I am delighted today to be able open this year’s conference and would like to thank the Nuclear Industry Association for inviting me to speak. The NIA works tirelessly for the industry and I hope that they – along with all of you here today – take heart from what has been, as Lord Hutton has said, a momentous year, for the nuclear industry. I look forward to working with him and Tom Greatrex going forward.
Looking forward, the NIA is ideally placed to help deliver on some exciting developments in areas like building new reactors. The UK supply chain and our skilled engineers and apprentices can benefit from an industrial strategy that will drive economic growth at home and abroad, and at the national and local level.
And the NIA will, of course, have a central role in the delivery and governance of this agenda in running a reformed Nuclear Industry Council, which I will come onto.
I said it had been a very good year for the industry. In fact, I think we will look back on 2016 as a truly pivotal moment.
After many years of preparatory work and negotiations, we signed the Contract for Difference for Hinkley Point C – the first new nuclear plant in the UK for more than 20 years.
Construction has since ramped up, with close to 100 HGVs and 1,000 workers onsite every day.
When completed, Hinkley Point will provide 7% of the UK’s electricity needs using continuous, reliable and secure low carbon energy.
But the value of Hinkley goes much further than this. It will make new build a reality. It signals serious intent to the UK supply chain. It signals to our young aspiring engineers that nuclear is a sector worth aiming for. In short, Hinkley will trigger this country’s nuclear renaissance.
Already we are exploring ambitious plans to bring forward further nuclear new build, working with developers NuGen and Horizon as well as EDF and CGN on their proposals.
In total, there are industry proposals for new nuclear developments at six locations, including Hinkley, which would deliver around 18GW of capacity over the coming decades.
These proposals present opportunities to grow our nuclear expertise; build up our supply chain; and to develop our export potential – and in so doing, add real value to our economy at both a national and regional level.
For Hinkley, 64% of the project value will be spent in the UK, and a total of almost £4bn over the lifetime of the project will go into the regional economy.
British companies are already benefitting. £465m-worth of contracts have been awarded in the South West and the £100m deal for Welsh steel demonstrates just one of the benefits new nuclear projects can bring. We can expect to see many more such announcements as the project progresses.
But for the next plant we want to go further.
We want British companies to be ambitious and to have access to compete for the higher value plant components which will help build sustainable capabilities in the UK. We want new nuclear developers to share supply chain information with industry early to ensure that UK companies are positioned and prepared to bid for these opportunities. The government is taking steps to support this.
To this end, I can announce that for future New Nuclear projects, developers will be required to produce Supply Chain Plans. They will need to show evidence that their projects will support growth in the UK supply chain, will support the development of competition, and boost innovation and skills.
Having visibility of the projects will give UK companies the incentive and confidence to expand their capabilities. It should give them more confidence to invest; to train and retain their skilled employees.
And I believe that if these companies are supported in this way, we will see British suppliers growing their exports to the international nuclear market.
We fully understand that nuclear projects based on technology originating overseas can have some established supply chains in their country of origin. But supply chain benefits to the UK need not be mutually exclusive with benefits elsewhere – there is a mutuality of interest and a balance to be struck.
You will, I’m sure, have seen the Prime Minister’s announcement last week at the CBI Annual Conference, that the Government will increase its investment in R&D – providing an additional £2 billion investment per year for research and development by the end of this Parliament, to keep Britain at the forefront of science and technology, disciplines that are clearly key to the nuclear sector. Also announced was a new Industrial Strategy Challenge Fund which will help Britain capitalise on its strengths in cutting-edge research.
There are opportunities for the nuclear industry beyond the new build proposals, as we strive to become nuclear pioneers again.
Last month we announced around £20m of funding for research and development programmes for the civil nuclear sector across five major areas from 2016 to 2018, building on recommendations from the Nuclear Innovation Research Advisory Board - NIRAB.
This includes funding to maintain the UK’s leading work on advanced nuclear fuels, which would provide greater levels of nuclear safety and efficiency.
This funding will underpin the next generation of nuclear reactor designs, enabling initial work on fuel recycling processes and support to improve the operational safety and efficiency of nuclear reactors.
Innovation in the nuclear sector must be supported by effective regulation. It is vital that regulators work with their international counterparts and with developers early on to make the regulatory process as smooth as possible.
At the ONR’s industry event last month I was encouraged to hear the regulators talk about their important role as enablers of innovation alongside their primary duty to ensure robust safety and security.
We must all work together across the nuclear industry to realise the opportunities that lie ahead, both in the regulatory and innovation areas, but also in terms of delivery of UK policies.
The Geological Disposal Facility, which Bruce McKirdy from Radioactive Waste Management is going to speak about later, is a case in point. The government will need your support to help realise the benefits of this project but we’re moving forward and are planning to launch the siting process for the GDF next year.
Challenges and Support
I turn to skills, for the UK nuclear industry to maximise the benefits ahead, it needs to attract, train and retain often highly-skilled individuals – now and for many more years ahead.
