To be published as HC 117-iv




Energy and Climate Change Committee

Building New Nuclear: The Challenges Ahead

TUESDAY 6 November 2012

Ed Mitchell, Dr Andy Hall, John Jenkins and Bruce MCKirdy

Mr John Hayes MP, Hergen Haye and Emily Bourne

Evidence heard in Public Questions 361- 471



This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.


The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Energy and Climate Change Committee

on Tuesday 6 November 2012

Members present:

Mr Tim Yeo (Chair)

Dan Byles

Barry Gardiner

Ian Lavery

Dr Phillip Lee

Mr Peter Lilley

Albert Owen

Christopher Pincher

John Robertson

Sir Robert Smith

Dr Alan Whitehead


Examination of Witnesses

Witnesses: Ed Mitchell, Director of Environment and Business, Environment Agency, Dr Andy Hall, Deputy Chief Inspector of Nuclear Installations and Director of Regulatory Standards and Acting Chief Nuclear Inspector, Office for Nuclear Regulation, John Jenkins, Chief Operating Officer and Acting Business Head, ONR, and Bruce McKirdy, Managing Director, RWMD, Nuclear Decommissioning Authority, gave evidence.

Q361 Chair: Good morning, and welcome to the Committee. Thank you very much for coming in. You will know that we are reaching the end of our work on this current inquiry on building new nuclear. There is considerable interest in it. The reason we are starting a bit late this morning is we have just had a private briefing from Hitachi, who are new kids on the block for this purpose.

I will skip introductions. We know who you are, and you know who we are. We have a little under an hour to try to get through a range of topics, so I appeal to colleagues to be disciplined in their questions and perhaps also to the witnesses to be concise in their answers. Could you start by telling us a bit about the way in which you engage with local communities and how you try to, I would hope, build their trust in the safety of the UK nuclear regime?

Dr Hall: Yes. The Office for Nuclear Regulation is involved in a lot of activities with local communities. Each of the nuclear sites in the UK has either a site stakeholder group or a local community liaison council that meets every six months or so, at which we provide reports and we talk to members of the local community about the activities on that particular site.

We have also held various events in the locality of potential new build. For example, there has been a public debate in Bristol about nuclear power, including ourselves as the regulator, the prospective operators and the NGOs who are opposed to nuclear power, so we could debate the proposals there and the implications, for example, of Fukushima. We also engage local communities through our website. We have published many documents concerned with Generic Design Assessment for new build there. In addition, we are also publishing project assessment reports for the existing plant, so that people can find out how we have reached decisions on permissions that we have given for that plant.

Q362 Chair: The ONR does have a degree of trust from the public, which is obviously desirable and no doubt reflects on what you have done in the past and is helpful. Do you think the visibility, however, of the ONR among those communities around the sites is sufficient to boost or maximise the confidence that your work could engender?

Dr Hall: It is important that we are recognised as being an expert and independent regulator, and part of the reason we have built that trust is that we are seen to be impartial in our dealings with both operators and other stakeholders. In terms of raising our profile, we think, in order to build confidence in the regulation of these sites, it is important that we are visible to people who have an interest in those sites. We are always thinking of potentially new ways in which we can engage. We have, for example, an e-bulletin that we issue to people who sign up on our website; we attend professional conferences at institutions; and, as I say, we also engage in public debates. But I believe the way to enhance our reputation is to show that we are impartial and that we are working on behalf of Parliament and the public to protect people and society against the risks associated with nuclear operations.

Q363 Chair: Does the pursuit of that impartiality sometimes lead to a situation where you may say something that perhaps cuts across something that the local authority in the area concerned has said, and that might cause some confusion or concern among the public?

Dr Hall: It is certainly the case that sometimes there are local authorities around the countryside who are not supportive of nuclear power, and of course that is quite legitimate. When we are talking to people who are opposed to nuclear power, what is important is that we demonstrate that we are neutral on that topic and what we are doing is trying to ensure that if nuclear operations go ahead then they go ahead safely and securely.

John Jenkins: I would add, on an evidence-based assessment.

Ed Mitchell: Speaking on behalf of the Environment Agency, on this issue of visibility, we notice a distinct difference between the person on the street corner who is not engaged with us or our issues and, for instance, a community around an industrial site or a new nuclear power station where they know us quite well. It does depend. If you have been flooded recently or engaged with us on flood defence issues, you will know us quite well. However, our visibility in the wider community is perhaps slightly less.

Chair: As a matter of observation, it seems to me that often the community near a nuclear site is among the most supportive because they have lived with it for a long time and are very comfortable.

Q364 Albert Owen: I live close to a nuclear power station, and we are waiting for the second one to go ahead, as are many of the people I represent. Can you tell us the status of the EPR design that AREVA and EDF are going ahead with, and how far are they in the GDA process?

Dr Hall: We issued an interim design acceptance confirmation last year. The intention with that was to highlight the regulatory issues that were still outstanding at that time, and on the EPR, there were 31. We issued it on the basis that the requesting party had demonstrated to us that they had a plan for resolving those issues. Over the intervening period, we have been working with them as they have developed their responses. There had been a slight delay, but AREVA and EDF have enhanced their team, who are interacting with us, and the result is that now 13 of the 31 issues are closed down. Provided that the requesting parties give us the information in the form that we are expecting, we would anticipate the remaining issues will be closed down by the end of November.

Q365 Albert Owen: Does that just involve them, or are there third parties involved as well that could be delaying the process? For instance, like a school inspection, usually it is just the teachers have to get their act together, but there is a local authority as well that will have certain responsibilities.

Dr Hall: No. It is just an interaction between ourselves and EDF and AREVA. In terms of planning issues, of course, that is the remit of the local authorities, but that is a separate process to the GDA process.

Q366 Albert Owen: Have they got some of the tougher ones out of the way? I know when you are talking nuclear, you can’t be relaxed about this-it is not about ticking boxes-but are there certain issues that can be done very quickly?

Dr Hall: I think that the easier issues had been resolved before the interim design acceptance confirmation was issued, so all of these are important matters that need to be resolved, and I would not like to distinguish between them. They are all important. All of them do need to be resolved before we would be in a position to consider issuing the final design.

John Jenkins: If I may, Andy, I would add that we have reviewed them on a basis of principle as to whether we could move past, and we are happy to say, although we have a lot of work to do, there are no matters of principle outstanding in the 18 that are left.

Q367 Albert Owen: Is it realistic now that this process could be done quicker in the United Kingdom than in the country of origin in France? Is the EPR in Britain going to get the process completed quicker than in France?

Dr Hall: We will benefit from the experience that will have been gained by building in France and building in Finland. We have the advantage in this country that we are dealing with a design where the detail has now been worked out. The original build at Olkiluoto in Finland started before the design had been fully worked out. That is one of the advantages of the GDA process. It does mean that all the detail is considered and issues resolved before construction starts, so once construction does start, it should be able to move ahead more rapidly than it has done in those other two countries.

Q368 Albert Owen: As the Chair indicated, we met with Hitachi, who have thrown their hat in the ring, and very welcome they are in my part of the world. With regard to the GDA process, roughly how long is it going to take before you engage with Hitachi directly? We hear that four years is a conservative estimate to get through the process. Now that you are up and running and up to speed and doing the work effectively, as you have just indicated, what sort of timetabling can we expect between yourselves and Hitachi on this new ABWR reactor?

Dr Hall: The first point to make is that we would not engage in Generic Design Assessment until DECC informs us that it wishes us to do that-unless a company applies for a licence to build, when we need to be given an indication of whether the Government wishes us to consider this alongside other responsibilities.

In terms of the timescale for GDA, it is difficult to judge. I have made the point that GDA so far has taken just over five years. We have learned from that process, and one of the things we have learned from that is that it is very important for the requesting party to engage with us very early on, so that it understands the regulatory requirements in this country. There will be issues with Hitachi of designs and communications being in a different language. The documentation will need to be put into English. It is very important that a requesting party understands that the regulatory regime in the UK is somewhat different to that in many other countries. We have a goal-setting approach, where the onus is on the requesting party or the licensee to demonstrate its plans are safe, rather than a prescriptive process where, as a regulator, we issue a set of the rules and the licensee simply has to demonstrate that it is complying with those rules. Although all regulatory systems around the world have the same aims, they are achieved safely by different means and in order to facilitate GDA it is important that the requesting party understands the differences and then provides the information to us in a way that clearly demonstrates it is meeting UK requirements. We are, of course, happy to work with requesting parties to help them understand those differences.

In the case of Hitachi, the GE Hitachi ESBWR-the Economic Simplified Boiling Water Reactor-did enter the GDA process some years ago and was taken through to the end of step 2, so they will already have some understanding from that.

Q369 Albert Owen: Does the fact that it is operable give it an advantage because you can go and see a working reactor?

Dr Hall: It means that the design has already been elaborated to every last detail, so we are not simply working with a paper design. We are working with a design where all of the details are known, all of the engineering is known, and indeed there will be results from the commissioning test and so on, so that is an advantage.

Q370 Albert Owen: A direct question for you, do you have enough resources in ONR to do all this work? I raised this as an energy question to the Secretary of State and he assured me that any additional resources would be available if they were needed.

Dr Hall: We are in a position where we are still seeking to recruit safety inspectors. Over the next three years, we are hoping to recruit about 100, and we have about 49 vacancies at the moment. We will have to prioritise our work, and we will have to consider the relative primacy to give GDA, as opposed to regulating the existing sites where that already exists.

Q371 Albert Owen: Have you made that request to the Secretary of State, and has he been as helpful as the Secretary of State was with my response?

Dr Hall: I believe that we have permission to go ahead with 80 vacancies with DWP.

