We are talking here about a nuclear programme of construction that will continue for probably 30 years. As someone once said in the context of school dances, “You rarely went home with the person you danced with first”. In this context, we may well find emerging technologies that provide us with opportunities. At the moment we have to be realistic about the fast breeder element in the technologies that have been spoken of this afternoon—they are somewhat limited. When I was chairing the Nuclear Industries Association, I had the opportunity to attend a conference in Paris that was meant to be a shop window for the French nuclear industry. I think that the French were a bit miffed when Japanese and South Korean companies came forward and spoke very confidently about their capacity to realise fast breeders in what will now probably be 15 years’ time. We did not go down the road of fusion today, which every schoolboy knows will be available in 35 years’ time; 35 years ago, they said it was going to be available in 35 years’ time. We therefore have to be a wee bit cautious about fast breeders, but we could be talking in terms of getting one in the United Kingdom perhaps 20 years from now, when we will probably still be building—

Viscount Hanworth: Perhaps I may interject. The truth of the matter is that we have already had a fast breeder in the UK that worked fairly well, in spite of rather diminished support. There were two fast breeders in France. There was Phénix and Superphénix. Phénix was very successful. There were some doubts about Superphénix, which had some engineering difficulties. However, its primary difficulty was, of course, political. I will reassert what I said previously, which is that fast breeders constitute an eminently practical technology. They are not 15 years away, but are as far away as it would take to ratify and certify them.

Lord O'Neill of Clackmannan: This is a classic example: if it was that good, why are we not using it?

Viscount Hanworth: For political reasons.

Lord O'Neill of Clackmannan: It is no longer for political reasons. Proliferation arguments have been set aside for a long time. The Koreans would not be knocking their socks off to try and do this if there was a technology they thought was good enough lying there untouched.

We have to be realistic. There is no question that I am an enthusiast for nuclear power but I also live on planet Earth. This planet is governed by rules of economics which the noble Viscount probably knows more about than I do. These technologies are, to a large extent, not proven in a commercial context for the generation of electricity. There are arguments about whether or not you should be using plutonium and how it can be dealt with. These are understandable but they are yesterday’s arguments. Today’s concern is producing reactors which can do the job at a reasonable price, efficiently and safely. At the moment, these

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criteria have not been met. If they had, the Japanese and Koreans would have the full-blown fast breeder on the table.

We know that there have been these things. There is a case for thorium but, as I understand it, the reactor in India produces 40 megawatts of power at the moment and it has quite a way to go. Some years ago I was fortunate to host a conference when a group of Indian technologists came over and described their work. It was fascinating but it was still small scale: I could compare it to carbon capture and storage. An enthusiast will tell me that somewhere in the world there is carbon capture and storage on a big scale but nobody has yet been able to find a way of developing it in an economically efficient manner.

Within 10 to 15 years we will probably have this kind of thing. Is Britain in a position to either contribute to this process or properly benefit from it? This is where the Science and Technology Committee report was highly critical of Government for not taking this seriously enough, over a number of years; this was not a coalition-specific charge. The previous Government, when they woke up to the requirement to embrace nuclear, understandably did a number of commendable things in terms of training and widening the opportunities for nuclear to be part of university engineering qualifications. Something like 13 university courses across the UK offer that, which is an achievement which is down to both Governments’ active encouragement. However, we still have a long way to go. We have a national laboratory at Sellafield which is not getting the funding it merits. This was the view of the Science and Technology Committee. Professor MacKay, the scientific adviser to DECC, who was before the committee last week but we have yet to get Michael Fallon, the Minister responsible, who will come before us after the recess.

Without getting too specific or hung up on particular technologies within the nuclear framework, it is essential that if we are going to take advantage of the new technologies as they come through we have got to have trained, capable people to do that. At the moment, I am not certain that the Government are giving it the highest priority and that is what this debate should be about. We could go through the specifics of Select Committee reports but that is not productive. If we are going to have this technology it is not a once-and-for-all thing. It is not like combined cycle gas plants which just need a little tweaking here and there. There are possibilities for bigger changes but, in order to invest in the right and most appropriate one, we must have a skilled labour force and institutions and research establishments capable of dealing with that. As someone hinted, we need to have an open-mindedness in the industry which, at times, it does not have—because they are very much companies wedded to particular technologies, as EDF is. It is just unfortunate in some respects that the company that is first to the starting line is the one that in the European context uses the least reliable technology in terms of construction, and probably the most expensive to run. If we get a strike price, as we will eventually, it will have to be set in such a way that it does not provide the more efficient and perhaps cheaper technologies with a chequebook to make fabulous amounts of money out of. I realise that

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that is the predicament that the Government have, but we must not just keep saying, “We don’t have a UK capability—we’re dependent on foreign countries”. The technical changes that will come through in the medium term will be such that it would be a tragedy if we repeated the failure of the 1980s, the 1990s and the noughties in terms of getting the proper people and technical capabilities.

