House of COMMONS









Monday 3 November 2008


Evidence heard in Public Questions 223 - 269




This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.



The transcript is an approved formal record of these proceedings. It will be printed in due course.


Oral Evidence

Taken before the Innovation, Universities, Science and Skills Committee

on Monday 3 November 2008

Members present

Mr Phil Willis, in the Chair

Mr Tim Boswell

Mr Ian Cawsey

Dr Ian Gibson

Dr Brian Iddon

Mr Gordon Marsden


Witnesses: Mr Mike O'Brien, MP, Minister of State, Mr Michael Sugden, Assistant Director, Nuclear Supply Chain and Skills, and Dr Nicola Baggley, Director Nuclear Strategy, Department of Energy and Climate Change, gave evidence.

Q223 Chairman: Could I welcome our witnesses to this, the final session, in one of our case studies which have been looking at nuclear engineering as part of a broader inquiry looking at the future of engineering in the UK. We welcome in particular Mr Mike O'Brien, the Minister of State, and we welcome you to your new post.

Mr O'Brien: Thank you.

Q224 Chairman: It is good to see you, supported by Mr Michael Sugden, the project manager for waste and decommissioning. Welcome to you and Dr Nicola Baggley, the director of nuclear strategy at the Department for Energy and Climate Change. Could we also extend a very warm welcome to the Royal Society Fellows who are part of the pairing scheme this week. We are delighted to have you within our Committee this afternoon and we fully expect to see you here on Wednesday morning as well, otherwise we will regard it as a dereliction of your duty. Minister, nuclear engineering is clearly now very firmly on the Government's agenda with a challenge of building up to eight nuclear power stations by 2023, some as early as 2017/2018. What we would like to know from you first of all is where does nuclear engineering fit into the Government's thinking? Is it just your department? How is it approached across Government?

Mr O'Brien: The whole way in which we develop nuclear power is going to be crucial to the country. It deals with some of the issues around climate change, the security of energy supply and the issue of affordability. What we are conscious of is that in terms of building up the capacity to develop nuclear power what we need to have are the skills and the workforce to do it.

Q225 Chairman: But we do not have them.

Mr O'Brien: We have 50,000 of them, so we do have some. At the moment one of the difficulties of course is that the modal age of some of them is now getting on. We also have a significant agenda in terms of decommissioning, clean up, new build, defence and it is a broad agenda. Not only that; we are operating in a global employment economy where we have other countries who will be competing for much of this skilled labour here. The UAE and Jordan recently made some announcements.

Q226 Chairman: We will come on to the issue of where we are going to get the skills from but what I am interested in as a starting point is who discusses this whole issue of nuclear engineering across Government, or is it just purely your department?

Mr O'Brien: It would be ourselves and BERR, Lord Mandelson's department, who would discuss it with us and it is all part of the skills agenda that they are running. We would be involved in that and, of course, the DWP in the sense of work; but also of course the universities and schools are absolutely crucial in this. In terms of where it sits with Government, we would be the lead department to ensure that we get delivery of the nuclear agenda. In terms of who would also be involved, a whole series of other Government departments, particularly education and universities would have a crucial part to play and BERR in terms of developing the broader skills agenda.

Q227 Chairman: Is there a structure within Government that you lead where all the different departments have representatives, where you have a common structure, a common goal, or is nothing formalised?

Mr O'Brien: There is a clear Government strategy in relation to both skills and nuclear. Developing that is part of the Government's objective. Ministers constantly meet to talk through some of these issues both on an ad hoc basis and more generally when we are discussing issues around the skills agenda. Within Government there is the capacity for ministers to regularly discuss this.

Q228 Chairman: We would agree with you there is clearly the capacity. The question is does it happen?

