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CORRECTED TRANSCRIPT of ORAL EVIDENCE to Be Published As HC 879-I

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CORRECTED TRANSCRIPT of ORAL EVIDENCE to Be Published As HC 879-I CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 879-i HOUSE OF COMMONS ORAL EVIDENCE TAKEN BEFORE THE ENERGY AND CLIMATE CHANGE COMMITTEE A SEVERN BARRAGE? THURSDAY 10 JANUARY 2013 RT HON PETER HAIN, MARTIN MANSFIELD and ANDY RICHARDS MARTIN SPRAY, KATE JENNINGS, DR SIMON PRYOR and MARTIN SALTER SIMON BIRD, MATTHEW KENNERLEY and PROFESSOR TIM BROYD Evidence heard in Public Questions 1-128 USE OF THE TRANSCRIPT 1. 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. 2. The transcript is an approved formal record of these proceedings. It will be printed in due course. 1 Oral Evidence Taken before the Energy and Climate Change Committee on Thursday 10 January 2013 Members present: Mr Tim Yeo (Chair) Dan Byles Barry Gardiner Ian Lavery Dr Phillip Lee Albert Owen Christopher Pincher John Robertson Sir Robert Smith Dr Alan Whitehead ________________ Examination of Witnesses Witnesses: Rt Hon Peter Hain, MP for Neath, British Labour Party, Martin Mansfield, Wales TUC General Secretary, and Andy Richards, Wales Secretary, Unite the Union in Wales, and President, Wales TUC, gave evidence. Q1 Chair: Good morning. We have a very tight timetable, as you know; we have scheduled 30 minutes for this session. We have two other groups of witnesses. This is an inquiry in which there is enormous interest, so I think that itself reinforces the justification for conducting it. Welcome to our first session. I should draw the attention of the Committee to my entries in the Register of Members’ Interests, and in that context, perhaps, Peter, I might ask if you want to do the same thing. Mr Hain: Happy to do so. I have been working with Hafren Power, the company concerned with this. I have had a longstanding interest in the Severn estuary from when I was Secretary of State, but I have no commercial relationship with it at all. Q2 Chair: Fine. I just wanted to get that clear. I would like to start on the question of costs, which seems, to me, absolutely central. The evidence we have had from the company suggests that a figure of £170 per kilowatt hour would be required. As you know, that is very substantially higher than almost any other renewable energy source under consideration as a potential substantial contributor to our energy needs. Why do you think we should be considering something that looks so much more expensive? Mr Hain: When I went to see the Secretary of State for Energy about this, and the company came with me, it was very clear that this was not going to be an issue, but Hafren Power made it clear that their financial plans mean that they are not asking for anything more than offshore wind gets. In fact, if you look at the net cost, it will be substantially less, as you can see from their evidence that they provided to you, because of the flood protection savings to the nation. This is the one renewable energy project that will see considerable savings on flood protection, and that needs to be netted off, I think, in the overall bill. I am not sure about 2 that figure, Chairman. When we have engaged with DECC, it is very clear this is not going to be obstacle, although there is a commercial negotiation to happen. Q3 Chair: It is not really possible to net off savings of public expenditure against the costs of contracts for difference, because that cost falls directly on electricity consumers, and there will be no way of reimbursing them for a high price paid for a particular electricity source, even if it did deliver savings in some part of public spending. Mr Hain: I understand that, and the company welcomes contracts for difference as being a better deal for the consumer. All I am saying is, if you are looking at this project in the round and its considerable benefits, which, no doubt, we will get to, from my point of view, to look at the massive savings, running to billions, in flood protection for the nation as a whole, even though you cannot net it off in quite the way that might have been supposed— you are right about that—nevertheless, you have to look at it in the round. Q4 Chair: When the company comes to see us, which I think it is doing in about two or three weeks’ time, it will confirm that it would be happy with the strike price, which is the same as the one granted—we do not yet know what it is; we have a rough idea—for offshore wind? Mr Hain: Yes. They are not asking for anything more or less than offshore wind, and there will be, in the end, a negotiation to be had around this. I do not see this as being a problem at all, frankly. Q5 Barry Gardiner: Why did they put the price of £170 into their figures? Why is it out there in the public domain? Mr Hain: Because this is a public evidence session. Barry Gardiner: If in fact they are only asking for whatever it is that offshore wind is getting, then why don’t they say that publicly in the documents? Why do they have a figure of £170 in there in the first place? Mr Hain: I think you should ask the company about that. Barry Gardiner: Yes, we will. Mr Hain: From my point of view, I am very clear that the company is not asking for anything more than offshore wind is getting, and indeed, as I say, because of the flood protection benefits, it will actually be less. Q6 Chair: The company has said in a letter itself that its proposals are, at this stage, inchoate. They are not prepared to clarify them until they have agreement in principle from the Government that the Government will support the project. Do you think that is a reasonable approach? Mr Hain: This is early stages, Chairman. I have only been involved in this myself for the last six months or so, and the company is very much in its early planning. This is a huge project, with massive benefits to the nation, and I think it is right that it is approaching it step- by-step, and your evidence session is an opportunity to test some of those matters, but this is a stage-by-stage approach. Q7 Chair: But it is quite difficult—is it not?—for Ministers, or indeed for this Committee, to say in principle whether this is a good project if the details of it are not even clear from the evidence supplied by the company. Mr Hain: I think the evidence is very clear. I think they have laid it out in a great deal of detail. This Committee has the benefit of having more detail on their plans than has ever been given before, and, as I say, you will have the opportunity to question them in detail, as 3 you are doing so to me, and then we can move forward. But I hope we can get on to the benefits of this project, because they are massive, for the United Kingdom as a whole, and for South Wales and the South West of England in particular. Q8 Dan Byles: I am very interested in the idea that you can say they are only asking for what offshore wind wants, yet, at the same time, we have been told that the initial contract for difference price they expect to be £170 per megawatt hour, filtering through to much lower costs further down the line, to a jam tomorrow of £20 per megawatt hour. What you are saying is simply not true. The figures the company has given us are significantly higher than the current figures that we are looking at for offshore wind. Mr Hain: All I can say is that when I was in the meeting with the Secretary of State for Energy, with the company, it was made absolutely clear—and this is the position I have always understood from the company. It is a separate operation; I am a Member of Parliament supporting, passionately, a project that I think is in the interests of the country and the interests of renewable energy and the interests of tackling climate change, and it has enormous infrastructure and investment opportunities. It was made clear in that meeting that they are not asking for anything more than offshore wind, and in fact probably less. Q9 Dan Byles: It is all very well saying that there are great benefits to the nation. That may well be true, but— Mr Hain: I am talking about the strike price. They are not asking for anything more than offshore wind. Dan Byles: I think we are going to have to explore that with the company, perhaps, when they come in front of us. That is not the impression that we have been given from the paperwork we have been shown. Q10 Chair: Could I bring the TUC to the discussion? Would you like to tell us about your meetings with the company, and what your expectations are from all this? Martin Mansfield: Certainly. The Wales TUC obviously is a constituent part of the UK TUC, but we have devolved responsibility for matters specific to Wales. Our interest is to ensure that any development of tidal energy on the Severn has maximum impact on particularly the Welsh, and the South West, workforce and economy, and we believe that major infrastructure investment like this is absolutely required in order to provide the economic stimulus that we need to take us out of the economic crisis we are in, particularly in South Wales.
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