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House of Commons
Session 2007 - 08
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General Committee Debates
Energy

Energy Bill



The Committee consisted of the following Members:

Chairmen: Mr. David Amess, Mrs. Joan Humble
Baron, Mr. John (Billericay) (Con)
Binley, Mr. Brian (Northampton, South) (Con)
Hendry, Charles (Wealden) (Con)
Horwood, Martin (Cheltenham) (LD)
Iddon, Dr. Brian (Bolton, South-East) (Lab)
Ladyman, Dr. Stephen (South Thanet) (Lab)
Main, Anne (St. Albans) (Con)
Owen, Albert (Ynys Môn) (Lab)
Palmer, Dr. Nick (Broxtowe) (Lab)
Reed, Mr. Jamie (Copeland) (Lab)
Robertson, John (Glasgow, North-West) (Lab)
Seabeck, Alison (Plymouth, Devonport) (Lab)
Swire, Mr. Hugo (East Devon) (Con)
Tipping, Paddy (Sherwood) (Lab)
Webb, Steve (Northavon) (LD)
Whitehead, Dr. Alan (Southampton, Test) (Lab)
Wicks, Malcolm (Minister for Energy)
Chris Shaw, Committee Clerk
† attended the Committee

Public Bill Committee

Tuesday 4 March 2008

(Morning)

[Mr. David Amess in the Chair]

Energy Bill

10.30 am
Charles Hendry (Wealden) (Con): On a point of order, Mr. Amess. The Committee will remember that last week we had a debate on feed-in tariffs. In the course of that debate, the Minister gave a robust defence of why the Government were not looking at feed-in tariffs and said that they would consult on that, among other issues, in the summer. However, it was suggested in the press over the weekend that the Chancellor is planning to announce feed-in tariffs as part of his Budget submission. I wonder whether the Minister has indicated to you, Mr. Amess, any desire to clarify the Government’s position, as it now appears from the press reports that we were inadvertently misled in our discussions last week.
The Chairman: I have listened carefully to what the hon. Gentleman has said. The Minister has not indicated that he wishes to make any specific statement, so we shall let the matter rest there. Perhaps the Minister will reflect on what the hon. Gentleman has said.

Clause 41

Duty to submit a funded decommissioning programme
Question proposed [28 February], That the clause, as amended, stand part of the Bill.
Question again proposed.
The Chairman: I remind the Committee that with this we are taking the following: New clause 23—Nuclear Decommissioning Authority Funding
‘(1) Section 22 of the Energy Act 2004 (expenditure and receipts of NDA) is amended as follows.
(2) After subsection (5) insert—
“(6) The Secretary of State may make regulations to include the value of grant payments made by him to the NDA under this section in ‘funded decommissioning programmes’, as defined in section 41 of the Energy Act 2008.”’.
Martin Horwood (Cheltenham) (LD): The purpose behind the new clause is to address a general issue with clause 41. I am not sure whether we have yet had the stand part debate, so if I am permitted, Mr. Amess, I will make some more general remarks about funded decommissioning programmes.
The Minister has already referred to the gap between funded decommissioning and the capping of any long-term storage facility, and he mentioned in our earlier deliberations that that might happen in the next century—the 22nd century. That would be equivalent to Asquith and Lloyd George making policy for today, as we are talking about very long periods of time. It is difficult to predict the cost of those plans, and I am sure that Asquith and Lloyd George, being good Liberals, would never have taken on such risky liabilities in their day.
Mr. Jamie Reed (Copeland) (Lab): The hon. Gentleman is making an interesting point about the long-term costs and predictability of waste management, but does he agree that the liabilities produced by our military nuclear programme are not in fact a subsidy to responsible action by responsible Government? Furthermore, does he not believe that the economic and environmental consequences of long-term waste management and the issues involved are much simpler than those relating to carbon capture and storage?
Martin Horwood: I am grateful for the hon. Gentleman’s intervention, and think that we might find common ground on many things during the debates on the clause, as we have a common interest in making the Conservative party honest over this issue. He is an unapologetic supporter of the nuclear industry and I am an unapologetic opponent of it, and neither of us believe in fudging the issue. He is right that long-term storage and the management of that storage involves responsible action by responsible Government—I think that that was the term he used. That is clearly true. We have the waste now, so we clearly have to address the issue. However, I am clear that we should avoid the nuclear industry becoming a special burden on the taxpayer, and we have to be clear on whether that subsidy is being given. We heard evidence from the nuclear installations inspectorate.
Dr. Stephen Ladyman (South Thanet) (Lab): I cannot help pointing out that the hon. Gentleman favours the carbon storage industry being a special liability on the taxpayer. Therefore, as an indirect consequence, the people who produce that carbon in the first place are a special liability on the taxpayer. His attitude seems completely contrary.
Martin Horwood: The hon. Gentleman makes a reasonable point. First, carbon storage is a good thing, while nuclear waste is a bad thing, so I do not pretend to see why we should have a level playing field between the two. Secondly, the Bill does not pretend to meet the cost of carbon capture and storage. It is open, as we have been on both sides of the Chamber, about the need to subsidise carbon capture and storage in order to provide incentives. That is part of saving the planet. The nuclear industry certainly is not.
Dr. Ladyman: Carbon storage may be a good thing; carbon production is not. We do not need carbon storage if we do not produce the carbon in the first place. By proposing a system whereby the state takes the liability in the long term for carbon storage, the hon. Gentleman will be subsidising the production of carbon. The nuclear industry will not produce any carbon.
Martin Horwood: I absolutely deny that allegation. We have already tabled an amendment to try to ensure that no new fossil fuel fired power stations are built without a commitment to bearing the cost of installing carbon capture and storage at a later date. We are applying the same principle to the production of carbon, if not to the storage. The hon. Gentleman is simply wrong. However, we are not on the carbon capture and storage part of the Bill.
Mr. Reed: Will the hon. Gentleman give way?
Martin Horwood: If the intervention is on nuclear power, I will give way.
Mr. Reed: I am exceptionally grateful to the hon. Gentleman for being extremely generous with his time. Does he remember from the evidence session that the Carbon Capture and Storage Association believed that it was unreasonable for the private sector to maintain and carry the costs of long-term carbon capture management—the management of stored carbon. That, as a matter of principle in the association’s opinion, should be a cost held and burdened by the taxpayer.
Martin Horwood: That is broadly true. However, returning to the subject of the clause—the funded decommissioning programmes—there is a second area on which I would like clarification from the Minister. In considering whether there is any intention for the costs to be met by the taxpayer or through the funded decommissioning programmes, what about the nuclear installations inspectorate? That will continue after the active life of a power station and is involved in the safe decommissioning, over a long period, of the nuclear power stations. From my research, it appears slightly difficult to establish exactly what the net cost of the nuclear installations inspectorate is. Perhaps the Minister will confirm that?