Mr O'Brien: It does happen. Indeed, it has happened very recently when ministers have had discussions on this and particularly on the nuclear agenda. Because we have quite a significant policy development that has taken place now over the last few years, certainly with BERR, it has been one of the key priorities that they have had in the last couple of years. There has been a widespread discussion, as you know, across Government on the whole issue. In terms of where would engineering fit and where would the issues around the skills in engineering fit into the wider setup of Government, Cogent and the skills council there has been tasked with drawing up a skills assessment, a sort of stock and flow assessment, of what there is now, not only in terms of the capacity for new build, the current need, decommissioning and also MoD needs, but also where we are now and how we go forward. That will then become the responsibility of ourselves and other Government departments to implement.

Q229 Chairman: I appreciate that you are very new in this post and perhaps your colleagues will help you out. It is a huge agenda to produce at least one nuclear power station on the ground by 2017. To produce eight of them by 2023 requires more than these loose connections between different departments. It is the engineers who are going to deliver this. It is not going to be politicians. Where is the structure? If it does not exist, then just say it does not exist.

Mr O'Brien: There are a number of structures. One is in terms of policy development. Another is in terms of delivery, so the Office for Nuclear Development has been set up in terms of delivering the whole nuclear agenda. That operates across Government departments. I am not sure I quite understand whether you are asking me if there is a Government policy capability. There clearly is.

Q230 Chairman: We know you have a policy; it is how you deliver it.

Mr O'Brien: In terms of delivery, it sits within the Office for Nuclear Development as a delivery mechanism which is responsible to DECC and answers to me through the department and then to other ministers.

Q231 Mr Boswell: That is very helpful. You will forgive us because we are not familiar with the details of this either. Essentially, from the centre - that can be from Number 10 down, including all ministers - if there is concern about the timing of this or any worry about slippage, it will be the OND who reports on it and does any progress chasing of any of the delinquent departments or other policy areas that may be required.

Mr O'Brien: The straight answer to that is yes.

Q232 Mr Boswell: Somebody is going to crash this through if that is what you need to do.

Mr O'Brien: Yes. The OND has a cross-departmental responsibility for ensuring delivery of the agenda, but in a sense it is not the policy forum. It is the delivery forum.

Q233 Chairman: Nicola, you were nodding your head so vehemently there that I think we will give you the option to say something briefly.

Dr Baggley: The OND was launched formally in the middle of September. It very much sits within DECC. We report up to Mike and it is very much envisaged as the one stop shop for nuclear. One of our key aims is to facilitate new build. We very much see it as a step change from the old nuclear unit which sat within BERR's energy directorate on a number of fronts. One of those which I think is most pertinent to this Committee is a renewed focus on the supply chain and skills agenda. Back when the White Paper first looked at the barriers to bringing on new build in the UK, the skills and supply chains were identified as an issue but were very much felt to be something the market would address. In the last few months I think we have had a step change. Ministers have asked us to focus on what more we should do to make sure it is not an issue. We were only formally launched in September. It is very much a new focus for us alongside the other facilitative actions that were set out in the White Paper. At the same time that the Office was launched the Nuclear Development Forum was also launched and that is a Secretary of State chaired forum of people from industry, but also cross-departmental, so representatives attend from the MoD. There is a number of departments which are interested in the nuclear agenda. The Forum is very much for us to hear directly from senior members of industry what the challenges are to delivering our programme but also for them to hold us to account to ministers for delivery. It is not a formal Forum; it is non-advisory, but it is just useful. We have only had one meeting so far but the skills agenda was very much raised as an issue. We plan to discuss that at the next meeting which we are hoping to schedule in the New Year.

Q234 Mr Boswell: Can you say a bit more about the project management skills of this? It had a background in my own constituency and I am conscious that we took radar from an invention in 1935 to a completely fully fledged home defence system in four years, which required a really prodigious effort to get it done. In this case you are not the contractor, you are not building in-house and you need to see contractors. Can you just say a bit more about what we might almost call business skills that will identify bottlenecks and so forth that we need to address?

Dr Baggley: Certainly. Do you mean within the wider new build programme or the skills?

Q235 Mr Boswell: I meant within the wider programme.

