Urgent Question (Commons) on Nuclear Power: Toshiba - Nov 12

At its board meeting last Thursday, the Japanese company, Toshiba, confirmed that it proposed to wind up its subsidiary NuGen following an earlier decision to exit the overseas nuclear power business. This followed the well known financial difficulties of Toshiba’s US subsidiary, Westinghouse. Following that, Toshiba considered the sale of NuGen, but, having failed to agree terms, the Toshiba board decided that the company will instead be wound up. I met board members of Toshiba in Tokyo on Wednesday, and they confirmed that the board’s decision was a commercial one. The decision is ultimately a matter for Toshiba and we fully understand the challenging circumstances that that company has faced over the past 18 months.

 

The Moorside site in west Cumbria is owned by the Nuclear Decommissioning Authority and the land will revert back to the NDA. It remains a potential site for nuclear new build and the NDA will consider a range of options for its future. The Government are fully committed to new nuclear being part of a diverse supply of energy. The EDF-led Hinkley Point C is under construction and future potential projects include Wylfa, Sizewell C, Bradwell and Oldbury. All projects are developer-led and can proceed if, and only if, they satisfy the most stringent safety and regulatory approvals process and that, at the point of a contract being issued, they demonstrate value for money compared with alternative sources of electricity generation available at the time.

 

I recognise that last week’s announcement will be a disappointing but not an unexpected one to the people of west Cumbria. One thing is certain: west Cumbria will continue to be a centre for excellence in civil nuclear. It is of huge strategic importance to the UK and a source of large numbers of highly skilled and well-paid jobs and will be for many decades to come.

And so the people of Cumbria are thrown under a bus. I thank the Secretary of State for that statement, but I have to say that it is extraordinary that he has had to be dragged to the Chamber to make it rather than offering it proactively on a project that will affect up to 21,000 jobs in the constituency of the hon. Member for Copeland (Trudy Harrison) and many, many in my constituency and across Cumbria.

 

In his initial statement, the Secretary of State did not even commit to a new civil nuclear power plant in the Cumbrian area. It is just not good enough. It is not good enough for the Government to hide behind the idea that this is simply a commercial decision, because he knows that if the Government had offered terms to NuGen, to Kepco, to Toshiba that were on a par with those that they have offered on other sites in the country, this deal could have been salvaged.

 

I would like to hear from the Secretary of State this afternoon. Surely this is not the end. Will he commit to working with the people of Cumbria, their MPs, their  council, and their local enterprise partnership to salvage the prospect of new civil nuclear in Cumbria? Does he recognise the hole that losing Moorside will create for the UK’s ability to generate low-carbon energy, and does he see the potentially irreversible decline in absolutely essential nuclear skills in Cumbria for the nation if civil nuclear is not allowed to go ahead on the site?

I am grateful to the hon. Gentleman for his question. I know that the nuclear industry is very important to his constituents, as it is to those of my hon. Friend the Member for Copeland (Trudy Harrison).

 

The hon. Gentleman knows that no one is more committed than I am to the future of nuclear power in this country. It is this Government who have revived nuclear power following more than 25 years in which no new nuclear power station was inaugurated. He knows that the approach that we have taken to new nuclear power stations is that they should be developer-led. That has always been the case since the right hon. Member for Kingston and Surbiton (Sir Edward Davey) was Secretary of State and established this approach and this policy.

 

The hon. Gentleman knows very well, because he talks to the executives himself, that the problems that Toshiba has encountered during the past 18 months, since the entry into chapter 11 bankruptcy proceedings of its Westinghouse subsidiary, have made for a fundamental review of its strategy. It has decided, for commercial reasons, which the board of Toshiba told me, in person, on Wednesday, that it wants to concentrate on its activities away from international nuclear. The announcement is a consequence of that. Obviously, it is not possible to enter into negotiations with a counter-party that is exiting the business and does not have the financial opportunity to be able to take on this project. That has been clear, as he knows, for some time.

 

I was certainly very clear in my response to the hon. Gentleman that I regard the site, when it returns to the NDA, as available for further projects, and I will work very closely with those in the industry, including his predecessor. Of course I will meet the hon. Gentleman, my hon. Friend the Member for Copeland, and other people who take the same interest that I do in the future of nuclear in this country, and particularly in west Cumbria.

Will the Secretary of State reassure my community that this Government do back nuclear through the nuclear sector deal, that he recognises the strategic importance of nuclear to meet our energy and our environmental requirements, and that he values the highly skilled workforce in my constituency and, indeed, across Cumbria, who stand ready to design, build, commission and operate Moorside in Copeland?