I can see that the Health and Safety Executive has an overall budget of £59 million, which includes major hazard outcomes that I understand, in turn, include the nuclear installations inspectorate. The income from nuclear installations is the HSE’s major source of income and yielded £24.2 million, but I am not clear whether there is still a subsidy hidden in there, because the details are not clear. The HSE has a net cost of £35 million a year, so I would be interested to know how much of that is a hidden subsidy to the nuclear industry.
Then we have the Committee on Radioactive Waste Management, which gives vital advice on the long-term decommissioning. The estimated running costs of CoRWM are £2.3 million in 2006-07. There is continuing expenditure for that body as well. Then we have Nirex, the figures for which I do not have to hand. Can the Minister also clarify how much we spend on Nirex and whether there is any intention to recover any of those costs from the funded decommissioning programmes?
We then have the major accident costs, the subject of a statutory instrument only the other week. Discussion of the instrument left us unclear whether there was another long-term subsidy by the taxpayer—for those costs above which the nuclear industry could not get insurance—and whether that long-term liability was yet again being picked up by the taxpayer.
Finally, we have the big daddy of them all, the Nuclear Decommissioning Authority. I was stunned when I realised the scale of the public spending. The NDA’s own action plan says that in 2007-08
“the cost of delivering our remit is expected to be approximately £2.79 billion”,
with a total anticipated income of some £1.37 billion. Within that budget, the cost of running the NDA—the headquarters and administration costs—will amount to no more than £60 million. That leaves an enormous public subsidy of more than £1 billion a year, and I had not realised that that is the largest part of the Minister’s departmental budget. In relation to the settlement that will allow the NDA to increase its budget in a year, a spokesman for the NDA said that
“this is a good settlement”.
I am sure that many local authorities would agree. Many of the programmes that are being cut—for instance, the business resource efficiency and waste programme in recycling and waste production—would agree that that is a good settlement for the nuclear industry.
The Minister for Energy (Malcolm Wicks): Does the hon. Gentleman accept that, as nuclear reactors were built during a period of public ownership, we have a duty now in terms of the nuclear legacy? The Government recognise that duty but is it the position of the Liberal Democrats that we should do nothing about the legacy of nuclear waste?
Martin Horwood: We can categorise that as the Northern Rock defence. It is clear that decommissioning and the work of the Nuclear Decommissioning Authority are important. Since the country has got itself into the situation of having that huge nuclear legacy to clean up—Liberal Democrats would not have got ourselves into that situation—clearly we have to fund it, and it would be unrealistic at this stage in the old nuclear industry’s lifespan to try to retrieve any of the vast public funds spent on it. The question is whether the funded nuclear commissioning programmes expect that mistake to be repeated, or will we take the opportunity to avoid having yet more billions of public money poured into decommissioning costs in the distant future, after the current generation of nuclear power stations is long gone? Will we take the opportunity to give the Minister powers to recover those costs from the nuclear industry? That there should be no subsidy to the nuclear industry is, after all, the principle that the Conservative party certainly has espoused, and it is part of the public debate. That is a crucial matter.
Dr. Ladyman: I am sure that the hon. Gentleman did not mean to mislead the Committee, but he said that the Liberal Democrats would not have got into that position. May I remind him that the Liberal Democrats were in favour of a state-controlled nuclear industry?
Martin Horwood: I am intrigued by that—I will have to check previous manifestos. I have never been in favour of nuclear power and have never been a member of a party that has. I think that the hon. Gentleman might be playing with words on the subject of state control in that, given that one has the industry, it might be a good idea to have it under state control. Liberal Democrat policy is not the subject of the clause and I will not give way further to the hon. Gentleman on that point.
We must conclude that we are talking about a vast part of Government expenditure. The Department for Business, Enterprise and Regulatory Reform’s website has some core statistics about the Department:
“We employ around 2,500 staff, plus 4,000 in our executive agencies. Our annual budget is just over £3 billion. Half of this is spent on nuclear decommissioning; the rest on a range of issues from trade promotion to energy security supply”.
I think that Department for Business, Enterprise and Regulatory Reform is a bit of a mouthful and perhaps the Department ought to be more accurately described as the Department for nuclear subsidy, since that is what it is providing from the largest part of its budget.
Malcolm Wicks: It is a legacy.
Martin Horwood: The Minister says that it is a legacy but the point of new clause 23 in particular is to enable the Minister not to repeat the mistake that has landed us with that legacy from the old nuclear industry. It will not land us with future billions of public subsidy from the new nuclear industry.
Mr. Reed: I am exceedingly grateful for the generosity that the hon. Gentleman has shown. It is important, despite our obvious differences of opinion which have been pointed out, that we deal in the facts in the Committee. The overwhelming majority of the costs that he is taking about, which are the responsibility of the NDA, are due to our military nuclear programme. Does he accept that what we are dealing with is the bill from the cold war?
10.45 am
Martin Horwood: I would like to hear the Minister’s precise take on this: if we can separate the costs between the military programme costs and the costs of civil nuclear power industry, that might be an interesting debate to have.
New clause 23 sets out generously to give the Secretary of State an enabling power to
“make regulations to include the value of grant payments made by him to the NDA under this section in ‘funded decommissioning programmes’, as defined in section 41 of the Energy Act 2008.”
The original section in the Energy Act 2004 made it clear that the proper terminology for the public subsidy of the NDA was in the form of grants. This same principle could be applied to the nuclear installations inspectorate and to any future nuclear liabilities financing assurance board, which, as suggested in the energy White Paper, would look after the funding liabilities of the nuclear industry. It could be applied to Nirex but the NDA is by far and away the most expensive part of this whole exercise.
The reason we are suggesting this new clause is to allow the Minister not to repeat the mistakes of the past, but to recover some of the vast public cost of decommissioning the new generation of nuclear power stations. I hope that he will look kindly on what is an obviously sensible suggestion.
John Robertson (Glasgow, North-West) (Lab): I was not intending to speak on this new clause, but I decided I had to put the record straight. The hon. Gentleman has been, to say the least, selective in what he has been saying in relation to energy in its entirety. His new clause sets out enabling powers, but only in a selective way. I would say that if he were going to put forward new clause, it should have been all encompassing. Anything to do with decommissioning should relate to all types of energy, and not just to the one he particularly dislikes. Therefore, I advise my hon. Friend the Minister that the new clause is not necessary because everything is in the Bill and all the angles are covered.
The hon. Gentleman has on many occasions invoked the California system for energy—a system that relies on its neighbouring states to provide its energy—and that results in that state occasionally getting itself into bother with its lack of energy. People in Nevada are getting very upset that they are supplying California with a lot of energy from its nuclear power stations. They take great exception to California using its clean attitude to say that everything to do with nuclear power is bad and, therefore, implying that its neighbouring state is bad. Again, California has a selective way of looking at things, just as the hon. Gentleman and his party have been so selective.