Dr Baggley: The OND is partially modelled on the shareholder executive to the extent that we have brought in secondees from the private sector to complement the existing Civil Service skills. My unit, the strategy unit, is a new unit that did not exist within the old nuclear unit. One of my main areas, aside from sitting over the supply chain and skills arena, is what we call programme integration. Although we have existing project plans and a timetable, we feel now is the time to revisit that and make sure that we know where we are trying to get to, what we are trying to achieve, what we need to do to get there and revisit all our facilitative actions but also look more widely. Is there something else we should be focusing on - for example, the National Grid? We also need to know more clearly what decisions industry needs to take, by when and what we need to have delivered for, for example, the next stage of investment.

Q236 Mr Boswell: It is the critical path?

Dr Baggley: It is the critical path. In doing that, one of the secondees we have brought from the private sector is supporting us in that work. He has had 40[1] years' experience building, operating and decommissioning power stations in the US. We have also the support of our professional, in-house project centre which is an internal project management centre of expertise.

Q237 Dr Gibson: Why eight nuclear power stations? Where does that figure of eight come from? Is it hard and fast?

Mr O'Brien: No. What we are looking at is how we can get a number of nuclear power stations going. Whether we get to the target we are aiming for will depend on a number of factors. You have already seen the significant announcement of EDF and British Energy which suggests we will get some development fairly quickly. By "fairly quickly" we are talking about 2017/2018.

Q238 Dr Gibson: It is not in tablets of stone?

Mr O'Brien: It is an objective that the Government has.

Q239 Dr Gibson: Do you think the UK nuclear industry will be able to build these nuclear power stations given that it has its military presence and job and it has a bit of decommissioning to do on the side which is more than five or ten minutes? How are these wonderful people going to do all that?

Mr O'Brien: We have to make sure we have the skills capacity in order to deliver that. That is why we have set up Cogent. We have the National Skills Academy for Nuclear and that is helping to develop not only the capacity in universities with degrees - Masters degrees in particular - developing some funding for that and bringing in the private sector as well to ensure that is there. I know you have already heard from some academics about it. I have read the evidence. You will know too they took the view that there was the ability to get the levels of skills required but it will not be easy. There is a lot of effort going to be required. That is not just going to be done by Government. It has to be done by the private sector and by universities and schools as well.

Q240 Dr Gibson: The generic design assessment process complicates it further. Will you be on time with that as well?

Mr O'Brien: We believe we can be. There are some issues around skills capacity there. In order to carry out the assessment we need some highly skilled people. We have a number of the people from the Nuclear Inspectorate who have been seconded to that, eight, and we probably need about 20 in all. We have to develop that skills group.

Q241 Dr Gibson: Are you going to hire them in like when you were in immigration? Are we going to have to bring people in from France and Germany? Will you be allowed to?

Mr O'Brien: There are some areas where obviously it would be inadvisable, particularly in terms of defence, to bring in people from abroad, but there are other areas where, if we are looking at new build in particular, we have EDF involved which obviously is not a UK base. We would have to look at who was coming in and what they were able to provide that we needed. We would look carefully at who was involved in what area but the straight answer to the question is yes, there would be circumstances in which we would be prepared to bring in skills.

Q242 Dr Gibson: You will have to scout for them. You will have to find the Chelsea stars.

Mr O'Brien: We would rather build up our domestic capacity. In terms of the skills situation, we currently have 50,000 people who have some skills in the industry as a whole. Because we have the substantial expansion of nuclear, not just civil but also military, we need to ensure that we have the capacity to deal with both of those areas in the future. That does require quite a significant future development and that is why we are putting some Government funding in. We are also looking to the private sector, Cogent and the National Skills Academy for Nuclear to develop that.

Q243 Mr Cawsey: We know there is going to have to be home grown talent and we will need more to meet these targets that are being set. Do you have any feel for what the balance is going to be between what we have in the home grown UK sector at the moment and what we will need to bring in to achieve the Government's aspirations?