Q372 Albert Owen: You mentioned engagement with the pre-application period, and I know that has been a problem in the Environment Agency. What can Hitachi do from day one that others have not done? I was interested, Dr Hall, when you said that they had already got to stage 2, so all that work has been done. Horizon has not done any work thus far-has it?-for the GDA process. So what does Hitachi have to do? They are sitting behind you, I know that, and we have spoken to them, but I am sure that they could welcome your advice.

Dr Hall: Originally, Horizon were considering both the EPR and the AP 1000 design. The AP 1000 design was part of the GDA process. Sometimes it is difficult to engage with local communities until you know which local community you need to engage with. GDA separates out the assessment from specific siting issues and therefore it becomes more difficult, and that is why we try to engage with communities across the country through our website on GDA. As particular sites are identified-and clearly Horizon has intentions for Wylfa and Oldbury-then we can hold more community events to explain what is happening there. Last year, I engaged in a public meeting in Bangor, so that people from the island of Anglesey and other areas in Wales could come and hear about what we have been doing as a result of the Fukushima accident and what was being learned from that.

John Jenkins: If I could add as a direct answer to your question, it is around our regulatory regime to learn from that, to engage with us, to understand the changes, but also they have partners in Rolls-Royce and Babcock who are familiar with working in the nuclear industry at the moment in the UK, understand that regime, so get the internal learning and speak to us as well at the early stage, because that is the big-

Q373 Albert Owen: Am I reading the signals right? It does not have to take anywhere near five years?

John Jenkins: I would not say that. What I am saying-

Q374 Albert Owen: If everything is hunky-dory-and in the past it has been relatively new and it has taken the maximum amount-and we help you get all these extra resources, it could be done quicker.

John Jenkins: The largest issue for us was response back from the requesting party. That added time into our programme. So, in a sort of hunky-dory sense scenario that you spoke about then, yes, we could take some time off it, but that is a big amount and we can’t quantify that.

Q375 Albert Owen: Surely language is not an issue. Dr Hall, you mentioned that. Hitachi have licences in America and Taiwan, and I suppose the Welsh language will be a bit of an issue but not too much.

Dr Hall: The design certification in the States has expired and so they are having to go through the process in the States again. There are differences in regulatory systems around the world and the fact that a company has a licence or a certificate in one country does not mean it can necessarily get that in another because all the regulatory systems are not equal. What we have found and experienced to date is that the speed with which we can progress very much depends on the quality of the submissions that the licensee makes to us and whether or not it provides those on time in accordance with its own programme, and very often that is where delays arise.

The other point to make is that the boiling water reactor design is one that has not been utilised in the UK previously, so it is a completely different type of reactor to the pressurised water or gas-cooled reactors we have. Neither ourselves nor the technical contractors that we use to support us in GDA have detailed knowledge of those designs, so at the start there will certainly be a need for us to develop our understanding of those designs. Of course there are common features with other light water reactors, pressurised water reactors. There are variables that could mean that the process could be shorter, but also there are variables that could mean it could be longer. Without knowing how it will pan out, it is difficult to make that call.

Q376 Albert Owen: Is it realistic for Hitachi to say that a safe generation can come online in early 2020 or 2022?

Dr Hall: I can’t say one way or another about their judgment. It really depends on how effectively they are able to engage with us in the GDA process, and of course the other permissioning processes as well.

Q377 Sir Robert Smith: Just to pin down, Mr Jenkins, you are saying that up until now if there has been a pause it is because you have been waiting rather than the applicant has been waiting for your assessment?

John Jenkins: What I meant to communicate precisely was that in a five-year programme there were times within it where we were waiting for a response. Does that put it more precisely?

Q378 Sir Robert Smith: Could it have been sped up at all by you having more resources so that when it was-

John Jenkins: No, that would have made no difference.

Q379 John Robertson: A small question, just looking at this article here. It says the Office for Nuclear Regulation, ONR, comes under DWP. I have never known Departments to talk to each other at the best of times. DWP? A strange partnership there. Why DWP?

Dr Hall: It is partly because, as an independent regulator, we need to be effectively separated from parts of Government that have an interest in the nuclear industry because otherwise those Departments or other bodies could be trying to exert influence over us and could compromise our independence. This independence and effective separation from parties involved with nuclear power is something that is recognised worldwide as being highly desirable for nuclear regulation and it is written into various nuclear conventions.

Q380 John Robertson: So was it tossing a coin and DWP won? I can see why you would put it under Defra or something like that, but DWP does not strike me as where it should be.

John Jenkins: It is a decision for Ministers rather than ourselves, but we are happy with the sponsorship arrangements. That is the status quo right now, so it is not an issue for us.

Q381 Dan Byles: Following on from that, according to the Institute of Civil Engineers, the lessons from France and Finland are that, "A comprehensive communications network between vendors, licensee and regulators should be made a priority in the early stages of any nuclear new build". Do you agree with that, and do you have plans in place to establish such a network?

Dr Hall: Yes, we completely agree that good communication is vital. If you look back at our experience with the EPR and AP 1000, we have had over 700 meetings between our staff and the requesting parties over the period of GDA. We have also set up protocols for the way that we interact with the requesting parties, so that when we have meetings we understand what the objectives of those meetings are and we can review at the end of those meetings whether or not those objectives have been met. We do not want parties breaking up after a meeting with different understandings of what has been agreed and what has not been agreed. We have also set up a so-called traffic light system for interactions, so that if we felt that submissions were being delayed or were not of the appropriate quality when we received them and we could see that that represented a risk to resolution of issues, then we would flag up, using the traffic light system, to the licensee or requesting party and it could clearly see the parts of the programme where there were issues. I agree that communication is vitally important.

Ed Mitchell: Just to add that the Environment Agency is a body responsible to Defra, but we have a joint programme office and we operate as one unit as far as the developer is concerned in the outside world, so these structural differences do not have any bearing on how we operate on the ground.

Q382 Dan Byles: So you are content, as an alternative agency, that that communication network fits in-

Ed Mitchell: Very strong and very close, yes.

Dr Hall: The point is also that we and the Environment Agency are working extremely closely together on GDA, so from the perspective of the requesting parties it is a one-stop shop.

Q383 Dan Byles: Dr Hall, you have already noted that the UK regulatory regime is quite different to that in many other countries because of our goal-setting approach. The ICE also recommended that the provision of adequate regulation resources by the regulator at an early stage would help to improve vendors’ understanding. What resources do you provide specifically to vendors to help them understand the regulations in the UK, so that we could head off potential problems further down the line?

Dr Hall: The first step of GDA is a preparatory step, where we engage with the requesting party to explain what the regulatory system is in the UK and to agree with them the submission of documents and the sorts of documents that need to be provided. In terms of the resources needed, again we have to prioritise, but we recognise the importance of investing in providing information upfront because that then sets the scene for the future submissions and sets the programme rolling.

Q384 Dan Byles: Do you anticipate any problems or delay as a result of the fact that our regulatory regime might be different to other regimes that the players have operated in elsewhere in the world?

Dr Hall: It would certainly mean that there is a learning curve for the requesting party to climb, although in this case, because GE Hitachi had already submitted the ESBWR for GDA, it will have already gained that understanding, so that is an advantage it already has.

John Jenkins: There were also material amendments made to the EPR as a result of our regulatory regime, so we would expect that to take place as well.

Q385 Dan Byles: So you do not see any clash of regulatory cultures in that respect from a company like Hitachi, that is used to operating in the US and Japan, coming here?

Dr Hall: No, but it needs to understand that demonstrating safety in the UK is not simply a matter of showing that you have met requirements in certain sets of rules, but rather demonstrating that you have thought about the safety of the design and you understand why it is important to protect the plant in a particular way.

Q386 Dr Lee: In what way is our regulatory regime different, and why?

Dr Hall: It all goes back to the Health and Safety at Work Act in 1974. Health and safety regulation in the UK had evolved over 100 or more years and it had done so in a rather prescriptive way. There would be an incident or an event in a particular industry and a new regulation would be developed to specifically address that event, but it meant that the regulatory system grew and grew, almost by a process of accretion, into a large number of prescriptive rules, some of which of course became outdated because the technology changed.

With the Health and Safety at Work Act, building on the Robens Report, the Government decided that we should move to a goal-setting approach, so that rather than setting down how you meet a safety objective, the legal requirement was to meet the safety objective. The primary responsibility for employers and duty holders in industry is to reduce risks to members of the public and workers so far as reasonably practicable. The rest of the health and safety system provides information on ways that that can be done but allows flexibility.

The advantage for ourselves in the Office for Nuclear Regulation is that we have what is sometimes described as a technology-neutral system. As we are not developing specific rules for specific technologies, it means that requesting parties can come along with designs from elsewhere in the world and our system is not biased against those technologies because it is technology-neutral. What the requesting party has to do is show why it believes the reactor designs are safe. Whereas in other countries that safety is demonstrated by showing that the requesting party has met all of the detailed rules for that particular reactor design that have been set down by the regulator. In the UK, the burden of demonstrating safety is on the requesting party, but it is free to choose how to demonstrate that the plant is safe. It then has to persuade us of that.

Q387 Dr Lee: Do you think that we put additional costs on development of new reactors as a result of our regulatory framework in comparison to, say, France or America?

Dr Hall: No, because in developing a reactor or any other nuclear plant, the designer has to consider the hazard that will be present in that plant and to protect the plant because it needs to reduce risks to people in society and it needs to protect its commercial investment as well. The licensee or the requesting party has to do that thinking regardless, but it is not in the UK constrained by a particular prescriptive framework.

