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Hinkley Point

Volume 560: debated on Tuesday 19 March 2013

With permission, I would like to make a statement.

I am today publishing a development consent order which authorises the construction of a 3,260 MW nuclear power station at Hinkley Point, known as Hinkley Point C. The order will allow, from a planning point of view, NNB Generation Company Limited, a subsidiary of EDF Energy, to construct two European pressurised reactors, each of a capacity of 1,630 MW. It will also enable the company to construct associated development, such as freight handling and road improvements, and to carry out the necessary work to obtain land and rights over land, by compulsory acquisition if necessary.

My decision to grant consent comes after a long process of consultation and analysis, first on the policy that underpins the decision. As set out in the national policy statements that were approved by this House in July 2011, a new generation of nuclear power stations are a key part of our future low-carbon energy mix, tackling climate change and helping to diversify our supply, contributing to the UK’s energy security. Low-carbon energy projects will also bring major investment, supporting jobs and driving growth.

Secondly, on the proposals for Hinkley Point C itself, these were considered, with full public engagement, by a panel of five experienced planning inspectors from the Planning Inspectorate, whose conclusions and recommendations I have followed very closely. I am grateful to them for all their work, and to all those who engaged in that process, which was completed within the statutory time scale of six months. Copies of my decision, together with the panel’s report and other supporting documents, have been placed in the Library.

In recommending that development consent be granted, the panel concluded that the benefits of the proposed Hinkley Point C station outweighed the impacts, including those on the local communities, particularly when taking into account proposed mitigation measures. These include the provision of a bypass around Cannington; enhanced landscaping and access for amenity purposes; and ensuring that the work force do not cause any additional burden on local services such as health, education and housing. In making my decision, I also took into account representations made too late to be considered by the panel and not therefore included in its report. My consideration of these late representations is set out in my decision.

I expect the wide range of mitigations and controls provided for in the order and elsewhere to be effective in reducing the impact of the construction work on local people, but I also recognise that as these works are carried out, those who live in the area may well have their daily lives disrupted in one way or another. This disruption is, in my view, outweighed in the final analysis by the benefits that the project would bring. Chief among these is the very significant contribution it would make to the achievement of energy and climate change policy objectives. The energy national policy statements make it clear that the construction of new low-carbon electricity generation infrastructure is of crucial national importance. There is also significant potential for local benefits including new jobs, with a work force of up to 5,600 during construction, and contract opportunities for the supply chain including local businesses.

I said that the order authorises construction from a planning point of view. There has of course been an entirely separate process scrutinising the nuclear safety aspects of the project, with decisions taken by independent regulators in the Office for Nuclear Regulation and the Environment Agency, including the issuing of a nuclear site licence.

Some further regulatory approvals remain to be taken, including the Marine Management Organisation’s marine licence and site-specific aspects of generic design assessment from the Office of Nuclear Regulation, but the decision I am announcing today, together with those already taken by the nuclear regulators and a number of other permits issued last week by the Environment Agency, means that NNB Generation Company Limited now has the majority of the consents it needs to build and operate the plant.

That, of course, is not the end of the story. Decisions remain to be made on the funded decommissioning programme and strike price. Discussions on both these subjects are ongoing and intense, but I expect them to be concluded shortly. As confirmed in my January statement to Parliament, the Government are committed to their existing policy on long-term disposal of nuclear waste and are pressing ahead with plans to identify a geological disposal facility in order to put in place a permanent facility for disposal of radioactive waste from both new and existing plants.

Affordable new nuclear will play a critical role in a secure, diverse electricity supply for Britain and make a significant contribution to the transition to the low-carbon economy needed to tackle climate change. Therefore this decision on planning aspects of the first new nuclear power station in a generation represents an important milestone in that process to decarbonise our electricity supply and economy. I commend the statement to the House.

