HC Deb 21 July 1988 vol 137 cc1302-11 4.15 pm
The Secretary of State for Energy (Mr. Cecil Parkinson)

With permission, Mr. Deputy Speaker, I should like to make a statement about the Government's future funding of the research programme being carried out by the United Kingdom Atomic Energy Authority into the fast reactor

. The programme involves the major facilities at Dounreay in Caithness—the prototype fast reactor, known as the PER, which started operation in 1974. and the associated plant for reprocessing fast reactor fuel. The rest of the programme takes place at a number of other authority sites including Harwell, Risley and Windscale. This is chiefly concerned with materials and fuel development, plant performance and safety.

In the current financial year, net expenditure on the programme is planned at £105 million, of which the CEGB is contributing £28 million. Of that total, some £50 million represents the net cost of the Dounreay operations.

The Government have carried out a review of the programme in the light of the expectation that commercial deployment of fast reactors in the United Kingdom will not now be required for 30 to 40 years. Our overall aim in the review has been to retain a position in the technology for the United Kingdom at economic cost. In considering the programme, we have also had firmly in mind the importance of Dounreay to the Caithness economy, and the contribution of the people of Caithness to the development of the fast reactor.

We recognise that there is continuing benefit to be secured from operation of the prototype fast reactor. We have therefore decided to fund the reactor until the end of the financial year 1993–94. This will enable operating experience to accumulate for a further five years. We have also decided to fund the reprocessing plant at Dounreay until 1996–97, to process spent fuel from the reactor. Our decisions will ensure continuing and substantial employment at Dounreay into the late 1990s.

In addition to the work at. Dounreay, we have decided to maintain a core programme of fast reactor research and development of £10 million a year. The present research programme will be phased down to that level over the next 18 months. This will enable us to make a continuing contribution to the development of the technology. We shall also continue our support for the existing collaboration between European countries on fast reactor research. Moving to the core programme could mean the loss of over 1,500 jobs over the next two to three years at sites other than Dounreay.

The programme that I have set out recognises that the commercial requirement for the fast reactor in the United Kingdom is likely to be some decades away. At the same time it will retain a position in the technology for the United Kingdom at economic cost; it recognises the special contribution of Dounreay to the Caithness economy; and it provides a basis for continued collaboration with our European partners.

Mr. John Prescott (Kingston upon Hull, East)

The Minister's statement offers some welcome, if short-term relief for the Dounreay site in Scotland, but it yet again increases the redundancies in essentially high technology areas in Harwell, Risley and Windscale. Since the Minister has made it clear that he does not see a use for a commercial fast breeder reactor for 30 or 40 years, is he offering Dounreay a role for only five to eight years? There is clearly a long time gap, which suggests a phased closure programme. Therefore, does the Secretary of State anticipate a role for Dounreay after 1993?

Does the Secretary of State agree with and confirm Lord Marshall's statement that ending the contribution to the research programme is justified, since a privatised industry would not fund such research for benefits that are 30 years away? What will be the future funding for a privatised electricity industry in that area?

The Secretary of State states that the research programme will be reduced to £10 million. What is the cut in funding and what effect will that have on the spin-off advantages of non-nuclear technology, which we have seen particularly in oil rig structures and computer controls? What skills and jobs are affected by the statement and will the Secretary of State identify them by the authority's sites in Harwell, Risley and Windscale? What future will they have for re-employment?

Finally, does the Secretary of State accept that the reality of today's statement arises directly out of the Government's programme for the privatisation of the electricity supply industry where the short-term commercial criteria are in direct conflict with the long-term national interests?

Mr. Parkinson

First, I must make it clear that this does not arise from the privatisation proposals. Had the industry stayed in the public sector, the same examination would have had to take place and we would have come to the same conclusion that there is no likely commercial application for 30 to 40 years. The privatisation issue is a red herring.

Mr. Prescott

What about Lord Marshall?

Mr. Parkinson

Lord Marshall would have had to persuade the Government to put up the substantial funds that would be necessary if we were to continue, and I have no reason to think that he would have been in any way successful.

Dounreay will be a major employer in the region until the late 1990s. It will be available as a site for other nuclear purposes should they arise during that period. My right hon. and learned Friend the Secretary of State for Scotland will be making intensive efforts during the nine years that this programme offers to find work to replace that at Dounreay.

I told the House that £105 million was being spent on the programme; that £50 million was being spent at Dounreay; and that the other £55 million represents the cost of the rest of the programme. I said that that would be scaled down over the next 18 months to a core programme of £10 million a year.

Hon. Members

What does that mean?