The hon. Gentleman talked about the nuclear industry and its special burden on the taxpayer, yet all types of energy present some kind of problems to taxpayers. Back in the old days of coal bings, there were problems with mud slides throughout the country. That was a cost to taxpayers, who had to pay money to make sure the bings were safe. If we had known at the time they were going to be as unsafe as they were, we would have done something about it, but, in the case of nuclear, we have learned a great deal.
I invite the hon. Gentleman and his colleagues to the all-party group on nuclear energy, which will have the chairman of CoRWM at its meeting tomorrow morning. The hon. Gentleman should come along and listen and ask questions because, unlike him, we are not blinkered and are quite happy to listen to other people’s ideas.
Martin Horwood: I thank the hon. Gentleman for that generous invitation to breakfast. Will he answer one question if he has more detailed knowledge of CoRWM than I do? Is the latest thinking from CoRWM that any long-term storage facility will have an ongoing accessibility into the next century?
John Robertson: That is a very good question. I suggest that the hon. Gentleman comes along to the meeting and asks it. I hope that he will get the answer that he is looking for. He might not, but he will get an answer and that, in itself, is a step forward.
The hon. Gentleman talked about the capping of nuclear waste. A gentleman described to me that today’s nuclear waste could be tomorrow’s fuel. If that is the case, I stress to the Minister that we should not look at capping nuclear waste, but should store it so that it is retrievable because one day we may be able to use it.
The hon. Gentleman talks about years and years and I think that he is talking about centuries and about the stories about nuclear fuel. Thinking back to where we were 100 years ago in relation to energy, with the best will in the world, I cannot imagine where we will be in 100 years. We may not even need nuclear fuel, but we need it today and we have to look at the problems that we have with energy.
The hon. Gentleman’s argument falls down because he is not willing to look at the big picture. He wants to look at a picture and he is happy as long as the part at the end is not in it. The new clause should not be passed because it is so selective. I recommend that my colleagues do not support it.
Mr. Brian Binley (Northampton, South) (Con): I apologise for my rather throaty vocal approach. On one occasion in the Chamber, I said that I am sometimes on another planet. I have not yet touched down on planet Liberal, but it seems that we are being invited to do so in debating the new clause. I am not attracted to that planet.
I am a committed supporter of the nuclear industry and think that we need to send out a robust message to it so that we can close the gap that the hon. Member for Glasgow, North-West referred to. The problem that we are facing is that the lights may go out; it is not very difficult to conceive of that. Incidentally, in the daytime, our light is provided by a nuclear reactor and I wonder why the Liberals never bring that to the public’s attention. They might think about that fact a little. We call it the sun, but it is a nuclear reactor.
I have a specific question for the Minister, which he might refer to when summing up. As I said, I want to give as robust a message as possible to the industry and to help it as much as possible because we need its help. This is an issue of mutual interest. I must therefore clear up a small matter. Under subsection (8), a person who submits a decommissioning programme will have to pay the fee determined by the Secretary of State for the Ministry to do that work. Will the Minister give us some idea of the size of that fee so that the industry can have a little understanding of the matter? It will not be a massive amount in the great scheme of things, but I think that it will be of interest to the industry.
Charles Hendry: I welcome the fact that the first time we have come to discuss nuclear policy under the Bill is when talking about issues of decommissioning. That shows that the two matters must go hand in hand. We have debated a new generation of nuclear plants many times. I was rummaging through my collection of old copies of The Guardian the other day.
Malcolm Wicks: As you do.
Charles Hendry: As I do. I came across the issue of Friday 10 June 1983. The other 4,500 copies in my collection seem to have been lost, but for some reason I kept that one. The front page says, “Seven nuclear plants planned”. One can tell that it is The Guardian because that is the lead story and the second story is that the Tories won the general election. It was being said in those days that Sizewell B would be the first of a tranche of seven new reactor and it was said that it would be up and running by 1990. What wishful thinking that was. Nevertheless, we have discussed many of those questions before, and it is good that the House has had the chance to look at them again.
Malcolm Wicks: Will the hon. Gentleman give way?
Charles Hendry: Indeed. I was about to celebrate the Minister’s own personal journey.
Malcolm Wicks: Will the hon. Gentleman be outlining any other Tory broken promises today?
The Chairman: Order. Tempting though that may be, I ask the hon. Gentleman not to respond.
Charles Hendry: I wish to reassure the Minister that the days when people say, “Tories on course for a landslide” are on the way back. History is on the verge of repeating itself.
We wished also to celebrate the Minister’s personal journey from being an anti-nuclear campaigner. As he mentioned, he used to go around the country saying, “Och, och, och, there’s a monster in the loch”. Now he walks up the coast of Suffolk saying, “Look, look, look, we want another nuke”. Throughout his journey, we have seen how we must address these issues.
We must consider decommissioning and waste in the context of the general approach to nuclear policy. The Government’s role in energy policy should be to seek energy security and as much energy as possible from no or low-carbon sources. That means that the Government should set the framework, and business should decide where to invest. The Government should not micro-manage or decide exactly where that investment should go. We have seen that the Government cannot readily build a dome or a football stadium, so what hope would they have of putting in place and constructing an entire national energy policy?
Within the national energy policy, the Government should seek to be technology-neutral. Our view is that if people wish to invest in nuclear energy, they should be free to do so. There should be no principled objections to it. Nevertheless, new build projects must be subject to certain criteria. There should be no subsidy; the full running, building, decommissioning and waste costs must be covered by the companies that are seeking to build the new reactors. My understanding is that we and the Government are essentially at one on that consideration.
Of course, there will some debate about what “no subsidy” means. Liberal Democrat Members have referred to it this morning. No subsidy does not mean that contractors cannot agree contracts with Government bodies to buy the energy that they produce. That is how the new-build programme was partially funded in Finland, and it is a legitimate commercial arrangement. It does not mean that those businesses must be responsible for the waste-management costs for the next 100,000 years. Certainly, they should be responsible for the management of the waste when it is on site, and for the cost of disposal. However, after a given period, it is right that the Government should take on the management of that programme, but with the companies that have created the new waste covering the costs of their portion of that waste.
Martin Horwood: I was merely seeking to clarify the point of who would be responsible for the very long-term storage of waste if the contractors were not to be. However, the hon. Gentleman may have answered my question.
Charles Hendry: The approach that the contractors would take out a bond that would contribute towards any additional costs of the residual management of that waste over a longer period is the right one. It should not fall on the taxpayer; it must be covered by the companies themselves. However, the hon. Member for Copeland was absolutely right to try to separate the matters of legacy waste and new-build waste. It would be nonsensical to have a deep repository for the long-term storage of legacy waste, funded by the taxpayer, and to build a new repository for the much smaller amount of new waste. It is inevitable that they will be stored in the same place. The Government make that point in the White Paper, in which they also state that there will therefore be incremental costs for storing that additional waste in the repository and for the infrastructure implications. Those are the costs that the industry should bear.