I thank the Secretary of State for early sight of his statement. When we last debated nuclear power on 7 February, I was clear that we strongly support and are absolutely committed to facilitating new nuclear build in Britain at a fair price, and I very much welcome the Secretary of State’s strong support for nuclear power in the House today.

We believe that nuclear power will have an important role to play as part of a more balanced, secure and, importantly, low-carbon energy supply for the future. That is why we have supported the Government’s efforts to attract investment in new nuclear, which began under my noble Friend Lord Hutton and my right hon. Friend the Leader of the Opposition, as well as ensuring the establishment of a statutory Office for Nuclear Regulation. I also commend the role of the local MP, the hon. Member for Bridgwater and West Somerset (Mr Liddell-Grainger), whose ancestor, Queen Victoria, oversaw during her reign an industrial revolution. He is playing a small part in the new, clean, low-carbon industrial revolution for the 21st century.

Today’s announcement granting planning permission for new nuclear reactors at Hinkley builds on the progress in recent months which has seen the ONR approve the reactor design and the Environment Agency granting the necessary environmental permits, all of which we welcome.

On the specific point about planning consent, let me ask the Secretary of State three questions. First, as we know, new nuclear build has the potential to contribute to economic growth and job creation. Hinkley Point C alone could require as many as 500 new construction apprentices and 200 operations apprentices. Last year, the Prime Minister signed an agreement with France on nuclear energy, but what specific steps is the Secretary of State taking to ensure that the UK supply chain and the local work force are able to benefit as much as possible from this development? Many of the people we hope will be building and operating this power station are probably still in school, so we have got to equip them with the skills they need.

We must also be mindful, however, that any development of this magnitude, if not properly dealt with, could have a detrimental impact on the local area. Secondly, therefore, will the Secretary of State tell the House in more detail what measures will be put in place as part of the planning agreement to ensure that any mitigation measures needed to reduce or eliminate this impact are implemented?

Thirdly, nuclear power stations are national assets, but we should also recognise the contribution of the communities that host them on our behalf. Last year, the Government launched consultation on the community benefit of onshore wind. Will the Secretary of State tell us what community benefit package, beyond what he has already mentioned, the Government believe is right for new nuclear developments? Will he also provide a little more detail about how any package would be split between West Somerset council, which covers Hinkley Point, and other local authorities, such as Sedgemoor district council, which will also be affected by the development?

Given that EDF is still in negotiation with the Government to agree a strike price for the power it generates at Hinkley Point, it is difficult to debate today’s announcement on planning consent without some reference—the Secretary of State has already mentioned this—to the financing that will determine whether the development goes ahead. I understand that details of those discussions are commercially sensitive, but there has been much speculation in recent weeks that a deal is imminent.

The Secretary of State will know that the length of the contracts, as well as the price, will face scrutiny whenever a deal is reached, but can he provide an update on those negotiations and on when he hopes to reach agreement? He knows that we believe that the process for agreeing contracts for difference could be improved to make it more robust and transparent and to ensure that it delivers value for money for consumers. Will he tell us what, if any, further consideration he has given to our proposals in respect of the Energy Bill, which include ensuring that agreed investment contracts are laid before Parliament within three days of being entered into, provisions to ensure that any change to the contracts are published and subject to proper scrutiny, and greater protection for bill payers in the event that construction costs are lower than projected?

Today’s announcement is an important milestone in the development of new nuclear build in the UK. There is no doubt about that. On behalf of the Opposition, I am pleased to welcome it and to reiterate our support for nuclear power alongside an expansion of renewable energy and investment in carbon capture and storage as part of a clean, secure and affordable energy supply for the future.

I pay tribute to the right hon. Lady and the Labour party for their support and welcome today. Their support and indeed the work by the previous Government in their last few years have allowed investors and nuclear operators to see that there is cross-party support, which gives people confidence—[Interruption.] I hear some coughs from my party’s Benches and they remind me that it has hon. Members who do not support the proposal. However, we have coalition agreement that helps that cross-party approach.