Mr O'Brien: There is no reason to believe that we need to bring in any significant levels from abroad. I hesitate very slightly on that because my concern is not so much that we could not produce the levels of skill in this country that we will need going on for the next couple of decades. I think we are quite capable of doing that but there will be other demands from other countries who will be paying quite substantial sums to get exactly those skills. I have already mentioned to the Chairman about the Middle East and other areas of the world and indeed the United States now who are developing their own nuclear programmes. We are likely to see some competition there for skills. My only hesitation there is we may develop the skills here but we will need to make sure that we have the interest and the funding, the salaries and the good conditions, that will keep them here.

Q244 Mr Cawsey: Do you think we have perhaps shot ourselves in the foot slightly in that regard? There has been some criticism of the way that BNFL has been broken up over the years. I think it was the Institute of Physics who said that BNFL provided a strategic view on UK skills and expertise and that the UK has now lost its strategic thought and leadership as well as the source of funding for industrial research. Are you concerned that we have the capability now of ensuring we develop the skills in this sector?

Mr O'Brien: We were aware of the need to ensure we kept some of those skills, which is why we are setting up the National Nuclear Laboratory and bringing together some of those old skills from BNFL, but also adding to them with new skills that we hope will help not just that particular group of people but the wider nuclear industry.

The Committee suspended from 4.33pm to 4.43pm for a division in the House

Q245 Mr Cawsey: We were talking about the need to ensure that we have the right skills to meet the Government's aspirations. There is an acceptance that obviously the UK is not the only country going through this process. There is a limited number of people in the international market place. Other countries will be trying to get some of the same people that we would like to get to come to the UK. What are you going to do to ensure we can successfully compete to get those people into the UK so that we can meet our targets?

Mr O'Brien: The first thing is the matter of keeping people who are highly skilled here. In the end, it is going to be to a significant extent up to the private sector to pay the sorts of salaries that will keep those highly skilled people in the country. We can train them. We can create the university courses and the skills training in colleges and so on that will bring these people out in a condition where we have the skills we need, but then we have to keep them in this country. We have to pay them. Therefore there is going to be a demand. There are going to be other countries competing for these skills and they are, to a significant extent, transferable. I think the private sector recognises the need to fund that. We have a particular issue within Government that in a sense illustrates your point, which is that there is a transfer to some extent from the MoD to the private sector at the moment because of salaries. The MoD are looking at that and looking to address it. We are aware that in probably five years to a decade there is going to be quite a push to get this skills cohort. We need to make sure that we are able to fund keeping those people who we train in this country.

Chairman: With respect, you have not said a single thing about what you are actually going to do, other than that you are going to do it.

Mr Cawsey: The market will do it.

Q246 Chairman: Is that it?

Mr O'Brien: The question from Ian was are we going to be able to keep those people essentially in this country. The answer to that is yes, we are, providing we pay them the amount that keeps them in this country.

Q247 Chairman: That is it? We are going to have to pay them more?

Mr O'Brien: Yes. We are going to have to pay those who are of sufficient quality to stay in this country. There is no other way of keeping them. They have transferable skills and there is a free market out there. If you are asking me how do we make sure we have them in this country in the first place, I can set out very clearly for you how we are going to do that, but once they are qualified to some extent, unless they have some sort of honorarium from a particular company that requires them to stay in the UK, they will be able to transfer elsewhere.

Chairman: This is a key issue.

Q248 Mr Marsden: To bring us back to where we are now, we know from the evidence that we have received from Cogent and the Nuclear Skills Academy that we have substantial deficits and skills shortages at NVQ levels two and three now. We also know that over the next 10 to 15 years the demographic changes in this country are going to give you a smaller and smaller cohort of younger people potentially to fill some of those areas. Given that is the case, what are you going to do to address the skills shortages at levels two and three?

Mr O'Brien: The key thing that we need to do is to make sure that we are encouraging people to have interest in science, technology, mathematics and some of the key areas that we need to train them in. That is why the skills sector has already mounted a quite significant project to extend these stem skills in schools. Secondly, we have to make sure that we have the capacity in the colleges and in employment to teach. Thirdly, we have to make sure we have the apprenticeship schemes. As you know, we have set out the community apprenticeship schemes and also the expansion of apprenticeships across the nuclear industry which is being very much co-ordinated by the National Skills Academy for Nuclear. They are trying to develop that whole strategy. They have a clear programme of developing that. In the end, it is going to be about making sure that we have the universities as well that will in due course be able to provide the higher level skills that people will aspire to achieve.

