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However, it is right that we should work closely with the regulators to explore ways of enhancing their efficiency in dealing with new nuclear power stations. I am keen, therefore, to ensure that the UK has the most
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effective regulatory regime in the world. I believe that it could be a critical differentiator for the UK in securing access to international investment in new nuclear facilities. I have asked Dr. Tim Stone to take that work forward, alongside his continuing work on the financial arrangements regarding new nuclear power stations.

Secondly, during the consultation, many argued that a permanent solution for dealing with existing waste must be developed before new waste is created. We have considered the evidence fully, and our conclusion is that geological disposal is both technically possible and the right approach for managing existing and new higher-activity waste. It will be many years, of course, before a disposal facility is built, but we are satisfied that interim storage will hold waste from existing and any new power stations safely and securely for as long as is necessary. In addition, before development consents for new nuclear power station’s are granted, the Government will need to be satisfied that effective arrangements exist, or will exist, to manage and dispose of the waste that those stations will produce.

The third concern relates to cost. It will be for energy companies, not the Government, to fund, develop and build new nuclear power stations. That will include meeting the full costs of decommissioning and each operator’s full share of the waste management costs. The Bill includes provisions to ensure that, and transparency in the operation of the arrangements will be essential.

So in order to increase public and industry confidence, we will establish a new, independent body to advise on the financial arrangements to cover operators’ waste and decommissioning costs. The advice of that new body will be made public. The nuclear White Paper published today sets out a clear timetable for action to enable the building of the first new nuclear power station, which I hope will be completed well before 2020. The Planning Bill will improve the speed and efficiency of the planning system for nationally significant infrastructure, including new nuclear power stations, while giving local people a greater opportunity to have their say. A strategic siting assessment, to be completed by 2009, will help identify the most suitable sites for new build. We expect that applications will focus on areas in the vicinity of existing nuclear facilities. Work is already under way on assessing the safety of the new generation of reactors.

Finally, we must work with our EU partners to strengthen the EU emissions trading scheme to give potential investors confidence in a continuing carbon market. We look forward to the Commission’s proposals later this month. I remain firmly of the view that there should and will be room for all forms of low-carbon power technologies to play a role in helping the UK meet its energy objectives in the future. Nuclear power can be only one aspect of our energy mix as, on its own, it cannot resolve all the challenges that we face. Meeting those challenges requires the full implementation of our energy and climate change strategy, with nuclear taking its place alongside other low-carbon technologies. The Energy Bill will ensure that we have a legislative framework enabling all of those technologies to make a positive contribution to our future requirements for cleaner and more secure energy.

Giving the go-ahead today that new nuclear power should play a role in providing the UK with clean, secure and affordable energy is in our country’s vital
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long-term interest. I therefore invite energy companies today to bring forward plans to build and operate new nuclear power stations. Set against the challenges of climate change and security of supply, the evidence in support of new nuclear power stations is compelling. We should positively embrace the opportunity of delivering this important part of our energy policy.

I commend this statement to the House.

Alan Duncan (Rutland and Melton) (Con): May I thank the Secretary of State for advance sight of his statement?

There has never been a more pressing time for responsible policy making. Carbon emissions are changing our climate, we are paying $100 for a barrel of oil and we are facing a clear and massive energy shortfall. It is our duty to set political scrapping aside so that we can make sure that we do what is right for the country. So let me make it absolutely clear that, where we can find agreement with the Government, we are up for it and we will reach that agreement.

Our vision on nuclear is clear: we must refine the planning system, set a price for carbon to establish a long-term climate for investment, and ensure that there is clarity on waste and decommissioning. On no account, however, should there be any kind of subsidy for nuclear power. Judging by what the Secretary of State has just said, our position is, by and large, similar to the Government’s. If business wants to invest in new nuclear power stations on that basis, it should be free to do so, and it should know that the investment climate will remain stable under any Conservative Government. Any such investment must not be allowed to detract from unrelenting effort to improve efficiency and to encourage renewable technologies, microgeneration, decentralised energy and feed-in tariffs.

The first of our concerns—and those of investors—is the apparent weakness of our national skills base. Is it not the case that the nuclear installations inspectorate cannot find, recruit, train and retain the number of skilled employees it requires to assess and approve the different types of reactor for which licences are sought? Is it the Secretary of State’s policy to require the NII simply to accept or reject the proven designs submitted to it, or will it be empowered to reject the endless subsequent design adjustments that have so dogged the industry in the past?

Both the Government’s policy and ours is that there must be no subsidy. Although nuclear companies claim that they do not want subsidies, suspicions remain that the industry will end up asking for them, either through subsidised waste disposal or guaranteed off-take agreements. Is the Secretary of State satisfied that the industry will not later request some form of subsidy?

Will the Secretary of State tell us more about the authority of the new advisory board that he intends to set up? How will it assess and confirm the honesty, accuracy and integrity of new-build projects, and might he not prefer to set up that board on a statutory basis?