The right hon. Lady was right to pay tribute to my hon. Friend the Member for Bridgwater and West Somerset (Mr Liddell-Grainger), and I hope that we will hear from him shortly. He has played a leading role in his community, working with local councils there, and we should also pay tribute to those in all authorities, but particularly local authorities, who have worked so hard on the matter.

The right hon. Lady asked me some questions, including on planning, and I hope to give her the reply she wants. She rightly talked about the importance of the local supply chain. Already, a huge amount of work has been done on that, primarily by local councils and others. Bridgwater college is at the centre of trying to ensure that young people and the wider work force in the area benefit from the work that will be created directly and indirectly. She may be aware that my Department has been working with my right hon. Friend the Secretary of State for Business, Innovation and Skills on an industrial strategy for the nuclear supply chain, and we will publish it in due course. Whether at Hinkley Point C or any future nuclear power stations, we want to ensure significant British content—British firms and British workers—in the nuclear supply chain.

The right hon. Lady asked about work in the local area and conditions in the development consent order to make sure that local people’s lives are not disrupted. My decision letter, which I will place in the Library, includes a whole range of issues, most of which follow on from the independent panel—the examining authority. I have made one or two changes to its proposals, particularly concerning Combwich wharf to try to ensure that more freight can come by sea. Our proposal will further reduce traffic in Cannington. We have made decisions to protect local residents.

On community benefits, which the right hon. Lady rightly raised again, I confirm that there will be a package of such benefits, which will be announced in due course. I cannot say any more about that, but the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), is working on that.

The right hon. Lady closed with a request for an update on the negotiations. She will be aware that I have steadfastly refused the temptation to give right hon. and hon. Members a running update because the negotiations are commercial and it would be improper to do so. However, as we have said on several occasions, when the deal has been concluded, we will be completely transparent about its terms, including the strike price, the duration and other key terms and conditions.

The right hon. Lady was right to say that we will need state aid clearance in the usual way, and that will also enhance transparency. Finally, she referred to the issues that the Opposition have raised fairly and reasonably during discussion of the Energy Bill. We will respond to many of those issues on Report.

This is a very good day for Britain and a phenomenally good day for Bridgwater and West Somerset. I thank not only the Front-Bench team, which has been phenomenally important in that, but the Opposition, and especially the Leader of the Opposition, who signed this off when he was Minister of State. I am incredibly grateful to the House, and my constituents are more than grateful to everyone here who has played such an important part.

The importance of the announcement is that we can now kick-start the civil nuclear programme in the United Kingdom, and that is crucial. The innovation, jobs and input from across the industry are staggering. The Nuclear Industry Association is holding its conference across the road from here at the Queen Elizabeth centre, and it is like a cat on a hot tin roof, ready to go. We are Hinkley-ready, and we will be on time and on schedule.

Will the Secretary of State continue to wax lyrical, if I may tempt him, on what the decision will mean for Sedgemoor council, West Somerset council and Somerset county council areas? Those in Sedgemoor will feel the pain, especially in Bridgwater, because they will facilitate the plant, although it will be in West Somerset, as the right hon. Member for Don Valley (Caroline Flint) said. It will be important for education, innovation, industry and local people. I would be grateful if the Secretary of State continued to wax as lyrical as he has done so far, and I thank the House.

I have already paid tribute to my hon. Friend, and what he has just said shows why that tribute was appropriate. Much of his work and that of local councils, my Department and others has been aimed at maximising the economic benefit for the area, and indeed the whole country. He will be aware of the nuclear skills academy, which is based at Bridgwater college, and that Sedgemoor and other councils have attracted new investment to the area for additional construction, as well as support for schools in the area. He will also know that even before we unveil the community benefits project, the decision provides significant benefits to the local area.

My hon. Friend is right in saying that there will be some pain for some local people in the local community during the long construction phase, but I hope that they and he believe that the panel’s recommendations and my decisions will mitigate that as much as possible.

