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The Rt. Hon. John Hutton MP, Secretary of State for Business, Enterprise & Regulatory Reform
Unite Conference, BAFTA, London, 26 March 2008
Good morning ladies and gentlemen.
I’d like to start by thanking UNITE for their very kind invitation to speak at this important conference this morning, and also for the leadership they are showing on this crucial issue about the role of nuclear energy in the UK.
Thank you as well to Dougie Rooney – Unite’s National Officer for Energy. Dougie, you have made a unique contribution to nuclear’s renaissance in the UK. Your far sighted approach has advanced not only your members’ interests today but ensured that thousands of new skilled jobs can be created in the coming decades.
My argument to you today is simply this: Government has done the easy bit. We’ve published the Nuclear White Paper. We’re taking the legislation through Parliament. The hard task lies ahead.
Translating this policy into action on the ground is now my top priority.
And I believe we’re well placed. The public recognise the need to take action against the dangers to our planet from global warming and the dangers here at home from insecure energy supplies. The debate about doing nuclear ‘in principle’ is over.
But neither am I remotely complacent about our prospects. My country faces its own tough competition for new nuclear investment. From the US, China, India, France and many others. The acid test for politicians in the critical two year window that lies ahead, is whether we can clear a path to becoming the number one place in the world for companies to do business in new nuclear power. That is my ambition for my country.
Why? Because I believe that the revival of nuclear power in Britain today - together with the significant investment in renewables we know we need to meet our international obligations - has the potential to be the most significant opportunity for our energy economy since the exploitation of North Sea oil and gas.
That transformation of energy production and supply in the UK provided an injection of billions of pounds to our economy.
Today, as the long-term decline of these resources drives our transition from being a net exporter to being a net importer of energy, we must transform the way we use and source our energy.
Over the next few decades, Britain must complete the journey to becoming a low carbon economy - perhaps our single greatest challenge as a country.
Energy is again big politics on the international stage. Competition over access to, and control over energy resources is intensifying. The urgency of climate change and its challenge to our energy system of tomorrow is becoming increasingly clear to all of us.
And just as over the last four decades, when the North Sea oil and gas industry boosted local economies, created and sustained hundreds of UK businesses and provided employment for tens of thousands of people; this low-carbon revolution presents real and similar opportunities for British people and British companies. New skills. New wealth. New jobs.
More countries are looking to a range of low carbon solutions to answer their own energy challenges. There has never been a greater global demand for finance, equipment and skills to build and operate nuclear power stations. And here too I want Britain to be leading the world in the development and application of this new generation of low carbon power technology.
To become the number one place in the world for new nuclear investment, we must first learn the lessons of the past. Address the concerns raised during our consultation on safety and security, waste management, costs and the perceived impact of nuclear power on investment in other low-carbon technologies. And recognise and address the realities of an ageing workforce in our nuclear industry.
All of us - Government, business, the tradesunions and employees - have a role to play in making that happen: to generate the investment we need; to increase global cooperation; and to develop the skills and capability that will make the UK a global industry leader.
As a Government these are our priorities, and we are now taking the important steps that will translate this policy into action.
The UK’s open, liberalised energy market and robust regulatory regime have already helped us maximise the economic production of our traditional, indigenous energy resources, and develop the most competitive energy market in the EU and the G7.
This competitive energy market is delivering essential infrastructure investment to keep our supplies secure for the future.
And now, I believe, that liberal energy market offers the UK its best chance to make new nuclear a reality, on time and to budget.
In recent months, I’ve met with potential investors from the US, Europe and Japan. And there are powerful signals from them and others in the industry that the UK is now one of the world’s most viable new build markets.
Their interest is built, in part, on the openness of our energy market and our strong commitment to work with business to help make their new nuclear investments happen in the UK.
The UK’s stable political and fiscal regime, ready access to capital markets, a strong regulatory system and decades of experience and expertise make us, I believe, an attractive investment prospect.
And this interest is made real with British Energy’s recent announcement that it is in discussions with other interested parties about its future and plans in relation to new nuclear. We should welcome all of these developments.
But operators – particularly in the current financial climate - need predictability and a clear route map to turn their interest into action. And this is where, I believe, Government can provide leadership to shape investor confidence.
Not in hidden subsidies that deliver little value for public money. But crucially in clearing away the obstacles that prevent nuclear from playing an enhanced role in our country’s energy system.
So, what are the steps that we are already committed to taking to help make the UK the number one place in the world for new nuclear investment?
Earlier this month I travelled to Washington to sign the UK into membership of the Global Nuclear Energy Partnership. GNEP will enable the UK to play its full international role in promoting the benefits of civil nuclear power. It will help us gain invaluable expertise and experience on a range of critical issues such as infrastructure assessments, security and safety.
But another reason for being in Washington was to talk to the parent company senior executives of potential investors in the UK nuclear market. To hear from them about what they believed would position the UK at the top of the new nuclear investment league and to gauge their interest in the market.