With Hinkley Point C and the additional civil nuclear projects it’s estimated that we will need to grow the industry workforce by 30,000 by the mid-2020s. This has coincided with a time when we face the prospect of 70% of highly skilled workers in the nuclear sector retiring by 2025.
This is why industry and government have been working closely to stimulate the supply of skilled people into the sector, for example through the establishment of the National College for Nuclear which aims to train 7,000 people by 2020.
This has been set up with funding from government and industry and will create two hub campuses in Cumbria and the South West, with the first intake of students in September 2017.
I am very keen for our universities to play a role in supporting the nuclear industry. I like what is happening in Manchester and in Sheffield and elsewhere – institutions who offer pioneering courses to feed the industry – and would encourage other universities to do the same. They have an opportunity to attract young people to start a career path in nuclear, as well as support those students who are already taking engineering qualifications.
I mention Sheffield. Of course that is where the Nuclear Advanced Manufacturing Research Centre (“NAMRC”) is based. With the support of the National Skills Academy for Nuclear (NSAN), NAMRC’s Fit 4 Nuclear programme is helping UK companies to get nuclear-ready.
NAMRC is working closely with the Nuclear Industry Association, using the “demand model” to shape their programmes.
But that is not all - the Nuclear Skills Strategy Group (NSSG) are developing a strategic plan to address some of the key skills challenges facing the sector and I know Dr Fiona Rayment will have more to say on this later. I am personally very grateful to Fiona who has brought together under her Chairmanship industry, skills experts and government to think holistically about nuclear skills. The work of the NSSG will, I know, help us to achieve with an industrial strategy approach – a diverse and suitably skilled and qualified workforce right across the country.
Another challenge facing the industry is the growing danger of cyber-attacks, which are seen as a top threat to our economic and national security.
In response to this the Government launched the Civil Nuclear Cyber Security Strategy in August and I was delighted to visit GCHQ for the first time for a useful session with the industry.
This strategy sets out the roles and responsibilities of Government, the Office for Nuclear Regulation and industry in mitigating the current and emerging cyber threat to our sector, and the work that we all need to do to ensure the civil nuclear sector is resistant.
It is clear that duty holders and the supply chain businesses are the experts for their systems, and only they can develop the security solutions, which are needed to fit their unique situations in the most appropriate way.
We will continue to work closely with the regulator and with industry to regularly review the effectiveness of the strategy, but it is essential that management boards across the sector take ownership of the risk and responsibility for managing their cyber vulnerabilities.
Of course I must mention the UK vote to leave the European Union – a decision which exemplifies the balance of opportunity and challenge. Like all of industry, the nuclear sector wants clarity and confidence that its business will not be disadvantaged during our negotiations. This is a top priority for the Government, and we are assessing the legal and policy implications of the vote to leave, including the potential implications for the UK’s membership of EURATOM.
I recently met David Davis – the Secretary of State for exiting the EU – and he made clear this is one of the issues on his agenda.
Rest assured that you – the nuclear industry – will be key to helping us navigate this new course. We are talking to you and we will continue to talk to listen to your needs, so that we can work together to achieve stability in the short-term and growth beyond that.
Bringing it together
- Industrial Strategy and Co-operation
I have talked about the opportunities for the nuclear industry to expand their capabilities; grow their exports; and reap benefits for local and national economies.
And I have said that the only way to make a success of these opportunities is for industry, government and regulators to work together to overcome challenges such as bridging the skills gap, the threat of cyber-attacks and of course Brexit.
This is why the nuclear industry is so well placed to benefit from my department’s work on industrial strategy.
The industry is already doing many of things that our industrial strategy approach will be focussed on, such as:
- opportunities for the supply chain to grow at home and abroad;
- ensuring we have a system in place to nurture and develop the skills we need; and
- maximising benefits to local economies where there are industrial expertise.
As we develop our approach we will engage with you but we will need your experience to guide our ambition.
Nuclear Industry Council
In order to deliver on these opportunities and maximise the value and impact of an industrial strategy for the nuclear sector, there needs to be a forum to provide strategic grip from the industry and HMG and to provide good governance.
The nuclear industry already has such a forum - the Nuclear Industry Council.
The NIC has been somewhat ‘waiting in the wings’ following a review to determine how to make it more effective and strategic for the benefit of the whole of the nuclear industry.
With a resurgent nuclear sector the time is right to announce that we will re-establish the NIC in the New Year, to progress the work on industrial strategy in the nuclear sector. Acting on the feedback from industry, the NIC will be more strategic; a smaller and more focussed body; longer-term and broader in its horizons.
I want it to be a body that interacts effectively with wider industry so that views and ideas from right across the sector can support the bright and prosperous future that I know the nuclear industry can have.
2016 will be a year for the nuclear industry to look back on, I hope, with a sense of pride and positivity, acknowledging the important progress it has made – in partnership with government – towards making new nuclear a reality in the UK.
I know none of us are resting on our laurels because there is much more work to do. Yes, there are challenges facing the industry, but together we have the ambition, capabilities and vision in place to deliver vital secure, affordable, low-carbon energy and with it, benefits for the nuclear industry, the regions and the country.