour, Swansea East

Can the Minister confirm that there will be somebody from Wales on that committee?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

As I say, the make-up of the committee is being discussed right now, and I will certainly take that point away. I am quite sure that there will be someone from Wales on it, but I cannot say for certain because we have not got the names of individual members yet. I am grateful to the hon. Lady for making that point. As I was saying, we will not be able to make a decision about whether to award a CfD to Swansea bay until the review has been completed.

My hon. Friend the Member for Carmarthen West and South Pembrokeshire suggested an intergenerational CfD for up to 90 years, as did Stephen Kinnock. We will consider this and other means of financing this type of project as part of the review. However, hon. Members will appreciate that a 90-year CfD, or a CfD for even longer, is a very, very long-term intergenerational funding commitment that is not something that the Government have looked at so far. It requires further review; it is not something that we can simply pick up.

One of the very important reasons for the widespread interest in the proposed Swansea bay tidal lagoon and of course the wider lagoon programme is the potential for significant economic growth and job creation. We are taking this opportunity very seriously. If a decision is taken to award a CfD to this project, the Government will look to maximise the potential economic benefits as far as humanly possible. I can tell hon. Members that consideration of the supply chain is always a key part of a CfD negotiation, and the Government have already requested a supply chain plan and map from the developer. We are very pleased that the UK content of the project is likely to be up to 65% and that the Welsh content is likely to be about 50%.

That is good news, but hon. Members—in particular, my hon. Friend the Member for Carmarthen West and South Pembrokeshire, and the hon. Members for Aberavon, for Salford and Eccles and for Swansea East (Carolyn Harris), and my hon. Friend the Member for Gower—asked, “What do we get from this, especially for the steel industry and so on?” I can tell all hon. Members that in the context of offshore wind, where there is a very clear commitment to further growth, I am pushing extremely hard to maximise the opportunity for the UK supply chain, and if this tidal project goes ahead I will be like a Rottweiler and absolutely fighting for as much UK content as possible. That is a very important point to make to all hon. Members.

Photo of David Jones David Jones Conservative, Clwyd West

My hon. Friend has mentioned offshore wind. Is it not the case that the strike price proposed for the Swansea lagoon is comparable to that for offshore wind? Does not the lagoon have the substantive advantage of not being intermittent, unlike offshore wind?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

My right hon. Friend is exactly right that the advantage of this project is that it is despatchable and not intermittent, which is the problem with offshore wind. However, I am afraid that he is not right that the cost of this project is comparable to the cost of offshore wind, because the timescale for this project is vastly different. If we compare like with like, we find that this project is much more expensive.

Once again, I congratulate hon. Members; this has been a very constructive debate and I have taken away a number of points from it. I also pay tribute to Paul Flynn, who has expressed his very long-term vision, which is far beyond the pedigree of most of us here, if not all of us here. He has been promoting the possibilities for tidal and he is absolutely right to do so. However, I can assure him that Hinkley Point is not comparable. We are very confident that the Hinkley Point project will get built and I will make the specific point that, as he will know, the decommissioning costs are taken into the CfD price, and so there is not a further cost of decommissioning, as some Members suggested.

Photo of Paul Flynn Paul Flynn Labour, Newport West

I am grateful to the hon. Lady for her remarks. If the Hinkley Point European pressurised reactor suffers the same fate as all other reactors—delays of six or seven years—what is the Government’s plan B to fill the energy gap?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

As the hon. Gentleman will know, the Government are not dependent on any one technology. The important thing is a mixture of technologies and we are confident in our strategy for ensuring reliable and affordable supplies of energy.

It is entirely understandable that people are getting behind this proposed tidal project. It has the potential to be a very exciting development for Swansea, south Wales and the UK. If the project goes ahead, it should have a positive impact on the local economy, and if a positive decision is taken, we will look to maximise the opportunity and the effect as far as possible. However, we have a duty to ensure that the decisions we take are in the best interest of consumers across the UK, both today and in the future. So while we will continue to discuss the project with the developer and carefully scrutinise its most recent proposals, we will await the outcome of the independent review before taking any decisions on the Swansea bay proposal.

Photo of Simon Hart Simon Hart Conservative, Carmarthen West and South Pembrokeshire 4:25 pm, 8th March 2016

Thank you very much, Mr Hollobone, for calling me again.

I thank the Minister, the shadow Minister, the Scottish National party representative Philip Boswell, and many colleagues for their contributions today.

This has been an interesting debate, summed up by three words beginning with u: unity, which is good and somewhat unusual—to give a fourth word beginning with u; uncertainty, which is bad, and I hope that has been taken on board; and unique, because this proposal has a unique nature. There have been some erroneous comparisons with other projects. This project is not the same as other projects and therein lies its strength. I hope that the Minister will agree.

I hope that the Minister will not mind my saying this, but as far as manifesto commitments are concerned, nothing annoys me—and I suspect voters—more than something that gives a very clear impression in the written word in a manifesto that is followed up a few weeks or months later with, “Oh, we didn’t mean it quite like that.” The manifesto was really pretty clear about this project; there was no indication anywhere that this project might run into the long grass at a later stage.

Also, when the Minister talks about “not at any price”—I accept that, because nobody is going to do anything at unlimited price—I hope that she will stipulate at some stage in the future what the acceptable price is. It is all very easy going round and saying, “Not at any price”, but we need a slightly clearer indication of what we are talking about.

On behalf of many colleagues, I will say that this has been a healthy kick-around of this subject, and I hope that the decision makers in this process realise that there is some momentum behind this proposal and that, as far as we are concerned, it would have nothing but positive benefits for the Welsh economy and the wider UK economy.

Question put and agreed to.

Resolved,

That this House
has considered the potential economic benefits of the Swansea Tidal Lagoon.