Does the Minister agree with himself, as the Lib Dem spokesman, that nuclear power is possible only with a vast—that was his word—taxpayers’ subsidy or a rigged market? Does he also agree with himself, as a supporter of the coalition agreement, which said that there would be no subsidy for nuclear power? Can he now deny the claims that the strike price, which was originally £50 per megawatt-hour, is being negotiated at £97, and that we will be giving to a near-bankrupt French company a short-term subsidy of £30 billion that could turn out to be £150 billion in 35 years?

The hon. Gentleman is right to say that my concerns on nuclear power for some time have related to the price, because the history of nuclear power in this country and elsewhere is that it has turned out to be expensive. That is why this coalition Government —and, indeed, the previous Labour Government—have gone about the third generation of nuclear power stations very differently from how Government’s went about things in the past to ensure that the consumer, business and the taxpayer are protected. That is why the coalition agreement says that there will be no public subsidy. I have to say to him that I simply do not recognise the figures he quoted.

I congratulate the Government on finally getting our civil nuclear programme moving after too long a period of paralysis in this country. It is vital for our energy security and our low-carbon generation. The Secretary of State will be well aware that the transmission from Hinkley will be through 450 kV cables as opposed to the current 132 kV. That will require electricity pylons more than twice the height of those we have now. Where is the overall green gain if we get green generation, but the transmission results in a blight on our environment in some of the prettiest parts of the country, and what can the Government do about that?

I am grateful for the right hon. Gentleman’s welcome for the statement. I should make it clear for him and the House that today’s decision is about planning. We still have a number of issues to resolve, but we are in intense negotiations.

The right hon. Gentleman makes the point about the infrastructure and pylons. He and I met to discuss the matter recently. I will repeat part of what I said then: every bit of green infrastructure has to be considered case by case; National Grid, under statute, is responsible for examining those cases; and, when planning issues result, the Secretary of State clearly cannot comment on them, as it would be improper to do so. When we met, I undertook to look into the issue. We are looking at it with my hon. Friend the Minister of State, who is energy Minister.

I commend the Secretary of State on his statement. In making this decision, he has clearly listened to many people in all parts of the House over many years, and I particularly commend him on his intellectual honesty in reaching this position.

It goes almost without saying that I, my constituents and my community will continue to assist the Secretary of State and his Department with the solutions required for radioactive waste management in this country, but will he now, in addition to introducing clarity on the strike price, undertake to bring forward a clear critical path for all the sites identified for new nuclear development so that we can further remove the uncertainty surrounding their development?

I am grateful for the hon. Gentleman’s comments. He has been a real champion for the nuclear industry, both for his constituents and more widely. I cannot say much more today on the strike price. I hope he understands that. He is right to say that we remain focused on finding a solution on the waste issue. I look forward to continuing to work with him and others on it.

Will the Secretary of State—my right hon. Friend—confirm that this planning decision does not represent a decision to go ahead with Hinkley C, in which respect it pales into insignificance beside the strike price negotiation? If he will accept my figures, which are hypothetical, and if the maths adds up, £97 per MWh for 35 years would guarantee an uncompetitive French nationalised energy company nearly £90 billion over time from British bill payers.

My hon. Friend is right to say that today’s decision is purely about planning. We have read, studied and listened to the detailed report from the independent Planning Inspectorate and the examining authority that looked into this matter over some time, and we have had a small team of planning officials looking at it in the Department, separate from the policy officials. The decision is completely separate from the issue around the strike price.

Again, I do not recognise the figures that my hon. Friend uses. I hope he realises that I shall not comment on the negotiations on the strike price.

I congratulate the Secretary of State on his work on the matter and welcome the Liberal Democrats to supporting new nuclear power stations. May I press him to say more about the skills base and what steps the Government will take to ensure that we have enough civil engineers and nuclear physicists going forward?