Q388 Dr Lee: On a broader point, the fear of radiation is based upon a hypothesis that does not have a lot of evidence base. Mr Jenkins mentioned evidence base driving your work, but a linear no-threshold hypothesis does not have a lot of evidence supporting it. That being the case, is it your responsibility to commission work to educate people about the fact that the hypothesis upon which all radiation regulation is based is potentially nonsense? Is it your responsibility to commission research on that and, if not, who is responsible for that? Do you foresee a situation where we talk about risk and the mitigation of risk from an evidence point of view rather than from a situation where everybody thinks that Wylfa is going to be like Hiroshima, which is what the man in the street thinks? You talk about public opinion. The public do not really understand the risk, so their opinion is not necessarily that informed, is it?

Dr Hall: We enforce the rules and regulations in the radiation area that come out of European directives nowadays. Those directives are based on work that is performed by the World Health Organisation, which periodically reviews the evidence for the relationship between radiation doses and risk and then makes recommendations. This is a collective activity that takes place within the WHO and also with the International Atomic Energy Agency, and it is member states who agree these dose limits through those bodies. I recognise that the linear no-threshold hypothesis is, as it says, a hypothesis, but it is one that has been adopted by consensus within these international organisations as being a hypothesis that provides a degree of protection.

Q389 Dr Lee: I guess my point is there is a certain irony in the fact that people are risk-averse about developing a risk strategy.

Ed Mitchell: If I may, there is a wider point as well about the open and transparent way, and our independence as regulators, that helps communicate those risk issues. The Science and Technology Committee recently took evidence from us and Dr Weightman at ONR and others about communicating risk and radioactive risk in particular. Back to your question about what Hitachi could do, the initial tone of communications and the openness and transparency of those communications, I think, will set the scene for much of the dialogue with local communities, which will enable sensible and rational conversations to go on.

Dr Hall: One thing that does help is to put radiation doses into the context of everyday living. The fact is that we live in a radioactive environment on a radioactive planet. We obtain doses of radiation by flying and so on. Very often when we are talking about the doses that people receive in nuclear operations, they are small compared to the doses you would receive in your own home.

Q390 Dr Lee: That is my point, I guess, that we are engaging in a five-year regulatory process in order to protect ourselves again something that might not actually have any risk attached to it. It does strike me as quite ludicrous.

Dr Hall: Yes. I think what you will find is that people are quite happy to accept radiation doses in their everyday lives. The doses around the UK vary considerably from one region to another, and people do not avoid living in particular regions because there is a higher dose rate there, but that is a matter of choice for them.

Q391 Christopher Pincher: I want to ask you about the regulatory framework post-Fukushima, but before I do can I quickly pick up on the point that Albert made about boiling water reactors. Given the caveats that you understandably have to employ, would you say that a four-year GDA process for a boiling water reactor would be reasonable and conservative?

Dr Hall: I think that it would be possible, but it really does depend on the factors that I mentioned earlier.

Q392 Christopher Pincher: Nicely skirted around. All right, to Fukushima. Dr Weightman said in his report last year that there are no fundamental weaknesses in the UK’s nuclear industry but that we need to learn lessons around national emergency preparedness. As a result of those lessons learned, have there been any new regulations applied to the UK nuclear industry?

Dr Hall: There have been no new regulations, but we already had the powers that we would need to ensure that the licensees improved their operations. Since Dr Weightman spoke to you last year, there have been four major reports issued into lessons learned from the Fukushima accident. There was the stress test report for nuclear power plants, requested by the European Council, which was published in December last year. Going back a few months before that, Mike also published the final report on lessons learned from the Fukushima accident, which he had produced as the result of a request from the Secretary of State. In May this year, we produced a stress test report for the non-power-generating facilities. This was not requested by the European Council, but Mike felt that it was appropriate that the stress tests were applied to all of our nuclear facilities. Just last week, an implementation report was published by ONR to set out what licensees have done since last year in terms of making real changes to the nuclear sites as a result of the reviews that they were required to undertake through the previous reports.

In terms of, first of all, regulations, the regulatory system has not changed and we do not anticipate that it will change. Since it is based on this goal-setting approach and the requirements to reduce risk so far as is reasonably practicable, whenever any new information appears, we can immediately turn to licensees and ask them whether they are doing everything necessary to reduce risk so far as is reasonably practicable, so we do not need new regulations to do that.

In terms of emergency preparedness, the body that co-ordinates planning in the UK, the NEPLG, has been reviewing the way that data can be obtained in an accident about releases of radioactivity offsite. It has been considering ways in which the consequences of those releases can be calculated in terms of where the material is moving to and where people on the ground might receive higher dose rates, so it is enhancing the ability to predict risks to people. There is work going on in that area. In addition, in terms of the emergency exercises that we in ONR witness, there is work going on to perform exercises over more extended periods than we have done in the past and also to encompass more severe conditions as well.

Q393 Christopher Pincher: It sounds as though, although the regulations are not being altered or increased, the processes within them are being changed and strengthened. Would that be a reasonable proposition?

Dr Hall: I think what is happening is that, in the UK and other countries, ways in which safety on sites can be enhanced are being identified. What that means, in our terms, is that relevant good practice is changing. When judging the safety of operations on sites, we often refer to what is the relevant good practice, and internationally that relevant good practice is rising and therefore we would expect that same good practice to apply in the UK.

Q394 Christopher Pincher: We have heard previously that raising the bar of standards, adding new regulations, would increase the cost of roll-out in nuclear. Would you say that the enhanced standards that you are talking about now within the existing regulatory framework will also add to the cost of roll-out, or do you think it will be an insignificant cost?

Dr Hall: It will certainly increase costs. EDF Energy, for example, is purchasing off-road vehicles and pumps, diesel generators and so forth, building facilities for housing mobile equipment. Clearly, that has a cost, but compared to the cost of nuclear power stations themselves it is a relatively minor cost. That is for the existing plant. For new build, the new reactor designs have already taken into account external hazards such as earthquakes, tsunamis and bad weather to a far greater extent than the older designs, so we would not think that the new requirements would significantly add to the costs there.

Q395 Christopher Pincher: They do not add to the development time either. You are not having to do new things within the normal development time, but you are also not increasing the development time for construction of a new facility.

Dr Hall: A lot of the work is around recovery post an event. It is getting generators on to the site after something has happened, so it is equipment associated with an event rather than something on the plant in its own right.

Q396 Christopher Pincher: Is it an immaterial increase in costs, in your opinion?

Dr Hall: I do not think there would be a significant increase in costs, no. That partly reflects the robustness of the systems we already have in the UK as well. For example, if you compare the UK to some other countries where there is some significant construction taking place on the sites in terms of introducing new diesel generators and back-up power supplies, the UK sites already have those and so we are not doing that because we are already in the state that some other countries are now aspiring to.

Q397 Christopher Pincher: One last question related to the Energy Bill, when we see it, we suppose it will enhance your regulatory powers and your flexibility of manoeuvre. Are you content with what you have seen so far or do you think that you need more authority statutorily through the Bill?

Dr Hall: I believe the Energy Bill will provide us with the powers that we need to be an independent, responsive and appropriately resourced organisation, so it will set us up well.

John Jenkins: We have been involved in the drafting as well. Our policy team is on that.

Q398 Christopher Pincher: As a result of it, what would you do differently from what you can and do do now?

Dr Hall: The fact that we will have more resources in the future than we have had in the past will put us in a very much better position in terms of responding to licensees and other stakeholders at the times they would like us to respond, so that we will not have to take perhaps some of the difficult decisions on prioritisation that we have had to take in the past, which have always been to ensure the safety of existing operations. It will mean that we can look over the horizon that bit more and respond to developments in the future, such as new build, in a more effective and efficient way than we have done previously. It will also enable us to be much more open and transparent about what we do, because clearly there are resource implications in that as well. By having adequate resources, we will be able to engage more with local communities and others than we have done in the past.

John Jenkins: We would expect to be more accountable in terms of what we would do differently.

Q399 Christopher Pincher: Would you say that the supply chain to build these extra facilities that you are getting as a result of the Bill, or may get as a result of the Bill, should give more confidence to all of the stakeholders in the communities involved?

Dr Hall: We hope so, certainly, yes.

Q400 John Robertson: Mr McKirdy, you have not had much to do so far, so it is your turn now. I will let you finish the water you have just taken. Does the NDA have any input into plans for new nuclear power stations, and obviously particularly into plans for how the waste will be managed?

Bruce McKirdy: Yes. Our involvement is in three different areas. In my part of the organisation, which is the Radioactive Waste Management Directorate, we are involved in assessing the disposability of any fuel or waste that could be generated from the new reactor designs. We are also involved in providing cost estimates of disposal facilities to DECC, which they then use as part of their methodology for assessing pricing unit costs for disposal to charge prospective operators. Finally, we are involved in reviewing the waste management and decommissioning plans that are submitted to Government by prospective operators to provide a technical assurance. We do not do the financial or the legal assurance. That is done elsewhere. That is to DECC, again.

Q401 John Robertson: This Funded Decommissioning Programme was to pay for the disposal. Are you confident that DECC will set out contracts at the right level to cover the cost?

Bruce McKirdy: I think so, yes. From our perspective, we provide two inputs to DECC. One is our best estimate cost, which goes into estimating the expected costs as part of the Funded Decommissioning Programme. We also look at 30 different scenarios for different disposal facilities, calculate costs for all of those scenarios and feed those into DECC, which are then used to estimate the cap.

Q402 John Robertson: Does that include the length of time before these costs will be incurred?

Bruce McKirdy: Yes, it does.

Q403 John Robertson: How are future costs estimated?

Bruce McKirdy: We have something we call a parametric cost model that, because we do not have a-

Q404 John Robertson: Could we have that in English?

Bruce McKirdy: Yes, I will unpack that. Sorry. We have a basic repository design concept, and we look at designs that have been developed in countries that are more advanced in their repository programmes than we are and we benchmark against those. We build up a cost model that enables us to look at different geological settings, different scenarios for the waste inventory, looking at upper bound scenarios with new build, lower bound scenarios with no new build, looking at plant life extensions, and it allows us to look at geographical differences, because transport costs change significantly. All of that information we have benchmarked against geological disposal programmes in France, Sweden and Switzerland.