Mr. Neil Hamilton (Tatton)

Will my right hon. Friend confirm that, contrary to the assertions of the hon. Member for Kingston upon Hull, East (Mr. Prescott), there is no necessary connection between fast breeder reactor technology and ownership in the private sector? Such investment as takes place in Germany comes from the private sector.

Will my right hon. Friend confirm that the National Nuclear Corporation's design team which is working in this area has 20 years' expertise behind it and there will at some stage be a future for fast breeder technology, so that it is important to keep this technology going? However, it is perfectly understandable that, in view of long-range forecasts for fuel prices in the future, it should be put on the back burner at this stage.

Mr. Parkinson

Yes, I recognise the important work done by the NNC in this area. The best news for the NNC is that the Government have committed themselves to a major new programme of pressurised water reactors which will ensure that that important national facility and skill continue to be used.

Mr. Robert Maclennan (Caithness and Sutherland)

Why has the Secretary of State taken such grave and damaging decisions before the reorganisation of the electricity supply industry and before it could give him a coherent statement of its view of consumers' needs? Why has he done this before the responsibility for carrying out research and development into all our long-term fuel needs has been reallocated, as it will have to be following privatisation?

The Government's intention to reduce participation in the European collaborative programme to a mere £10 million may well be seen by our European competitors as a cop out, and it may even scupper the collaboration. Has he taken soundings of those Governments before announcing this, or is he prepared to let our lead in this area pass to France?

Why has the right hon. Gentleman not stated more precisely the loss of jobs associated with the decision at Dounreay and in the north of Scotland? What steps have been agreed by him and his Cabinet colleagues to offset the undoubted economic damage that will be done to the north of Scotland? He has been vague on that, and that will not be acceptable.

I recognise that forecasts of energy supply needs are notoriously difficult to make, but why has the Secretary of State suddenly changed the Government's forecast from approximately 20 years to approximately 40 years? Has he simply plucked that figure out of the air?

Finally, will the Secretary of State recognise that the dismay which was felt by my constituents and many people throughout the country about this programme stems not only from anxiety about its impact on the economy of the north and those other establishments where the work is more immediately being cut, but because they have a sense that two generations of work on producing a superb British technological achievement which leads the world is being handed to our commercial competitors?

Mr. Parkinson

If the Opposition listened to the statement instead of thinking about their supplementary questions, they might hear the answers to the questions that they subsequently ask. The statement made it clear that 1,500 jobs will be lost in the next 18 months at the sites other than Dounreay. That was in the statement. There is no question——

Mr. John Garrett (Norwich, South)

How many redundancies at each site?

Mr. Parkinson

That has not yet been settled, because the distribution of the work has to be determined in the light of the new programme.

Lord Marshall has made it clear on privatisation that he would not propose to support the programme beyond 1990 and it is clear that there will be no commercial need for a reactor for some considerable time.

The hon. Member for Caithness and Sutherland (Mr. Maclennan) talks about European collaboration, but let me remind him that at this moment the French Superphenix is out of action and the Germans, who were supposed to build the next reactor, cannot even obtain a licence for the operation of their demonstration fast reactor, so that programme is in abeyance. We are offering a continuing programme of work on fast reactors and reprocessing, coupled with a core programme of research. That will enable us to play a substantial part in the European collaboration.

Several Hon. Members


Mr. Deputy Speaker (Mr. Harold Walker)

Order. I remind the House that we have another important statement and a number of important debates to follow. Therefore, may we have brief questions, please?

Mr. Ian Bruce (Dorset, South)

Will my right hon. Friend say a few words about Winfrith, the Atomic Energy Authority facility in my constituency, which I believe is doing some work on this programme? Will he also say a few words about the nuclear energy research programme? We all saw at the last general election that the Conservative party was the only one committed to continuing nuclear energy. I am amazed at the comments coming from the Opposition. Will he say something about our continuing research on pressurised water reactors and other areas?

Mr. Parkinson

My announcement today represents about a quarter of the work of the Atomic Energy Authority. That is the £105 million programme, of which, as I have explained to the House, about £60 million is due to be retained well into the next decade. Therefore, the authority has a substantial programme of other work. The authority will have to make some major adjustments as a result of this announcement, and that is recognised. The authority commands the almost exclusive use of some skills that are in short supply and we expect there to be quite a demand for the personnel that the authority releases.

Mr. Tony Benn (Chesterfield)

Is the Secretary of State aware that, although his statement was cast in bland language, he is plainly saying that the fast reactor is not commercial and cannot be seen to be commercial for the foreseeable future?

