Energy
Security
Motion made, and Question
proposed, That the
sitting be now adjourned.-(
Mr Vara.)
2.30 pm
The Minister of
State, Department of Energy and Climate Change (Charles Hendry):
I am grateful to you, Miss Begg, for calling me to open this important
debate
on a subject fundamental to our country's future. Energy security is a
high
priority on the Government's political and economic agenda. Our view is
that
energy security and climate change go hand in hand and must be addressed
together. At the moment, we need particularly to secure new investment
in the United
Kingdom's energy generating capacity in
order to compensate for facilities that will soon be decommissioned.
8 July
2010 : Column 144WH
Turning to the specific
technologies, we believe that nuclear should be part of the mix as long
as it
can be built without subsidy; we broadly agree with the former Labour
Government in that respect. According to the coalition agreement,
if it
can be built without subsidy, it will be part of the mix. We are clear
that
that means the private sector should be responsible for the building,
running,
decommissioning and long-term waste disposal costs of any new nuclear
power
stations. The Government must be involved in the effort to remove
barriers to
investment-the work of the Office for Nuclear Development has been
important in
that respect-and ensure that the appropriate safety, security and
environmental
regulations are in place. We see nuclear as part of the mix, but
realistically,
even if everything goes according to the most optimistic plans, it will
be 2017
or 2018 before new plant can be constructed.
8 July 2010
: Column 150WH
2.58 pm
Emily Thornberry
(Islington South and Finsbury)
(Lab): It is a pleasure to serve under your
chairmanship, Miss Begg. To keep the lights on, the country needs both
adequate
levels of storage and security of supply, and that cannot be left to the
vagaries
of the market
8 July 2010
: Column 153WH
The Minister has for a long time been a supporter of nuclear power, but
the
Government are unable to give clear leadership on the issue because they
do not
have a position-they have a large number of positions. They are
notionally in
favour in nuclear power, but the Lib Dem representative will speak
against it,
the Lib Dem party will refuse to vote on it, and I have yet to get my
head
around what the Secretary of State's position is. Frankly, the industry
needs
to know and to have clear leadership.
Charles Hendry: The
heads
of all the nuclear companies have said that they are entirely
comfortable with
our position and understand it precisely. Will the hon. Lady not accept
their
assurance that our position is rational, sensible and realistic, rather
than
creating scares that do not exist?
Emily Thornberry: As
Christine Keeler said, "They would say that, wouldn't they?" The
point is that the nuclear industry needs to know what the Government are
doing.
The industry will not pick a fight with the Government at such a crucial
stage,
but it needs to know where they are going. The Government have a number
of
positions, and it is not easy for the industry in those circumstances.
Of
course, the industry will not come out publicly and criticise the
Government-that is our job in opposition. However, we are confident that
it
does not help the nuclear industry for the Government to hold four
positions at
the same time on the future of nuclear power.
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July 2010 : Column 154WH
Charles Hendry: There is one position, which is that nuclear will be
part of
the mix if it can be built without subsidy, and that is it-one position,
complete clarity.
Emily Thornberry: That
sounds simple and understandable, but we then need to look at how these
things
are implemented. For example, is the cancelled loan to Sheffield
Forgemasters
the first casualty of the uncertainty over Government policy on nuclear?
There
are a number of questions relating to that. Did the Lib Dems' prejudice
against
nuclear power have a role in the decision to cancel the loan? Was the
decision
made because of the coalition's policy of having no public subsidy for
nuclear?
Did that impact on Sheffield Forgemasters or not? Was it right for the
Government to give Nissan a grant to make electric cars-a proposal that
we support-but
not to provide a commercial loan to help a British company be at the
centre of
an indigenous nuclear supply chain? How do these things fit in?
What
we see are the Government's confusion and the refusal to grant a
commercial
loan to a company worth £40 million. The loan would need to be £80
million, and
it would be difficult to get that money from a bank. The refusal to
grant the
loan means that Sheffield Forgemasters is unable to build the sort of
kit we
need to build nuclear power stations in Britain.
We are not necessarily talking about a subsidy from the public purse. We
need a
Government who are prepared to look to the future and to decide that the
triumvirate includes nuclear, that we are serious about these issues and
that
we will give such assistance as is necessary. The current situation is
very
unfortunate, and we have a number of questions as a result.