Q405 John Robertson: I have been to Sweden, and I have seen the Swedish one. It is very impressive, I have to say. What progress has been made on the geological disposal facility?

Bruce McKirdy: I will take this in two strands. One is the siting process and the other is in the development of the designs and the organisation that I am responsible for. Taking the second of those first, as an organisation, we are working towards becoming a site licence company. Since 2009, we have been under regulatory scrutiny as a prospective site licence company, so we are operating under regulatory supervision now as if we were already a licence-holder. There are things that we need to do differently. The regulators will point those out to us, such that when we get to the time when we need to apply for a licence we will be in a good state to do that.

We also published, in February 2011, our disposal system safety case, which is a generic disposal system safety case. That has also been reviewed by ONR and the Environment Agency. We have had constructive, positive review comments with improvements that have been pointed out, primarily to improve clarity of the document but also how we can improve the way in which we present the safety case to regulators when we get to a specific site. That is us getting ourselves prepared to implement the geological disposal facility.

The other important thing that we do need is a site on which to develop the facility. At the moment, this is the Managing Radioactive Waste Safely process, which is being run by Government; DECC are heading this up. It is a voluntary process. At the time the White Paper on implementing geological disposal was published in 2008, a call was put out for volunteers to express an interest in the process. So far we have had three formal expressions of interest, all in Cumbria-Cumbria County Council, Copeland Council and Allerdale Council. They have spent three years working in partnership, addressing a whole number of questions, with a comprehensive work programme that was completed in July this year with the publication of a report. It is now with decision-making bodies to decide whether to move into the next stage of the process, which would involve us doing desk-based studies into specific geology and surface areas in the region. That decision was going to be taken in October, and the councils have now agreed that they will defer the decision until 31 January to enable them to get more information.

Q406 John Robertson: I know there is a consultation going on about that in that area. Having said that, you will appreciate that obviously one of the things that puts people off nuclear is the fact that we have this waste and there has not been a definitive answer of what we are going to do with it. When can we expect a final decision? By the sounds of it, we are talking Sellafield here. When are we going to get the final decision that there is a place where this waste will be put?

Bruce McKirdy: I can’t give a definitive answer on when we are going to get that decision. It is not with me to make the decision; it is not just with Government to make the decision. It is a volunteer process driven by communities, and we have to, especially at this early stage of the process, operate at the pace at which communities-

Q407 John Robertson: Let me rephrase it then. How long is this process going to take?

Bruce McKirdy: Our current plans suggest that first waste emplacement in a disposal facility will be in 2040, but again that is still heavily dependent on the early stages-

Q408 John Robertson: We will have announced it a long time before then because we have to build it. When can we expect to get a decision? In the process, it will be, "X is going to be the place it is going to happen."

Bruce McKirdy: On 31 January, the Cumbrian councils will decide whether to move into the next stage of the process. That will be desk-based studies. That will take about five years to identify two sites for further investigation, using boreholes and so on. That could take 10 years to complete those studies before identifying a single site for development of those disposal facilities. I have to come back to this caveat, which does not bode well with trying to get a definitive answer but it is the situation, that it is a volunteer process and we have to work, especially in these early stages, at the speed at which stakeholders find comfortable. To add to that, the volunteer process, with all of its shortcomings in terms of uncertainty, is the only process that has worked anywhere in the world in terms of successful programmes.

Q409 Sir Robert Smith: I must remind the Committee and the witnesses of my interests in the Register of Members’ Financial Interests to do with the oil and gas industry, and in particular a shareholding in Shell. On the earlier discussions, we have certainly in the North Sea seen the benefits of a goal-setting regime. You have mentioned a lot about the fact that we are goal-setting and the others are prescriptive. Does that preclude you from partnership-working, or do you still try to learn lessons from the other regulators?

Dr Hall: Certainly not. We have very good interactions with other regulators, particularly the French and the Finns on the EPR, and also with the Americans, the US Nuclear Regulatory Commission as well. In fact, in our GDA of the EPR and AP 1000, we have reached common positions with regulators in those other countries on certain technical issues, where we have issued joint statements that set out our joint views, so we have benefited from those interactions. We are certainly not isolated from the international community, nor do we wish to be. There are huge benefits from working with others. After all, if another regulator has identified an issue and we identify the same one but they have come to a view that that issue has been resolved, we want to understand why that is, so that we are not reinventing the wheel.

John Jenkins: We also operate a target-setting regime for materials transportation because of its international nature, so we are fully familiar.

Q410 Barry Gardiner: You will be familiar with the EU Commission report of November 2011. That was their communication on the comprehensive risks and safety assessments of nuclear power plants in the EU. In that it says that nearly all plants need to undergo safety improvements and that, "Although measures were agreed internationally following the Three Mile Island and Chernobyl incidents, their implementation is in many cases still pending". Why is that, who is responsible for it and where is the UK on this list?

Dr Hall: We were somewhat disappointed with the communication that came out of the commission because, in the views of a number of members of ENSREG, which is the European Nuclear Safety Regulators Group established by the European Council to provide guidance and advice to the commission, that communication did not reflect the discussions that had taken place in ENSREG.

Q411 Barry Gardiner: ENSREG put its action plan in place in July 2012, did it not?

Dr Hall: Yes.

Q412 Barry Gardiner: That is a bit of a while after Three Mile Island and Chernobyl. Why is it that in the intervening period the recommendations have not been implemented and that there are plants that are falling below the safety standard to the tune of €200 million per reactor unit-a total of €10 billion to €25 billion across Europe?

Dr Hall: What I am saying is that the members of ENSREG do not agree with those conclusions.

Q413 Barry Gardiner: Why did they put in place an action plan this year, in that case? Why do they say that there is that amount of money shortfall in implementing safety procedures?

Dr Hall: ENSREG did not actually identify the amount of money that it would cost to implement these safety measures. There are not similar-

Q414 Barry Gardiner: Do you dispute those figures?

Dr Hall: I do not know what the basis of those figures is. I do not know where those figures have come from. What I do know is the situation-

Q415 Barry Gardiner: Have you made any inquiries as to why the commission thought it right to publish that communication in that case?

Dr Hall: I have been a member of ENSREG, and we did discuss within that body where those figures had come from, because they were not recognised by members of ENSREG. In other words, they were not recognised by the senior regulators from regulatory bodies within the member states.

Q416 Barry Gardiner: Dr Hall, do you categorically repudiate that there were recommendations made for the safety of reactor units following Chernobyl and Three Mile Island that have not been implemented, and you categorically repudiate the figures that have been suggested by the commission of-let me just make sure I am quoting them correctly-between €10 billion and €25 billion in total over the coming years?

Dr Hall: There were lessons-

Q417 Barry Gardiner: Just a straight yes or no. Do you repudiate that or not? Do you accept it, or do you reject it?

Dr Hall: There were no recommendations that resulted from the Three Mile Island accident. There were a lot of lessons learned from that accident in terms of the way that severe accidents should be analysed, but there was no international body that made recommendations as a result of Three Mile Island.

Q418 Barry Gardiner: Do you repudiate what the EU Commission has said?

Dr Hall: I do not agree with that particular statement. Those countries-

Q419 Barry Gardiner: You do not agree, so you repudiate it?

Dr Hall: May I offer to provide a note on this, if that would help?

Barry Gardiner: It would be extremely helpful if you can try to reconcile why your opinion is at variance with that of the EU Commission in November 2011. Thank you very much.

Chair: Thank you all very much. It was a very useful session. We will incorporate some of what you have said in our conclusions, and I am sure we will be keeping in touch with you in the future. Thank you for your time this morning.

Examination of Witnesses

Witnesses: Mr John Hayes MP, Minister of State, Department of Energy and Climate Change, Hergen Haye, Head of Nuclear New Build, DECC, and Emily Bourne, Head of EMR Programme Team, DECC, gave evidence.

Q420 Chair: Good morning. Welcome, Minister, to your first appearance before this Committee. I am sure we shall have a constructive and close relationship with you, as we did with your predecessor over the last two and a half years. You will be aware that there is considerable interest in our current inquiry on building new nuclear. I will not go through introductions. We know who you are, and you know who we are.

I will begin by asking, in view of the delay in publishing the Energy Bill-which was scheduled to appear yesterday and now we do not know quite when it is going to appear, but it is certainly some weeks away-and also in view of the statement by one of your ministerial colleagues in the House that, even when it does appear, the Bill will be subject to subsequent tabling of Government amendments, do you feel the atmosphere of uncertainty this is creating may jeopardise decisions by potential participants in nuclear new build and that we may therefore be putting at risk the prospect of Britain having new nuclear power stations?

Mr Hayes: Let me deal with the three points you make, Chairman, in reverse order, to add a certain colour and excitement to our affairs. The last part of what you said about investment is clearly not the case because, as you know, Hitachi has just committed very significantly to the purchase of Horizon, with a sale price that reflects a significant investment, and plans to build perhaps half a dozen reactors. I think the signs are not that investors are nervous but the evidence is that investors are prepared to commit to nuclear build in the current policy framework.

The second point you make is about the more general uncertainty around the progress of the Bill. What you have said is that the Government will make amendments. You have been in the House a very long time, Mr Chairman, and indeed your Committee is rich in expertise and experience, and you will know that no Bill ends its passage through this House exactly in the way it started. Bills are by their nature amended and, my goodness, a Bill like this where cross-party consensus is critical would be a very odd creature if it was not amended during its passage through the scrutiny and argument in the House, through committee, through the other place and, indeed, through the Government reflecting on some of the arguments that are made.