We also think that there should be a level playing field for new-build nuclear projects. That means addressing the issues of site and type approval and also having a streamlined planning approach. We are not happy with the Government’s approach to the infrastructure planning commission, but that is obviously a matter for a different Bill. In order for a streamlined planning approach to happen, various things must be recognised. First, the nuclear installations inspectorate needs to have the necessary resources. Unfortunately, it looks likely that it will not now be able to evaluate the different types of reactor before it. In the next few weeks, we expect that it will have to narrow it down from four reactor types to three and it is unfortunate that it does not have the skills base available.
11 am
Steve Webb: Northavon (LD) Clearly, the cost to the NII of inspecting potential new sites falls into the category of the incremental costs of the new generation, which the hon. Gentleman mentioned. Given that it is incremental, should not that cost be met by the industry to avoid public subsidy?
Charles Hendry: The work that the NII does at this stage when it evaluates different reactor types is essentially work on behalf of the Government in assessing which ones should be allowed to go forward. That work would not be done if there were not a new build programme in place and I think that it would be right for contributions to be made from the industry towards the cost of the NII’s work in that area. However, I also hope that the NII will be given the staffing levels that it requires because it cannot cope with its current workload.
We must build several reactors of a single type. If we go down the path that we have taken before—having one of this type, two of that one and one more of something different—the whole new programme will become completely unaffordable and unimaginable. We must recognise that we will probably end up with a fleet of a number of reactors to the same design type. We must also ensure that not too many add-on extras are included during that process. During the evaluation of different reactor types, I hope that the Minister will urge the NII not to say that every possible bell and whistle must be added on. That is what happened with Sizewell B—it added £1 billion of extra costs and some of the elements that were included have never been used in over 10 years of operation. That is an important matter.
We are more generally concerned about the skills base within the nuclear sector. It is encouraging to look at places like the university of Central Lancashire and the courses that it wishes to lay on and develop, and at Southampton university, which is keen to develop expertise in those areas. I hope that the Minister will tell us how the Government plan to build up the skills base in this area, and how he will keep Parliament informed about that.
My own approach has been greatly influenced by what I have seen. The various journeys that I have made are covered in the Register of Members’ Interests and include visits to not only nuclear but wind, oil and gas facilities. I had the opportunity to go to Sizewell B, which is an absolutely extraordinary plant. It has been operating for a year and half at full tilt, and for those who have concerns about the security of modern nuclear plants, bearing in mind that it is over 10 years old, it is an incredibly safe facility and a great credit to the industry.
I also had the opportunity to go to Oskarshamn in Sweden, where a model is being built for the sort of repository that is thought appropriate for deep disposal. I urge all those who are sceptical about nuclear waste disposal to go to look at that facility. It is 500 m underground and they take 10,000 people a year down there. Because of its communications programme, it has managed to get 80 per cent. support within the local community for the burying of nuclear waste in that location. When Nirex appeared in the 1980s, there was 100 per cent. objection to nuclear waste being buried in those communities. However, if we look at how the Swedes have done it, with the thoroughness of their technology, their scientific approach and their approach to involving the local community in trying to persuade it about the right approach to deep disposal, we could learn some significant lessons. I came away convinced that we could manage the long-term deep disposal of waste in a constructive and safe way.
I was also struck by the way in which waste is stored on site; in that nuclear facility, it is kept in pools of water. Somebody on the edge of the pool is a little further away from it than from where I am to where the Minister is, but not by much. If someone stands on the side of the pool with a millisievert counter that measures how much radiation there is, the counter does not move. I did not get any radiation. I was rather disappointed as I had hoped to get a small amount—0.1 or 0.2 millisievert—to know that I had genuinely been there. I got much more radiation in the course of the aeroplane flight on the way, not to mention the carbon issues that will have gone with that. It is fascinating to see how that waste is stored safely on site. If we have doubts about the programme, we should investigate how it is done so that we can be reassured.
We are told by those in the industry that they are happy to invest on that basis of being responsible for their full-term costs and not having a subsidy. Clearly, the greatest issue of concern to the public is how the waste would be handled in the longer term. On Second Reading, I said that I would table an amendment whereby that the industry could not start to operate a new plant unless a site had been identified. We wanted at that point to drive forward the Government’s work in identifying a suitable long-term repository. We have not tabled that amendment because on further reflection we felt that it was not the right way forward. I was persuaded that it would be possible for a site to be found which, on further geological investigation, proved to be inappropriate, so that people would have gone ahead with their investment plans only to have the carpet pulled from underneath them as they got close to it. That would be unacceptable. I was also persuaded that it would give an incredible power to local authorities. If a site was identified and it seemed to be going ahead, an authority could say, on the day before the announcement was due to be made, “Hang on guys, we need another £50 million on this if we are going to do it.” That would give them an unacceptable amount of influence.
I was also concerned that we should not give a signal to the industry that we were seeking to obstruct its investment. We understand that boards around the world are looking with great care at the United Kingdom market, but they are also looking at other markets where they could invest. If we want them to feel that the UK is a suitable place, they have to feel that a potential alternative Government would not put additional hurdles in their way or obstruct the investments that they are seeking to make. It behoves us above all to take a responsible approach to this. We aspire to be a Government. There will be different views on both sides of the Committee about this, but we have to be realistic in our approach.
We are encouraged by the approach taken in the Government’s White Paper on nuclear power published in January. The conclusion on page 99 bears repeating:
“The Government considers that it would be technically possible and desirable to dispose of both new and legacy waste in the same geological disposal facilities and that this should be explored through the Managing Radioactive Waste Safely programme. The Government considers that waste can and should be stored in safe and secure interim storage facilities until a geological facility becomes available.
Our policy is that before development consents for new nuclear power stations are granted, the Government will need to be satisfied that effective arrangements exist or will exist to manage and dispose of the waste they will produce.”
That strikes the right balance in this equation, and we are looking to move things forward with the Government on that basis.
I have a couple of specific questions. Clause 41(3)(a) refers to “written notice”. What does that mean? Does it just mean an e-mail to the Secretary of State saying that this is what is being considered? Is there a standard form that will be expected to be filled out? Can the Minister give us some more information about that? Subsection (7) concerns decommissioning standards and processes. Who will set those? There seems to be a chicken and egg situation. Should not the Government first set the standards for decommissioning so that industry knows what it is estimating the costs for, instead of expecting the industry to come forward with its own estimates which may then prove to be unacceptable to the Government? The Government should take the lead here. The Minister may intend that that is what the Government would do, but otherwise industry will try to guess what is in their mind. That would be an unacceptable way forward. This may be covered in clause 50 on the regulations and guidance, but it would be useful to have some clarity.