We do make reactors in the United Kingdom; we make them for our nuclear submarines, and they are made by Rolls Royce. If a proper programme was developed, one would imagine that Rolls Royce would be interested in getting into the new generation of nuclear technologies. There are companies within the United Kingdom that have the capability to take advantage of this, but they need encouragement from government more than anybody else.

Baroness Worthington: On the question of what the UK can contribute, the noble Lord is absolutely right that Rolls Royce is already involved here in reactor design and manufacture. That company is sponsoring a student in the Dalton Research Institute in Manchester, looking at a small modular reactor based on a thorium fuel cycle; it is looking at different reactor designs, including molten salts. So it is here. One example of how a small amount of money can have a big effect is the $10 million grant given by the Department of Energy in America to a number of universities, plus the Oak Ridge National Laboratory, to look at molten salt-cooled pebble-bed reactors. That funding programme enabled them to leverage into the Chinese nuclear reactor research programme, such that the Chinese changed direction and are now collaborating in work on a molten salt-cooled pebble-bed reactor using thorium. I use that as an illustration that you do not have to build everything yourself and spend hundreds of millions; you can have a highly leveraged impact if you are smart about your R&D choices and build on your existing strengths.

One great thing about the all-party parliamentary group has been exposure to an increasing number of scientists in the UK who are working on thorium and molten salts—and in combination. It is true that Sellafield and the National Nuclear Laboratory, by being commercial, have to go out and seek funding from the existing incumbents in the market. Therefore, they do not have the luxury of being able to horizon scan or think slightly more outside the box, because they are continually looking for funding. If more funding were provided by government and we had a genuine R&D for nuclear fusion strategy, the NNL would be an absolute asset in this search for the most sustainable forms of nuclear power. They are the ones working with Thor Energy, fabricating solid fuel thorium rods today that are being tested in the Halden reactor. So there is plenty to be very proud of and to build on in the UK.

3.30 pm

Baroness Verma: My Lords, Amendment 55F from the noble Viscount, Lord Hanworth, provides me with an opportunity to outline what the Government are already doing to better co-ordinate and develop research and development in nuclear technology.

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The Government welcomed the Science and Technology Committee’s excellent 2011 report on Nuclear Research and Development Capabilities in the UK, and in responding to it we committed to undertake a programme of work designed in the simplest terms to assess where the UK was in terms of nuclear R&D, where we and the industry believe the sector could be by 2050, and how to get there. The work under this programme completed around the beginning of this year and went on to form the basis for the development of the nuclear industrial strategy. The strategy was published alongside the outputs from our R&D work in March.

This package of work highlights how essential research and development will remain in ensuring that nuclear power can play its role in the current and future energy mix while allowing us to continue to deal safely and securely with the legacy of our nuclear past. The strategy was clear that the co-ordination and development of nuclear R&D needs to be taken forward in collaboration between industry, academia and public bodies. In doing so, we aim to maximise the use of public and private resources and provide a level of harmonisation between industry’s commercial aspirations and maintaining energy options for the UK’s future growth. As such, we believe that it is unnecessary and even counterproductive to put a legislative requirement on the Government part of this larger collaboration when we have already committed to moving forward together. We recognise that while R&D on advanced fission technologies and alternative fuel cycles is important, it is just part of the wider whole that includes essential work on decommissioning and long-term waste management.

On the management of the UK’s plutonium stockpile, all the options being considered involve the spending of public money, and a key driver will be ensuring best value for taxpayers. Following a public consultation on long-term plutonium management, the Government have concluded that for nuclear security reasons the preferred policy for managing the vast majority of UK civil separated plutonium is reuse, and that plutonium should be converted to mixed oxide fuel for use in civil nuclear reactors. The Government’s expectation is that at current uranium prices the value of the fuel generated will be significantly less than the cost of its manufacture; in other words, for the foreseeable future, the manufacture of MOX is primarily a route for consuming plutonium stocks rather than a commercial operation in its own right. However, the Government remain open to any alternative proposals that offer better value to the taxpayer, and the Nuclear Decommissioning Authority continues to work on an assessment of both the CANDU and PRISM technologies, the use of either of which would involve the use of advanced reactors and new fuel forms.