Q249 Mr Marsden: That seems to me to be all very well and good and encouraging as far as it goes, but you have not said a single thing in there about how you might reskill or upskill some of the people in the industry at the moment. I repeat the point that I made earlier: given that you are going to have a much smaller cohort of younger people, should you not be thinking about doing more in that area now?

Mr O'Brien: We are thinking about that through Cogent. Cogent is already examining how we upskill some of those who are already in the industry to make sure that within employers some of the training that they provide and the access they give for further training outside the workplace is given a higher level of priority by the nuclear industry itself. I accept your point that there will be a narrower cohort of young people coming through. All we are doing is giving higher priority to that cohort and ensuring that the STEM issues are given a much greater priority in terms of the delivery, not only in schools but in colleges, and that in due course employers are creating the ability to encourage their employees to go and do the upskilling that we need for the future.

Q250 Mr Marsden: There is also an issue, is there not, Minister, about the diversity within the workforce? I am very encouraged that you have Nicola with you as a concrete demonstration of that diversity within your own department but the fact of the matter remains that out there not only is the workforce, as you said, very old; it is very male dominated and it is not very ethnically diverse.

Mr O'Brien: You are quite right that because of the nature of that employment going back 20 years it recruited people who were predominantly male and are now in their forties and fifties very often. What we are trying to do is encourage employers to recruit more broadly. We need to make sure that not only in terms of recruiting more women but also ethnic minorities it is more diverse. Employers have certainly got the message - that is what they tell us - that developing a wider skill base is important to them because, if they do not, they end up focusing on the group of people that they have recruited up to now and they will not be in a position to get the breadth of skills that they need.

Q251 Mr Marsden: Mr Sugden, could I ask you a quick couple of questions about your particular area which covers decommissioning? That is of particular interest to me because I have just down the road from my constituency the Springfield decommissioning plant. Interestingly, we had a slight conflict of view from two of our witnesses previously. The University of Central Lancashire said they thought there would be competition for talent within the sector between decommissioning and new build. The Royal Academy of Engineering however tended to downplay the problems or issues regarding getting people in to do decommissioning and said, "... there is no urgency requiring the diversion of nuclear engineering expertise to the task of decommissioning." Which of them is right?

Mr Sugden: Both of them in a way.

Mr O'Brien: You are virtually asking a political question. I think it is better directed towards me rather than to an official. In terms of decommissioning, we will be seeing the NDA publishing tomorrow how it is going to develop its skills base, what it says it needs, and we are hoping that that will set out in some detail the answer to your question.

Q252 Mr Marsden: Whatever balance is struck, will that again take on board the issue of reskilling within the industry as well as recruiting from outside it in terms of decommissioning?

Mr O'Brien: It will. The whole industry is conscious that it has a major task in that upskilling of its current workforce as well as reskilling, so developing a whole new skill capacity amongst some of the current workforce and bringing in new people will be essential if we are to deal with the gap that we can all see coming. To be fair, of all the areas of energy that I deal with at the moment, the nuclear area is the one area where I think there is a clear understanding of the nature of the problem and an agenda that has been set out to deal with it. If we were talking about some of the other areas, I would have some more concerns but this is an area where the nuclear industry and the academic side of nuclear interest are very conscious of this problem and are ensuring that we put together a clear strategy for dealing with it. We have not really gone into some of the things that are happening, the way Cogent is developing its analysis of what is needed across the whole piece, the way the National Skills Academy for Nuclear is working with employers and Government and others to set out a clear strategy for dealing with this and for delivering it. Broadly, I am content that, yes, there is a problem - no one is complacent about it - but there is a grip on this problem from both the Government and indeed from the wider industry.