That
is one casualty, but there is another. Will the Minister confirm whether
there
will be cuts to the Nuclear Decommissioning Authority? If there are to
be cuts,
when will they be and what will they be? More importantly, will they
have an
impact on the future of Britain's
nuclear power industry?
The issue of the
public purse
paying for cleaning up after nuclear has always been part of the
arguments
about whether nuclear power is being subsidised, so what will happen?
Are we
talking about a subsidy or not? Where does that fit with the
coalition
agreement on nuclear power? We need to know, and the industry definitely
needs
to know. Publicly, the industry might not be critical, but the
Opposition are
being critical because a confused picture is being put out.
The
expansion of Sheffield Forgemasters represented an opportunity for
Britain
to make key components for the nuclear industry, which will now have to
be
sourced from places such as Japan
and Taiwan.
That is very unfortunate for green jobs and the economy. The Government
have
tried to defend their position by suggesting that Sheffield Forgemasters
should
obtain funds from the financial markets. Once again, we see actions
motivated
by free market ideas that are completely misplaced.
Before
the Conservatives made their deal with the Lib Dems, they were highly
exercised
by the gap between the end of the life of the current fleet of nuclear
power
stations and the earliest date by which we might get some new nuclear
power
stations. Why are the Conservatives now so relaxed about that? There
seems to
have been a change. The Government should be taking up the long-term
8
July 2010 : Column 155WH
challenge of decarbonising the economy and the job market, rather than
just
embracing short-termism, but some of the decisions that have been made
are
simply short-termist.
The
Government share our view that the nuclear industry should not receive a
direct
subsidy from the public purse, but the industry needs clarity and
reassurances,
not obstacles. In the words of Richard Nourse, managing partner of
renewable
energy fund novusmodus,
"Nuclear is a long journey
and developers need
confidence to keep travelling."
Can
the Minister provide that confidence? What percentage of our electricity
does
he expect nuclear to contribute in the next 10 years? Without that
confidence,
we will surely see delays, which will increase our dependence on gas.
8 July 2010
: Column 159WH
I am not sure that setting an enormous amount of store by a technology
that
relies on a fuel of which we produce not one ounce in this country is a
common-sense view. Setting aside any of the questions at the front of
our minds
about build scale, commissioning, public subsidy and other aspects of
nuclear
power, we must remember that, because nuclear is not renewable, it is
reasonable to ask questions about the security of supply of uranium for
reactors, should we build them in this country. This is not necessarily
to take
a side on the nuclear debate but simply to ask that question.
Given
the likely reserves of uranium-on the present supply against
production-its
life is roughly that of oil: 40-odd years. However, if there were a
large
number of nuclear builds over the next 20 years, the amount would come
down
dramatically. On present figures, it appears that uranium could become
scarce
during the lifetime of a future nuclear reactor built in this country.
That
ought to raise a question mark about energy security, and about the role
that
nuclear may play in future considerations for the UK.
Indeed,
given our concerns about our carbon dioxide emissions and footprint, new
supplies of uranium would need to be found. Otherwise, existing supplies
would
be depleted, and the richness of uranium per tonne of rock mined would
be so
low that the carbon footprint would eventually equate to that of a
gas-fired
power station. That would not follow the low-carbon footprint route for
our
energy supplies in the long term. The figures relate to Australian and,
to some
extent, Canadian supplies of uranium. There are richer supplies in
places
8
July 2010 : Column 160WH
such as Kyrgyzstan,
but they raise the same questions for energy security in an uncertain
world set
against supplies of oil and gas.
Ironically,
we could increase our supply of uranium by sequestering supplies that
are kept
for military purposes and translating them to domestic nuclear purposes.
If we
did so in this country, we could double the life of our uranium supplies
without taking uranium from elsewhere, which raises the interesting
question of
developing a domestic nuclear power programme to thwart a military
nuclear
programme, but perhaps that is a debate for another day.
8 July 2010
: Column 1633H
3.48 pm
Mr Iain Wright (Hartlepool)
(Lab)
I mentioned my final point in another debate in this Chamber on nuclear
power, and I give notice to the Minister that I will keep banging on and
on
about the role of the north-east in energy production and supply. We
have all
the ingredients in place for my region to be the great powerhouse, not
only for
this country, but for Europe and, arguably, the world in
ensuring that we have a diverse source of energy production and supply.