Your first point is on timing, Mr Chairman. Yes, there are matters to be confirmed before the Bill receives its first and second readings, but in essence, in substance, there is certainly no change of direction. The fundamental importance of reforming the market to create the certainty necessary for investment remains unabated and unabridged. We want to get the Bill right, and it is important that we do so in detail as well as in substance, and any short delay will be used to make sure that that happens. Of course, you would not expect me to second-guess those responsible for the parliamentary timetable-the Leader of the House would not thank me for so doing-but you can be assured that we are determined to get this Bill on to the Floor of the House, debated in Committee and on to the statute book with appropriate rigour but also appropriate vigour and alacrity.

Q421 Chair: I should have drawn the Committee’s attention to my entry in the Register of Members’ Financial Interests. Responding in the order in which you did, on the point about Hitachi, given that they are several years away from making a final investment decision, given that they need to recruit investment partners for their consortium before any construction takes place, given that the recruitment of those partners depends in turn on the passage of the Energy Bill and agreement over the strike price for Contracts for Difference, I am not sure that the decision they made-welcome unreservedly though it is by me-represents quite the vote of confidence in the Government’s nuclear policy that you claim, but we will put that on one side.

On the point about the Bill, you will know that this is a Bill on which more substantial investment decisions rest than the vast majority of legislation that is brought forward. You will also know that the Bill has been under consideration for several years. It has been subject to pre-legislative scrutiny. This Committee is therefore dismayed that, after all that, we are warned that, even before a Bill of this importance has been published, the Government has not decided what to put in it. That is a very unhelpful background for the investors who are wondering whether to invest in the UK or perhaps to go somewhere else in what is a totally global industry. However, perhaps we can get some more reassurance from some of your later answers.

The lead horse in this race is still the EDF-Centrica consortium. If you are unable to reach agreement that is satisfactory to them on the Contracts for Difference strike price, would you consider using the Treasury guarantees scheme, which was announced in July, as a way of supporting the construction of new nuclear power stations?

Mr Hayes: I think the best answer to that is to draw on the evidence that was given to you by EDF themselves, which I have in front of me, where they argue, "The Contracts for Difference will reveal the cost-competitiveness of nuclear with all other low-carbon technologies. Nuclear is the best low-carbon choice for consumers. The CfD will be a simple, transparent and proven instrument". Clearly EDF, when scrutinised by this Committee, were arguing that on the basis of the Contracts for Difference-the contracted price that will be agreed after a proper negotiation-there would be a basis for that deal to go ahead. I can tell the Committee that I met them yesterday and we had a productive and positive meeting. I am anxious for the terms of this agreement to be settled before the end of the year, the headline agreement to be in place. They are anxious for that to happen, too. I think with the new energy that I hope I have brought to the role we can do just that.

Your point about the sluggishness before I arrived is not something that I would comment on, of course, but I can assure you that since I have been here we have been very determined to settle this matter and to move ahead with the legislation, too.

Q422 Chair: Will the process of negotiating that strike price eventually be completely transparent?

Mr Hayes: The process will indeed be transparent. It will be brought to the House, as you know, so that the House can be absolutely clear about the process. I think it is important that it should be. I know that that is the view this Committee takes; it is a view that I share entirely. It will be brought to the House in the form of an instrument. You are obviously familiar with the detail of that process, so the answer to that is yes.

Q423 Chair: Would it be possible for the Contracts for Difference strike price to have a provision that, in the event that construction costs overran the estimate, the strike price could be adjusted to cover those additional overrun costs?

Mr Hayes: Part of the detail that is struck with EDF will be on costs. There will be a price deal, clearly, but there will also be a negotiation around costs, because exactly the point you have made is the point that any commercial organisation would make in these circumstances. These are commercial matters and the Committee, again because of its experience and understanding of these things, will know that the commerciality of this is not something that it would be appropriate to discuss in detail now, but it is absolutely right that once the deal is done the mechanics of that deal should be entirely transparent.

Q424 Albert Owen: Chair, can I just come in on this issue that you raised-I do not think we have had a full answer from the Minister-with regard to the amending of the Bill? The Bill has been delayed significantly, for whatever reason. Only last Thursday, your colleague, Greg Barker, said to the House that they would be including a number of amendments. Is it ready now and awaiting the Leader of the House to formally announce it, or is it not ready and, by definition, you would be able to do those issues that you intend to amend in the future? We have been through this process for a long time, and we are quite frustrated by it. It is hugely confusing that we have been told exactly what you have just told us by your predecessors and Secretaries of State, and yet we were told only last Thursday that this Bill is not quite ready but will need seriously amending. There is a contradiction there.

Mr Hayes: When the draft Bill was published and this Committee reported on it, scrutinised it closely-and I have your thoughts here, which are extremely useful, if I might say so-there were a number of not insignificant issues of detail. I would not minimise them by calling them details, but the essence of the strategy was not something that you disagreed with. You accepted wholly that there needed to be radical market reform. You argued, I think quite properly, that that decision could have been made much earlier. I don’t just speak of this Government; I speak about Governments. That is not a partisan remark, by the way. Some of the things you said seem to me and to my predecessor and my officials to be not only worthy of consideration but sufficiently worthy of consideration to make changes to the Bill. I can assure you that, when the Bill comes to the House, it will reflect that but it will not be a different Bill, in essence, to the Bill that you looked at.

Q425 Albert Owen: I fully understand that. We are totally in agreement there. Why did your colleague say there is going to be a series of Government amendments, even before the Bill has been published?

Mr Hayes: I think a combination of things, in truth. We are, of course, looking at the commitment that the Prime Minister has given on tariffs. You will be familiar with that. There has been a public debate, heaven knows, and that needs to be in the Bill, because the Prime Minister said it will be in the Bill. That is something that we need to look at closely, because as I have said in the House-

Q426 Albert Owen: That is a more direct answer than your colleague gave last week.

Mr Hayes: I like to give direct answers. That is my style.

Albert Owen: Brilliant. I look forward to it continuing.

Mr Hayes: That is the right way for-

Q427 Chair: On the direct answer, the Department was taken completely by surprise by the Prime Minister’s announcement.

Mr Hayes: No, that is not what I said. What I said was that the Prime Minister had given a commitment, and the commitment was that the Bill would be used as a vehicle to explore the issue of tariffs. Of course, that requires us to look at a number of legislative options within the scope of the Bill, and we are doing that. That is one example. There are one or two other detailed issues in the Bill, but in essence the Bill is ready to run. It is the Bill that we published but with the changes, a number of which were made by this Committee, that reflect our considerations over the last several months.

Q428 Sir Robert Smith: In answer to the Chair on construction risks, you mentioned how costs were going to be taken into account in the Contracts for Difference. Is construction risk going to be reflected in the Contracts for Difference?

Mr Hayes: We are very clear that the commitment given by the previous Secretary of State is that there would be no subsidy for nuclear power. We argued repeatedly, entirely in line with that statement-and I spoke about it last week in the House at questions, as you may have noticed-that there should be nothing available for nuclear that is not available for other technologies. The deals, on a case-by-case basis, will have to be the subject of specific negotiation, but there is certainly going to be no fundamental difference between the approach we take to nuclear and the approach we take to other generating types.

Q429 Chair: On that point-a very interesting point here-let us say, for the sake of argument, that the strike price for nuclear was 100. That does not constitute a subsidy. If we then found that the strike price for onshore wind farms was 90, would that also not constitute a subsidy?

Mr Hayes: Currently, different technologies cost different amounts, if you look at the difference between onshore wind and offshore wind, for example. Indeed, if you look not just within the renewable low emissions sector but across energy more generally, a different price is paid for different generating types. So that would not be unprecedented or a subsidy unless one is taking the view that those differences equal subsidy, and I am not sure one could reasonably take that view.

Q430 Chair: No. I wanted to be clear that you are arguing that the strike price for nuclear does not constitute a subsidy and, therefore, you are honouring the commitment given by the previous Secretary of State. I was raising the question that, if that does not constitute a subsidy, the public might think that a lower strike price for different technology also does not constitute a subsidy.

Mr Hayes: Different means of generating energy cost different amounts of money. I think this Committee takes the view-and it is a view taken by this Government and by previous Governments-that it is important that we have an energy mix. As soon as you accept that it is important that we have an energy mix in order to guarantee resilience and sustainability, you are inevitably in the business of accepting the fact that different forms of generation cost different amounts of money. I think the public would favour the idea of an energy future based on that mix, because it is by far the best public policy option.

Q431 Sir Robert Smith: The public would not want that future at any price. You can’t give away the negotiating strategy in detail, of course, but does the Government have a bottom line that, if EDF go too high, the Government are ready to say, "That is too much for the consumer. We are not going to accept that."?

Mr Hayes: Absolutely. There is absolutely no doubt. As I looked into the eyes of Vincent de Rivaz yesterday, I told him that the Government will always put the national interest first. Where the national interest coincides with commercial interests, and I think it generally does, that is great for both of us, but of course in any commercial arrangement-in the end, this is a commercial arrangement-both sides need to be able to walk away from the deal. As soon as that is not the case, it becomes a rather unhealthy arrangement.

Q432 Sir Robert Smith: You mentioned there will be a process to be followed once the strike price is agreed, in the event of agreement. At that point, for transparency, would the cost calculations become available for public scrutiny, so that the consumer could have confidence that the best deal had been struck?

Mr Hayes: I want to check the exact detail of what will happen, because I think this is very important. The parliamentary process is-and you saw the clauses in the draft Bill in these terms, and those are unaltered-any investment instruments agreed before Royal Assent must be laid before the House during the passage of the Bill, and this may have been what my ministerial colleague was referring to. They will therefore be available for Parliament while they are scrutinising the Bill, and after Royal Assent investment instruments will be laid in Parliament. There will also be a parliamentary scrutiny of any modifications for electricity supply licences or regulation from any connection with investment instruments. So there will be a proper parliamentary process by which these matters are subject to consideration, and this was set out in the draft Bill, as you know.