That is an important issue and the hon. Gentleman is right to raise it. I mentioned what is being done locally with the nuclear skills academy and EDF working with Bridgwater college and others. When we introduce the nuclear supply chain strategy with the Department for Business, Innovation and Skills, we will say more on that matter. Already, work is under way with higher education institutions and others, and he will be aware that the chief scientific adviser has made the point that the issue needs to be tackled. Work is under way.

May I say how delighted I am that the Secretary of State, as a Liberal Democrat, has now consented to more new nuclear capacity than any Minister since Tony Benn? Does he agree that that shows that the new planning system is working as intended, with tens of thousands of pages considered and agreed within about a year? Will he join me in paying tribute to officials in the Planning Inspectorate, the Department of Energy and Climate Change and the other parties involved for all their resolve in bringing a nuclear renaissance in the UK one big step closer?

I am grateful to my hon. Friend for his comments. I certainly will pay tribute to the officials in my Department and elsewhere who have been critical to bringing the decision forward and, indeed, taking forward the new nuclear programme. I also pay tribute to him. He was an excellent Minister and he played a significant role in the new nuclear renaissance under this Government. There are Liberal Democrats who will not necessarily agree with not so much the decision today, but the overall new nuclear building programme. However, many Liberal Democrats in the local area and in the national party believe that we need to focus on climate change as a real and present danger to our country and the planet. Difficult decisions are required if we are to tackle climate change.

There are much faster, cheaper and more affordable ways to tackle climate change than nuclear, but my question to the Secretary of State is about the only two nuclear power stations under construction in Europe today. They are billions of pounds over budget and delayed by an ever increasing number of years. Italy, Switzerland, Belgium, Holland, Spain, Germany, Sweden and Denmark are all rejecting new nuclear. Even France is aiming to reduce its reliance by 25%. What do all those countries know that we do not? Why is the Secretary of State locking UK consumers into artificially high energy prices for years to come—to the benefit of the French Government, not the UK taxpayer?

The hon. Lady has pushed her views for some time, and I have respect for them, but tackling climate change means that we need every form of low-carbon generation possible. The risk and the challenge are so great that it is wrong for people who are worried about climate change to turn their back on the issue. She points to other countries, but around the world many countries are looking again at new nuclear. She is right that the two new nuclear power stations that are being built are over budget and out of their original time schedule. That is why we are being extremely careful in our approach to those negotiations and to the new nuclear programme, learning the lessons of the past and from other countries so that we do not repeat those mistakes.

I welcome the Secretary of State’s statement, which gives a huge boost to the confidence of everybody involved in the UK civil nuclear industry. Is not the statement also a statement of hope for other communities, such as Dungeness in my constituency, which aspire to be part of the revolution in the British nuclear industry?

I agree with my hon. Friend. Many people—not only in the nuclear industry, but in the low-carbon energy sector generally—will see the statement as a key moment and welcome the boost to confidence more broadly. He has been a doughty champion for Dungeness. He and I have already met formally and talked about the work that he wishes to do locally, and I encourage him to keep going.

I welcome the Secretary of State’s announcement. I visited Hinkley in November as part of the Select Committee visit and was most impressed by the arguments for community benefit, of which he has spoken. However, he rightly said that this is not the end. I do not wish to press him on the strike price—I understand that those matters are commercial—but will he at least acknowledge two principles? First, the strike price will be based on the construction costs. Therefore, will he incorporate a clawback into the formula, should those costs be overestimated? Secondly, does he accept that Jean-Paul Chanteguet, Chairman of the Select Committee in the French Parliament, has said that Flamanville, on which Hinkley is based, will be producing at €72 per MW, and that that must, in anybody’s account, form the baseline for assessment of the negotiations in which the Secretary of State is engaged?

I pay tribute to the hon. Gentleman and the other Select Committee members who have not only grilled me on this and other issues but made inquiries into the matter and been generally supportive. On the details of negotiations, clawbacks and the actual price, I am afraid that I must disappoint him; I will not be drawn on those. We are determined to get a price that represents value for money, that is fair and affordable and that bears scrutiny.