What
can the Minister do to ensure that potential? Narec in Blyth
is a centre of excellence for renewable energy. Given where we are in
terms of
marine technology and our proximity to the North sea, all the different
sources
of energy-oil, gas, renewables and nuclear in my constituency-can
provide the
21st century, modern economy that the north-east demands.
We
have great things in place. The developments at Narec, the Centre for
Process
Innovation in the Tees Valley,
and Renew Tees
Valley, were being led by the
regional development agency, One NorthEast, which was adding value by
ensuring
that we could have a low-carbon economy and energy policy, but confusion
over
the Government's contradictory advice on RDAs
8
July 2010 : Column 164WH
has inhibited progress. We have huge potential in the north-east. What
steps
will the Minister take to ensure that we fulfil it? I have invited him
to the Tees
valley to look at the potential there, and I do so again. The role of
the
north-east in the future share of the British economy and energy policy
is
incredibly exciting.
My
hon. Friend the Member for Islington South and Finsbury said that we
must not
leave the matter to the vagaries of the market, and she is absolutely
right. We
need big government on energy security in the 21st century, and we need
strong
leadership. I know that the Minister is up for that, but I question
whether his
Government as a whole are up for it. I hope to be reassured by his
response.
8 July 2010
: Column 164WH
Charles Hendry: It is a
continuing pleasure to serve under your chairmanship, Miss Begg. We have
had a
high-quality debate. Our numbers may have been limited, but we have
touched on
many of the key issues that go to the heart of the debate on energy
security
8 July 2010
: Column 168WH
Let
me move on to some of the other technologies that were raised. The hon.
Member
for Islington South and Finsbury rightly spoke about nuclear. We would
be
further ahead had it not been for the moratorium, but the position of
the
Government now is absolutely clear. Nuclear will be part of the mix if
it can
be built without subsidy. There are no ifs or buts; that is an
absolutely clear
position.
I
hope that the hon. Lady will work with us, because in opposition, I was
very
happy to work with the Government to reassure potential investors, to
the
extent that I was asked to go to the investors forum a couple of years
ago so
that investors could be told that the potential new Minister, if there
was a
change of Government, was attending and could give that continuity of
policy.
Investors attach enormous importance to that political stability. I hope
that,
given that the position is absolutely clear, the hon. Lady will decide
that she
wants to be a serious contributor to the debate, rather than making
political
comments from the sidelines, because that will do more to undermine the
case
for new investment than anything happening elsewhere. There are
communities up
and down the country that want to see parties working together on this
issue.
We have a clear position, which is essentially the same position as that
of the
previous Administration, and I urge her to work with us.
An
important point about the changes that we are making is that we have
said that
the national policy statements will be voted on on the Floor of the
House. That
will send a clear message to investors that there is massive cross-party
support
for the national policy statements when they are put forward. I hope
that that
will be the outcome of that process. It is not just a political party
saying,
"This is our position," but the House as a whole expressing its view
on the national policy statements. That makes the process more robust,
reduces
the risk of judicial review and enhances the prospect of making
progress.
Emily Thornberry: The
problem with the changes to the planning system is not just who will
make the
national policy statements and how they will be decided, but how they
will be
implemented and the fact that a Minister will be implementing the
decisions.
That is the reason why many people and organisations are concerned that
there
will be delay. That is a vital issue in respect of the development of
our
infrastructure.
Charles Hendry: Let me
seek
to reassure the hon. Lady. The discussions that we have had with
industry have
reassured it about the changes that we are making. Our concern about the
Infrastructure Planning Commission was that it had no democratic
accountability. Decisions on nationally significant issues were being
made with
no prospect of contributions from Members of Parliament and without the
opportunity
for parliamentary scrutiny. We believed that that was not just
democratically
wrong, but enhanced the risk of judicial review, so the change that we
have
made is that the back-office function-the work of analysing the
individual
planning applications-will go ahead as originally planned but within the
planning inspectorate, and the recommendation will then be made to the
Secretary of State, who will have three months to make a decision. That
is
exactly the same time scale as would have been the case under the IPC,
but
there will
8
July 2010 : Column 169WH
be less chance of judicial review and there will be greater
parliamentary
accountability. Also, transitional arrangements will be in place so that
whichever system an application starts under, it will complete under it.