The right hon. Gentleman will know better than anyone that Lord Marshall was one of the most passionate advocates of the fast reactor and that in 1974, during my period in the Secretary of State's office, he was demanding the immediate building of a full-scale fast breeder reactor?

The right hon. Gentleman's statement will be welcomed because it is the first statement by a Minister in this Government that a complete line of nuclear reactor systems is to be phased out. The many skills of those in the industry need to be safeguarded, but I hope that the Secretary of State will come clean and tell us that the decision has been dictated in part by the fact that there is a big pressurised water reactor programme from America.

Furthermore, while I strongly disapprove of privatisation, I know that when one privatises one does not back non-commercial projects such as the fast breeder reactor programme. One of the reasons why the whole nuclear programme in the United States has been at a halt for 10 years is that no private utility in America is prepared to build any reactor system, and that includes the pressurised water reactor to which the Secretary of State now seeks to commit us by a statutory requirement that a given amount of electricity must be generated by nuclear means.

Mr. Parkinson

I have announced clearly that there will be no commercial demand for this technology for some decades. That was not always the case. Presumably the right hon. Member for Chesterfield (Mr. Benn), who supported the programme when he was Secretary of State, did not always hold the view that he now holds, or he would have made a decision, like the decision that I have announced today, to reduce this technology and its costs to a more bearable size. He did not do that.

The right hon. Gentleman asked about privatisation, and privatisation has forced us to face up to questions that should probably have been asked some years ago.

Sir Ian Lloyd (Havant)

It is extraordinary how the nuclear cookie crumbles. My right hon. Friend the Secretary of State has made a statement with grave and far-reaching implications, which I have no doubt the Select Committee on Energy will wish to investigate in some detail. In advance of that, however, perhaps my right hon. Friend will elucidate four points.

First, what are the crucial assumptions that he has made in reaching his decision that a commercial fast breeder reactor will not be required for 30 to 40 years?

Secondly, what financial contributions does he expect to be made by the Central Electricity Generating Board and its successors after 1993–94?

Thirdly, why does he believe that the core programme of fast reactor research can be sustained on the minuscule sum of £10 million when the existing programme has cost well over £100 million and has not been successful?

Fourthly, what will be the financial level of the British contribution to the European fast breeder reactor programme? Finally, have we abandoned all intention of taking part in the possible construction of a commercial fast breeder reactor in Europe?

Mr. Parkinson

My hon. Friend asked me about the crucial assumptions. The commercial electric utilities see no possibility of ordering a commercial fast breeder reactor for the foreseeable future—for many decades—and that is very important. If there is no customer, to continue with a huge programme, which assumes that there will be a customer, is to fool oneself. Secondly, the £10 million core programme, coupled with the additional work which will be continued at Dounreay, will enable us to continue to maintain and increase our knowledge of fast breeder reactors and their working for the foreseeable future.

I have already mentioned that the European collaboration is in some disarray. My hon. Friend may have noted that, in addition to the fact that the German programme has been stalled, the Italians have held a referendum and have virtually been ordered to pull out of the European collaboration. I have had discussions with my German and French counterparts, and I shall be having further discussions, to establish how we can maintain a sensible programme that will not cost as much as the previous programme.

My hon. Friend asked whether we will contribute to the cost of a European fast reactor. I should have thought that it was clear that we do not think that there would be any purpose in making the huge £800 million investment that would be needed, and we shall therefore not be taking part in the European fast breeder reactor construction programme.

Mr. Alex Salmond (Banff and Buchan)

The Secretary of State referred to Dounreay being available for other nuclear purposes should they arise. Are they codewords for nuclear dumping in Caithness? Is not the clear implication of the statement, which puts a fine time scale on the operations at Dounreay, part of a softening-up process to make the area acceptable for EDRP, the European demonstration reprocessing plant, or nuclear dumping—the dirty end of the nuclear industry? Does not the future of the Caithness economy lie in diversifying out of the nuclear industry and into alternative and renewable energy resources, whose total research budget from the Department of Energy is only one sixth of the budget of the fast breeder programme?

Mr. Parkinson

The hon. Gentleman would be quite wrong to say that I was suggesting that we should keep Dounreay open so that it could accept the Nirex proposals. That is not the case. During the next eight or nine years, there may be other nuclear work which may be suitable for the area. I do not say whether there is, but if the facility is available the work could be done. There are possibilities of other work but they are so general that I cannot give further details of them at the moment. The facility will be there if it is needed and it will be there for the next eight or nine years.

