With permission, Mr Speaker, I would like to make a statement on the Hinkley Point C nuclear power plant.
As the House knows, on the 28 July following a decision by the Board of EDF to approve the Final Investment Decision of the £18 billion project to build a new nuclear power plant in Somerset, I announced that the Government would carefully consider all elements of the project before entering into a contract with EDF, and that we would make a decision by the early Autumn.
I can announce today that the Government has decided to proceed with the first new nuclear power station for a generation. However, this decision is made with two important changes.
On the Hinkley project itself, the Government will now be able to prevent the sale of EDF’s controlling stake prior to the completion of construction. This agreement will be confirmed in an exchange of letters between the Government and EDF. Existing legal powers, and the new legal framework, will mean that the Government is able to intervene in the sale of EDF’s stake once Hinkley is operational.
Furthermore, and even more importantly, we will reform the wider legal framework for future foreign investment in British critical infrastructure. These reforms will have three elements:
Firstly, after Hinkley, the British Government will take a special share in all future nuclear new build projects. This will ensure that significant stakes cannot be sold without the Government’s knowledge or consent.
Secondly, the Office for Nuclear Regulation will be directed to require notice from developers or operators of nuclear sites of any change of ownership or part-ownership. This will allow the Government to advise or direct the ONR to take action to protect national security as a result of a change in ownership.
And thirdly, the Government will significantly reform its approach to the ownership and control of critical infrastructure to ensure that the full implications of foreign ownership are scrutinised for the purposes of national security. This will include a review of the public interest regime in the Enterprise Act 2002 and the introduction of a cross-cutting national security requirement for the continuing Government approval of the ownership and control of critical infrastructure.
These changes will bring Britain’s policy framework for the ownership and control of critical infrastructure into line with other major economies. This will allow the UK Government to take a fair and consistent approach to the national security implications of critical infrastructure, including nuclear energy, in the future. The changes mean that, while the UK will remain one of the most open economies in the world, the public can be confident that foreign direct investment works in the country’s best interests.
This £18 billion investment in Britain provides an upgrade in our supply of clean energy. When it begins producing electricity in the middle of the next decade it will provide 7% of the UK’s electricity needs; giving secure energy to 6 million homes for 60 years.
Furthermore, it must be stressed that the contract negotiated places all the construction risk on the investors alone. Consumers will not pay a penny unless and until the plant generates electricity.
The proposed strike price of £92.50 – reducing to £89.50 if Sizewell C is built – contains important elements of insurance against any cost over-run in construction and future high gas prices, which have historically been volatile.
It compares broadly with the costs of other clean energy, whether offshore wind with additional costs of intermittency, or gas with carbon capture and storage.
Hinkley unleashes a long overdue new wave of investment in nuclear engineering in the UK, creating 26,000 jobs and apprenticeships and providing a huge boost to the economy, not only in the South West, but in every part of the country through the supply chain of firms, big and small, that will benefit from the investment.
EDF have also confirmed that UK businesses are set to secure 64% of the value of the £18 billion investment being made – the biggest single capital project in the UK today.
But as the first of a wave of new nuclear plants, we expect the experience of rebooting the nuclear industry to mean that this should reduce for future new nuclear power stations, of which another 5 are proposed.
In any consideration of nuclear power, safety will always be the number one consideration. The construction of Hinkley Point C will be under the close scrutiny of the Office for Nuclear Regulation – which is independent of the industry and of ministers.
The Office for Nuclear Regulation has the power necessary to halt construction or require amendments to any part of the plant if at any point it is not completely satisfied with the safety of any part of the reactor and its associated construction.
Unlike in the past, the long term decommissioning costs for the plant will be provided for explicitly as part of the funded decommissioning programme at a level that has been assessed independently as prudent and conservative.
Mr Speaker, any investment that provides significant electricity supplies for the next two generations of British people and businesses requires and deserves serious consideration. It was right that the new Government should have taken the time to consider all components of the project.
Having reviewed the project, the Government is satisfied that the improved deal and the other changes announced today will, for the first time, remedy the weaknesses of the regime for foreign ownership of critical infrastructure.
It is important the right balance between welcoming foreign investment and ensuring that it serves the national interest. That is exactly what these changes will achieve.
The investment will secure 7% of the UK’s electricity needs for 60 years, helping replace existing nuclear capacity which is due to be decommissioned in the decade ahead.
The electricity generated will be reliable and low carbon, and so completely compatible with our climate change obligations.
And Hinkley Point C will inaugurate a new era of UK nuclear power, with UK-based businesses benefiting from almost two thirds of the £18 billion value of the project, and 26,000 jobs and apprenticeships will be created.
All of these developments are good for Britain.
It is now right that we support this major upgrade – the first of many – to the infrastructure on which our future depends.