More generally, how can costs be estimated, given how construction prices will change? Decommissioning will be carried out in 60 or 70 years’ time, and if there is 10 years or so before the first plant is going to be operational, they will then have worked for 40 or 50 years. We are looking a tremendously long time ahead. What mechanism does the Minister propose to build in to ensure that the funds will be available to reflect the actual costs at the time when decommissioning takes place? What would happen if there was a fundamental shift away from nuclear in that time scale ? For example, what if there was a massive advance in carbon capture and storage technology, renewables or fusion, which my hon. Friend the Member for Northampton, South often talks about, and that made nuclear no longer economically viable? How is decommissioning going to be carried out, if the plant is not going to be operated for its full cycle, and how would we ensure that the fund had enough in it to look after the waste that had been generated during that time?
I hope that the Minister will see from the comments that have been made that we are seeking to work with him in as constructive a way as possible. I know that some people have deep concerns about nuclear power and how it goes forward. Our obligation is to try to ensure that if people decide to invest in it, they do so in a way that fully takes account of the costs involved in the programme but, above all, provides safety for the nuclear waste and decommissioning regime.
Mr. Reed: There is a welcome outbreak of cross-party consensus on the issues that we are facing and discussing, particularly those which the shadow Minister raised about regulation and the burden on the NII. In recent months, considerable movement has been made to help the NII with its staffing structures and systems to meet the new nuclear challenge. He also talked about the four reactors being whittled down to three. I would advocate going for this now and looking at only two.
The hon. Member for Wealden also talked about the need to have only one reactor type licence in the UK to make the new nuclear project work. I would like to dissuade him on that. We need more than one reactor type. Of those that I believe are likely to be licensed and operated in the UK, the Westinghouse AP1000 and the Areva EPR are the most likely types that we should be considering. In fact, if we are looking at costs, expediency and bringing generation to the marketplace quickly, it may be that we should look only at EPRs, given that they are much bigger than AP1000s and we would need fewer of them. These are obviously costs for the NIII and the Department.
On skills, we now have the National Nuclear Laboratory, coincidentally based in my constituency. I should declare an interest as a former employee of Nirex and because the NDA’s headquarters are in my constituency. We have heard a lot of talk from Opposition Members of both parties about Nirex and the costs associated with it. Nirex no longer exists or has any legal responsibilities at all—the NDA subsumed those at the end of 2006, and I was active in ensuring that that took place. We are are developing a skills base in the UK, with the national skills academy for nuclear, based just outside my constituency in that of the hon. Member for Workington (Tony Cunningham)—a £35 million project supported by the NDA, the North West Development Agency and the industry. In addition, there are the courses that are going to be undertaken by the university of Central Lancashire, the nuclear decommissioning courses and nuclear skills and training courses that are going to be provided by the fledgling university of Cumbria, the National Nuclear Laboratory, and the establishment of the university of Manchester’s Dalton nuclear institute in Cumbria and the Wesklake science park in my constituency. Those developments mean that the industry’s skills base is set fair not only for the foreseeable future but for its long-term needs and interests.
Steve Webb: I want to add a few observations on new clause 23. In the well-informed and thoughtful contributions that we have heard from around the Committee, I am yet to hear an argument against it. The principle that the new clause is getting at concerns incremental costs. When I intervened on the hon. Member for Wealden, he said that the incremental costs of the NII, for example in relation to the next generation, might legitimately be regarded as an incremental cost and therefore that the industry should bear it. I did not hear during his interesting remarks whether he supported the new clause. Presumably, to the extent that there are incremental costs of the NDA, over and above the legacy costs, why should not the industry bear them? It may turn out that these costs are not that great. The costs of setting up new generation nuclear power in the period that we are talking about may not involve very large sums of money, which makes it all the harder to see why the principle is being resisted.
It has been suggested that we are being inconsistent with carbon capture and storage and long-term nuclear waste. That is an interesting question that I want to respond to. The fundamental difference between the two is that we cannot, in any foreseeable future, avoid using more carbon and generating more CO2 that we want to capture and may have to store. That is not a choice variable for us now. We will be burning carbon for the foreseeable future, so we are going to have to do something with it. We want the carbon captured and stored, and we want to make that happen. On the other hand, we have a choice about whether to generate new nuclear waste. That is the fundamental difference. We know we have a problem with carbon; as the hon. Member for South Thanet said, we do not want it but we are lumbered with it. We therefore want to encourage industry to generate carbon capture technology.
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The Government’s position is not to incentivise new nuclear but to be hands off. As the Secretary of State said in his statement to the House on nuclear, they are not mandating new nuclear but simply saying that they will let it happen, but who should bear any incremental cost? New clause 23 says simply that the industry should bear it. We have given the NDA as an example, and the NII would be another one.
The new clause is relatively simple, and to return to what one might call planet Conservative, the hon. Member for Northampton, South made a point which would, I think, go further than his Front-Bench colleagues. I have observed that he is a free spirit. He may well want to incentivise new nuclear energy. He wants to send a very positive signal, and might be willing to say, “Look, we will pay a few of these on-costs if that sends the right signals.” That is not the position of his Front Bench colleagues at the moment. I have heard the shadow Secretary of State say “No subsidies.”
NDA, NII and other incremental costs are subsidies in a way that some of the other things that the hon. Gentleman mentioned probably are not. I accept that public sector purchase of nuclear energy—if we have got it—at the market price is not a subsidy. However, such additional costs are incremental, and the industry should therefore meet them. It seems an entirely reasonable and rational proposition that, if new nuclear comes forward, whatever one’s views about it may be, the industry should meet the incremental costs. That is all we are trying to ensure.
Malcolm Wicks: Good morning, Mr. Amess. This has been a very interesting and full debate, and I am afraid that I may need to take a few minutes to answer the rich array of questions. I will try first to set out our arguments about the new clause and then go on to answer some of the more specific and sometimes quite technical, but important, questions that have been asked.
As I mentioned during the last sitting, we are creating a framework to ensure that the operator of a new nuclear power station is responsible for and makes prudent provision to meet the full costs of decommissioning and its full share of waste management costs. That objective was stated in our nuclear White Paper, published in January. The effect of the framework is to ensure that, once a new nuclear power station has been decommissioned, the operators of that station, having made provision for the back-end costs throughout its generating life, return the site to a state agreed with the regulators and the planning authority—it is likely to be similar to greenfield.
The new clause would allow the Secretary of State to make regulations to include the value of grant payments made by the Secretary of State to the NDA for the purposes of new build waste and decommissioning costs. That would allow Parliament to scrutinise payments related to new build made by the Secretary of State to the NDA for the disposal of intermediate-level waste and spent fuel. Although the proposed effect of the new clause is not completely clear, I believe that the intention of the hon. Member for Northavon in tabling it is to allow the Government to set out now, in legislation, the costs that will be charged to operators for waste disposal, and how those costs will be calculated and allocated to the Government and the NDA.