On the question of waste, what do the Government mean by their reference to the “full share” of waste management costs rather than to the full costs of waste disposal? Who exactly will pay for what? On decommissioning, we accept that companies will set
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money aside, but how can the Government be confident that their economic modelling is correct, and what would happen if a nuclear company went bankrupt?

We need a long-term price on carbon, but the present carbon regime is weak. The EU emissions trading scheme is insufficiently robust. Does the Secretary of State agree with us that it needs to be underpinned by a possible carbon tax? In the spirit of the responsible approach that we wish to engender, does the right hon. Gentleman accept that it is illogical to continue with the climate change levy, which taxes nuclear, when a carbon regime should release nuclear from carbon penalties and affect only methods that create carbon?

We shall study with the greatest care the broader proposals set out in the White Paper and the Energy Bill. We note in passing that the Government appear to be putting no limit on the number of new nuclear power stations that might be built. We regret that the Government seem to have rejected feed-in tariffs, even for microgeneration, but we welcome—at least as a first step—their proposal to band the renewables obligation to give more balanced support to emerging technologies in a way that removes the perverse bias towards onshore wind and methane.

We are critical of the delay in respect of carbon capture and concerned about the contradictions in the Government’s policy. Britain was ahead of the game; now, it is not. How can the Government say that it is not their policy to pick one technology over another when they have done exactly that in determining the terms of their carbon capture competition?

Whatever happens to nuclear, it is clear that it is part of a much bigger picture. If we are to have secure, affordable and green energy in 20 years’ time, we must do much more to encourage energy efficiency, we must achieve a fundamental shift toward microgeneration and decentralised energy, and we must lead the world in taking advantage of renewable and new energy technology. Today’s statement is just one part of that process. The true test of the Government’s determination will be whether they continue to put together all the pieces of the energy jigsaw.

Mr. Hutton: I broadly welcome what the hon. Gentleman says. All of us Labour Members will welcome what I hope is the end of the flip-flopping on nuclear policy that we have witnessed from the Opposition in recent months. [Interruption.] We probably need to move on. I hope that the hon. Gentleman will support the Planning Bill’s progress through the House, because it is a critical part of speeding up the introduction of low-carbon technologies. So far, his party has been lukewarm in its support for that legislation. We have set out a full, balanced and diverse energy policy that includes support for renewables and diversified energy systems. Nuclear will be one part of our policy in future, not the sum total of it.

The hon. Gentleman raised a number of specific points about nuclear, including on reactor safety procedures. Of course, that is properly and responsibly a matter for the nuclear installations inspectorate, but clearly its decisions could have important financial implications for potential new nuclear investors. As it is a matter for the NII, I do not want to comment on any
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aspect of the safety and approval system. On his point about subsidy, there will not be a subsidy for new nuclear, and we have made that absolutely clear. As for the new body that he asked about, we will consider all the options. As I say, the Energy Bill is published today; its Committee stage will start in the next few weeks, and there will be plenty of opportunity to consider the argument then. He asked how the body would do its job. We will need to get good, decent, experienced people to serve on it, and I am sure that there will not be a shortage of people prepared to do that.

The hon. Gentleman asked what was meant by the “full share” of decommissioning costs. Each energy company that wants to operate a new nuclear power station will have to meet its full share of the cost of new nuclear waste. I do not think that that policy is unclear. Of course, what each company’s share will be needs to be resolved, because it will obviously depend on how many nuclear power stations that operator runs. There will be an opportunity later in the spring for us to consult fully on the details of the financial mechanisms that we are proposing. I hope that the broad principles will be available for the Committee considering the Energy Bill later next month.

The hon. Gentleman asked about the financial modelling for the economics of new nuclear. We have proceeded on a prudent, conservative basis—I hope that he will like that—in terms of understanding the modelling of nuclear economics in future. We have taken the best international evidence from the International Energy Agency and others to form the basis of our calculations. On carbon pricing, we are waiting to see new proposals from the Commission on the ETS. We will keep all our options open for the long term to make sure that investors have sufficient confidence that the ETS will work in the way that we want it to. There has to be a robust, increasing price for carbon; it is a pollutant, and we have to make sure that we regard CO2 in that way.

The hon. Gentleman raised his familiar arguments about feed-in tariffs and the renewables obligation. I am sure that there will be other occasions when we can consider the detail of those matters. Finally, I do not accept his view that the UK has slipped when it comes to carbon capture and storage. We are one of only three countries in the world to have signalled their willingness to invest and support the demonstration of a commercial-scale carbon capture and storage project. The others are the US and Norway. That puts the UK in a global leadership role; we are not losing ground on CCS.