There
will be no risk, when the system changes, of an application that was two
thirds
of the way through having to start again. Whichever jurisdiction it
starts
under, it will continue under.
The
process provides the speed that is necessary and that industry is keen
to have.
It provides greater scrutiny, greater acceptability and less risk of
judicial
review, which might delay the whole process by six or 12 months. Those
are the
reasons why we have made the changes, but we have been extremely
conscious
throughout of the need to maintain investor confidence, and the work
that we
have carried out with the investors reassures us that we have got the
balance
right.
Emily Thornberry: I am
very interested to hear what the hon. Gentleman is saying, and it is
clarifying
a number of issues, but there is the additional residual problem. He
talks
about the national policy statements being agreed on the Floor of the
House and
party politics therefore being taken out of it. Nevertheless, if an
individual
Minister will in the end make the decision, surely party politics comes
straight back in again.
Charles Hendry: The
hon.
Lady is absolutely wrong. The Minister is acting in a quasi-judicial
capacity.
He is acting not as a party politician, but as someone who has a legal
responsibility. A recommendation will be put to him through the planning
inspectorate as to whether to accept or decline an application. He will
not be
able to say, "That's a little bit close to a Conservative seat"-or a
Labour seat-"so I won't give it the go-ahead." He must decide on the
basis of the argument put to him and must explain why he has either
accepted or
declined the application. The process is intended to maintain political
impartiality.
I
can tell the hon. Lady that I do not believe that in any decision I am
making,
there is a political imperative about where a national grid connection, a
nuclear power plant or a new gas-fired plant goes. My job is to look
after the
national interest and to ensure that applications are made in line with
planning law. To me, this is not a party political issue, as I hope the
hon.
Lady will accept. We are deciding on projects of national significance
and
trying to get the right outcome as far as the country is concerned.
Emily Thornberry: The
hon. Gentleman talks about political impartiality and a quasi-judicial
function, but surely a Minister has choice. If a Minister is to act in a
judicial fashion, he or she simply has to step out of the arena and make
a
quasi-judicial decision. I do not understand, if someone is to make a
decision
in some sort of judicial capacity, how that is democratically
accountable.
Either they are allowed to use their political brain and make a
decision, which
is then democratically accountable, or they use a judicial one, which
steps
outside the arena and outside politics.
Charles Hendry: The
fundamental difference is that a Minister sits in Parliament. A Minister
can be
questioned by Members of Parliament. They can be called before Select
Committees much more readily. There can be debates in Westminster Hall
or
Adjournment debates in
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July 2010 : Column 170WH
the main Chamber. There is a range of areas where the Minister can be
subject
to scrutiny on the decision made. It is a quasi-judicial role, but we
believe
that it provides a degree of democratic accountability that is simply
missing
within the IPC. We may simply have to disagree. We believe that the
process
maintains the speed and the important elements of the IPC-changes that
the
previous Government put in place-but it rectifies the democratic
deficit.
The
hon. Lady raised additional matters relating to the nuclear sector. She
asked
about the work of the Nuclear Decommissioning Authority. We take very
seriously
the legacy issues, but we separate out the legacy responsibilities from
new
build. There is no doubt that clearing up the old legacy issues, which
are a
combination of civil and military nuclear issues, is something for which
the
nation, the taxpayer, the Government have to be responsible. The
previous Government
addressed putting that right with a degree of seriousness that had been
missing
historically, for which I give them credit, but much is guided by
independent
legal assessment. The Government are not at liberty to decide which bits
they
want to do themselves. They are required by law to carry out certain
actions
now in respect of the clear-up, and that work is central to the work of
the
Department.
The
hon. Lady will be aware that the NDA's budget is about half the entire
departmental budget, so if there are areas that are not absolutely
necessary
and there are areas where we can gain additional resources and revenue,
we
will, rightly, consider those as well, but I ask her to be in no doubt
whatever
about the moral imperative that we attach to addressing the legacy
issues.