Q253 Mr Boswell: My question is about the co-ordination of the different players in pursuing this skills initiative which we are now focusing on. You have the National Nuclear Laboratory whose job as I understand it is to preserve the critical skills needed looking forward, new programmes; yet, its funding is only going to come from the existing customers. Does that create a contradiction?

Mr O'Brien: It is about making sure that we do not lose some of the BNFL skills. That was the initial thing. We have some skills here; and let us not lose them, and then there was the thought: now we have that, can we do more with it? Can we create a National Nuclear Laboratory that everyone can utilise with these skills? We have brought in Government funding and funding from other sources in order to try to create a laboratory with capacity for research and information that can have more general application. It would be wrong to see this as the only source of that sort of knowledge. It is not, and there are other private sector organisations and organisations in the public sector that also have a lot of that knowledge and employ people, including in universities. Am I concerned that those are the only sources of funding? We would like to broaden the funding but at the moment what we also have is a certain number of people that we can bring into this organisation and I think in the future we would be looking for more funding from outside but not at the moment.

Q254 Mr Boswell: To put it more crudely than if I had time to make it diplomatic, is there any question of an entry fee for outside interests that might want to come in to build power stations?

Mr O'Brien: There are always going to be entry fees but not particularly in terms of this.

Q255 Mr Boswell: Just to pursue the various players in this orchestra: the National Skills Academy for Nuclear, the National Nuclear Laboratory, the Nuclear Decommissioning Authority, Cogent, the Royal Academy of Engineering as the professional guardian of standards and of focus, the universities you mentioned and then the new Nuclear Institute which is going to be formed out of the Institution of Nuclear Engineers and the British Nuclear Energy Society. You have added in two new bodies as well which I have not put down this purpose: the Office for Nuclear Development and the Nuclear Development Forum. How on earth is the Government going to conduct this particular orchestra, make sure it is all playing in tune and gets to the end of the piece at the right time?

Mr O'Brien: Because we have set up the OND, the Office for Nuclear Development, it is their job in a sense to ensure that the conducting of the orchestra is done in a way that produces the tune that we want.

Q256 Mr Boswell: They are in the driving seat?

Mr O'Brien: They are essentially there to make sure everything works effectively. I demur slightly from being in the driving seat, they do not directly control companies or anything like that. It is their job to say, "This is where we are. That is where we want to be. This is how we get there." If somebody is going off at the wrong angle, then we tell ministers and ministers will have the job of pulling them back.

Q257 Mr Boswell: A light touch, I hope.

Mr O'Brien: Yes.

Q258 Mr Boswell: You will know the Committee has just been in China and Japan very interestingly and of course those countries have very different histories and social structures, but they do seem to have the common theme of being relatively more straightforward and simple in all this. Is there anything we can learn from that? Do we have the ideal structure given our personal history or is there a degree of rationalisation which somebody - the OND or ministers - might actually seek to promote to make it easier?

Mr O'Brien: We have looked at this relatively recently and hence we have set up the Nuclear Development Forum to bring together everyone into one body which can hold Ministers and the Office for Nuclear Development to account for the development of the nuclear agenda. In a sense, we have looked at this but if you are asking, "Is there never a capacity for greater rationalisation?" I am sure there is. I think the way to do this would be through discussion with people on the Forum rather than trying to suggest that we need to stop some of the initiatives that are going on at the moment because there is some quite good work going on in terms of developing the skills agenda at the moment in particular and developing academic work in universities. I think we could do more in universities at the moment.

Q259 Mr Boswell: Part of this of course is about the public credibility of these programmes as to whether they are going to happen or not. Are you also giving thought to using the Forum as the vehicle for producing a situation report for lay people and indeed commentators outside Government to have some sense that there is an onward progress, even if perhaps there is not too much to see for it on the ground on day one?

Mr O'Brien: I am not sure the Forum is the right place or organisation to do that report. I think probably the OND is because they have the responsibility of doing that and keeping Parliament updated. The Forum is really an opportunity for the various Government departments and the main outside stakeholders involved to come together and hold to account ministers and the OND for what has happened or what has not happened. It is not really a reporting organisation in that sense. I think probably, in terms of reporting, it would be (a) the OND and (b) ministers.