I pay tribute to the workforce and the community that my hon. Friend represents, and indeed to her leadership and advocacy for the case for recognising the strategic importance of that, as well as to that of her neighbouring MPs. I enjoyed spending time with her during the summer visiting Sellafield, as I have done before, and in particular looking at the opportunities in the supply chain for new nuclear, in which Cumbria has clearly a lot to offer, given not just the heritage but the actuality of the skills there.

 

We continue our programme of new nuclear builds; it is important that they should be developer-led. As I said, there is a pipeline of proposed new projects, but it is important in every case that the regulatory conditions are met and that each proposal offers value for money. There is a very bright future for the highly skilled workforce in my hon. Friend’s constituency, now and in the future. Through the sector deal that was agreed enthusiastically between the industry, the Government and local partners, we are investing in the future, including in those skills.

Toshiba’s decision to withdraw from Moorside is a blow to the UK’s energy security, its decarbonisation goals, and the economy of Cumbria. But let us be clear where the real responsibility lies. The Cumbrian chamber of commerce, and the GMB and Prospect trade unions, among others, have all laid the blame with this Government for their lack of clarity over funding and their ultimate failure to take a direct stake in Moorside—something that Labour has repeatedly committed to do.

 

So, first, will the Secretary of State reaffirm a promise made to the people of Copeland during last year’s by-election when they were told that voting Conservative would ensure a new nuclear plant at Moorside, and will he describe his plan for salvaging the development? Secondly, Moorside was projected to provide about 7% of the UK’s electricity. If the Secretary of State cannot commit to the future of Moorside, can he describe the contingency plans the Government have in place to guarantee the UK’s energy security?

 

Thirdly, the electricity produced by Moorside would be low-carbon, which is key to meeting the UK’s future carbon budgets, so if the Secretary of State cannot commit to the future of Moorside, can he describe what additional measures the Government will take to reduce the UK’s greenhouse gas emissions? Finally, what contingency plans does the Secretary of State have in place for the economic development of west Cumbria, to which Moorside would have brought a reported 6,000 jobs in the construction phase and 1,000 permanent jobs thereafter?

I am rather surprised by the statement and questions of the hon. Member for Salford and Eccles (Rebecca Long Bailey). First, it is widely known that Toshiba has had to engage in a corporate restructuring because its major nuclear subsidiary, Westinghouse, had to enter bankruptcy proceedings. That is what has happened. When I met the board of Toshiba last week, it was clear that that was the reason it is retreating. That is the central fact and the reason it is moving out of NuGen.

 

The hon. Lady asked about the Government’s approach to new nuclear. The policy of this Government is clear: we are in favour of new nuclear as part of a diverse and low-carbon energy mix. We are the first Government for 25 years actually to deliver a new nuclear power station. As my hon. Friend the Member for Copeland mentioned, the sector deal we have struck with the industry has been very widely supported. For the first time, we are training a new generation of nuclear engineers through the nuclear apprenticeship programme. It is an important industry now, and it will be an important industry in the future.

 

One of the things I find when I talk to investors in the nuclear industry is some concern at the complete absence of a united policy on nuclear on behalf of the Labour party. We would think from hearing the hon. Member for Salford and Eccles that the Labour party was in favour of nuclear power, whereas the leader of her party, who I assume has some influence on policy, has said:

 

“I stand here as somebody who is passionately opposed to nuclear power and nuclear weapons in equal measure.”—[Official Report, 13 December 2011; Vol. 537, c. 699.]

 

The shadow Chancellor has said that he would end nuclear power

 

“in the first 100 days of a Labour Government”.

 

It is no wonder that the trade unions the hon. Lady refers to have said that her own party’s energy plans would not leave the lights on.

 

Our approach is to continue with the programme of nuclear new build that we have. It is subject to being developer-led and, as is strictly necessary, to the safety case being made in each example, as well as to establishing value for money. It is, after all, the taxpayers or consumers who pay the bills, and we will always have that in mind as we continue our programme.

The Secretary of State is a most cerebral fellow, and also unfailingly courteous, but there is a bit of pressure on time, so if he can zip through it, with that rapier-like brain of his, that would be greatly appreciated by the House.