Mr. Elliot Morley (Scunthorpe) (Lab): There is much to welcome in the energy White Paper, and of course we cannot separate energy policy from the overriding need to tackle climate change, but will my right hon. Friend confirm that there has been nothing to stop anyone coming forward with a suggestion for a nuclear power station in the past 20 years? He can understand why people will ask, “What has suddenly changed?” On carbon prices, is he talking about some form of carbon price guarantee? On subsidies, will he make it clear that the obscene windfall profits for generators from free carbon allocation needs to be looked into at some point?

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Mr. Hutton: I pay tribute to my right hon. Friend for all his years of service as a Minister in the Government. On his point about the ETS, we will have to wait and see what proposals come forward from the Commission later this month, but I have tried to put forward in the House today our view that we need a strengthening of the ETS. The issue of allocations and allowances will have to be looked at carefully as part of that.

My right hon. Friend’s more fundamental question was about what had changed. It is of course true that any company could have brought forward a proposal to open or operate a new nuclear power plant, but they would not do so unless there was a clear planning framework and a view from Government that such a plant could be an acceptable way forward. Today, that signal is being given, but it was not previously. That is why there have not been new applications for some considerable time. The other things that have changed are the science of climate change and the economics of nuclear power, to which I referred, including carbon markets. That is leading to a totally different situation.

Steve Webb (Northavon) (LD): I thank the Secretary of State for his statement, just in case we had not read it in the newspapers last week.

I am not clear about what the Secretary of State has just said. As the right hon. Member for Scunthorpe (Mr. Morley) asked, what has changed? The Secretary of State said that, following a second sham consultation, the Government have come up with the answer that they first thought of, which is hardly a surprise. He said that the Government would now take the active steps necessary to facilitate new nuclear, but we are still not clear what they are. We still do not know how we will dispose of the waste. How are companies meant to invest with certainty, unless the Government give them guarantees and subsidies? Can he give us a cast-iron guarantee that there will be no subsidies at any stage of the entire process? Can he put that on the record?

Is there not a danger that new nuclear will lock us rigidly to a technology for the best part of a century, at a time when other technologies such as carbon capture and storage and renewables are evolving practically every day? Is not the danger that the technology will be obsolete by the time that we get the first, small amount of new nuclear power?

What about before 2020? We have an energy crisis now. Does he agree with his predecessor, the right hon. Member for Derby, South (Margaret Beckett), who said:

She was right. Why does he not agree with his predecessor that going ahead with new nuclear inevitably crowds out renewables and energy efficiency, in terms of Government time, expertise, and manpower? Why are the Government so slow on such issues? Why are we producing half the renewable energy of the rest of Europe, when we have the resources to do far more?

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What about fuel poverty? The Secretary of State did not mention it. Will the Energy Bill include anything on mandatory social tariffs? There are too many people in this country living in fuel poverty, and the statement offered them no hope. I cannot decide whether new nuclear is a white elephant or a red herring, but it clearly is not the answer to the energy problems that we face today.

Mr. Hutton: I am saddened but not entirely surprised by that response. I am particularly disappointed that the hon. Gentleman did not understand what I said in my statement. If he would like me to send him a copy with bolder type, so that he can understand it, I shall be happy to do so. It may be helpful if I cleared up one or two confusions under which he is labouring. We are not mandating the use of nuclear power.

Steve Webb: I appreciate that.

Mr. Hutton: Well then, obviously the hon. Gentleman has understood my statement. We are not giving planning permission today for new power stations, and we will not subsidise them; I have made that absolutely clear. If power companies want to invest in other forms of cleaner technology, there is obviously nothing stopping them doing so. Those are decisions that the energy operators or companies will make. It is transparent from the hon. Gentleman’s contribution that we in this House could benefit from some fresh thinking, instead of a rehash of all the old prejudices that have confused the debate for so long. We want open minds, not closed minds. I am all in favour of reducing emissions, and we can start with what comes out of the hon. Gentleman’s mouth.

Mr. Adam Ingram (East Kilbride, Strathaven and Lesmahagow) (Lab): I thank my right hon. Friend for the statement. It will be particularly welcomed in my constituency, the home of British Energy. May I draw his attention to the fact that thousands of jobs in Scotland are tied up in the nuclear industry? It is vital to the science, engineering and technology base of the Scottish economy. Will he use his persuasive powers to try to convince the Administration in Holyrood, led by the Scottish National party, of the error of their ways, and to make them understand the vitality of the industry and its importance in the energy equation?

Mr. Hutton: On my right hon. Friend’s latter point, I shall certainly do that. We invited Scottish Ministers to support a Sewel motion in the Scottish Parliament to facilitate the operation of the energy clauses of the Bill on a UK-wide basis. That would have been sensible, because the clauses are designed to ensure that there is no subsidy going into the costs of nuclear waste decommissioning and disposal. It is a missed opportunity.

My right hon. Friend is right about the manufacturing consequences of the announcements that we are making today. There could be a renaissance in UK power engineering, with significant consequences in constituencies all over the United Kingdom. I hope that that is another reason why hon. Members will support what we are trying to do.

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