Before I go on to speak in more detail about the new clause, let me clarify that the Government anticipate no statutory role for the NDA in relation to the decommissioning and on-site waste management of new nuclear power stations. Those activities will be carried out by the operator or by contractors working for the operator and will not be covered by the fixed price the Government intend to set for the disposal of intermediate-level waste and spent fuel.
The Government are currently considering the best approach to scheduling when and how funds to cover the fixed unit price for waste disposal should be paid by new nuclear operators. As we made clear in the White Paper and in the consultation on the guidance published on 22 February, the Government intend transparently to set a fixed price for the disposal of intermediate-level waste and spent fuel. The Government also intend, again transparently, to agree a schedule of payments with new nuclear power station operators in advance of the construction of a new nuclear power station.
In so far as it concerns regulating the way in which the fixed price is set, the new clause is therefore unnecessary. The method that the Government will use to calculate waste and decommissioning costs was published as part of the draft guidance consultation. We also set out a road map that contained an indicative timetable for publishing projected waste disposal and decommissioning costs based on the technical guidance and the methodology set out in the consultation.
A fixed price for waste disposal would have to be agreed for each new station to ensure that the sum is based on the most up-to-date information available. That sum would have to be set out in the operator’s funded decommissioning programme since it will impact on the target amount for the independent fund. Those who are responsible for the fund will measure the performance of the fund against that sum regularly throughout its life. Taken together, we believe that those steps should ensure adequate transparency about the way in which the sum is calculated and charged. The Government have not yet determined how moneys payable by the operator in relation to the waste disposal service will be paid into public funds. Some of those matters are touched on in the consultation. The new clause is therefore not only unnecessary, but premature.
It is clear that the Committee has a keen interest in what role is envisaged for the NDA in relation to new nuclear build. The NDA has clear primary objectives, which are to clean up legacy stations and waste under the Energy Act 2004, to develop low-level waste solutions and to implement the geological disposal for higher activity wastes. The work that the NDA is doing to develop a parametric cost model for a geological disposal facility will continue to feed into work to establish a fixed unit price for the disposal of intermediate-level waste and spent fuel. In addition, in the past, the NDA has provided expert advice on British Energy’s decommissioning plans. There could be a role for the NDA, with its expertise in decommissioning and radioactive waste management, in providing similar advice for new build operators, the managers of the independent funds or the new advisory body that the Government will set up— namely, the nuclear liabilities financing assurance board.
The Government and the NDA will need to take a view on whether it is appropriate for the NDA to play such a role in providing such advice for new build in the light of the NDA’s primary objectives. I reiterate that we have no intention of subsidising new nuclear. With the Bill, we are taking steps to ensure that the risk of costs falling to Government is remote at all times. We have already said that operators will be required to pay their full costs of decommissioning and their full share of waste management costs.
By full decommissioning costs—we had a useful exchange on this during our last sitting—we mean dismantling the plant at the end of its operational life and returning the site to a condition agreed with the regulators, which is likely to be a state similar to greenfield, depending on the state of the site before the construction of the station. By full share of waste costs, we mean the costs that are directly attributable to disposing of new build waste in a geological disposal facility; a contribution towards the fixed costs of building a geological disposal facility, which is a very important provision; a significant risk premium over and above those costs to take account of uncertainties about the cost of constructing a geological disposal facility and the time when it will be able to accept new build waste; and the costs of managing that waste pending disposal or pending transfer for disposal. I put it to the Committee that that very full list shows our ambition and, indeed, determination that a full share of costs will be met.
Martin Horwood: The Minister is saying many encouraging things, but he is not saying explicitly—perhaps he could do so now—whether the sum total of what he has said amounts to the whole work currently provided for the legacy nuclear power stations by the NDA being wholly funded by the private sector with respect to new nuclear. Is that what he is saying in crystal clear terms?
We are committed to ensuring that we have a robust framework in place that will enable the private sector to make proposals for building new stations, while minimising the risk to the taxpayer. Such a framework will provide certainty on the operator’s waste disposal liabilities. We will reflect carefully in the coming weeks on the debates in Committee and take into account representations and responses from the guidance consultation to see whether we need sensibly to make any further provision to secure our goals.
I shall deal with some of the questions that were asked. The hon. Member for Cheltenham asked who covers the cost of the NII. The costs of the NII will be recovered from operators, as is currently the case with its costs for regulating existing nuclear installations, and operators will be expected to make provision in their independent funds to meet those costs. I hope that I have satisfied the hon. Gentleman on that point.
The hon. Member for Wealden asked about the related but slightly different matter of staffing requirements, which has been of concern to us. The Health and Safety Executive estimates that, in the current circumstances, around 230 full-time equivalent nuclear safety inspectors will be required at the peak of its programme of nuclear regulatory work. Following the pay agreement in November, the HSE launched a recruitment campaign for new inspectors in December, and I understand that it has had a good response. Interviews will be held by the end of March and a new campaign will be launched shortly in the light of the Government’s January announcement supporting new build.
The hon. Member for Cheltenham asked about the costs of Nirex, which is subsumed within the NDA. We believe that it is right and proper that the Government are finally taking responsibility for cleaning up public sector legacy waste. Nirex no longer exists, but in any event, its costs were met by the industry. He also asked who funds the NDA and whether new operators will pay towards those costs. I hope that I have partly answered that, but I emphasise that the NDA is funded by public funds and the income that it generates. Operators of new nuclear power stations will cover their full decommissioning costs and their full share of waste management costs. The NDA’s primary function relates to the legacy, as we have said. In so far as it will be involved in new build, the costs will be met by operators—for example, through the fixed unit price that they will pay for the disposal of intermediate-level waste and spent fuel.
The hon. Member for Cheltenham asked about insurance for major incidents. I remind the Committee that the Paris and Brussels conventions set a financial limit for operator liability in the event of a nuclear incident, above which public finds may be used to meet third-party liability. They are set out in European Union law, and we have no option but to follow them. In exchange for that, the operator accepts strict no-fault liability for personal injury and third-party property damage caused by nuclear matters for which the operator is responsible up to the cap. That provides legal certainty not only for operators, but for potential claimants who, in the event of a nuclear incident, would know against whom to make their claim. It will also ensure that claims are not unduly complicated or lengthened by having to prove fault or having multiple defendants and cross-claims. Operators are required to have insurance or other financial security to cover the costs of any claim up to the cap.
The Government do not provide any insurance to cover such damages. It is possible that they may do so in the future, because the Paris convention has been amended to cover types of damage for which commercial insurance is not currently available. If the Government do provide insurance, we would charge the operators a premium for it.
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Again, the hon. Member for Cheltenham asked about the costs of the new advisory board that we are setting up on nuclear financial liabilities. Let me reassure him that we intend to recover costs, such as those for independent advice provided to the board by nuclear power station operators. The operating costs of the board should be recoverable under the Bill. In other words, we want to ensure that the operators will pay those costs. That will include any independent advice that they seek. As a non-statutory body, there will be no ongoing financial commitment created by the formation of the board.