Does my right hon. Friend agree that if we are to develop a nuclear industry with the skills and the supply chain necessary to deliver baseload electricity that is reliable and cost-effective, it really is essential to avoid the kind of long gaps in procurement—for example, between Sizewell B and Hinkley C—that we saw under Labour? Will he intensify his work to find a financing model that is equally as attractive to our long-term funds as it could be to overseas investors?

I pay tribute to my right hon. Friend for his important work in re-establishing the civil nuclear industry in this country. He is absolutely right: it is not just investment gaps that cause problems; we lose the ability to train workers in that industry, and we are having to restart training nuclear engineers. In previous statements to this House, I have said that we have accepted the recommendations of the Public Accounts Committee about looking at new models for financing new nuclear. It is right that we should do so, and in so doing we will proceed with deploying new nuclear power in this country.

The Secretary of State should indeed have come to the House with a statement on this matter, because it demonstrates clearly that nuclear plants are not economically viable. Will this failure finally lead the UK Government to realise that they must scrap plans to set up new plants for the declining, dangerous nuclear sector? Will the Secretary of State now commit to ruling out increased subsidies to other nuclear developments?

 

With the inevitable impact on the UK’s ability to meet its carbon reduction targets, does the Secretary of State regret his Government’s decision three years ago to cut investment in green technologies vastly, for ideological reasons, including the infamous betrayal of the £1 billion Peterhead carbon capture and storage project? The latest failure of nuclear is yet more evidence that renewables, growing cheaper and more reliable, are the future of low-carbon energy. Will the Secretary of State now finally properly commit to investing in renewables, including carbon capture and storage, to avoid falling even further behind the rest of the world?

There is no one more committed than I am to the role of renewables in decarbonising our electricity supply. In fact, I am proud that the UK has delivered the fastest rate of decarbonisation in the G20 in the last years. We have created more than 400,000 jobs —many of them in Scotland—in low-carbon businesses and the supply chain. Renewable capacity in this country has quadrupled since 2010, and 30% of our electricity comes from renewables. Our record on renewables stands comparison with that of anyone else in the world.

 

However, my belief is that we should have a mix of low-carbon energy sources, and it is important that we should have low-carbon power from nuclear as part of that mix. I am surprised that the hon. Gentleman does not recognise and pay tribute to Scotland’s proud nuclear tradition. Many people are employed now, and have been employed in the past, in nuclear—at Chapelcross, Dounreay, Hunterston and Torness. The former leader of the hon. Gentleman’s party actually wrote to EDF to request and support the extension of the life of Hunterston and Torness well into the 2020s, so that they could continue to provide those jobs and that power. The hon. Gentleman talks a different game from his party’s correspondence.

From where I am sending, it appears the Government do not have a coherent energy policy, particularly with regard to nuclear, and that has clearly had an impact on the Cumbrian economy. Given what has happened at Moorside, what does the Minister intend to do to support the Cumbrian economy?

My hon. Friend is a great champion of the nuclear sector in Cumbria. It has a bright future. As he knows from the sector deal, there is investment in the supply chain and in reducing the cost of new nuclear, which will be essential if it is to compete with other sources of power. There are also great opportunities through decommissioning, not just in this country, but in selling expertise around the world. Cumbria is the centre of that expertise; it has a strong strategic role in our economy; and we will back it all the way.

We are now entirely reliant on foreign investment to support new nuclear build in our country. If businesses abandon their plans, as Toshiba has done, that will affect the generation of new electricity supply and the costs borne ultimately by consumers. What is the Government’s alternative plan if foreign investors do not support the new nuclear build we need in the UK?

I am grateful for the comments from the Chair of the Business, Energy and Industrial Strategy Committee. She will know that it is only very recently that it has been possible to invest in new nuclear. The Labour Government she supported had no future new nuclear build programme. She will know from her visits to Sellafield and other nuclear installations that we are taking forward the recommendations of the Public Accounts Committee, including at Wylfa in north Wales, to look, where we do have a counterparty with which we can negotiate, at new financial models, and it is right that we should do so. However, as the hon. Lady would expect, that depends on being able to demonstrate value for money for bill payers and taxpayers.

How likely is it that the Secretary of State will find an alternative developer for a nuclear project in Cumbria? If we do not, how will we generate the power we are missing?

We have a substantial pipeline of new energy projects, as a number of hon. Members have made clear. When it comes to the Moorside site in Cumbria, it was always available to developers to leave it. It will now revert to the Nuclear Decommissioning Authority. It will be open to developers to come forward to make proposals. However, whether with nuclear or other sources of clean power, we have a substantial pipeline of new projects coming forward to add to our energy supplies.

