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Energy Security: Hinkley Point

Volume 769: debated on Thursday 10 March 2016


Asked by

To ask Her Majesty’s Government what actions they are taking to ensure that the UK’s long-term energy security is protected, in the light of uncertainty regarding Hinkley Point.

My Lords, good progress continues to be made on the deal so that Hinkley Point can provide clean, affordable and secure energy that families and businesses can rely on now and in the future.

I thank the Minister, but he will be aware that there is a certain amount of coverage in the media: the finance director of EDF has quit; the value of EDF shares is falling; and EDF does not have a legally binding contract with the Chinese. If it does not proceed with Hinkley Point, what is the Government’s plan B for the security of our energy supply in future years, given that the support for renewables industries has been completely undermined by the Government and that there is still no commitment to the Swansea Bay tidal lagoon, which would provide energy for 120 years—three times as long as would a nuclear power station?

My Lords, EDF has said that it is working hard to take a final investment decision in the near future with the full support of the French Government. We believe—along with the Minister who took the initial decision, Ed Davey—that the Government negotiated a good deal; he repeated that this week.

My Lords, does my noble friend agree that, whatever happens at Hinkley—obviously, there are some serious problems there—we have a perfectly good and better-time nuclear programme in place and in the pipeline for the longer term? Will he accept that the real threat to our energy security, which is leading to humiliating talk for this great industrial nation that we should have to deal with power cuts, comes from the failure to build new gas turbines in sufficient quantities to ensure that our power supply is regular in the 2020s and early 2030s? Will my noble friend finally agree that this arises from the gross mishandling and mismanagement of our energy policy in recent times and in the past and that it must now be corrected? We should all give full support to the Government to get that correction in place.

My Lords, I am grateful to my noble friend for his support. My right honourable friend the Secretary of State, Amber Rudd, has made it clear that energy security is the number one priority for this Government. That is why the project at Hinkley is so important. It will deliver 7% of our energy needs.

My Lords, does the Minister agree that this is a mess of the Government’s own making? We have chosen the wrong type of reactor; costs and timescales are at least doubling and may get even more than that. More broadly, will the Minister confirm that protection is in place to ensure that UK firms keep more than 70% of the supply chain contracts for the third planned reactor and beyond and are not squeezed out by the Chinese supply chain firms, because that is the plan of the Chinese supply chains?

No, my Lords, I do not agree with that. The costs that are increasing are essentially those of EDF. We have a strike price that is agreed, constant and unchanging. I believe that it is a good deal for the Government and that the supply chain is secure. The noble Lord should know that 60% of jobs in the supply chain are already guaranteed for the UK.

My Lords, is it not sadly clear that the ability to be energy self-sufficient, where nuclear power should be making a significant contribution, is jeopardised because we are unable to build the power stations ourselves? We are dependent on the French, the Chinese and the Japanese. Let me say, in case anyone wants to disagree, I do not hold the present Administration responsible for those circumstances. However, as the Minister will recall, the Chancellor of the Exchequer made an important announcement in the Autumn Statement about support for the development of small modular reactors. Will the Minister tell the House how much support has been given to date, to whom it has gone and for what purpose?

My Lords, the noble Lord is absolutely right about the importance of small modular reactors. He will know that £250 million was announced in the spending review specifically for that purpose in this Parliament. We will bring forward proposals on that early this year—that is, in the spring.

Is the Minister aware that the Chancellor is making the situation worse by flip-flopping our energy policy from the Treasury and cancelling the carbon capture and storage project, onshore wind, the feed-in tariff arrangements, the zero-carbon homes and the Green Deal, and causing huge investor and company unrest and insecurity? We will not deliver an energy supply that is secure for the future as long as that continues. What are the Government going to do to stop the Chancellor flip-flopping energy policy and to restore investor and market confidence?

My Lords, the noble Baroness is wrong: there is no flip-flopping over energy policy. It is absolutely clear and it was set out in my right honourable friend the Secretary of State’s speech that we regard security as the number one proposal. We are ending subsidies. We are moving away from subsidies to a market-based approach, which is the right thing to do. It is important that we balance the interests of the public purse with the interests of decarbonisation and security, and that is what we are doing.

My Lords, would the Government be prepared to consider taking a significant share in the equity of EDF? Then the Company might become part of a nationalised industry owned jointly with the French. At present, we are in the process of underwriting all the risks of the Hinkley C project, so surely we should also expect to partake in any profits that might derive from that project.

My Lords, this is a commercial deal, as the noble Viscount should be aware. It is a matter for EDF if the costs increase: they are EDF costs. We have a strike price, as I have indicated, which is firm and unchanging and will guarantee us energy up to and beyond the 2030s—for 60 years from when this comes on stream.

My Lords, is not one of the problems that, in negotiating with EDF on the two nuclear power stations at Hinkley and Sizewell in Suffolk—I declare my interest in the latter—the Government were outfoxed by EDF? EDF has shown an astonishingly ruthless determination to get exactly what it wants, lacking, in some cases, in integrity. To give one example, in Suffolk, in order to persuade people that there was support for its local transport plans, EDF summoned a meeting at which £20 notes were handed out and the people were filmed.

My Lords, I have no knowledge of that particular evening in Suffolk. I wish I had known about it—I could have been there. I return to the point that this is a good deal for the Government. It was a good deal when it was struck and it is a good deal now. It will provide 7% of the energy needs of the country, which is enough to power London twice over when it is fully on stream in the 2020s.