Q260 Dr Iddon: The Government's hope is for Britain to become again the leading nation in nuclear engineering. Bearing in mind that we are going to be importing French and American designed reactors with the possibility that they will bring in their own engineers who know that plant better than ours, do you think that Government hope will be realised?

Mr O'Brien: Yes, I do. Although it is certainly true that the French will bring in knowledge that they have and no doubt the Americans will in due course and others, we know that they will want to have the ability to use the people and the knowledge that we have as well. We also hope that there will be other players in the market who will be producing nuclear power and therefore I think there will be plenty of demand. There will not be a shortage of demand for the skills in nuclear. Will we be importing some of the knowledge from France and America? Yes, we will import their knowledge and we will use that knowledge to generate power in this country for people here. That is all to the good. I do think that companies like EDF and others will want to have people who are able to run their power stations who have been trained here as well. They are not just going to want to import all the knowledge from abroad.

Q261 Dr Iddon: The Government last week nailed itself to the 80 per cent reduction in CO2 mast under extreme lobbying of course from Friends of the Earth and others.

Mr O'Brien: The new department took a decision and convinced them to support us.

Q262 Dr Iddon: That is the Government answer.

Mr O'Brien: I congratulate those who also lobbied for it.

Q263 Dr Iddon: That is by 2050 of course. Bearing in mind that we are going to be closing a substantial number of our existing reactors down during the next two decades, do you think that nuclear power is going to play a significant role in getting that 80 per cent target met?

Mr O'Brien: Yes. It must. We have 15 per cent electricity generated from nuclear, a drop from 19 per cent four years ago. We are going to see a number of nuclear power stations coming off production over the next few years. We have to replace those. We have a big renewables programme. That is not capable of itself of replacing the capacity from nuclear. We need to ensure, for environmental reasons, for security of supply reasons as well as affordability reasons, that we have a range of provision of power. That means we have to have it from renewables. We have to have it from oil, gas and other sources. We also have to ensure that we have nuclear generation of electricity too. That is going to be a key component of ensuring that we get to the very tough targets that we have set ourselves for 80 per cent reduction of emissions by 2050. We were conscious when we agreed that that we were challenging the country. We were also aware that we were giving a clear message to those who say "No nuclear" that they would have to explain how on earth we were going to be able to hit these challenging environmental targets without nuclear. We will not. It is as simple as that. We have to develop nuclear as a serious technology if we are going to hit these targets.

Q264 Dr Iddon: Is eight new reactors an initial target?

Mr O'Brien: That is initially where we are. We do not have a statistical "we want this percentage generation" but we have dropped over the last few years from about 19 per cent to about 15 per cent. We certainly would want to replace that sort of area with nuclear generation of electricity.

Q265 Dr Iddon: Let me turn now to another pressure which Japan is meeting. Japan is going for overcapacity in nuclear energy, not only to provide electricity for its citizens but also to generate the hydrogen economy. As you know, there are various processes - electrolysis of water being just one, reforming of methane as steam being another, and there are other processes - whereby we can generate hydrogen using nuclear power as well. Has the Government considered that option of overcapacity to enjoin the hydrogen economy?

Mr O'Brien: It is not our view at this time that we want to go to overcapacity. We are interested in the development of the hydrogen economy. Indeed, when I was previously in this post, I had some involvement in trying to promote the development of the hydrogen economy in the UK. We need to see how this technology will develop in the future. I hesitate to say it is experimental but it is also quite well-developed and we know a lot about it. At this stage, we will be looking to see how that develops and it is not our aim to create overcapacity by reason of nuclear generation.