Q433 Sir Robert Smith: How informed will that process be by actual details? Two sides can agree a price and say, "This is a good deal," but if no one can then audit or scrutinise the arithmetic that has gone into building up that price then they have to take it on trust. How much will be in the public domain?

Mr Hayes: My view on that is rather similar to this Committee’s stated view, which is that it should be as transparent as possible. I do not think it would be healthy if this was thought to be a kind of smoke-filled room arrangement, not that any rooms are filled with smoke any more.

Chair: Sadly.

Mr Hayes: I make no comment, Chairman. A smoke-filled-room deal would not be what we would seek, and it is certainly not what the House would expect.

Q434 Sir Robert Smith: Are you confident that you have the level of staff and the seniority of staff available to take on this task?

Mr Hayes: I am blessed with wonderful civil servants who bring joy to my heart daily, but we will also be using other experts. There will be KPMG on the financial side; we have legal experts who we are using, too; and specifically on waste, we will be dealing with experts as well. Technical experts, legal experts and financial experts will be used by the Department in order to make sure that we are sufficiently prepared and equipped to do this job. Of course, all of that information will again be entirely transparent and open to scrutiny.

Q435 Chair: On the matter of staff, I came to a rather agreeable party last week at the Department for the retirement of the Permanent Secretary, Moira Wallace. Does the Department plan to appoint a successor and, if so, when?

Mr Hayes: Yes, we are planning to appoint a Permanent Secretary.

Q436 Chair: Sometime next year maybe?

Mr Hayes: We have an existing senior official of the Department, Phil Wynn Owen, acting as Permanent Secretary at the moment, as I am sure you know, Chairman. I understand the Secretary of State is giving these matters urgent consideration, and I know that he would want to move ahead with due speed, particularly given the passage of the legislation we were just speaking of. It is very important that we have strong leadership, given that this will be a landmark piece of legislation, as this Committee has remarked previously.

Q437 Chair: We can’t help noticing, alongside the progress of the Bill, that Moira Wallace’s retirement was announced about four months ago. It is somewhat surprising that the process has moved so slowly-that there is no indication of even when there is likely to be an announcement, let alone an appointment. I just note that in passing.

Mr Hayes: I know the Secretary of State is keen to proceed with speed. Secretaries of State are always determined to get the best people in the Department, which may in part help to understand why I am there.

Q438 Chair: Did the Secretary of State particularly request your appointment?

Mr Hayes: These are matters for the Prime Minister, not for me.

Q439 Christopher Pincher: It is reassuring to know why you are there, Minister, but can I press you a little more on the timeline to transparency. In his evidence last week, Mr de Rivaz said, "We have put on the table for DECC all our costs," so clearly they believe they have been transparent with you. He then goes on to say, "There is a risk analysis which has to be done in common," so you are mutually looking at the risks involved for Hinkley C. He said, "That work is what we are doing. Then the result of it will be made public." When?

Mr Hayes: Without breaching any confidentiality, I can assure you that he pressed that case very firmly with me yesterday and he has, of course, been in discussion regularly with my officials. As a result of all of that, I gave an undertaking yesterday to him and told my officials that I expect, by the beginning of December, to be in a place where I have received advice on what that deal might look like, such that we can put the main part of the deal together by the end of the year. I repeat to this Committee that I expect to have the material by the end of December, such that the terms of the deal can be agreed by the end of this year. I think EDF were pleased to hear that.

Q440 Christopher Pincher: By the end of this year, you will have those terms made public?

Mr Hayes: Yes.

Q441 Dr Lee: My question is about funding the necessary new nuclear that the country needs. People are always loth to say that we need a certain percentage of generation being nuclear but, on the basis that most people say 40% would be a nice target, are you confident that the funding of the Contracts for Difference model is able to deliver that level? We are talking about 20 nuclear reactors at that point. It is going to be quite a significant investment on the books of companies like Hitachi and EDF to fund that number. Have you had any thoughts about that? I asked a question last week about the potential purchase of Westinghouse. Is there a desire at all for the Government to step in to push it along a bit?

Mr Hayes: The important thing is to have engagement from businesses, consortia typically, that are committed to investing. Beyond that, further investment will be necessary to get to the level you describe, Phillip. It is very hard to envisage the growth of the kind you describe without very large-scale investment. Of course, some of these matters are commercial, but Government can play its part in supporting that kind of investment, through the framework it creates, through the environment that pervades, through a strong commitment to nuclear and through a legislative process in the Energy Bill that creates a degree of clarity and certainty, which is fundamental as a prerequisite to building confidence that leads to investment. Growth in the programme of the scale you describe requires that legislative approach: Government to go further and support investment in every way it can and then to attract that kind of investment, some of which will be domestic and some of which I suspect will be from abroad. Infrastructure investment is usually coloured in that way, isn’t it?

Q442 Dr Lee: Is there a particular technological mix you want to see? We now have Hitachi with a particular type of reactor; EDF has a particular type of reactor; there is the AP 1000. Is there a desire to have more than one type in Britain for a reason? Is there a technical reason for that, or is it just a case of having two-

Mr Hayes: Hergen is dying to get in because he feels I am hogging too much of this Committee’s consideration. I am going to let him in a moment, but I want to say that you will understand the Hitachi purchase of Horizon and their proposal is built around a boiling water reactor. You will know that that is a technology that is well established but not established here in the UK. That will require regulatory process as you also know, which I am told may take some years. I want that to be as thorough as is necessary to assure safety and security, but I do not want it to be an endless process. My anxiety is to ensure that we have high-quality technology that is proven and that is regulated properly.

Hergen is now going to say something impressive and technical.

Hergen Haye: I am not quite sure I am, because that is absolutely right. We decided early on to allow for a number of reactors to be evaluated by the nuclear regulator. Two of them are the EPR, which is the choice technology for EDF and Centrica, and the AP 1000, which has not found an operator yet in the UK market. Due to the recent sale of Hitachi, we now have the boiling water reactor, which has to go through the generic design assessment to make sure it is appropriately suited for the UK market. There is definitely a benefit in diversity, also the ability to develop, for example, two or three significant supply chains, depending on the different reactor designs, but the Government has no particular rule. It needs to work for the investor operator, and they will often decide on commercial grounds which reactor is the most suitable one. The generic decision assessment will then validate whether that is possible.

Q443 Dr Lee: One final question. In view of the fact-and I am very encouraged by all this-that there seems to be a commitment towards nuclear in the medium to longer term, our commitment towards the next generation of reactors is sketchy. We are not really in there with Generation IV in the way that other countries are. Is there any desire in the Department to revisit that decision in terms of funding new technology Generation IV reactors?

Mr Hayes: Our determination is to ensure that nuclear plays a central part in the energy mix I described earlier. I think it is quite a good thing that we are going to be going through the process that Hergen described, establishing that this Hitachi offer, this boiling water reactor is right for us because, as you implied, Phillip, it is another kind of technology, different to what we have had in our own nuclear industry previously. I am not uncomfortable with the idea of several technologies running alongside one another, and I think it is probably a very good thing for the long term, as you describe. We are very open-minded about technologies, providing they go through the proper process, they are absolutely safe, secure and reliable, and they can be delivered in an affordable way. We are not close-minded about the technology, provided we are robust in the way we handle it.

Q444 John Robertson: Do you have any contingency plans in case the new build is not forthcoming?

Mr Hayes: We are confident it will be. The fundamental for Government is ensuring energy security, John, as you know. That is best assured by a mix of technologies, of the kind I described at the outset of this Committee, and I am confident we will.

Q445 John Robertson: Minister, we originally had 2017 as the date when we were first going to get new nuclear. Having listened to Hitachi and EDF, they are talking now 2021. It keeps going back. You must have a contingency plan.

Mr Hayes: I know that you speak about these things with great regularity in the House and you have been a member of this Committee for a while. Let me be clear that I understand your point. What you are referring to is the fact that, given the timeline on nuclear, given the age of the existing nuclear stock and given the fact that coal will be coming off stream over time, there will be a pressure on energy security. Your analysis reflects the Ofgem analysis, which you will know just a couple of weeks ago talked about us moving from 14% or so spare capacity down to a figure possibly as low as 4%, in their estimate. That requires investment in technologies to be brought on stream quickly. That will mean gas playing a role. I am not terribly apologetic about that as I think it is important that gas does play a role in guaranteeing energy security. I would not want us to have all our eggs in one basket, and over time that is not what the Government intends, but I do not think it is any secret that in order to deal with the demand issues that you suggest, we will need investment in a new generation of gas generation. I have used "generation" in two senses in the same sentence, Chairman, by the way. Part of the basis of the Bill, and the confidence I described that leads to investment, is to bring that about.

Q446 John Robertson: DECC recently commissioned a study by McKinsey, and it was looking at a 40% reduced electricity demand by 2030. If a 40% electricity demand reduction could be achieved, would it be possible then to continue without nuclear?

Mr Hayes: I think it would be very desirable to look at demand reduction and management. You make this point, as a Committee, in response to the draft Bill. It is a point that I am extremely sympathetic with. I know that you shared that with my Secretary of State, and I hope that when the Bill in its final form is published, you will see that that is something we have taken seriously. You are quite right, John, that too much of the debate on energy over time has been conducted wholly around production and not enough around consumption. Supply matters, but demand matters, too. That is particularly true when you are planning a strategy that could take us not over a decade but over several decades. Nuclear may be over 60 years. The patterns of demand over 60 years are hard to model, but what we can be certain about is that more informed consumers, and the more cost-effective consumption that springs from that information, is likely to change patterns of demand, so I agree with you that demand matters. However, I would contest whether that would change fundamentally our view about nuclear. I think nuclear will have a key role to play, even in that environment where demand is something we tackle with seriousness.

