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22 Oct 2002 : Column 214—continued

Mr. Alex Salmond (Banff and Buchan): Is it not the case that one of the biggest objectors to wind farms—even bigger than the Liberal Democrats—is the Ministry of Defence? Might not a partial solution be for the Minister to have a word with some of his MOD ministerial colleagues and ask them to stop objecting?

Mr. Wilson: I have done, but not in that spirit, because I recognise legitimate interests. Often, when the MOD is blamed for making objections, they turn out not to be from the MOD at all, but from aviation interests in general and civil aviation interests in particular. There is a concern about the impact of wind farms on radar, for example. There are, therefore, perfectly reasonable grounds for concern. I am trying to get a much more stated position from the MOD, so that people know when they are likely to run into objections, but the Ministry is actually co-operating with a large number of developers to give them the advice and guidance that they need. It is worth pointing out that, of the first tranche of 18 offshore wind farm sites to be cleared by the Crown Estate, the MOD objected to or raised concerns about only two. It is not, therefore, true to say that the MOD is making blanket objections.

Mr. Lansley rose—

Mr. Drew rose—

Mr. Wilson: I shall give way to my hon. Friend the Member for Stroud (Mr. Drew).

Mr. Drew: I thank my hon. Friend; he has been generous with his time. I believe that he will get total support from the whole House—particularly from Labour Members—for the drive towards more renewables, but we must also look beyond renewables to the hydrogen economy. One of the problems involved in trying to shut down the nuclear industry is that, if we

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lose the knowledge and expertise that it contains, where will the hydrogen economy come from, if not from that source? Perhaps my hon. Friend could tell us that.

Mr. Wilson: My hon. Friend makes an excellent point. I keep saying that we have now moved into an era in which the world should not be divided into pro and anti-nuclear fan clubs. We are not fighting the arguments of the 1960s or the 1970s, when the decisions were taken that led to the existence of the nuclear industry. The point is that we have a nuclear industry, and it supplies us with 25 per cent. of our electricity. In Scotland, it supplies us with much more.

The rational, intelligent argument in which we must engage is whether it makes any kind of sense to run down an industry that is the major low-carbon contributor to the energy mix, just when we face an enormous challenge to reduce the carbon content of our energy supply in general. That is the nub of the debate, and it is perfectly possible to talk about it sensibly.

Mr. Patrick Hall (Bedford): Surely we do not need to talk about running down the nuclear industry. We must look at the next 20 years, during which the existing nuclear power stations will reach the end of their safe lives. Has not the performance and innovation unit suggested in a recent report that that period could present an opportunity for renewables and other sustainable means of electricity production to bridge the gap, meeting the need for a secure supply while reducing some of the public costs and liability involved in the decommissioning of nuclear power?

Mr. Wilson: That is roughly what the PIU report said, and I think that there is a strong element of truth in it. In five years, we will know much more about what renewables will actually, rather than potentially, deliver. We will know much more about the potential of offshore wind, biomass, wave power and all the technologies that are being developed. It is a difficult balance, however. If the formula that we should keep the door open to nuclear power is simply repeated as a mantra rather than being backed up by action, at some point it will become a formula for closing the door. As was said by my hon. Friend the Member for Stroud (Mr. Drew), the skills base will be lost, and a long planning run-in is needed for the building of new stations.

Mr. George Osborne: Will the hon. Gentleman give way?

Mr. Wilson: I will give way once more. I am trying to be helpful.

Mr. Osborne: One of those skill bases is in my constituency, where NNC, which built virtually every nuclear power station in Britain, employs 1,000 people. The Minister says that to keep the door open we need to start planning new nuclear power stations. Is that what the Government are saying in this debate?

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Mr. Wilson: I think that I have said what I had to say on that. [Laughter.] I am not sure of the reason for the hilarity. Perhaps I have missed something.

Mr. Osborne: I merely wanted to know whether keeping the door open to nuclear power meant starting to plan to build new nuclear power stations. Are the Government in favour of that?

Mr. Wilson: I am even more puzzled about what the laughter was about. I have just recognised that what the hon. Gentleman has raised is an issue. Lines must be drawn; a form of words about keeping the door open means nothing. Those are weasel words unless something is done at some point to give them substance. Because of the long run-in, the decision must be made sooner rather than later.

Mr. Lansley: Will the Minister give way?

Mr. Wilson: I want to wind up my speech, because I know that others on both sides of the House want to speak, but I will give way once more.

Mr. Lansley: I do not wish to interrupt the Minister too much, but there seems to be a confusion that I think he could help to clear up. The hon. Member for Twickenham (Dr. Cable) pushed the idea that running the current British Energy nuclear plant was uneconomic. Will the Minister confirm that essentially, as British Energy told the Trade and Industry Committee earlier this year, it aims to get its costs down to 1.6p per kWh? That is below the current price curve under the new electricity trading arrangements. It is clearly economically viable to continue to run the plant; the question in relation to British Energy is how to deal in the longer term with the decommissioning costs.

Mr. Wilson: That is a fair point. The problems of British Energy are complex—[Laughter.] This is weird.

The central point about NETA and the price of electricity is that no form of generator can indefinitely produce electricity at a price higher than what the market is paying. In fact, it does not matter what the commodity is; the principle still applies.

In the context of this debate, what I find puzzling is why the Liberal Democrats or anyone else should say that that argument is the death knell for nuclear power. By the same token, it would be the death knell for renewables. We recognise that, and the whole House agrees. The renewables obligation is a mechanism enabling renewables to be freed, for excellent reasons, from precisely that trap.

In conclusion, all the issues have to be brought together in the White Paper. Essentially, there are three imperatives of energy policy. First, we must deliver the security of supply that our people are entitled to expect; secondly, we must meet our post-Kyoto environmental targets and obligations; and thirdly, we must deliver affordable energy to households and to industry. This debate and others clearly demonstrate that reconciling those three objectives may be difficult, but it is a central challenge of policy making in the UK.

In many ways, competitive markets are working. In 1998, we passed legislation to create a competitive and liberalised electricity industry that has improved the

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way in which the electricity and gas industries operate and are regulated in the UK and the early creation of a truly competitive single European energy market remains our priority. It is worth noting that in the competitive market some 900,000 accounts a month are being switched. That is a remarkable degree of churn.

Mr. Chris Mole (Ipswich): Does my hon. Friend welcome the acquisition of TXU(UK) and its associated businesses by Eon-Powergen because , subject to further competition considerations, that will provide some reassurance of supply for consumers and, in the short term at least, of employment for 1,900 TXU employees, many of whom live in my constituency?

Mr. Wilson: My hon. Friend will understand my difficulty in simply welcoming the takeover, but I note it with interest and I well understand his point. On my previous point about switching accounts, one of the questions that I raised with Eon-Powergen yesterday was specifically about the XStay Warm" scheme, which applies to pensioners. I would not like to think that there was any concern about the impact of a takeover of TXU on that scheme. I was given the assurance that certainly the existing contracts will be honoured. That is an important message.

The competitive market is working well in many ways. It is true that competition has brought benefits, but it is also true that reductions in the retail cost of electricity, particularly to domestic consumers, in no way reflect the 40 per cent. drop in the wholesale price of electricity over the past 18 months. I believe that if the liberalised market is to have credibility, it must be clear that consumers are benefiting.

I welcome the debate. There is much to be discussed before the White Paper and I genuinely look forward to contributions from hon. Members from all parties as there is a lot of valuable input to be made.

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