These meetings confirmed for me that there is tremendous international investor interest in the nuclear renaissance in the UK. I want to cement this interest through a major investor conference in London later this summer. Investor confidence will be dependent upon focussing relentlessly on, what I would describe as, five key building blocks: regulation, planning, sites, waste and skills.
So let me touch on each of these in turn.
We have one of the most effective nuclear regulatory regimes in the world. Today, safety, of course, is paramount for all of us. But there is always more that we can do. I have long believed that the effectiveness of our regulatory system can be a key differentiator for attracting inward investment.
That is why I asked Dr Tim Stone to set out proposals for how we can further enhance the efficiency of our regulatory system in the UK.
And tomorrow, as part of the UK-French summit, I am meeting with Monsieur Borloo, the French Energy Minister to discuss how the UK can work more closely with France on civil nuclear issues - in particular how our two nuclear regulators can work closely together to enhance the efficiency and effectiveness of the reactor design licensing process.
Short-listing the generic reactor designs to be submitted for more detailed assessment is another key milestone. Last week, we began this prioritisation process.
And next week, we will be inviting the industry to bring forward new reactor designs for a Justification Decision that I need to make in the next few months – an important stage in getting the first new build started.
The Justification Decision is the first major regulatory hurdle in the new build process. Based on consultation last year, we’ve worked hard to ensure the process is as efficient as possible – reducing unnecessary administrative burdens for industry, Government and the regulators; whilst also ensuring it is fair and open.
And to ensure we have regulators with the necessary skills and experience to deal effectively with the new nuclear licensing process, the Nuclear Installation Inspectorate is continuing its drive to recruit the people they need.
Creating an efficient, predictable and fair planning regime is, perhaps, one of the most important factors that companies take into account when deciding where to locate their investment. And just to remind ourselves, it took us six years in the UK to secure planning consent for the Sizewell B plant, costing £30 million. Despite this, only 30 of the 340 days of the inquiry were focussed on local issues.
And so the urgent challenge of climate change and energy security can’t be compromised like this again.
The Planning Reform Bill, currently being debated by Parliament, will help us tackle such long, inefficient, costly and unnecessary delays.
Establishing a new independent Infrastructure Planning Commission, to make decisions within the framework of National Policy Statements will deliver quicker, more cost-effective and informed decisions. We have already in my Department begun drafting the Nuclear National Policy Statement to be published for consultation later next year.
We need therefore to make sure that there are sufficient sites made available for Britain’s new generation of nuclear power stations. So in addition to the process that British Energy is going through, the Nuclear Decommissioning Authority has now made areas close to existing sites available for consideration as potential locations for new plants.
And we have also worked closely with potential investors to develop detailed guidance to progress the Funded Decommissioning Programmes for New Nuclear Power Stations.
This guidance will enable operators to understand the requirements the Energy Bill places on them for meeting their decommissioning, waste management and disposal costs.
Finally, we also recognise the importance of continuing to make progress on waste management. That is why our White Paper was clear that before development consents for new nuclear power stations are granted, the Government will need to be satisfied that effective arrangements exist or will exist to manage and dispose of the waste they will produce. And DEFRA will be setting out later this spring in a White Paper how they plan to take forward the managing radio-active waste safety programme.
These are some of the practical actions that my department is taking today to speed up the development of new nuclear power in our country. These measures will help to make real what could be one of the biggest energy infrastructure projects in the UK since the exploration of natural gas and oil. And it could position the UK as the gateway to a new nuclear’ renaissance across Europe.
So this renaissance here in the UK and across Europe, offers tremendous opportunities for highly skilled jobs across the breadth of the supply chain.
The potential scale and complexity of each investment is breathtaking.
Just replacing our existing capacity alone will equate to 3 times the size of the project to build Terminal 5 at Heathrow. It could represent around twenty billion pounds worth of business for UK companies.
And now with no artificial cap to constrain the potential of new build in the UK, there is every reason to believe that the industry could be contributing a significantly higher proportion of the UK’s energy in the decades ahead.
Creating in the process, thousands of long-term highly skilled jobs directly within the energy industry, and throughout the supply chain. And, I think here, the prize could be absolutely massive.
I have said that I don't want to see just a like for like replacement of nuclear capacity in the UK. Obviously, it’s up to the market to decide what investment takes place. But energy security and climate change should provide the push for a significant expansion of nuclear in the UK in the coming decades. And could potentially create up to 100,000 new skilled jobs. This includes thousands of highly-skilled, well paid jobs and many in some of the UK’s most deprived communities.
At its peak, the construction of Sizewell B employed over 4,000 people. More than 3,000 UK-based companies were involved in its construction, 630 of those were local companies in East Anglia.
First the services to help build and operate the station – designers, engineering firms, project managers and construction companies; and then the manufacturers to produce structural products and goods such as concrete, steel and pipe and machinery and equipment including reactor components, pumps, switchgear and transformers.
And second, the countless support industries - transport, catering, accommodation, communications, finance, business and legal services - that are essential to major projects of this nature.