Q266 Mr Marsden: Minister, you have talked already about what we are going to have to import in terms of skills and expertise as only part of the process that we are now going down, but there is also surely a requirement on us to have an input into new developments. I am referring specifically to the Generation IV International Forum and to the nuclear systems from which we have, I understand, as a country directly withdrawn ourselves as from 2006. Professor Billowes from the Dalton Institute said to us that our engagement with Europe and America is weak in basic R&D. How are you going to reverse the actuality of that weakness in R&D? Are you going to be prepared to provide the 5 million which would enable us to re-engage with the Generation IV programme or, if not, what else have you got on the agenda?

Mr O'Brien: We have a large agenda in terms of investment into development of knowledge but in terms of the Generation IV it was the case that we had to look at what our priorities would be. There are always going to be competing priorities. We took a view that there were other areas that we wanted to prioritise. As you know, this technology and experimental work is unlikely to produce significant, commercial development until after about 2030. The aim is to ensure that we focus on other areas of research. We are involved in Taurus and we are encouraging university research. Ten years ago there was very little development of nuclear research or courses in British universities. Now we are seeing an increasing involvement in research and building up courses. I think you heard from the academics who were before you that a few years ago they would have had very few PhD students but now they have a significant number, so there are at Imperial, at Warwick, at York, at Lancaster now universities that are doing quite a lot of research. In terms of high level, long-term research we did not feel that our involvement in that particular project was where we wanted to focus our resources. There are always going to be priority choices.

Q267 Mr Marsden: You talked earlier, quite rightly, about how you have to engage more people at graduate level. You are not worried that this sends out a signal to them that there will not be any meaningful international collaboration in this particular area and that will then restrict their own research interests subsequently?

Mr O'Brien: The Nuclear Education Consortium has just put together a project involving 2.6 million from EPSRC and others to generate more academic research and MAs, PhDs. I think most people know now that there is a very clear agenda, shared broadly by the two main parties, with deference to the Chairman on this.

Q268 Chairman: I am totally neutral on these matters.

Mr O'Brien: They have made a very clear, long-term commitment to nuclear. It is very clear to anyone considering whether or not they want to develop a career in research in this area that there is going to be a long-term need for those skills and for that knowledge. I do not believe that our decision in relation to GIF in particular or the Gen IV project is something which is going to cause any serious academics to have any doubt that we are fully committed to nuclear research. It is very clear from what else we have done. John Denham last week pledged 98 million for skills including nuclear. There is plenty of funding behind the development of these skills and this area of education and, for this particular project, whatever signal it might have sent, the signals have been overwhelmed by the other signals that we have sent about development.

Q269 Chairman: Minister, we are very grateful to you for your presence this afternoon. Although the Committee has different views in terms of the nuclear issue, that is not our issue as far as this inquiry is concerned. It is really how we produce the engineering capacity to be able to deliver what the Government has as its programme. It is our job to scrutinise that. It would be very useful if we could have a note from you about specifically those issues to deal with skills because Cogent have clearly set massive targets for the expansion of skills over the next ten years. We do not have a clear picture from you as to what the Government's involvement in that is going to be and that is at every level from the nuclear scientist right through to the level two and three skills that Gordon Marsden was talking about. In order to present that in our report, it would be useful to have the Government's plans to help deliver those skills so it is not simply a matter of saying, "Pay people more within the private sector."

Mr O'Brien: I think I was making it clear that there was a bit more than that in terms of the Government's commitment, both financially and otherwise, to the development of this agenda. I would hope to publish very shortly the Sector Skills Council report into the need for skills in the energy sector as a whole. When I say "shortly", I mean within a week or so. That will give you not only a view about what the Government is doing and what the wider industry is doing in terms of nuclear but across the whole of the energy sector. If I may say so, this report that you will be doing will be timely and will be able, I hope, to take account of the response from the Sector Skills Council to the Government's Energy White Paper, but I would not want you to go away thinking that my only view about keeping people in this country was that we pay them enough. I think that is a crucial factor but there is also the fact that we provide the interest and the long-term career prospects which they see as being crucial to their future. That is what is going to keep them here too.

Chairman: I think we would agree on that. Minister, Mr Sugden and Dr Baggley, thank you very much indeed.

[1] Note from the witness: "Actually 30"