When I was doing the Secretary of State’s job, there were plenty of such setbacks and delays to new nuclear, and they really worried me. I was worried about how we would keep the lights on in the 2020s and 2030s, given that the forecasts were reliant on so much new nuclear, so I looked at contingencies, particularly tidal lagoon power. Will he now reverse his views on tidal lagoon power and look at it quickly, because it can provide the firm reliable power that new nuclear offers and be built much more quickly than a new nuclear power station?

The right hon. Gentleman is correct in noting that the scale of such projects means the companies proposing them need to have a plan that is financeable and, in this case, a source of technology that is available. I repeat what I said at the beginning, which is that the Westinghouse subsidiary of Toshiba went into chapter 11 bankruptcy. On the tidal lagoon project, I am in favour of diverse sources of energy—that is clear—but we have to recognise value for money for taxpayers and consumers. The Swansea tidal lagoon proposal was so far out of being able to be financed that it was not value for money for either the taxpayer or bill payers.

Does my right hon. Friend agree that smaller nuclear reactors can be an innovative heart of the mix to provide the country’s future energy needs?

I do indeed. The sector deal to which I referred emphasises the role that small modular reactors can play, including on some sites of decommissioned nuclear power stations. That is an important area for the future.

This decision means that this country will be more dependent on co-operation with France and our European Union partnership. Does the Secretary of State agree that it is important we sustain that?

I think the hon. Gentleman knows very well that I think we should have a good trading relationship, including in energy, with the rest of the European Union, as we have had in recent years.

The UK is the home of civil nuclear technology. One reason for that is the thousands of very highly skilled apprenticeships the nuclear sector provides. What is the Secretary of State doing to ensure that that legacy continues, so we can continue to bring through very highly skilled well-paid jobs?

My hon. Friend makes an excellent point. We have established the new nuclear college to ensure that the gap in skills, to which my right hon. Friend the Member for Sevenoaks (Sir Michael Fallon) referred, can be supplied. Apprentices are now being trained for the first time in new nuclear build—an important way our historic strength in new nuclear can be projected forward into the future.

I thank the Secretary of State. What consideration has been made of the wider impact of Toshiba’s decision on the UK nuclear industry and its supply chain? Does Toshiba’s decision put into doubt any other projects coming down the line?

I was very clear and Toshiba was very clear that there were particular circumstances relating to the financial difficulties of its Westinghouse subsidiary. All these projects are promoted by a particular investor. It has made a decision. It is one that I think was widely expected, given those financial difficulties, but it has no implications for any other promoter.

I understand that the shadow Chancellor said last year that he would end all nuclear power within 100 days of a Labour Government. Given that nuclear energy accounts for about 20% of our energy production, how would they keep the lights on?

This is the point the trade unions have made. The failure of the Labour party even to support the policy described at the Opposition Dispatch Box by the hon. Member for Salford and Eccles (Rebecca Long Bailey) concerns investors in new nuclear. In the past, we have been able to establish a common approach in this area so that investors can take a long-term approach with certainty. It would be helpful if we returned to that.

I thank the Secretary of State for his replies so far. Toshiba’s decision to withdraw from the nuclear plant leaves a clear gap in the energy market. It has been stated today that there will be a 7% deficit in energy provision as a result; how will that deficit be filled and by whom?

There will not be a deficit. We have a substantial—in fact, increasing—pipeline of new investment. One of the features of the energy industry in the UK is that we have not only a pipeline of proposed new nuclear power stations—as I said, they need to meet the value for money threshold—but a substantially increasing volume of investment in renewable energy coming from and reflecting the fact that the price of offshore renewables has halved in the past two years.

The northern powerhouse has just taken a huge dent to its power generation for the future. The Secretary of State knows how important those jobs would be to the north-west of England, including in the Ribble Valley, which I represent. Where Toshiba has failed, will his Department not re-energise its efforts to ensure that the nuclear experts that he relies on can work with embassies and high commissions throughout the world, where some of this expertise lies, to give at least some hope that, where Toshiba has now pulled out, somebody else can come in within a short time?

My officials and I, and my ministerial team, talk regularly to countries and companies across the world. When I was in Japan last week, I had discussions with Hitachi, which is actively engaged in negotiations on the Wylfa project. Now that Toshiba has taken its decision, for reasons that everyone understands, and I make no criticism of it—it has been very transparent in the reasons for this—that site is now available. Other developers will know that and be able to engage.