I turn now to the reporting requirement to Parliament that is set out in the amendment. The nuclear industrial strategy sets out our intention to create a co-ordination structure across the UK nuclear R&D landscape, including the formation of the Nuclear Innovation and Research Advisory Board with its own expert secretariat. We envisage that this body will be in place by the end of the year. Part of its remit will be to provide publicly

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available progress reports about the strategy and the pathways in the road map, and comment on any divergence from these. This will provide an independent report that will be available to Ministers, the public and Parliament, which will be wider ranging and more detailed than what is proposed in the amendment.

I shall touch on a couple of points raised by the noble Baroness, Lady Worthington, on the remit of the Nuclear Decommissioning Authority. We believe that it plays an essential role in ensuring that the historic civil nuclear legacy sites are decommissioned safely, securely, cost-effectively and in ways that protect the environment. As we set out in the Government response to the committee’s report, we would have serious concerns about changing the authority’s remit or reallocating essential resources from it because we do not want to dilute its ability to focus on this critical mission. It is also worth noting that over the past five years, the NDA estate has itself contributed more than £544 million to R&D activities, with an annual spend of between 3% and 5% of its overall budget.

The noble Lord, Lord O’Neill, and the noble Viscount, Lord Hanworth, both asked why we are not using fast breeder reactors in the UK, and I think that the noble Viscount said that we had already done so. Dounreay used fast breeder reactors, but we found them to be commercially not viable. It was generating less than 50% at the time and was also a prototype, so there was some reasoning behind that decision.

I hope that I am able to reassure the noble Viscount, Lord Hanworth, that the Government are taking the issue of nuclear research and development very seriously and are working in partnership with experts from a variety of sectors. On that basis, I hope that the noble Viscount will withdraw his amendment.

Baroness Worthington: Before the Minister sits down, I have a question about one key phrase that was used. The noble Baroness talked about value for taxpayers. However, I was trying to communicate that the Bill will introduce considerable extra costs for consumers. What I am trying to get at is that taxpayers and consumers are one and the same—we are all taxpayers and all consumers of electricity. If you focus purely on the disposition of plutonium as something completely separate that the public purse has to fund, and argue that we just spend money on what costs the least, you are missing the bigger picture. As a citizen, I am both a consumer and a taxpayer, and will be paying for nuclear projects as a consumer. I would like to see a coherent strategy that says, “Here is a solution that gives two outcomes. We get rid of plutonium and we have low-cost electricity, which saves consumers money”. I just want to test that.

Baroness Verma: Absolutely—as I alluded to earlier, we are looking at proposals from both CANDU and PRISM. We have not put them to one side but are looking at them seriously. In the bigger context, it has to be about value for money as well as doing all the things that the noble Baroness and I would want to see.

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Viscount Hanworth: I am distressed by the inertia, the lack of vision and the dilatoriness of the Government and particularly of those agencies of government that have to deal with our technological future. I feel sure that we will come back to these questions time and again and will do so until we get some satisfaction. That may be a long time coming but in the mean time I will, of course, withdraw my amendment.

Amendment 55F withdrawn.

Clauses 137 and 138 agreed.

Clause 139: Financial provisions

Amendment 55G

Moved by Lord Whitty

55G: Clause 139, page 107, line 41, leave out paragraph (c) and insert—

“(c) the establishment and operation of an Expert Advisory Panel to advise on the exercise by the Secretary of State of powers relating to CFDs, Investment Contracts or Capacity payments made under Part 2 of this Act.”

Lord Whitty: My Lords, we really are at the end now. I shall try to be brief but make no apology about turning to a subject that affects the deliverability and credibility of the entire Bill. When we had a discussion on the establishment of an expert committee, the Minister referred me to the clause to which this amendment applies. Clause 139(2)(c) provides for resources to be raised for the employment of advice. I have no objection to that, but ad hoc advice, as we said the other day, is not sufficient for delivering such a complex project. We are now horribly aware of that, having been through nine days in Committee. Apart from a few serious experts in DECC and possibly Ofgem, a few very sharp lawyers sitting in the big six and other interested parties that may be on the other side of these deals, we probably know as much as is likely to be known at this stage about the nature and process of the contracts, the difference in the process of investment contracts and to a lesser extent, given that a lot still is fairly obscure, about capacity mechanisms.