Q447 John Robertson: One last question. With what has happened with E.ON and RWE, with obviously the influence of the German Government on those companies in relation to nuclear, and with a Japanese Government now who are relooking at nuclear, thanks to the accident at Fukushima, and if the Japanese Government were to put pressure on Hitachi, we could end up with the same situation again with a company withdrawing its intention of building nuclear power stations. Is there is a risk we could find the Horizon project up for sale again?

Mr Hayes: It is not for me to comment on Hitachi. It is a matter for their Government.

Q448 John Robertson: This is a political thing. Have you talked to the Japanese Government in relation to this bid?

Mr Hayes: My Department has relationships with countries across the world. There is a dialogue that takes place departmentally with all of our partners and friends across the world. On the specific point you make, I think this is an example where Britain can lead the world, rather than follow others. I think we can attract investment, perhaps because of the things you said, because investors will be looking to Britain, which has a very clear commitment to nuclear. I think a cross-party commitment is very important, given that sometimes Governments change and Ministers change, too, and that that is supported by a piece of legislation that underpins certainty and, therefore, builds investment confidence. I am very confident that nuclear can play a key role in our energy supply, and I think Hitachi take the same view.

Q449 John Robertson: I agree with you, but the investment is not coming from the UK Government. The investment is coming from companies outwith the United Kingdom and you can’t control that.

Mr Hayes: You can create an environment where that is made more likely, where that is made more attractive. Investment is not wholly about subsidy. Investment is about ensuring that Britain is the right place in which to invest. Certainty around public policy, and the framework one creates in legislation, is an important part of building that confidence.

Q450 John Robertson: We do not seem to have much confidence in investment from the UK.

Mr Hayes: I am extremely confident about investment in nuclear.

Q451 John Robertson: That is why all these foreign countries are investing in-

Mr Hayes: You are right that there are other sources of investment apart from overseas. Nuclear represents a long-term, steady and pretty sound investment over a 50 to 60-year period. As infrastructure and investment goes, that is very attractive to certain kinds of investors, as you will know. I would expect the UK investment community to be very interested in this, but I think the Chairman’s opening remarks are highly pertinent here: the Bill matters, public policy matters, clarity matters, consensus matters and certainty matters.

Q452 Albert Owen: When questioned about the contingency plan for nuclear if there are delays, you quite rightly and honestly said about gas filling the gap in some sense. Do you not agree that there is a danger that many of these companies who you see as future investors in the nuclear industry have a wide portfolio, which includes gas? We heard from E.ON and RWE, sitting where you are, when they pulled out of the Horizon that they were going to go into the renewables because they felt that was more attractive. I would put to you, and I put it to them, that is more attractive for their shareholders in the short term. Is there not a danger that you are giving signals about a possible dash for gas that would be more attractive to these companies who have this wide portfolio who would otherwise be looking at long-term investment in nuclear?

Mr Hayes: I think you are right that for any Government maintaining that mix is a challenge because we are dealing with a range of international factors-the international gas price is the obvious factor in relation to your question-and at particular times-

Q453 Albert Owen: No, it is not, with respect. It is you making statements as a Government saying that you are encouraging a new dash for gas. What has been reported is that there is going to be new investment in gas at a time when you have not negotiated a strike price for other technologies, including nuclear. The differential is huge and it is big for the shareholder.

Mr Hayes: When I made the comments I did a few moments ago about gas, I did qualify it by saying one would not want to become too dependent on any single technology. It is clear that we are going to have to have some new gas generating resource, not least because of the age of existing gas power stations. Some of those, as they age, will be replaced by more efficient and lower emission gas generation, so gas is an important part of the mix. I would not want to suggest at all, Albert, that it is the only part of the mix that matters. You are right, renewables will continue to be-

Q454 Albert Owen: Enough is enough on wind; nuclear is delayed; gas is the option-that is what could be interpreted.

Mr Hayes: This Committee knows very well, and in fact it has commented previously, there is a long lead time on nuclear because the build time, for example, is such that to bring it on stream is going to take many years. Getting the legislative framework in place now, attracting the interest of businesses, getting the investment behind that will allow us to plot that development over time. You are also right that energy demand-notwithstanding John’s very good point about demand management, which I think he is right needs more attention than it has had previously-necessitates us putting in place sufficient resource to meet that demand. That can be done by a variety of means and I think gas is part of that. We are going to be publishing our gas strategy very shortly, which will set this out. You fleetingly mentioned shale-

Q455 Albert Owen: I don’t think I did, but I mentioned wind. Do you want to take that one up?

Mr Hayes: I think you did.

Albert Owen: I did mention wind. Perhaps it sounded like shale from over there.

Mr Hayes: Maybe in that case it was Freudian, and I will wait until someone does.

Albert Owen: Okay. I am a big supporter of that as well.

Q456 Sir Robert Smith: On this contingency planning, given the delays in construction in France and Finland and given that the financial model we have come up with to incentivise nuclear means that a construction delay is a big risk for the investor, do you not think that if the first project has any hiccups there is going to be a serious problem maintaining the target?

Mr Hayes: You are right about France and Finland, and I assumed that the Committee would raise that example. To be fair though, Hitachi have a good record of building on time and on price. One of the encouraging-

Q457 Sir Robert Smith: Hitachi are not going to be the first. If EDFs project gets into any kind of trouble then the lure for investors is going to be a lot less.

Mr Hayes: We think time and price are important, and we think we can do better.

Q458 Ian Lavery: The supply chain and the potential opportunities for UK businesses are extremely important, particularly at this point in time. There have been many witnesses writing to the Committee to express concern about the lack of capacity in the UK supply chain. That in itself will have the potential for huge bottlenecks because of the limited suppliers, both in the UK and abroad. Do you think that the potential for the bottlenecks could delay the construction of new reactors? If that is the case, do you have any idea how you would minimise this?

Mr Hayes: We have. In fact, Chairman, in my previous capacity as the Minister for Skills, working across BIS and DECC, I was able to bring together a meeting under the banner of the Nuclear Skills Alliance that we formed, using the Nuclear Skills Academy as the conduit for the expression of demand from the industry, so that we could then put into place the necessary policy levers to meet that demand with supply. You are right though, Ian, this is a significant challenge. Part of the reason it is a significant challenge is that, in modern times, we have built only one new nuclear plant: Hinkley C in 1985. The skills base has to some degree aged and eroded over time. We will need to put in place a significant investment in skills. The process that I began, working with the officials that I am now working with more directly, means that we will have a very clear quantification of the skills that are required, with a degree of specificity around new build but not just around new build-around the whole process from build to managing, running stations to disposal of waste. I am going to work with colleagues in BIS, with the HE and FE and training community to ensure that we are equipped to provide those needs.

Your other point-forgive me for the verbose answer, Chairman-was on the supply chain, which is a slightly different point but equally important to me. I am a pretty unabashed patriot, Ian, like you, and I think Britain has to benefit from this in more ways than one. The obvious benefit we get from this investment is energy security, providing the power needs of our households and businesses, but there must be another very substantial benefit and that is in jobs and skills. That does mean a very strong commitment to ensure these projects have a very close relationship with a supply chain that is equipped to do the job. This can be a very exciting development. You will know that in the case of a nuclear power station there will be perhaps 6,000 people, or more, involved in the process of construction. There will be 1,000 long-term jobs. The benefit that this new work brings should not be underestimated. I will personally commit to this Committee that I will use every avenue possible to ensure that that supply chain relationship is central to our considerations around what we build, where we build it and who builds it.

Q459 Ian Lavery: That is extremely important. Are there any parts of the supply chain that you believe are more likely to suffer bottlenecks than other parts of the supply chain?

Mr Hayes: When you build this kind of plant there is a range of the kinds of skills required. There are a number of generic skills that are drawn upon and then, as you move through a project, the skills become more tailored, more specific. It is ensuring that we have those specialised skills in sufficient volume to do the job. The Hitachi project, even in its early stage, has engaged both Babcock and Rolls-Royce and that is only the beginning of their relationship with a wider supply chain. Part of this is about ensuring that at the outset key businesses with crucial strengths are engaged in the process, and I think that is a good example. Using that as a model, we can learn from that and do still more. I am very committed to this, Ian so having given the commitment I have given, I expect you to test me on it.

Q460 Ian Lavery: With regard to that, there was a visit by members of this Committee to Hinkley. It was raised there that there were some potential supply chain organisations who might fail to get the proper accreditation needed to access business opportunities with new nuclear build because the upfront investment is seen as too risky. Would you be in a position to assist these types of businesses?

Mr Hayes: I think that risk needs to be quantified and explained. Some of this will be about perception as well as about reality. The more work one can do early on to explain the commercial opportunity and risks associated with that, the better. My own view is that when you are dealing with very small businesses that may be able to benefit from this, you need, as I said earlier, to provide conduits-because if you are a very small company your exposure to risk is perhaps greater-such as mechanisms through which the Nuclear Skills Alliance could be a conduit for their work. It is really important to find vehicles by which you can engage a whole range of smaller organisations that may be able to bring particular skills, rather than just the big boys-much as I value them-soaking up the whole of the opportunity. In the case of Hinkley, the involvement of the local training community will be important in this respect, too. Bridgwater College and West Somerset College are involved in providing the skills, working with the industry, needed and in making it clear to people that there are real employment opportunities here. Engaging the education community in this as well is really important.

Q461 Ian Lavery: Will you provide assistance to businesses, regardless of size, who basically need to get into the process? It is pretty specialised.