Despite losing £100 million on this venture, Toshiba’s share price went up when it pulled out, yet the Secretary of State stands there and tells us that nobody is more committed to nuclear than he is. It is quite obvious that renewables are the future, yet this Government are blocking onshore wind development in Scotland. They are looking at pulling the export tariff and as my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) said, they have already pulled CCS funding. When will they provide proper investment in renewables and end this nuclear obsession?

The first part of the hon. Gentleman’s question makes my point for me. The reason that Toshiba took the decision that it did was to restore robustness to the financing of the company following the chapter 11 bankruptcy proceedings that Westinghouse went into. It has grasped that nettle. On the deployment of renewables, he will know that when it comes, for example, to wind in the remote islands of Scotland, I made sure that we were able to take that opportunity, and as a result, investment is going into those communities. [Interruption.] He says that it is small, but the performance of offshore wind is creating jobs all around Scotland and the United Kingdom and is a reflection of the commitment that this Government have given to it.

This decision is not just about west Cumbria. Springfields nuclear fuel, which is based in my constituency and employs 1,200 people, was hoping to make the nuclear fuel for this plant, as the Secretary of State knows, because he visited it. What assurances can he give that workforce, and what measures are the Government taking to make sure that Springfields can make nuclear fuel for some of the other plants that he has outlined this afternoon?

Springfields is very successful and has an active programme of supplying the nuclear industry generally. It will be one of the beneficiaries of the fact that we have restarted the build programme for civil nuclear power in this country. My hon. Friend knows that I will work closely with it and him to make sure that it can bid into those projects when they mature.

The Secretary of State says that he is talking to other investors in UK nuclear. Will he name which alternative companies he and the Department have approached since Toshiba’s decision, and will he follow up on the exploration by my hon. Friend the Member for Workington (Sue Hayman) of a positive intervention by CGN—China General Nuclear Power Group—to prevent the loss of skills, jobs and equities at Moorside?

We have regular discussions with investors in nuclear. The decision was taken only last Thursday and has some way to go to be implemented, but the hon. Gentleman has my assurance that prospective investors in this site and others will be able to talk, in the first instance, to the NDA, which owns the land, but are also free to discuss these matters with my officials.

The Secretary of State has championed the development of battery technologies, through the Faraday challenge, and his Department is also looking closely at demand response technologies. Can he say whether these renewables plus storage slash flexibility options are quickly replacing the need for centralised thermal plant and whether we should be looking at those options alongside the new nuclear programme as a priority for our future energy mix?

My view is that we should have a mix of energy sources. It is true that storage, and the progress being made in storage, plus renewables is increasing the possible contribution to our electricity generating system, but, as I say, we are always wise to have a diversity of sources, which is why nuclear has an important role to play.

When NuGen hands back the Moorside site to the NDA in January, will it be the taxpayer who pays for the clean-up, or—I hope— its preparation for a new tenant?

If my hon. Friend visits the Moorside site, he will see that it is pretty clean already. The site was available for development but has not had substantial work on it that would require any remediation.

As foreign energy companies look to develop new nuclear build around the world, with Her Majesty’s Government’s nuclear sector deal, how attractive is the UK electricity market compared to those of other countries?

It is an attractive market. That is one reason there is interest from several companies in the new nuclear opportunities available. Our market has always been open to overseas investment, and our commitments have attracted interest, not least in the next in the pipeline, which is Hitachi’s proposed investment in Wylfa in north Wales.

Small nuclear reactors have already been mentioned briefly today. May I invite the Secretary of State to go fractionally further than he did in his previous answer and say that when it comes to these smaller, cheaper, more efficient reactors, we should be looking not just at existing nuclear sites, but at other sites being decommissioned in the near future?

My hon. Friend is absolutely right. One of the advantages of small modular reactors is that they can be deployed in a wider range of locations than the larger traditional reactors, and that is part of the attraction recognised in the sector deal.

I have considerable sympathy for the Secretary of State’s position in this matter. Does he agree that Toshiba’s much-publicised problems in this area are not of his making and that had Toshiba been willing to keep open its troubled subsidiary on the basis of this one contract, he could have been accused of getting poor value for money for the taxpayer?

It is up to the company, as a commercial investor, to decide its future strategy. It has had a major financial problem as a result of the problems experienced by Westinghouse. We have always been clear that these projects need to be commercially backed, and Toshiba has taken a commercial decision to exit from overseas nuclear. That is a matter for it.