The public know nothing, the potential participants know nothing and consumers know nothing. DECC, the counterparty and Ofgem will face a complex process. They will have to deal with extraordinarily complicated and novel arrangements that do not reproduce anything extant anywhere in the rest of the world when it comes to electricity supply. They will be dealing with companies who are very sophisticated, who employ the very best advice and who, necessarily and rightly, are looking for a deal which will profit them as well as helping the long-term future of our energy security.

Delivering what is in the Bill, even though it is not that thick a Bill, will be an extremely complex process. Parliament and the public would expect departments and others representing the Government and the public in this process to have very solid advice. Some of that can be dealt with on an ad hoc basis, contract by contract and aspect by aspect. However, as was made clear in a previous debate, you need an institutionalised

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body which is clearly publicly known and respected, consisting of people with deep experience of the legal, financial, technological and economic issues which it is tackling. Above all, you need consistency. You need corporate memory and a body to oversee the individual officials and Ministers who, whether we like it or not, are not there for ever. They are often there only for a few months or years and cannot take full responsibility for negotiating these contracts.

The expert panel is an advisory panel, but it is an important strengthening of the whole process. I do not expect the Minister to change her mind today, but unless the Government recognise that they need something like this—they may want to call it something else—the deliverability of this whole process, on which so much depends, will look extremely shaky. I therefore hope that the Government will at least take on board that they ought to look at this concept again. I beg to move.

Lord Deben: My Lords, I very much oppose the amendment, which seems unnecessary. A great deal of advice is available and it is not necessary to have yet another committee. A committee has been proposed with a different role, which seems to me to have a much more sensible and wider view. That was in an earlier amendment—which has been withdrawn but which I have no doubt will come back—proposed by the former chairman of Shell UK, the noble Lord, Lord Oxburgh. That seems to be a much better proposal than this one. It is not necessary to shove this in at this point. The Secretary of State will have at his behest a whole range of people on whose advice he can rely. This gives him permission to do that, and although I am all in favour of giving him that permission, I do not want him to have yet another committee. I think that this is the wrong way to do it and I very much hope that my noble friend will resist the amendment. I rather suspect that she will, and it is always a pleasure to end such an afternoon, now almost evening, by entirely supporting my noble friend.

Baroness Verma: I am extremely grateful to my noble friend. I thank the noble Lord, Lord Whitty, for his amendment, which would set up an expert panel to advise the Secretary of State on the exercise of his powers relating to CFDs, investment contracts and capacity payments. I reassure the noble Lord that we are working hard to ensure that the process through which final contracts for difference and strike prices are set is transparent, robust and informed by a full range of expert input. The consultation on the draft delivery plan, as well as workshops and events with stakeholders, will allow industry, consumer groups and all other stakeholders to scrutinise the figures, and the evidence used to develop them, and provide us with feedback to inform the final plan.

Prior to the consultation, the draft strike prices were also informed by two pieces of independent advice: the analysis provided by National Grid, which helped the Secretary of State understand the potential impacts that different strike prices could have on the Government’s objectives and, of course, the independent scrutiny of that analysis by the panel of technical

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experts. Both these reports were published alongside the draft EMR delivery plan and copies have been deposited in the Libraries of both Houses. The panel of technical experts in particular, which consists of experts in relevant areas such as economics and generation costs, was appointed through an open competition. It is impartial and independent of any particular viewpoints. I do not therefore think that we need to create another expert advisory panel. We have used existing powers to appoint the current interim panel of technical experts and, following Royal Assent, we intend to establish an ad hoc advisory group. Clause 139(2)(c) provides the spending authorisation to support this work.

3.45 pm

We will use the strike prices published in the final delivery plan to set strike prices for investment contracts for renewable technologies. As such, they will be informed by the analytical process and independent panel that I have described. For investment contracts that are bilaterally negotiated, specialist advice will be sought as appropriate and there will be rigorous scrutiny of proposals. For example, the Government have appointed technical and financial specialists to scrutinise a developer’s plans and proposals. We will publish summaries of reports from these advisers and a value-for-money appraisal in the event that agreement is reached alongside the contract when it is laid before Parliament.

Let me reassure the Committee that the Government have listened to concerns of Parliament. Similar concerns to those being raised now were voiced in the other place, and that is why we made amendments to this Bill in response. We removed the discretion of the Secretary of State to withhold information when publishing an investment contract, beyond what was explicitly agreed as confidential in the contract negotiations. For information agreed as confidential and thus withheld, we have committed to publishing a description of that information and the reasons for doing so. In relation to EMR more widely, we introduced a statutory reporting duty at Clause 5(4) which requires an annual report on how the Secretary of State has exercised his functions under Part 2.

