MPs on the Public Accounts Committee have blasted the government for its “blinkered determination” to agree a deal on a new nuclear plant at Hinkley Point C, ”regardless of changing circumstances”. It said government should have considered the case for different financing structures where risk was shared, although it was not the prevailing policy. It should re-evaluate and publish its strategic case for supporting nuclear power before agreeing any further deals for nuclear power stations.
The cost of the project is many times the original estimate and the government has made no plans to secure other benefits in jobs and skills.
PAC chair Meg Hillier MP said, “There is clearly scope to link the nuclear programme to the wider strategy of driving economic opportunities and growth. Government credibility in this area will inevitably be questioned when – by its own admission – it doesn’t know what UK workers and business will gain from this project, and appears to have no coherent idea of what to do about it.”
“The creation of the Department for Business, Energy and Industrial Strategy presents a clear opportunity to link the nuclear programme to the government’s industrial strategy to drive economic opportunities and growth. However, the Department does not know to what extent UK workers and companies will benefit from Hinkley Point C and the wider follow-on new nuclear programme, and has no plan in place to show how it will maximise the wider benefits of the project.”
Among its recommendations, the PAC said BEIS should now put such a plan in place.
No-one protected consumers
The government was concerned with whether the risk of the deal would end up on the government’s balance sheet instead of on the implications for consumers. And the Department pressed on with locking consumers into an expensive deal, despite the case for Hinkley Point C and nuclear power weakening during its negotiations, the PAC said.
In each household electricity bill, £10-15 (in 2012 prices) will go towards supporting Hinkley Point C up to 2030. But the Department’s assessment did not sufficiently consider the costs and risks of the deal for consumers. Its assessment only went out to 2030, despite the long-term nature of the contract; and it did not consider whether consumer top-up payments would be affordable in the context of its support for other low-carbon technologies.
Energy security risk
The PA warned that if the new plant is delivered late there would be a risk to energy security and that could mean the government will step in to cover extra costs to keep the project moving. That eventuality is less likely if it maintains an alternative means of ensuring a sufficient supply of electricity, so the Department should publish a ‘Plan B’ for achieving energy security before the end of this year, and review it annually.
Meanwhile, the Low Carbon Contracts Company would have to maintain capability many years into the future to monitor and manage it effectively, adding, “Government departments have a poor track record on contract management, as this Committee has reported previously, and we will be looking again at progress with Hinkley Point C and at how effectively the LCCC is performing its role.”