Now if UK companies are competitive enough, and we have the right skilled workforce and ambition – I believe and hope, the bulk of the capital expenditure related to this programme will flow into this country, creating new jobs, markets and businesses.
But, of course, across the world, more skilled people, specialised equipment and money is needed to meet the world’s insatiable appetite for energy supplies and to de-carbonise energy for the future. And both our nuclear new build and decommissioning programmes are running in competition with other major global projects for resources.
The industry is facing the pressure of replacing an ageing workforce. Around 1,500 employees need to be replaced every year. This will increase in the future, as retirement bites deeper.
Cogent, the skills body, estimates that even without the demands of new build, the UK nuclear industry needs up to 4,500 skilled trades people, and just under 9,000 graduates to maintain existing operations and deal with decommissioning in the next ten years. Alongside this we need a strong, constant supply of school leavers with good STEM skills.
Our job now – Government, unions, business and employees - is to ensure we are ready, able and qualified to make the next steps forward.
The world’s transition to a low-carbon economy will create perhaps the most significant new market for investment and manufacturing in the decades ahead. The global environmental goods and services market is set to grow, for example, from $548 billion in 2005 to nearly $800 billion by 2015.
As one of the world’s largest manufacturing economies, and home to some of its leading hi-tech manufacturers, the UK has the potential competitive edge to capitalise on this new generation of green collar jobs.
And later this year, we’ll be publishing our new manufacturing strategy to help UK manufacturers better compete and lead in these markets. Working with stakeholders such as Unite to tackle gaps in our low-carbon supply chain and deliver support to business for maximum impact.
Building on the work we did for the Nuclear White Paper, It’s also critical that we get a clear picture of the skills challenge that now exists in the nuclear industry.
The design, build, operation and decommissioning of new nuclear power stations call for a spectrum of professional skills - from engineers, scientists, mathematicians, radiation specialists and health physicists to project managers, office workers and administrators.
It’s time to update the strategic review of the industry’s skills base that was run at the beginning of the decade.
The Sector Skills Councils including Cogent will now run a skills audit of the energy sector to identify skills shortages, skills gaps and the impact of these and other demographic factors on our energy industry.
They aim to report their findings later this year, and also set out strategies that the Councils and employers can implement to ease supply constraints across sectors.
The newly established National Skills Academy for Nuclear is also working now to coordinate and develop training at a regional and national level; alongside academies focussed on boosting skills in manufacturing, the process industries and off-shore oil. And we are investigating the potential for a new Academy in Environmental Industries.
With training partners, the Academy for Nuclear aims to deliver 1,200 apprenticeships, 150 foundation degrees and to retrain 4,000 existing workers in its first three years of operation.
In addition, the Academy is building closer links with the Higher Education sector. And universities are now responding strongly to our agenda to improve the supply of graduates into the sector – with new and expanded courses, and moves to better integrate technician and graduate training and align their teaching more closely with sector need.
For example, the University of Central Lancashire – the academic body selected to run courses at the Academy – has launched Britain’s first degree in nuclear decommissioning and 11 UK institutions now offer Masters Degrees in nuclear related subjects.
Recently, Manchester University announced plans to create a £25 million centre for training and research in the nuclear industry, and the Academy is working with the Universities of Portsmouth and Central Lancashire to develop new foundation degree courses.
The Engineering and Physical Sciences Research Council (EPSRC) and industry partners are also contributing more than £2.5 million towards a new “Nuclear Technology Education Consortium”.
This strong and powerful support comes on top of the millions of pounds worth of funding that the EPSRC and business have already contributed to research programmes and initiatives to increase capacity across our nuclear industry.
They include creating new research Chairs at the University of Manchester and the establishment of an Engineering Doctorate Centre in nuclear engineering.
The National Nuclear Laboratory will also provide a platform for UK and internationally funded research and technology. And a business model for this new organisation - which we hope will be a Government owned, but commercially run enterprise - is now in the final stages of preparation.
We will shortly launch the competition to appoint a management contractor to run the Laboratory. Once appointed, this contractor will play a key role in ensuring the Lab can make best use of its skills and facilities, including the Sellafield Technology Centre, to support both decommissioning and wider research and technology work.
So in the UK, our energy challenge is clear: to secure a diverse mix of low-carbon energy supplies – including maximising indigenous production - and to work effectively with other countries to tackle the global problem of climate change.
Our commitment to enabling nuclear to play a full role in meeting this challenge is strong and unshakeable. Momentum is building. Companies from across the world now see new build in the UK as a gateway to the rest of the European market.
So it’s critical that we capitalise on this interest not only so we can realise our ambition for new nuclear capacity from 2017, but also to help hundreds of British companies and thousands of British workers benefit from the re-birth of our nuclear industries.
So Dougie, I believe, we have an unrivalled opportunity here for new business and jobs, and it’s critical therefore, that we work together as we have done in the past – Government, unions and business - to develop the capability and maximise the skills we need in our country.
Thank you very much indeed.
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