The hon. Gentleman asked a question, which was taken up by my hon. Friend the Member for Copeland, about military nuclear costs vis- -vis civil nuclear power costs. I understand that an inventory of the radioactive waste that the UK has to dispose of is produced and updated by the NDA. That inventory identifies the amounts and types of waste that have been produced by different nuclear installations, including military waste and waste from civil nuclear plants. Based on that inventory, it should be possible to estimate the proportion of the costs for dealing with legacy waste that is attributable to military activity and that which is attributable to civil nuclear power stations.
Steve Webb: And the answer is?
Malcolm Wicks: I am saying that it should be possible to do that. As I understand it, we do not currently have data on that matter. Does the hon. Gentleman not accept that we have a legacy commitment? It is not at all clear to me whether the Liberal Democrat party understands that there is a problem to be dealt with and whether it supports the Government in dealing with it. Would it rather—I hope, not literally but perhaps metaphorically—brush it under a carpet somewhere? I am not clear whether the Liberals understand the legacy that we have and the Government’s determination to tackle it.
Malcolm Wicks: I am grateful to my experienced colleague for that intervention.
The hon. Member for Northampton, South asked about the fees that will be charged by the Secretary of State. As is the case with the NII, the Secretary of State will look to recover costs incurred through fees charged for assessing funded decommissioning programmes. We will lay regulations in due course to set out those fees. I cannot give a figure, because we will not know it until we have established the nuclear liabilities financing assurance board.
The hon. Member for Northavon asked who will pay for generic design assessment. The regulators will recover the costs of the GDA process from the requesting parties—the vendors of nuclear reactor designs who have applied to have their designs assessed.
Dr. Alan Whitehead (Southampton, Test) (Lab): I have a genuine question that I do not know the answer to. Will any requester of generic assessment, whose submission is not assessed during the process, have new rights to recover any costs from their submission or to legal redress on the grounds that their submission has not been assessed?
Malcolm Wicks: We have something in common: I agree that that is an interesting question but nor do I have a precise answer. If an answer arrives, I will let my hon. Friend know.
I was about to say, however, that we believe it right that the regulator’s resources should be focused on those designs that have the greatest chance of being built in the UK. It is right that the generic design assessment process should be carried out in a reasonable time frame. The Government are keen to ensure that a competitive number of designs is assessed. Given those objectives and the resources involved, reducing the number of designs assessed from four to three is sensible, and we expect to hold a prioritisation process shortly. The hon. Gentleman raised an important question. If I can help him with an answer later, I will.
Dr. Ladyman: To what extent are we expecting the inspectorate to reinvent the wheel? Those designs have been approved in other countries, which are every bit as clever and as experienced as us at nuclear matters. Much of the information will be in the public domain already and will have been considered by the inspectorates of other countries. To what extent are we reinventing the wheel and to what extent are we adding value to the process?
The hon. Member for Wealden raised the important matter of skills, which is of concern to us and across industry. We need the skills base to develop for Britain’s industrial and business base in the 21st century. As the hon. Gentleman knows, the National Skills Academy for Nuclear has now been established. It was developed with industry and the sector skills council, Cogent. I was fortunate enough to be asked to speak at the academy’s launch, in the Science museum, only a few weeks ago. The academy will help recruit and develop skills. In its first three years of operation, it aims to start in training 1,000 apprentices and 150 foundation degree students and to retrain 4,000 existing workers. The academy is part of the answer—it is good news.
My hon. Friend the Member for Copeland has already talked about the work of the national nuclear laboratory. The hon. Member for Wealden acknowledged that many universities, encouraged by the Government’s decision, are now tooling up with courses of different kinds. That is important. Outside the immediate nuclear industry, my Department is assisting Energy and Utility Skills, the sector skills council for electricity, gas, water and waste management, together with relevant employers, to develop a skills strategy for the electricity sector.
The hon. Member for Wealden asked how we could get the costs right. Our cost estimates are being built using the best available information and data—more importantly, tested by external experts. We are working closely with the NDA in that exercise and will update the cost estimates as new information becomes available. The NDA is producing, as I said, a parametric cost model: the parameters can be changed to examine the cost implications of different scenarios. For example, the model can vary parameters such as rock type, depth of repository and waste inventories to reflect the impact on costs. The fixed unit price offered to operators will be set on a case-by-case basis and not agreed until such time as an operator comes forward with investment proposals.
The risk premium added to the fixed unit price will reflect what certainty we have in the cost estimates at the time an operator requests a firm fixed unit price. Over time, we will develop a greater understanding of the costs of disposing of intermediate-level waste and spent fuel, which might enable the Government to reduce the risk premium required. However, in the early stages, we expect that risk premium to be significant, to reflect our level of certainty in the cost estimates. For decommissioning and waste management costs, there will be a fixed price. Those costs will be calculated on the basis of risk, uncertainty and inflation-adjusted estimates and will be regularly reviewed. Contributions to the fund will be modified accordingly.
Charles Hendry: I am grateful to the Minister; his response is helpful. In the event that the risk premium were not used—because the Government’s initial costing was incorrect and the premium was therefore not required—would that money be returned to the companies involved or would it be kept by the Government?
Malcolm Wicks: I am pretty sure that it would not be returned. It is a premium that will be paid and is part of the commercial costs. The hon. Gentleman asked me who would set the decommissioning standards. In the consultation that we published on 22 February, we set out guidance to operators on the technical steps that the Secretary of State will expect them to include and cost in their funded decommissioning programmes. Those steps are called the base case. It is based on existing policy and regulatory requirements, with some additional assumptions to ensure that it represents a comprehensive means of estimating the costs. Operators will be able to propose alternatives to the base case in their funded decommissioning programme, and the Secretary of State will consider those on a case-by-case basis. It is right to encourage innovation in safe and efficient decommissioning techniques. Operators will always be required to satisfy the requirements of the regulators.
Mr. Hugo Swire (East Devon) (Con): When the Minister and his Department were updating the base case and the criteria surrounding that, did he or his officials look at other cases for decommissioning in Europe and other parts of the world? We have heard from my hon. Friend the shadow Minister about Sweden, for instance. Clearly there are lessons to be learned from other countries. When the Minister updated the base case, did he look at those other countries?
Malcolm Wicks: Yes. It might be helpful if later, or in writing, I gave the hon. Gentleman more information. We are aware of international experience. Colleagues and I visited the site in Finland where they are building a geological repository. I will give the hon. Gentleman more detail if I can.
The hon. Member for Wealden asked what would happen if changes in technology meant that nuclear were no longer financially viable. We would expect an operator’s funded decommissioning programme to have financial security in place, so that in the event of early closure, the operator could meet full decommissioning costs and its full share of waste management costs. The cost profile of nuclear—high fixed costs but low running costs—will make it unlikely that, once operational, developers will chose to stop generating electricity.