It is clear that the hon. Gentleman does not represent the constituency that contains Dounreay. If I had announced that we were closing the reactor forthwith, that 2,000 jobs would be lost and that we hoped for a programme of diversification, he would have been the first person to stand up and start shouting. In fact, we are announcing a continuing programme and my right hon. and learned Friend the Secretary of State for Scotland has announced that he will work to try to ensure that other jobs become available as Dounreay runs down.

Mr. John Hannam (Exeter)

Will my right hon. Friend confirm that the main reason for the non-viability in the immediate future of the fast breeder reactor and other energy technologies such as liquefaction and gasification is the long-term forecast of lower electricity fuel costs? Will he also confirm that we shall be maintaining a British-based technology?

Mr. Parkinson

We are trying to maintain a position in a technology which we still believe has a future—albeit much delayed as compared with original expectations. It will be some considerable time before the fast breeder reactor is needed—if ever. We believe that the technology has been proved at Dounreay; we have shown that we can construct and operate a fast breeder reactor, which is at the moment pumping electricity into the grid. By the time we close it down, Dounreay will have served its purpose in showing that the fast breeder reactor is a technical possibility.

Mr. Bruce Millan (Glasgow, Govan)

The answer that the right hon. Gentleman has just given is the first clear statement of what is going to happen after 1993. We welcome the fact that there are to be no immediate redundancies at Dounreay, but the Secretary of State has now said, has he not, that in 1993–94 Dounreay will close down; is that the reality? [Interruption.]

Mr. Parkinson

I am afraid that that is wishful thinking on the part of the hon. Gentleman, who is violently opposed to nuclear power in any form——

Mr. Millan

indicated dissent.

Mr. Parkinson

Not the right hon. Gentleman, but the hon. Member for Kingston upon Hull, East (Mr. Prescott), who has been busy doing a bit of electioneering on this important issue.

The facility will not close down in 1993. What will close down in 1993 is the reactor, and the reactor employs a small proportion of the people on the site. We estimate that by 1995 there will still be 1,600 people working on that site—on reprocessing, decommissioning and security. At the end of the operation, there will still be 500 continuing jobs on the site in security and maintenance.

Sir Trevor Skeet (Bedfordshire, North)

Following from the Secretary of State's decision, what does he propose to do with the 45 tonnes of plutonium that would have been used in the fast reactor system, which we now understand is to be deferred for 30 to 40 years? Will he bear in mind that the international collaboration has been seriously set back on three fronts—CERN, space and nuclear energy?

Mr. Parkinson

I have already said that there is no purpose in continuing with the programme, which was originally based on the assumption that commercial fast reactors would be needed early in the next century. It is now clear that they will not be needed. The Government have faced up to that and have come forward with a set of proposals that recognise the contribution of Dounreay and the need to run down the Dounreay site in a careful way over a long period. They also recognise that we should retain a position in the technology, and that is what we are doing.

I am not here today to discuss the other projects that my hon. Friend mentioned. We are recognising the realities of the fast reactor programme and making arrangements to maintain the technology in an economic way.

Mr. Tam Dalyell (Linlithgow)

When the Secretary of State was pressed by the hon. Member for Banff and Buchan (Mr. Salmond) on what he had said to my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) about other nuclear purposes, should they arise, his reply was "After all, they are so general that I cannot go into them." But some of us have gone into them with the directorate of Dounreay. As the Secretary of State well knows, one possible purpose is reprocessing and another is the problem of what to do with those 10 Ministry of Defence submarine reactors, which must be reprocessed, monitored and stored somewhere by the early 1990s. Will the right hon. Gentleman be a little more forthcoming about those alternatives?

Mr. Parkinson

The hon. Gentleman has mentioned some of the possibilities, but no one is prepared to make any commitment that the Dounreay site will be used for any of those purposes, although they are the sort of purpose for which it might he used. The Ministry of Defence and other bodies that have been consulted do not want to be committed to using the site. That is why I said that if the site is available and needs arise it will be possible to use it. But there is no commitment of any sort that it will be used for any purpose other than its present one.

Mr. Allan Stewart (Eastwood)

Does my right hon. Friend agree that the logic of the SNP policy—as far as such a description is appropriate—is that Dounreay should be closed immediately? Is not this announcement a positive outcome for Dounreay and Caithness, because it guarantees substantial employment until the late 1990s?

Will my right hon. Friend say anything further about the work that our right hon. and learned Friend the Secretary of State for Scotland will undertake? Can he give an assurance that it will involve the Highlands and Islands Development Board and the local authorities? Might it not be helpful if there were a meeting with the Scottish Office in the near future to consider the long-term economic opportunities for Caithness?

