Nuclear Power (Hansard, 7 June 1995)

The Minister of State, Department of Trade and Industry (Earl Ferrers)
My Lords, the question of funding for a new pressurised water reactor station at Sizewell C was examined extensively in the nuclear review. The Government would need to be convinced that there were compelling strategic reasons for using taxpayers' money to build another nuclear station when the private sector is unwilling to do so. The nuclear review found no such reasons.

§ Viscount Mersey
My Lords, I thank my noble friend for that reply. Can he confirm that building a nuclear power station is extraordinarily expensive and unlikely to be funded by the private sector? Consequently, will he confirm also that in around 10 years' time there will be only one nuclear power station left, Sizewell B, and that will be producing only around 3 per cent. of our electricity, while the remaining 97 per cent. will have to come from fossil fuels plus a few windmills? Inevitably the damage to our environment will be much greater than if we had gone down the nuclear road.

Earl Ferrers
My Lords, I agree that building nuclear power stations is an expensive exercise. However, if it is possible to find private finance to build the Channel Tunnel, then it is possible to find private finance to build a nuclear power station provided it is economical. The independent consultants looked at the development of fuel diversity since the electricity privatisation in 1990 and the likely future trends. They concluded that the mixture of different fuels for electricity generation was unlikely to fall below the levels of the 1980s during the period up to 2010. Providing public sector support for a nuclear power station would constitute a significant intervention in the electricity market. In the light of the consultants' report, Her Majesty's Government concluded that there was no case for public support for a nuclear build.

§ Lord Jenkins of Putney
My Lords, are the Government aware that on this occasion they are to be congratulated on coming to the inevitable conclusion? Anybody who reads the report and is able to come to a contrary conclusion will do so because of a preconception that it is necessary to build the reactor. The report proves conclusively that private enterprise will not build it and the Government are well advised not to invest public money in a project which is unwanted and the end of which is unforeseeable.

Earl Ferrers
My Lords, I do not quite know what to say. Congratulations from the noble Lord on anything that the Government have done is sometimes like the kiss of 1353 death. However, I shall not accept it as such, but merely as congratulations which he wishes to bestow and for which I am grateful.

§ Lord Renton
My Lords, will my noble friend and the Government bear in mind that nuclear power stations do not cause air pollution or acid rain in the way that coal and oil-fired power stations do?

Earl Ferrers
My Lords, my noble friend is correct. Nuclear power stations do not produce greenhouse gases or acid rain gases. There are various environmental arguments in favour of them. But, the nuclear review looked at all that and concluded, nevertheless, that there was no case for public intervention, which would distort the market.

§ Lord Clinton-Davis
My Lords, is the Minister aware that estimates have been given by economists who are well-versed in the subject of nuclear power that Sizewell B is likely to produce a derisory amount from its sale in consequence of privatisation proposals? What do the Government say about that? Will the Minister also comment on assertions that have been made that part of the nuclear levy, which was designed to deal with the decommissioning of nuclear plants, has been used as a subsidy for Nuclear Electric's ongoing operations? Is that right?

Earl Ferrers
My Lords, the fossil fuel levy was due to end on 31st March 1998. It will now end in 1996 when the advanced gas-cooled reactors and the pressurised water reactors are privatised. It was used specifically for the purposes of decommissioning. I do not agree that the sale of the nuclear industry would produce derisory sums. The noble Lord will have to wait and see. But I merely advise him of what the chairman of Nuclear Electric said—that he welcomed the acceptance that privatisation was the first step in safeguarding the industry's future.

§ Lord Clinton-Davis
My Lords, is the Minister saying that no part of the fossil fuel levy has ever been used for Nuclear Electric's ongoing commercial operations?

Earl Ferrers
My Lords, I was not saying that. I was saying that the purpose of the levy was to pay for the decommissioning of the nuclear power stations when that comes about.

§ Lord Ezra
My Lords, I agree with the Government's conclusion that there is no economic case for another nuclear power station, and by past experience I have been competing with nuclear power. Nevertheless, it is important from this country's point of view that we should retain an expertise in nuclear power. Can the noble Earl say what measures can be taken to maintain that expertise?

Earl Ferrers
My Lords, I can understand the noble Lord's concern, which I believe many people share. Nuclear Electric is the operator of a pressurised water reactor and therefore there will be a United Kingdom capability to operate, maintain and upgrade those kinds of stations, so that expertise will remain. The skill base will help to provide the basis for re-establishing a reactor construction capability should that be required.

§ Lord Avebury
My Lords, has the money which has been paid by way of levy been retained in a special fund which cannot be touched by Nuclear Electric for any other purposes after privatisation? Can the Minister say to what extent liability which will fall on Nuclear Electric will be affected by variations in the expected life of nuclear reactors, which differ perhaps from the accounting life of 30 years which I believe has been assumed in the accounts of the corporation?

Earl Ferrers
My Lords, the purpose of the levy was to provide funds for decommissioning the reactors. That money has been paid and is available for that purpose.