I might have to return to one or two other points in due course. The hon. Gentleman asked me what “written notice” in clause 41(3)(a) meant. We expect discussions to be initiated by the operator long before a programme is submitted. We will give an indication of that process on pages 38 and 39 of the draft guidance. Formal submission would take place before construction. Written notice would form part of the submission of the funded decommissioning programme.
11.45 am
I was asked by my hon. Friend the Member for South Thanet about the extent of the NII’s work on the standard design. There are obviously advantages to having standard designs that have been deployed overseas, but it is also important that reactor designs satisfy the regulatory requirements here in the UK. I want to assure my hon. Friend at this stage that the inspectorate is working closely with overseas regulators to take advantage of their knowledge and expertise.
Martin Horwood: I thank the Minister and all hon. Members for their comments. The hon. Member for Glasgow, North-West suggested that our new clause did not go far enough in seeking to establish the liabilities of the nuclear industry. I would be happy, therefore, to contemplate supporting any amendment he wants to table to make it more comprehensive. That would be perfectly welcome.
The contribution of the hon. Member for Northampton, South was very refreshing. It is good to see someone who is a nuclear Tory and proud of it. I had begun to think that the right hon. Member for Witney (Mr. Cameron) had turned the entire Conservative party into readers of The Guardian. Now I discover only the hon. Member for Wealden is still in that category.
The hon. Member for Wealden made an important contribution, producing a nostalgically yellowing newspaper from the long lost days when the Conservatives used to win general elections. He was very robust in some of his statements. He said absolutely that the Conservatives wanted no subsidy, and he raised the legitimate question of what will happen if technology changes and the nuclear industry becomes a dying industry, with many companies facing insolvency. We discussed that important issue at some of the evidence sessions.
The hon. Gentleman seems to be trying to stick to his robust line of no subsidy, yet it was also a virtuoso performance in demonstrating his party’s flip-flopping on the nuclear issue—because, at the same time, he seemed very concerned not to put too many hurdles or barriers in the path of people wanting to invest in the nuclear industry, even to the extent of asking for them to have the right to have their insurance premiums back. He must have entertaining discussions with his house insurers if he ever tries that argument with them.
Clearly, the reality is that, if those of us who really are arguing for a policy of no subsidy actually succeed—and I think we have made great progress on this today—and if all the possible liabilities and costs of decommissioning that at the moment run into billions of pounds per year are taken on board, I doubt that any sane investor would touch this industry with a barge pole. If that is the consequence of this policy of no subsidy, Liberal Democrat Members are certainly willing to accept that. We would have to find alternative ways of filling the energy gap described by hon. Members.
The hon. Member for Northampton, South said that the lights might go out if we did not make progress on this issue, but that is not true. The truth is that neither nuclear nor renewables are likely to be fully on stream within the decade or so required to fill the so-called energy gap. That gap will almost inevitably be filled by coal or gas-fired power stations, and that is why carbon capture and storage is so vital and why we place so much emphasis on it in other parts of the Bill. That transitional technology will eventually lead to a different kind of energy future.
The hon. Member for Glasgow, North-West talked about the kind of energy policy we might have in 100 years’ time and whether we could predict it. He suggested that we could not, and that is the whole problem with nuclear—it raises risks and policy questions for hundreds of years, probably millennia, into the future.
John Robertson: The hon. Gentleman is being selective yet again. That does not apply just to one form of energy; it applies to them all.
Martin Horwood: I am grateful to the hon. Gentleman for his intervention, but I will resist the temptation to enter into a discussion on the unique nature of radioactivity and why I believe there is a particular problem with nuclear energy.
Mr. Reed: I think today has been listed, “Why not be generous at Committee day?”, and I thank the hon. Gentleman profoundly for giving way. In Norway, whose economy is based upon oil and gas exploration, and throughout the European Union, it is widely recognised by scientists that the extrapolation of those materials produces radioactive discharges that would not ordinarily be brought into the environment. Backed by their Government and facilitated by their oil and gas companies, the Norwegians retain the radioactivity produced as a result of oil and gas exploration and store it in a repository in Himdalen. Does the hon. Gentleman think that that is a potential way forward for the oil and gas industry in Britain?
Martin Horwood: I am grateful for the hon. Gentleman’s intervention and particularly for the crucial words, “Backed by the Norwegian Government.” That is the common theme to most of the nuclear storage and decommissioning proposals and policies that we are discussing. I would happily entertain any technical suggestions from Norway that he would care to communicate to me.
The Minister answered many of the issues that I addressed. He was comprehensive in his comments, looking at the legacy of Nirex and the NDA, the equivalent decommissioning costs for new nuclear, and the proposed NLFAB. He was clear that, under his policy, in all those cases along with the nuclear installations inspectorate, the operators were intended to pay. However, in his genial and reassuring manner, he was still very careful with his use of language, which I noted down. The record will show that he said that there was no intention of subsidising new nuclear and that the Government would do their utmost to ensure that operators take up the full cost. That falls short of a complete reassurance, and the debate on the issue will continue. There is a great deal to be said about the need to provide the taxpayer with an absolute assurance that the billions of pounds of wasted public money, which was part of the legacy of the first generation of nuclear power stations, will not be repeated with the second.
Malcolm Wicks: First, I take the opportunity to return to the question raised by the hon. Member for East Devon. He asked whether we had looked at the experiences of some other countries when developing the base case, and I briefly assured him that we had. However, let me say in a little more detail that the base case is built on existing policy and standards. Much of it has been built following the consideration of a number of factors, including international experience. As we have said, the base case assumes that higher activity waste will be disposed of in a geological disposal facility. All countries with a nuclear programme that have decided what to do about the waste in the long term, have adopted a strategy of interim storage followed by geological disposal. I hope that that reassures the hon. Gentleman that we have looked carefully at the evidence.
I am advised that earlier I accidentally said—and it was an accident if I said it—that decommissioning would be subject to a fixed price. I meant to say disposal, so for the sake of getting the record straight, let me say that decommissioning and waste management will not be subject to a fixed price. Operators will be required regularly to reassess cost estimates for decommissioning and waste management, and to modify contributions to the fund accordingly. Only the cost of disposal of intermediate waste and spent fuel will be covered by a fixed unit price. That is my understanding of the situation, but I apologise to the Committee if I slipped up over some words. I hope that sets the record straight.
The hon. Member for Cheltenham was generous in his remarks. The Government and I are at pains to make sure that the principle that there should be no subsidy by the taxpayer be put into practice in the long term. We have looked very hard at that. By establishing the advisory board, we have put in place the potential for a good organisation to help ensure that we are on track. I think I have reassured the hon. Gentleman on a number of issues, such as the cost of the inspectorate, and would like to think that, despite his scepticism about new nuclear, he understands our good intentions. We have tried to ensure that the principle will be put into practice. Nevertheless, I expect he is right to say that the debate will continue.
Question put and agreed to.
Clause 41, as amended, ordered to stand part of the Bill.
 
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