Mr. Parkinson

Yes, my right hon. and learned Friend will be discussing this matter with the Highlands and Islands Development Board.

I confirm what my hon. Friend said about the Scottish National party. The only suggestion that the hon. Member for Banff and Buchan (Mr. Salmond) made was that we should extend the renewables programme. I suppose he means that we should cover Caithness and Sutherland with windmills. That is not a particularly sensible policy, and it would ensure that 2,000 people were put out of work now, with only the possibility of work in the future.

Several Hon. Members


Mr. Deputy Speaker

Order. I shall call all hon. Members who are rising.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

Does the right hon. Gentleman appreciate that this statement marks the final nail in the coffin of an economic programme for the Highlands and Islands which has been fostered by successive Governments of both political colours and which involved the Corpach pulp mill—now closed—the Invergordon aluminium smelter—now closed—and the Dounreay fast reactor programme which, in the words of the Secretary of State, is to close in the 1990s?

I refer to the question asked by the hon. Member for Eastwood (Mr. Stewart). Will the Secretary of State say anything more about the intensive efforts over the next nine years that the Secretary of State for Scotland will make to try to undo the structural harm done to the economy of the Highlands? I can tell him, on behalf of my constituency and that of my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan), that if they are as successful as the efforts of the past nine years made by the Scottish Office, unemployment will continue to rise and the economy will continue to collapse.

Mr. Parkinson

I have already told the House that there will be substantial employment at Dounreay. I mentioned the figure of 1,600 in the mid-1990s. That figure will slowly decline. At the end of the decade, about 500 people will still be working at Dounreay on maintenance and security. That will be a continuing commitment. Right through to the end of the 1990s, at least 500 will be employed, and there will be considerably more than that for most of the 1990s. During that time, my right hon. and learned Friend will be working hard with the Highlands and Islands Development Board to see what other jobs can be attracted to the area. At least he will have a lot of time in which to work to make this transition as painless as possible.

Dr. Michael Clark (Rochford)

Is my right hon. Friend aware that many of us who take an interest in the technology of nuclear generation are somewhat apprehensive about today's statement? Is it not possible that the right hon. Member for Chesterfield (Mr. Benn) was right to say that this is the beginning of the end for the fast breeder programme? Does my right hon. Friend agree that it is difficult to mark time in technology? Either we go forward with others or we stay behind on our own. Will his Department do all that it can to ensure that we keep abreast of the know-how in this technology so that we can re-enter at some later time, as we will almost certainly want to do?

Mr. Parkinson

We are not leaving this technology. As I have said, we shall operate various parts of the plant for at least nine years. We shall still have a substantial research programme after that. It would not have been justified to continue with expenditure on this scale and then to invest another £800 million in a European fast reactor, knowing that there was not likely to be a commercial customer for the technology for decades. We have faced up to the realities of the fast reactor programme and we are retaining a position in it.

Mr. David Heathcoat-Amory (Wells)

This is a sad and difficult, but correct, decision. I congratulate my right hon. Friend on facing up to the issue rather than postponing the decision. With the continuing low price of uranium and the comparative success of other reactor types, it must be right to reduce expenditure on the fast reactor, whose prospects are comparatively poor.

Will my right hon. Friend confirm that his commitment to the rest of the nuclear programme, and in particular to the PWR programme, is undiminished? Will he see whether research staff can be transferred from the fast reactor to the PWR programme?

Mr. Parkinson

I am happy to confirm to my hon. Friend that the Government remain committed, as they were in their election manifesto, to maintaining a substantial nuclear programme. I was at Sizewell on Monday and I have bad news for the Opposition. Sizewell is running ahead of schedule and all the signs are that it will be built to time and to cost and that it will be an efficient station pumping electricity into the grid in 1994. I have set up an inquiry into Hinkley Point. I have had no other applications from the CEGB. I understand that there will be two more. The Government remain committed to maintaining a substantial nuclear programme.

Mr. Tony Baldry (Banbury)

Given that fast breeder reactors are unlikely to be commercially viable, at least for decades, is not the only responsible decision that any responsible Government could take that which my right hon. Friend has announced this afternoon? Is it not clear that the logical conclusion of the energy policies of all the Opposition parties would have been the decimation of Dounreay—and of the whole of the rest of the British nuclear industry—a long time ago? So their indignation this afternoon is quite synthetic.

Mr. Parkinson

My hon. Friend has identified the Opposition's problem. That is why they sit muttering and shouting from sedentary positions. They are wholly opposed to the entire nuclear programme. Had they been in power, they would have closed Dounreay years ago, and thousands of other people in the industry would have been put out of work.