The
hon. Lady also asked about Sheffield Forgemasters. I repeat the
assurance given
by the Secretary of State in the Chamber last week during oral
questions. He
said that it was purely about costs, and that the nation could not
afford many
of the projects that had been approved-it was on those grounds rather
than
because it was related to the nuclear industry. He also highlighted the
fact
that had the directors involved been willing to dilute their
shareholding it
would have been easier to get a commercial loan. Is it the Government's
job to
put public money into a private company to enable directors to maintain
their
shareholdings if commercial arrangements could have enabled them to
secure that
loan elsewhere? The directors now say that they will seek to carry this
forward
through other mechanisms, seeking loans and support elsewhere. We
believe that
that is right. At the end of the day, however, it is not about nuclear;
it is
money that the Government simply do not have. We have run out of money,
as the
former Chief Secretary told us.
Emily Thornberry: The
problem with the Minister's explanation is that he was talking of a
commercial
loan. Given that the company is worth £40 million and the loan was for
£80
million, it was not a question of selling shares to raise money; the
company
was not worth the amount of the loan. That is the problem. That is why
we need
a forward-thinking Government, that has ambition but which understands
the
importance of moving to a low-carbon economy. The Secretary of State for
Business, Innovation and Skills often criticised the banks for not being
forward looking enough by when he was in Opposition; now, in Government,
it
would seem that he is falling into exactly the same trap with the banks
that he
used so readily to criticise.
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July 2010 : Column 171WH
Charles Hendry: We are
considering a whole range of things to which the previous Government
were
committed. Many were laudable, worthwhile projects, but we have to
accept that
we have run out of money. That was the fundamental problem. There was
nothing
about the nuclear industry, the locus of her original charge; we had to
consider major areas of expenditure, and commitments that had been made
that
could not be funded. It is a good company and a good project, and we
want it to
happen, but we have to decide whether public money should be
contributed, given
that we are trying to reduce some of the pressures and burdens on
taxpayers. I
assure the hon. Lady that the decision was based on the fact that the
money was
not available; it was no reflection on the company's workmanship, which
is
outstanding, or the nature of the project itself.
The
hon. Member for Hartlepool spoke about the north-east
and the contribution that it can make, as he has done before. I asked
whether I
could visit the area rather than him inviting me, but my offer to visit
is
still there. I shall have to be slightly careful about those nuclear
plants
that are going through the planning process, as I may subsequently be
involved
in some of those decisions. However, I am particularly keen to see some
of the
supply chain opportunities and the industries that ride on the back of
them. I
recognise the fantastic opportunities and potential of the north-east,
and of
those elsewhere.
What
is exciting at the moment is that many parts of the country are looking
at
their energy potential. Cumbria
is calling itself the energy coast, and Anglesey calling
itself the energy island. Many see it as a key point in selling their
areas to
potential investors. The skills base of the north-east and the
extraordinary
depth of experience in the engineering and technical sectors must be an
incredible attraction to industry. People looking to come to the United
Kingdom will undoubtedly consider the
north-east to be a priority area. I would very much welcome the
opportunity to
see some of that potential with the hon. Gentleman.
Mr Wright: Before the
Minister moves on from the economy of the north-east, will he comment on
the
prospect of One North East and the regional development agencies in
providing
such leadership to potential investors on the energy potential of my
region?
Charles Hendry: I am
sorry,
but I should already have done so, as the hon. Gentleman raised the
matter
earlier.
We
believe that some of the things that the regional development agencies
have
done were truly strategic, but that others were slightly artificial.
People's
view of RDAs is different in the various parts of the country. Having
been to
see One North East, it is clear that the area had a better sense of
regional
identity than in my region of the south-east. There is not an enormous
amount
binding the western end of Oxfordshire with eastern Kent;
people have different perceptions in different parts of the country.
However,
there must be rationality.
Most
coastal RDAs say that they are the No. 1 place in the United
Kingdom to develop offshore wind facilities,
but they cannot all be No. 1. If we are trying to attract big
international
investors, there may be a case for considering the wider national
interest
rather than breaking things down further. However, RDAs have undoubtedly
done
some exceptional work. For example, Yorkshire
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Forward has been considering how to put a carbon capture and storage
infrastructure in place; it is ahead of anything else in England.
I hope that some of that work will be continued, even if RDAs are not
part of
that future-they may be in some parts of the country-but local
authorities,
which are responsible for business development, might see it as a
particular
advantage for their communities, and be keen to ensure that it is part
of the
mix. Again, I am happy to visit the north-east to talk to those in the
RDA
about how we can build on the work that has already been done.