When does the Secretary of State expect the first regular stream of electricity to start flowing from the plant?

Assuming that we can conclude the negotiations with EDF on the funded decommissioning plan and the strike price, and assuming that one or two of the remaining regulatory approvals are granted and that construction can therefore begin later this year or early next year, EDF believes that it can start generating power by the end of this decade or early in the next decade. Of course, one should not be held to clear timetables in these matters, as we all know the dangers of overrun, but when I have discussed it with officials and EDF, I have been impressed by the amount of careful pre-planning done to ensure that the delays seen in Flamanville, in Finland and elsewhere are not repeated here.

I thank the Secretary of State for his statement. He referred to the fact that the Government are still pressing ahead with plans to identify a geological disposal facility. Taking on board the legacy going back 25 years with Nirex and the failure to find a facility—I hasten to add that I am not in favour of such a facility—can he indicate what sites are being explored? Does he agree that it is necessary to take into account the geological rock structures and framework of substrata in any such discussions?

The strategy to locate a site for a geological disposal facility was set out under the last Government, and we are following their policy. Some of the issues identified by the hon. Lady would need to be considered as it is developed. We have made it clear that we are sticking to the voluntarist approach set out by the last Government. We think that it is important that a geological disposal facility is not imposed on an area but is willingly accepted.

The recent Cumbria vote was interesting. The district councils of Copeland and Allerdale voted heavily in favour, and only Cumbria county council, with councillors representing areas a significant distance from the proposed sites, vetoed it. I believe that we will be able to find a site for a geological disposal facility using the voluntarist approach.

Half my right hon. Friend’s Department’s budget is already spoken for to pay for the nuclear clean-up, and the coalition has adopted a policy of no public subsidy. I have listened to what he says about not discussing individual figures, but anything other than a free market commercial strike price for that product would surely represent public subsidy. What can he say to reassure me and the House that the settlement will not be tantamount to a public subsidy for new nuclear power?

May I correct my hon. Friend? This year, 69% of my Department’s budget is being spent on decommissioning past nuclear power stations. That is why I, probably more than anyone else in the House, am determined that we do not make the mistakes of the past. Any strike price negotiated will take into account the costs of decommissioning and of waste disposal. It is absolutely critical that when we agree a deal with EDF or any future nuclear operator, it must do the clean-up and the decommissioning. That must be part of the agreement. The costs must be integrated, not left alone as they have been in the past.

I, too, visited Hinkley Point a year or so ago in response to concerns raised with me in Bristol, mostly about safety, which I accept is a separate process, but also about the impact on biodiversity and marine life in the area. When is the marine licence likely to be granted, and is anything specific holding it up?

I am grateful for the hon. Lady’s question. When she reads the decision letter, she will notice that the panel and I have spent some time on those issues. Section 4 of the decision letter discusses the habitats regulations assessment, and section 5 considers the environmental impact assessment. She is right that a regulation approval from the Marine Management Organisation is outstanding, but she will also understand that it is an independent regulatory body. I believe and am told that its examination of the issue is well under way, but I cannot hold the MMO to a timetable.

The strike price at Hinkley Point will send an important message to other potential nuclear developers. When the chief executive of EDF appeared before the Energy Bill Committee, he said that he was anxious for transparency on the strike price. The Minister has said that he will publish the contract, but will he also publish enough information for everybody to see how that strike price was arrived at and that there was no public subsidy behind it?

The hon. Gentleman is right that we will be transparent about the process, but of course some cost information will be commercial in confidence. We have never undertaken to publish every single document relating to the negotiation, but the key terms and conditions will be published.

Given that the announcement today is about planning, what discussions has the Secretary of State had with the European Commission on whether the proposed financing will contravene state aid rules? It comes down to whether or not it is public subsidy.

We have had some preliminary discussions with the European Commission, but given that we have not completed final negotiations with EDF, there is nothing for us to allow the Commission to analyse for state aid purposes. However, we will do so in due course.