In relation to scrutiny of contract terms, I agree that this needs to take place but believe that it would be better done by industry and consumer groups at large. This is why, over the past year, we have been working with an expert group consisting of industry and consumer group representatives in the development of key terms. We will also shortly be publishing the CFD contract spine, which builds on the draft contract terms published alongside the operational framework in November 2012. This will allow industry and other stakeholders to examine the terms of the contract and discuss them further with my officials. Because investment contracts for renewables will be based on the final standard form CFD, they will benefit from the same scrutiny that I have set out.

I therefore hope that the noble Lord is reassured that the Government are listening to the concerns of Parliament and have taken steps to ensure adequate scrutiny and consultation. On that basis, I hope that he will withdraw his amendment.

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Lord Whitty: My Lords, I think that we are near the end and, clearly, I am going to withdraw the amendment. However, I am both disappointed and unreassured. I say to the Minister and the noble Lord, Lord Deben, that the body proposed in the amendment has a very different and more precise role than the one proposed by the noble Lord, Lord Oxburgh, which we can argue for in a different context.

The Minister is effectively saying, “We have all these technical experts; we’ve got an ad hoc panel; we are going to have another body involving industry and consumers; and we are going to have another ad hoc technological panel, once the legislation is passed”. It is obviously reassuring to some extent that the department is getting all this advice, but why not make it clear that we have a body of real expertise to oversee this gigantic exercise of changing the whole way in which we deliver our energy—a body that is to some extent institutionalised and recognised by Parliament? I think future Ministers will regret not having that body to support them. I hope I am wrong, but I think it would give Ministers sharpness of advice in the process and protection after it. I regret to say that I think the Minister’s successors may well regret her dismissal of this amendment today. With that, and with a happy summer to everybody and my thanks to the Minister and her department for all the help she has given us, I beg leave to withdraw what I think is the final amendment to be debated.

Amendment 55G withdrawn.

Clause 139 agreed.

Clause 140: Extent

Amendments 56 and 56A

Moved by Baroness Verma

56: Clause 140, page 108, line 20, at end insert—

“( ) Part 1 (decarbonisation);”

56A: Clause 140, page 108, line 30, at end insert—

“( ) Section (Fuel poverty) extends to England and Wales only.”

Amendments 56 and 56A agreed.

Clause 140, as amended, agreed.

Clause 141: Commencement

Amendments 57 and 58

Moved by Baroness Verma

57: Clause 141, page 109, line 18, at end insert—

“( ) section (Feed-in tariffs: increase in maximum capacity of plant) (feed-in tariffs: increase in maximum capacity of plant);”

58: Clause 141, page 109, line 18, at end insert—

“( ) section (Fuel poverty) (fuel poverty);”

Amendments 57 and 58 agreed.

Clause 141, as amended, agreed.

Clause 142 agreed.

Bill reported with amendments.

The Deputy Chairman of Committees (Lord Skelmersdale): My Lords, this concludes the Committee’s proceedings on the Bill, but before I let noble Lords go, I, on behalf

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of all Deputy Chairmen who have served this Committee over a very long period—and noble Lords feel it more than I do—wish noble Lords a very happy Recess.

Baroness Verma: My Lords, I shall take just one or two more minutes of the Committee’s time to put on record my thanks to all chairs of the Committee’s proceedings. I also thank those who have worked behind the scenes: the clerks, Hansard, the doorkeepers and, of course, my very efficient officials from DECC, the Ministry of Defence, the Department for Communities and Local Government and the Department for Environment, Food and Rural Affairs who have been here to support the Government throughout our debates. I also thank all noble Lords who have participated in the Committee for the way in which we have conducted

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proceedings. We have had a good and thorough debate and have scrutinised the Bill in full. I particularly welcomed the spirit of collaboration that has been adopted with the aim of improving the Bill. We have been in broad agreement on the main objectives, and noble Lords have made some helpful suggestions for further improvement which the Government will consider very carefully. I wish all noble Lords a very happy Recess, and I reassure them that I will be working with officials during the Summer Recess to try to get all the information they require to them before Report stage.

The Deputy Chairman of Committees: That definitely concludes proceedings on the Bill.

Committee adjourned at 3.54 pm.