Mr Hayes: It is specialised. There are generic skills, but you are right; there are specialist skills, too, which is why I mentioned the colleges. Honing those specialist skills to demand is an important part of making sure as many people benefit as possible. One of the questions I asked is, are training frameworks sufficient? Are they sufficiently shaped by the industry, by demand? As a direct result of this Committee and your question, I am going to go away and do more on this. My intentions are very clear, I hope, but I think we will look again at how the process we have already begun can be tailored to bring about exactly what you suggest, which is the opportunity for as many smaller businesses as possible to engage. When I have done that I would be more than happy to write to the Committee setting out what we have done already and what more we think we might be able to do to ensure that outcome.

Q462 Ian Lavery: Thanks very much. That would be a great advantage for this Committee and obviously to business as well. Can you say what progress has been made on the Nuclear Supply Chain and Skills Action Plan to date?

Mr Hayes: Yes. We have been proceeding with that for a while, and I mentioned it a moment or two ago. I hope to be having a further meeting on that before the end of the year-very shortly-to bring together the parties that have been involved in the action plan, to review progress, given the Energy Bill. I think it is very important we do this in parallel with the Bill. Again, I would be more than happy to report back, following that meeting, to this Committee.

Q463 Ian Lavery: Do you have any idea when it will be published?

Mr Hayes: As you know, we have talked about publishing it this year. Rather as I described earlier, I am a great man for alacrity and I will tell my officials that this Committee and I both want it published by the end of the year. How would that do? Shall we say December?

Chair: That sounds like the end of the year to me, yes.

Mr Hayes: Would that be reasonable?

Chair: I know the Treasury have a rather flexible interpretation of the seasons but-

Mr Hayes: Yes, but I feel that my relationship with this Committee has special sovereignty.

Chair: I am delighted to hear that. It is a very welcome start to our co-operation. We do not have very much time.

Q464 Barry Gardiner: Minister, in 2009, the EU issued the Nuclear Safety Directive. That put into community law the IAEA Convention on Nuclear Safety, and it set a deadline for 22 July 2011 for the implementation of that by each of the countries within the EU. Of course, the UK did not meet that. We now find that at that point we became subject to infraction proceedings that were started by the EU against us. Could you give us a progress report on what is being done to combat the infraction proceedings and to ensure that we have in fact complied with the IAEA Convention on Nuclear Safety?

Mr Hayes: I am aware of the events you describe, and I am anxious to ensure that we are not in the unhappy position that you set out. I have asked my officials to give me urgent advice on that matter, and I expect to be able to draw it to a conclusion very quickly. I understand that we are now compliant as a result of that, but I am sure Hergen will want to say more.

Hergen Haye: We are a signatory to the IAEA; we play an active role; and we are compliant with their safety standards. Post-Fukushima, we have worked very hard to develop the new safety standards that we are pressing for all member states to adopt. With regards to the directive, we will be compliant and that will be implemented in an appropriate way.

Q465 Barry Gardiner: The deadline that we agreed in the convention was 22 July 2011. We agreed that as the deadline for being in compliance back in 2009. Why weren’t we, and how soon will we be? Are you, Minister, satisfied with the regulatory regime that allowed that to take place?

Mr Hayes: As you-

Barry Gardiner: Perhaps Hergen could answer the first bit, and you answer the second bit.

Mr Hayes: The reason I hesitated is because this anticipates my arrival.

Barry Gardiner: Anticipates your Government’s arrival.

Mr Hayes: I did raise it because I was familiar with the issue, and I have asked for urgent advice on the matter. Hergen may want to say another word in direct relation to your question. It is important officials are scrutinised as well as Ministers.

Hergen Haye: It is best, probably, that we write to the Committee on the later stage of implementing the directive as required. There is absolutely no question that the UK does not want to be compliant and is putting all the resources to be compliant with all regulatory requirements as agreed at the European level.

Q466 Barry Gardiner: If you cannot now, could you please include in that note to the Committee a full explanation of why we failed to be compliant by the deadline? If you can do it now, please do. If you can’t do it now then please put it in the note.

Mr Hayes: I think that would be absolutely the right thing to do. You have now a commitment from the Minister that that will happen.

Q467 Dan Byles: Minister, I would like to talk about community engagement in terms of nuclear power. Obviously, it is hugely important to have community buy-in. A nuclear power station in an area will be there for decades. There are some common issues of community engagement in terms of wind farms and other energy infrastructure. What factors do you think are most likely to affect the public view of the new nuclear programme, particularly in terms of the local communities where the new programme is likely to be?

Mr Hayes: You are absolutely right that community engagement is important. You will also know, Dan, that we have had two recent debates that I have spoken in on this very subject, particularly around Hinkley, which has been brought to the House’s attention by Ian Liddell-Grainger. Of course I refer the Committee to what I said then, but let me rehearse briefly what I feel about it. I do think that community engagement is fundamental. I think an explanation of the opportunities that I mentioned earlier, in terms of jobs and skills, is critical to that. I also think there is a broader issue of community benefit. It seems to me that, as with any major infrastructural development, engagement early on with both that explanation of opportunity but also a real payback to the local communities is pretty fundamental.

I think there is a parallel issue around disposal and waste, where there is a very similar set of arguments about how the community engage. I am entirely committed to that and, as I said when I spoke in the House about it, I think it takes several forms. There is the community engagement over time and the understanding that this is a considerable investment over time, so we need something that is an ongoing investment, that is of a scale that is sufficient to both garner support for the development but also which reflects its significance, that is defined and shaped by the community, so that it is not something that is imposed upon them. The community should have a real dialogue, through their local representatives-namely the local councils and so on.

Finally, linking your point to Ian’s, it should ensure that the wider economic benefit is felt within the community. The point that Ian was making about the supply chain relationship, particularly in respect of SMEs, is it often has a very local character, and that should be understood, too. It is not just about business; it is about the colleges and others, too.

I am very committed to the idea of community engagement, Dan. I think we do need to do some fresh thinking on it. I tried to begin to set that out in what I said in those two Adjournment debates. For me that is a fundamental part of achieving our ambitions on nuclear new build.

Q468 Dan Byles: The Committee visited Hinkley last week, and one of the issues that was raised with us was that local councils felt they needed greater clarity about what is meant by community benefits. One example is that the idea of business rate retention has been floated. There are some concerns, firstly, that that will go to local councils, not necessarily local communities. Communities do not always view the council as being part of the community, if you see what I mean. The other concern about that is that nothing would come in until after they are constructed at that point, and in fact these communities are going to face many years of disruption through the construction process. I would be curious to know what you think is the distinction of what sort of community benefits we can get, pre-operation during the construction, to offset the sort of blight.

Mr Hayes: That is why I was making the point about the timeline. I think that rather than seeing community benefit as a package at a particular point in time, there has to be an understanding that this is a long-term commitment by the community and there has to be a matching long-term commitment to the community. There are the 106 arrangements that would accompany any normal planning application of this kind, and those are negotiated by local authorities in the way you say. I do think wider engagement matters, too, of the kind you describe. I have a very positive view about local authorities and councillors because I was one, but not just because I was one but because I think they are an important part of our democratic infrastructure. I am not in any way apologetic about our local councillors. I think they do a wonderful job. You are right that the widest possible aspect of community engagement needs to be taken into account, and I wholly agree that it has to extend beyond the confines of the 106 agreement.

Q469 Dan Byles: Mrs Miggins in number 32, who is going to have hundreds of lorries going past her previously quiet cottage every single day for years while it is being constructed, might not care that the council has some 106 money that they are going to spend on the other side of town.

Mr Hayes: I do not know her, but I would be delighted to visit.

Q470 Dan Byles: Very finally, what about the idea of more innovative ideas, such as cheaper energy bills and shares in the energy company? In particular, some wind companies at the moment are looking at innovative solutions around, for example, paying the first £100 or £200 of local people’s energy bills-that sort of thing. Do you think there is a role for Government in looking at that sort of innovative approach, or do you think that is really down to the individual companies?

Mr Hayes: Yes, I do. I do think there is a role for Government in creating that different view about the kind of engagement with energy use. This relates to the arguments that John raised around demand. If we are going to create intelligent energy communities, that means individual consumers being more proactive in their interface with energy but I think could mean whole communities being more actively engaged too. I was on the Isle of Wight recently, where you will know they have this concept of an eco-island. Albert has left, but I know he has made this case in Anglesey, too. I suppose there is a certain logic in the fact that both of those places are islands, but none the less the idea of a local communal engagement with energy seems to me a very important one. It is an argument that has been rehearsed for a long time, but it needs to be given greater seriousness, and I think that the nuclear new build is a chance to look at that afresh. As I say, this has been debated in the House a couple of times recently. I have used those debates as a means of me going back to the Department and talking to officials about fresh ways we can engage. You are right that some new and exciting thinking around community engagement is essential if we are going to get the buy-in, the sense of ownership, the sense of direction that is necessary.

Q471 Sir Robert Smith: Can I reinforce that the important thing with a project like Hinkley is that it is not the end product that is so much of an intrusion on the community; it is the 10 years of living on a construction site? As someone said to us, if you start school, most of your school life will be on a construction site; if you are in retirement, most of your retirement will be. The community mitigation and the community engagement needs to be done very much in the early stages when the disruption is there.

Mr Hayes: Yes. It is fair to say that-we know this from the history of nuclear power in this country-once a site is established the engagement with the community is very different. Clearly, there is a benefit in all kinds of ways, not least in terms of local employment and so on. But you are right that during the build phase, particularly for nuclear because of the very long build phase, there needs to be an active policy engagement and a perceived and real benefit, and that is why I mentioned the timeline in these terms as being highly significant. We should not look at it as a package at one point in time. We should look at it as part of a process.

Chair: Minister, you have been generous with your time. We have had a very fruitful hour and 10 minutes with you, for which we are grateful. We look forward to seeing you again very soon on some of the other issues we have touched on but not really addressed in detail this morning. Thank you.

Mr Hayes: Thank you for your time and attention.

Prepared 20th November 2012